Attention to member, market needs is key to cooperative success - Commentary

Rural Cooperatives, Sept-Oct, 2002 by Randall E. Torgerson

As member-driven businesses, cooperatives are constantly required to assess members' needs and to stay in tune with those needs. This requirement is also a fundamental step in organizing new cooperative business ventures. A lot of time and effort goes into identifying the mutual needs of prospective members and in determining activities that the cooperative will engage in to meet those needs. This provides a rationale for members to invest in the new venture.

The needs assessment is also an important--albeit more complicated--step for established cooperatives. Is there sufficient volume of purchases or marketing to justify continued use of assets at different locations? Are there new business services required that provide an opportunity for expansion into new areas, or to extend processing of raw commodities into more profitable uses that can return additional income to members?

This constant evaluation of member needs and the cooperative's ability to respond to them is a fundamental strength of cooperative enterprise. What other business is better able to determine those needs than a user-owned business?

Needs assessment is more complicated for established local and regional cooperatives due to the increasing diversity in the size of members' operations and the wide range of needs among different segments of the membership. A homogenous membership, with similar needs and sizes of operations, has generally been regarded as an underlying key to cooperative success.

With a diverse membership, cooperative management and boards of directors must work harder to identify market segments that can be profitably served while still maintaining the common interest of the entire membership.

For instance, farm supply products and delivery needed by large commercial farmers differ significantly from those for small and part-time farmers. Similarly, the marketing needs of each segment of membership can differ markedly.

Cultural similarities among members and their community of interest can also be a determining factor for effective collective action. Such factors as national origins, religious beliefs, ethnicity and work ethics are each manifested in one way or another in the makeup of cooperatives in the United States and internationally.

Challenges posed by diverse memberships should be met and turned into strengths. Cooperatives are inherently positioned to be more sensitive to varying needs because they are focused on the business of serving those needs. Nothing in size, location or membership makeup detracts from that central purpose.

In addition, cooperatives have demonstrated far more ability to adapt than they have been credited for. Forthright, well thought-out responses to rapid and important changes in American agriculture--and society as a whole--will make farmer cooperation an ongoing, effective way for farmers to participate in the control, benefits and the contributions of agriculture.

Good examples of assessing member needs and business lines that can effectively meet those needs are found in the articles in this issue about local cooperatives in western Iowa, and the evolving cooperative marketing efforts of small minority farmers in north Florida and adjoining states. Each mirrors cultural attributes of producers in the communities involved, and the tastes, preferences and marketing requirements for serving various segments of the marketplace.

Another excellent contribution to this dialogue is also found in the Management Tip article, about standards required of cooperative directors to meet their responsibilities as stewards of members' interests and in overseeing operations of cooperatives.

As Cooperative Month is celebrated throughout the country in October, we are reminded of the significant role played by cooperatives in communities throughout rural America and the continuing opportunity for needs of farmers and rural residents to be met through effective forms of group action.

Randall E. Torgerson,
Deputy Administrator,
USDA Rural Business-Cooperative Service