1. Basic Philosophy
Cooperatives are member owned and managed businesses. They exist solely at the benefit of the member. It most cases, those members have shared values aside of simply making a profit. From social responsibility to environmental integrity, cooperatives will shape their business endeavors to meet the values of their members. The most fundamental building block to a cooperative enterprise is the one member one vote system. Democracy within the organizational decision making ensures that a balance of power is maintained throughout the membership. This is of great benefit for industrial hemp as it becomes and emerging crop in West Virginia. Collating power around a bourgeoning industry create a environment for the responsible development industrial hemp and will transcend the shortfalls of traditional capitalism.
2. Capital Structure
This is an opportunity for an organization of like minded individuals to penetrate the marketplace before other private or public entities begin to invest. This is because cooperatives have a unique value proposition for raising capital collectively and competitively with certain tax exemptions that are available to for-profit coops. This can alleviate the need to trade company ownership for capital. Being first doesn’t always ensure success, but it many commodities markets, the lowest cost producers typically wins the marketplace. Getting out in front of the curve can provide a significant advantage. Especially in the farming business, which is built on respect and trust. Cooperation with member pooled assets can provide significant efficiencies for all members of the cooperative and help to leverage the profitability of the whole.
3. Sharing Resources
Sharing resources is the most significant advantage for joining a cooperative in this new industry. Growing industrial hemp as a niche crop has significant challenges. From lack of farming knowledge, infrastructure, and initial human and financial capital commitments to run a company, starting a plant industry from scratch is tough A little TEAMWORK goes a long way here. Members can donate their time as employees of the company to avoid incurring costs before operations become profitable. Collaboration on new business ideas, equipment, contacts, and aggregation of crops helps to leverage the entire organizations ability to secure stable markets. It’s all about cooperation to reduce overhead and increase profitability as the hemp industry unfolds.
4. Leveraging Market Power
As a new hemp farmer in West Virginia, you’re going to have a tough time finding the right marketplace. To secure contracts for grains, oils, or raw fiber, you’re going to have to achieve an economy of scale that can compete with existing production models. Not to mention owning or having access to value added processing facilities that can cost big bucks up front. Many farmers will have to make the decision to make their own cottage goods or succumb to the market price demanded by hemp brokers that largely do not even exist at the time. Cooperatives can help farmers by aggregating their crop with other farmers across the state to achieve an economy of scale that can demand fair market prices and ensure profitability for the farmer.
Join the West Virginia Farmers Cooperative Today!
The West Virginia Farmers Cooperative is now taking new membership applications to assist farmers who are interested in the industrial hemp pilot program in West Virginia. If that’s you, please see our New Farmer Membership Overview below for additional information.