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Exploring Collaborative Marketing Collaborative Marketing Group Profiles |
Collaborative Marketing Group ProfilesMinnesota Agro-Forestry Cooperative
The Minnesota Agro-Forestry Cooperative has a lot of potential including an enthusiastic board, techni- cal support from the local WesMin Resource Conservation and Development (RC & D) office, and a commitment from a Northern Minnesota paper manufacturer to process poplar trees grown by the Cooperatives’ members. Why market collaboratively - identifying a need and an opportunity "A large paper manufacturer will build a plant to process the Cooperative’s wood if we agree to supply 100,000 cords (2,500 acres) of wood per year," says Minnesota Agro-Forestry Cooperative board member Joe Dooley. "We figure that if we can recruit 50 members annually who plant at least 50 acres of poplar trees, we’ll be able to supply short-term market demand normally filled by aspen tree owners, while building long-term market prospects," Dooley says, explaining that poplar is a good fiber substitute for aspen. The fiber industry is anticipating a shortage of native aspen trees in approximately 10 years owing to aggressive harvesting that began in the 1960s. Minnesota aspen, used for paper pulp, oriented standboard, and other commercial products, require 40 years to mature while the hybrid poplar trees planted by Cooperative members are ready for harvest in only 10 years. In the process of filling short-term demand during the upcoming aspen shortage, the Cooperative hopes to build long-term market share for hybrid poplars. Exploration of an idea The initial idea for a poplar cooperative stemmed from research conducted by the WesMin RC&D and the Minnesota Department of Agriculture (MDA) about the economic opportunities and environmental benefits of agroforestry crops. Conversations were launched in Winter 1995 between the two public agencies responsible for agroforestry research and a small group of individuals, including Dooley and Fred Roguske. During the meetings, the visionary group evaluated the market potential and membership requirements of an agroforestry cooperative. As a result of their meetings, a number of individuals contributed "seed money" and elected an interim board to research legal and financial questions associated with the formation of a cooperative. Using their own seed money and a grant from the University of Wisconsin’s Cooperative Development Initiative, the board hired Cooperative Development Services (CDS) to conduct a formal feasibility study. The study was positive and convinced the board to take its next step - the development of a business plan. Minnesota Agro-Forestry Cooperative’s business plan contains a summary of the group’s goals, a review of the economic opportunity offered by hybrid poplars, a brief history of how the Cooperative developed, a listing of its board of directors and collaborators, expected benefits for grower/owners and buyers, as well as potential risks associated with crop failure or shifts in market demand for poplar. Articles of incorporation were drawn up and submitted to the State of Minnesota in February of 1997. Shortly thereafter, on February 19, the Minnesota Agro-Forestry Cooperative held its first annual meeting to ratify articles of incorporation and bylaws and to formally elect its board of directors. Beginning operations
One of the first activities conducted by the Cooperative was a series of board training sessions, led by the University of Wisconsin’s Cooperative Development Initiative. Training topics ranged from how to run effective meetings to developing marketing plans and the operational theories of cooperatives. The board then devoted its efforts toward a plan on how to deliver goods and services to its existing and future members, as well as on the recruitment of new members - something that remains a top priority for the Cooperative. Challenges and Membership Recruitment Recruiting enough members to meet the processing industry’s demands has been a challenge and remains a barrier to the Cooperative’s success thus far. The board of directors originally hoped that agro-forestry would appeal to family farmers who operated on marginal or low-yielding cropland. Consequently, the Cooperative spent its first two years marketing its organization at Farm Fest and other events that traditionally draw farmers. But, Dooley and other board members gradually learned that they had been targeting the wrong audience. Family farmers, he explains, operate on an annual cash basis. They can’t afford to plant a crop that takes 10 years to mature before earning a profit. After two years of active recruitment, the Cooperative has a total of only 33 members, far short of their original goal to add at least 50 members annually. The members, who include farmers and other rural landowners dispersed throughout the state, have each planted between 10 and 50 acres of trees. Lessons learned After two years, Dooley and other Cooperative members have learned that "you need to recruit members who have a common economic interest, rather than simply recruiting members who you think should be involved." Dooley believes that the Cooperative needs to shift gears and "focus on recruiting people who can dedicate money to trees and wait 10 years before their investment yields a profit." He speculates that recreation enthusiasts, retired farmers, and absentee landowners like himself are the most likely candidates for membership. The Cooperative has also struggled with a second membership challenge: how to attract members who won’t reap cooperative marketing benefits for 10 years. "It’s hard to ask people to join a cooperative, contribute money, and stay interested when you won’t be providing services for at least 10 years," Dooley says. "This has created a membership and management obstacle." Dooley and other Cooperative members are working hard to overcome both membership challenges by revising their recruitment strategy and offering interim membership services. They are now targeting a different pool of potential members, such as recreation enthusiasts and associations that serve non-farm landowners. "This is our first step," Dooley says. "Our second step, once we’ve contacted a pool of potential new members, will be convincing them that a cooperative is the best way to market their wood." In an effort to overcome their second membership challenge, Dooley and other Cooperative members are offering interim services, such as educational materials on poplar production, site visits and grower plans, as well as access to grafted poplar saplings at discounted rates. Member benefits Planned member benefits include contract planting, grower workshops, customized harvesting, access to premium market prices through pooled marketing arrangements, and patronage refunds. According to Dooley, immediate member benefits include the opportunity to network with other poplar growers, an increased sense of market security, reduced input costs, access to technological information, and environmental enhancement through the creation of windbreaks and wildlife habitat. In the end, Dooley believes that the board will need to "draw the line" if their new membership goals aren’t reached. "Ultimately, if we don’t get enough members then we won’t have a viable business," Dooley says. Yet, he remains optimistic that the Cooperative will be able to take advantage of existing market opportunities. December 1999 update In order to address their membership goals, in 1999, the Cooperative put together a new funding strategy to attract new members called the Producer Capitalization Program. This strategy would give producers an opportunity to take interest-free advances on their long-term crop. Currently funding opportunities for this program are being explored and the Cooperative hopes to launch the program soon. They believe that this initiative can be the "last piece of the puzzle" to stimulating commitment on the part of growers and the industry to realize the potential of the agroforestry opportunity. |
