Sun Produce Cooperative
A multistakeholder cooperative ownership and governance model underwritten by a shared commitment to a sustainable local food economy has resulted in three major outcomes – 1) strengthened economic resilience of small local producers, 2) increased access to healthy produce and 3) its consumption
Sun Produce Cooperative (SPC) is a multi-stakeholder, agricultural and marketing cooperative in Tempe, Arizona. SPC formed in 2017 as a collective, self-help response to the difficulties of small-scale farming within the local Phoenix-area market. Their mission is to increase the viability of small-scale producers while contributing to a healthy, just, and equitable local food economy. To do so, they leverage the cooperative’s joint branding, marketing, distributing, and purchasing power to expand access to new and existing local markets and achieve economies of scale through aggregation across producers. But they also hold highly the aims of increasing demand and access to fresh, local produce, building community wealth, and promoting community wellbeing across the greater Phoenix area.
The cooperative’s roots go back to around 2011 amidst the growing but still small and fragmented local food scene in the Phoenix area of Arizona. Two activist leaders with long interest and involvement in creating a local food system as a means of promoting health, community, and local economic opportunity had observed that small, sustainably oriented farmers in the area were working in isolation despite facing the same struggles to stay competitive, reach markets, and access resources. The leaders, one of whom worked in local government community health promotion and the other for a university cooperative extension, patiently built trust with these farmers and in 2015 were able to bring around ten of them together, ostensibly for a food safety training course, but more subtly to get them talking about their problems and potential mutually beneficial solutions. Under the leaders’ guidance, the informal forum became a core group focused on finding a collective solution and, with the help of a local cooperative consultant, they committed to forming a multi-stakeholder cooperative in 2016. The decision to form a democratic, multistakeholder organization was a critical point in SPC’s development as it created the foundation upon which numerous other sustainable practices have been able to flourish.
The core group’s first priority was to formalize the cooperative base. Small grants and in-kind funding obtained from local government and university extension allowed the leaders and consultant to form a management team. They created bylaws, adapted from those of the 5th Season Cooperative in Wisconsin to allow a wider range of members, incorporated as an Arizona non-profit organization, formed an initial board, and recruited supporting members from the community, such as marketing and distribution experts. The cooperative has been conducting monthly board meetings ever since that are open to all members and to non-members (by request or invitation), with transparent sharing of minutes and annual reports. Members have developed their competencies for running a cooperative through learning-by-doing and supplementary training from the consultant and a local non-profit.
Having established its organizational foundation, the cooperative began searching for business opportunities. Personal connections were critical in securing the first customer: a local school district that was keen to switch its school lunch procurement contract to local, healthy produce. Securing an anchor institution provided much needed stability in the cooperative’s first year of operation but it first required a change to state procurement regulations, written to suit the needs of large corporate suppliers, to clarify the eligibility of small producers. Overcoming this barrier and becoming the first locally supplied school district in the county would not have happened without the willing partnership, based on long-standing relations and common goals, between the school district manager and one of the cooperative’s leaders in particular.
The cooperative formed a distinct approach to developing new business opportunities. The extensive local food network that its broad membership opened up for it has been an important means of finding business leads with community groups and or other organizations that are gatekeepers to potentially new customer groups. In particular, they looked for groups with similar aims of increasing access to healthy food for disadvantaged populations, where there was potential for creating shared value. They would then form a partnership with the group to collaboratively develop the opportunity to mutually benefit both parties. This was how the initial school district contract developed and the pattern has been broadly repeated numerous times since. It was used to develop the cooperative’s first direct-to-consumer farm-box product with a different school district where the custom arrangement included a 10% revenue share for the school’s projects fund. It also demonstrated again the willingness on both sides to make these partnerships succeed as it required working with broader stakeholders to modify state regulations to allow food stamp consumer subsidies to include the cooperative’s products.
While the network connections and activities of members has been critical in finding and developing new business, the broader local food economy network has become just as important for community organizations looking for access to affordable, accessible, sustainably-produced, local produce finding the cooperative. This was the case with the initial school farm bag, as it was later with a hospital, and an association of food banks. The latter two approached the cooperative after receiving funding aimed at expanding access to healthy food or simply reducing hunger in low income populations.
As the diversity and volume of sales increased, the cooperative has found ways to maintain its operational effectiveness. The willingness of producer members to cooperate, including sharing equipment and facilities, such as delivery trucks, storage and preparation, has been vital, as has the contribution of volunteer members to perform coordination and marketing, and the hiring of parttime workers, as far as profit allowed. As volumes grew, a non-profit organization became a key partner for its ability to provide volunteer workers to pack farm bags. The cooperative has been able to use volunteers as part of its business model and to continue to attract them, due to its core mission and values. Along similar lines, the cooperative was able to obtain substantial US government funding in 2021 that will support two more fulltime positions for three years.
Sun Produce Cooperative Practices
|Practice 1: Stakeholder ownership and democratic organization||Practice 2: Affordability and Accessibility||Practice 3: Local Economic Participation|
|The cooperative is a broad-based, democratic organization in which ownership is shared among producers (farmers), distributors, buyers, and community experts and support members. All members have equal voting rights and eligible to sit on the board.||Affordability and accessibility are at the heart of SPC’s mission to increase the viability of small-scale producers while contributing to a healthy, just, and equitable local food economy. SPC distributes its produce through a variety of community outlets, including schools, community centers, hospitals, food banks, and small, independent grocery stores.||SPC’s mission is intrinsically local-economy centered. All of the co-op’s farmer members were already highly focused on the local economy; yet SPC has enabled aggregate output to the local market to be increased.|
|The multi-stakeholder membership enables different perspectives, often complementary or counterbalancing, to be taken into account and for close collaborations to develop, leading to robust solutions that meet everyone’s needs.||They have actively worked to make produce from small farms eligible for school contracts and for consumer subsidies. As a result, SPC’s produce is available to community members across the socioeconomic spectrum, including children, low-income seniors, and others facing food insecurity.||SPC has created new markets through joint marketing and distribution activities and meets the increased demand by pooling resources and aggregating member output to increase total production to a level they could not have achieved as individual producers.|
|The range of members, particularly due to the inclusion of community stakeholders, brings a wealth of knowledge, skills, experience, and resources that enhances the creativity and capacity of the organization to design and implement innovative solutions.||On the supply side, SPC does not coerce its suppliers (i.e., its producer-members) into accepting prices that are not viable for them by empowering them to set their own prices and to choose if they want to meet an order or not. The Co-op is thus not a competitive marketplace for its producers, though its produce is available at various price points.||The increased spending on locally grown produce increases the wealth within Maricopa County; SPC has directly created five to seven jobs and has contributed to the viability of its member farms and the jobs they provide.|
|The Co-op’s staff are knowledgeable of the local food movement and committed to the organization’s values and mission. It is reasonable to assume, then, that staff spend a significant portion of their wages locally, thereby increasing the amount of money kept in the local economy.|
Enabling Factors for Practices
|Internal to the organization||External to the organization|
|Stakeholder ownership & democratic control : Create a safe space to nurture a core group; Allow bottom-up entrepreneurship to happen; Build partnerships across the supply chain; Commit to an inclusive democratic organization; Learn from successful examples; Continuous outreach and recruitment||Financing: Grant and in-kind funding, obtained directly from or with the assistance of local government, university, and non-profit organizations were instrumental in early stage business development and later stage consolidation and expansion. These public and civic sector organizations are effectively funding SPC to provide services to make up for market failures in supporting small, sustainable growers and access to healthy food for underserved communities.|
|Affordability & Accessibility: Create a diverse, multi-stakeholder enterprise; Develop community embedded markets; Scale-up supply capabilities through cooperation||Marketing: A variety of community-based organizations, including schools, community centers, community gardens, and hospitals have proved to be excellent partners and intermediaries for creating new markets based on their existing constituencies. Co-developing markets with community organizations creates economic benefits for the coop and social benefits for the communities.|
|Local Economic Activity: Create a diverse, multi-stakeholder enterprise; Secure contract with a mission-aligned anchor institution(s); Include producer-members in setting prices and allow opt-out; Create flexible, templated product packages; Partner with mission-aligned community organizations||Consulting: Consultancy on cooperative development provided development options at a critical point in the coop's formation and convinced the core group of the way forward. The coop has continued to benefit from advice on practical management aspects.|
|Capacity Building: Members of the cooperative received training on cooperatives and their operation from a local cooperative support organization which was closely involved in SPC's development.|
|Networking: An extensive local food network and subnets has been invaluable to SPC’s efforts to find market leads or develop new markets and, in the other direction, for potential new customers, partners and members to connect to SPC. Such connections have been critical to business development. SPC has itself been an active networking agent, being a diverse networking hub with active outreach activities.|
|Policy making: Existing expertise and connections of co-op members and partners enabled the co-op to work with the broader local food policy community to achieve policy changes that were critical to opening up new business opportunities, including regulations regarding school food suppliers and eligibility for low income family food stamp subsidies.|
|Advocating: Leaders and activists from local government and university extension working for the goal of a healthy, sustainable local food system were instrumental in the coop’s formation and its continued promotion.|
|Cultivating: The development of a local food system culture in the Phoenix area over 10+ years has led to substantial public support for local food initiatives. This includes a pool of goodwill and active interest that SPC were able to mobilize in the form of enlisting voluntary workers, recruiting specialist advisers and board members, and building community partnerships in ways that purely commercial and profit-driven enterprises would not be able to do.|
Arresting Factors for Practices
|Internal to the organization||External to the organization|
|Lack of facilities and infrastructure can make logistics and decisions more difficult as additional agreements and conditions are required with/by members whose resources are being used by the coop.||Difficulty of maintaining economic viability in a highly competitive market for fresh produce that shows only a very weak ability to internalize a great many social and environmental costs.|
|Lack of physical premises limits the identity and substantive presence of the coop.||Difficulty raising finance due to cooperative structure and the underlying non-profit legal form.|
|Consensus approach to decision making has occasionally led to single individuals preventing actions from moving forward, such as deciding to not to take further steps towards B-Corp assessment.|
|Lack of participation from producer members beyond their basic economic activities.|
|Difficult to maintain active engagement of board members and supporting members.|