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Kansas Organic Producers
by Ed Reznicek |
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Group Contact |
KSU experiment station, near Manhattan, with Dr. Bill Schapaugh (right), a KSU researcher.
Background The Kansas Organic Producers Association (KOP) is a marketing/bargaining cooperative for about 60 organic grain and livestock farmers located primarily in Kansas, with some members also in bordering states. KOP’s purpose is to help build markets for organic grain and livestock and to represent it s members in negotiating sales and coordinating deliveries of organic products. KOP was first organized in 1974 as an education association for organic farmers to promote organic agriculture, develop organic certification standards, and establish organic markets. By the late 1980’s several independent organic certification organizations were established and were certifying farms and other organic businesses. KOP members were involved with these efforts and in 1989 began certifying their farms with the Organic Crop Improvement Association (OCIA). With a reliable organic certification program in place and a growing inventory of certified organic grain, KOP members felt the need to develop a more aggressive marketing program. In 1992 Kansas Organic Producers reorganized as a marketing cooperative to help build markets for organic grains and represent it s members in negotiating grain sales and coordinating grain deliveries. The Role of the Heartland Project KOP applied for a Heartland cluster grant just as it’s cooperative marketing activities were getting well underway. Membership vigorously debated whether to apply for the grant out of concern over becoming dependent on grant funds for financial survival. This debate emphasized the need to develop a dependable source of income for the new co-op that was under members control and would continue once grant funds were gone. KOP received a Heartland Cluster grant and used the money, in conjunction with it s own marketing service fees, to begin the transition from volunteer to paid staff and to meet the increasing phone, postage, lab testing, and other operating expenses. The Heartland cluster funds helped KOP increase its marketing efforts and sales at an early stage in its development, and establish a foundation for ongoing marketing activity and organizational development. The Heartland Network provided vital organizational and financial assistance to KOP’s start-up as a marketing cooperative. The process of developing and implementing a Heartland cluster plan helped KOP establish organizational and accountability structures to resolve conflicts and continue to build the cooperative, both organizationally and as a business. Operating Region and Crops With members in Kansas and bordering states, the geographic production region for Kansas Organic Producers includes part of the corn belt along with the central plains hard red winter wheat producing area. The major crops KOP members produce and market include corn, wheat, soybeans, oats, sunflowers, alfalfa, clover, and various specialty crops, such as edible beans, blue corn, popcorn, spelt, buckwheat, etc.. Many members also raise beef cattle, and some are raising hogs and poultry. Members raise specialty crops primarily on a contractual basis. KOP will also produce the major crops on forward contract, given acceptable terms. KOP soybean production includes both food and feed beans. KOP can arrange the cleaning for food bean contracts. And with feed beans, KOP has a contract certified plant for extruding or expelling soybeans. KOP works routinely with several trucking firms and rail companies to arrange the most appropriate and efficient shipping. KOP customers are in all regions of the United States, some of which export KOP products to both Asia and Europe. Organizational and Operating Structures As a marketing/bargaining cooperative KOP does not take ownership or possession of members grain. Members store grain on the farm and retain ownership until the time of shipping. KOP’s role as a bargaining cooperative is to represent its members and provide coordination in a broad range of sales and market development activities. KOP's marketing coordinator, Earl Wright, works with members to maintain current inventory data, test for grain quality, establish production and pricing targets, etc. KOP’s marketing coordinator is in frequent contact with organic grain buyers and processors to learn their needs and to develop sales. KOP acts as the bargaining agent for its members in negotiating the full range of issues involved in contracting sales, including price, payment terms, delivery schedule, shipping, cleaning, etc. Once a sale is contracted, KOP coordinates the delivery, quality control, document transfers, and payment settlements. Buyers pay KOP, and KOP settles payments with individual producers. KOP has a five-member board of directors that meets monthly either face to face or by conference call. KOP's Grain and Livestock Marketing Committees meet periodically for problem solving and market develop activities. The general membership meets monthly (except during busy planting and harvesting seasons) for marketing updates, planning, contracting and providing input on marketing and organizational activities. Edward Reznicek, KOP’s part-time general manager, works closely with the board, conducts budgeting and planning activities, membership recruiting, issues a bi-monthly membership marketing letter, maintains contacts with other businesses and organizations, and assists the marketing coordinator. KOP’s part-time bookkeeper, Jennifer Drey, receives and issues payments, maintains the financial records, and generates financial reports. KOP funds its marketing program primarily with a marketing service fee paid by members on the value of sales. The marketing service fee is currently 6%. The Impact of Organic Production and Cooperative Marketing on Members Farms Organic crop and livestock production and cooperative marketing is challenging. It is hard work, but the efforts can be worth while. Well-managed organic farming operations generally reduce operating costs (primarily those associated with fertilizer and chemical applications), while maintaining average or better yields. If organic farmers can then realize price premiums for certified organic crops, they can significantly improve the profitability of their farming operations. Organic marketing is much different than marketing conventional crops. Identity preservation must be maintained throughout the storage and delivery phases, and most of the markets are not in Kansas. The role of a marketing/bargaining cooperative in the organic market is to help member farmers connect with reputable buyers, obtain market information, establish product quality, negotiate price and other sale terms, pool shipments for efficient transportation, collect and settle payments, and continually work on new market development. Cooperative marketing is a way for member farmers to pool their resources to develop an ongoing marketing effort that is difficult for any one member to do alone. Organic markets have their ups and downs similar to conventional markets, depending mostly on grain quality and the overall supply and demand factors of the market. But in most cases KOP member farmers have sold their organic grains into organic markets at significant price premiums. Twelve percent protein wheat sells in the $5 per bushel range, food soybeans from $13 to $18 per bushel, feed corn from $3 to $4 per bushel, feed beans from $7 to $11 per bushel. Some members have successfully used organic production and marketing as the means to remain in farming. Others have brought their children into the farming operation. Many have used the extra profit margin to reduce indebtedness, upgrade machinery and, in some cases, purchase land. At a time when agriculture lacks profitability because of high production costs and the lack of competitive markets, and farmers are highly dependent on farm program payments to remain solvent, KOP members have been able to carve out a production and marketing niche that improves their short term profitability and offers the possibility for an acceptable future in farming. Through their cooperative efforts, KOP members learned they have a shared interest in each others success. The ongoing challenge, both among KOP members and between KOP and it s customers, is to act in ways that are mutually beneficial. Major Accomplishments KOP’s major accomplishments are the establishment of an effective, low cost cooperative marketing program along with the development of substantial markets for KOP members major grain products - soybeans, wheat and corn. KOP developed and established it s marketing program by looking at what models were available, affordable and could most practically meet the needs of the members. Members formulated a marketing program through a process of many meetings, discussions, debates, visiting with other groups, and testing the program in practice. At the same time KOP members began formulating a marketing program, they began as a group offering certified organic grains for sale. The practical requirements of inventorying, selling and delivering grain as a group provided a solid, real world grounding for establishing the necessary organizational and operational structures. KOP helped establish stronger organic markets for the major grain products of its members by hiring a grain marketing coordinator who every day is working in the organic markets, talking with member producers and organic buyers, learning what the needs and trends are in the market, and how KOP can most effectively participate. KOP’s development process was a matter of asking the right questions, acting in ways that were relevant, practical and financially low risk, and committing the time and money for the necessary work. There are two critical areas that serve to make KOP members effective in working as a group. The first is that the cooperative benefits the members; and members need to continue to work together to realize the cooperative benefits. Members need each other. The second key area is to keep focused on the real issues at hand. KOP members can readily work together in solving actual problems. Finding agreement on hypothetical problems is more difficult and often leads to lengthy discussion and argument. It is also critical that members have ample opportunity to give input into the decision making and development process, and that they are treated fairly in the ongoing marketing activities. Future Plans KOP’s plans are to continue to increase its production and membership base, and establish and strengthen alliances with other producer groups, sustainable farm organizations and food companies. With these efforts KOP hopes to increase the demand and sales of organic products, stabilize prices at acceptable levels, and improve the long term viability of member farms and of KOP. Members believe that organic agriculture and food production, along with cooperative marketing, have much to contribute in building a sustainable future for family farmers, the environment and future generations. KOP members have worked hard over the last several years to get where they are. There is still a lot of work to be done. © Copyright
2007, Kansas Rural Center. All rights reserved. |
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