COOPERATIVES ARE A SILENT ECONOMIC GIANT, CORNELL STUDY FINDS January 25, 1994 Contact: William Holder Office: (607) 255-3290 Home: (607) 257-3669 ITHACA, N.Y. - Cooperatives are a silent giant in the Northeast economy,spreading into areas as diverse as aquaculture and high-tech manufacturing, according to a new Cornell University study. At least 9,955 cooperative enterprises throughout the region serve 9.9 million members and account for $37 billion in business activity, said Brian Henehan, a Cornell Cooperative Extension associate, and Andrew Ferguson, a cooperative development specialist. Cooperatives - organizations owned and operated for the benefit of their members - range from local farmers markets to multibillion-dollar groups of supermarkets that pool resources for purchasing goods and services. New ones have formed to produce and market specialty vegetables, venison, lamb, rabbits and farm-raised trout. Some are long-standing organizations in the agricultural and farm credit areas, while others are new consumer food groups and employee-owned businesses, according to Henehan, who is in Cornell's Department of Agricultural, Resource and Managerial Economics. "A growth area has been in cooperation among small business entrepreneurs," he said. The Windmill in Yates County, N.Y., for instance, is a farm and craft cooperative that has turned 20 acres of brushland into a nearly year-round outlet for 120 food and craft vendors, resulting in a significant economic impact on a rural area. Other cooperative business activities in the Northeast that are cited in the study include: * 1,709 credit unions with 6.9 million members and $29.5 billion in assets; * 234 agricultural and farm credit cooperatives serving 108,534 farmers and accounting for $4.5 billion in sales; * 13 rural electric cooperatives with 94,000 members and $128 million in business; * 842 consumer food cooperatives marketing $70.3 million to more than 79,000 members; * 1,159 firms that are full or partially owned by employees; * 5,780 housing cooperatives with 595,000 members in the Northeast. Businesses of all kinds are leveraging purchasing power by forming cooperatives to lower health-care costs, obtain expertise in areas such as telecommunications or negotiate better contracts for purchases of supplies, Henehan said. "Cooperatives often have been formed as a defensive move when a group of people with a common interest perceive a failure of the market or lack of service," said Bruce Anderson, Cornell associate professor of agricultural economics. "In the future, however, we expect to see new ones forming to create market opportunities." Among these may be flexible groups of small manufacturers that come together for specific contracts and then disband, he predicted. The U.S. Department of Agriculture has recognized the economic importance of cooperatives in rural America by funding eight regional projects for rural cooperative development. As part of this effort, the Northeast Cooperative Council is providing Cornell with $39,600 for a one-year pilot project to serve New York and the New England states, according to Anderson. The Northeast Cooperative Council is a membership organization comprising rural and agricultural businesses, including rural electric, insurance, service, supply, credit and marketing cooperatives. The Cornell Cooperative Enterprise Program will use the funds to expand a regional training program for managers of cooperatives, Anderson added. Other goals include developing an educational program that focuses on using cooperatives to address issues related to business and economic competitiveness, stimulating the adoption of new information technologies, expanding a cooperative business information clearinghouse and developing a volunteer network to assist new and emerging cooperatives. "Small gains in cooperative profitability can translate into significant benefits for the region when hundreds of thousands of members or billions of dollars are at stake," Anderson said. "But cooperative leaders face tremendous challenges in providing strategic direction for their organizations in the '90s. The goal of the project is to stimulate rural economic development."