University of Wisconsin Center for Cooperatives
"MAC" works for growers group
by Jody Padgham
The Country Today
March 28, 2001
"United we stand, divided we beg" exclaimed a member in talking about the new organic marketing organization, OFARM, at a recent meeting in LaCrosse. With a mission ‘to coordinate efforts of producer marketing groups to benefit and sustain organic producers’, OFARM (Organic Farmers Agency for Relationship Marketing) is a new example of a well tried model that allows producers to work together to promote their products and maintain market price consistency.
Realizing that there would be advantages in working together, six marketing organizations from the central Midwest and Canada created OFARM in December of 2000, agreeing to share pricing and inventory information on several commodity crops. The organizers saw the need to create an environment where individual producers would be working together for fair prices, rather than competing against each other. They recognized that bargaining power, coupled with the potential of market recognition through common labeling, could allow small and mid sized producers to have a strong market presence and access to larger market opportunities. The organizers noted that the average size of their member’s production units was much smaller than the consuming units, and that OFARM could play an important role in bring producers together to serve large-demand markets.
The organic commodity market is a relatively new one, but these innovative organic producers are borrowing the model of a marketing agency in common (MAC) from several other commodities, including milk (Central Milk Producers Cooperative) fruit (SunKist ) and nuts (Sun-Diamond Growers). The federal Capper Volstead Act of 1922 defines and makes possible MAC’s : a MAC is a grouping of marketing cooperatives, or a grouping of marketing cooperatives and individual farmers, who market products under a common agreement.
Meeting regularly via phone, and relying heavily on fax and email, the age of technology has allowed OFARM to be run as more or less a ‘virtual organization’. The founders see the association as serving several needs:
- To strengthen the marketing programs of member organizations, eliminating duplication of efforts
- To inventory production and manage organic marketing in a responsible manner
- To exchange pricing and marketing information among member organizations
- To develop and support communications among members
- To research, support and enhance market development, and to provide improved market information including trend assessments
OFARM does not actually market or take possession of its member’s products, but instead provides a communication network that allows member marketing organizations to intelligently price and market their goods.
For purchasers, OFARM brings to the market consistency in price and supply, a reliable relationship and a guaranteed supply. OFARM can play the role of sourcing product to fill a contract if any given member base has weather related or other production problems and can’t deliver.
To this point, OFARM is only working with a few crops: organic corn, soybeans and wheat, food and non-food grade. Member group representatives have met to set price goals for each of these crops, and have bi-weekly conference calls to share information and assess market and supply.
OFARM members would like to see the association grow, to include a larger percentage of organic commodity producers, other types of organic commodities and an expanded geographic area. Getting as much producer membership within a given commodity as possible is a goal, as strong coverage translates into unified information sharing and the potential for strong pricing strategy. If a market is too open, a MAC can run into problems in being under-priced and out-competed, as individual producers try to undercut the MAC’s unified goals. OFARM sees a responsibility in playing the role of a price-leveler, helping to create prices that are both fair for the producer and fair for the purchaser.
OFARM board members see a very exciting future for the association. The board sees potential in looking at branded labels, possibly starting a political arm of the group, and the option of setting standards for member products. Being farmer run, overall direction of the group is dictated by the membership.
At the present time OFARM is active with member marketing co-ops and associations in Michigan, Illinois, Minnesota, Ontario and Kansas. The National Farmers Organization is a member, and brings producer members from across the country into OFARM. Any marketing group with 10 or more members pays a $500 membership fee, plus $10 per individual in the organization to become a member of OFARM. Membership gains the right to join the communication loop and send delegates (one for every 10 members) to the annual meeting, where the governing board is elected. The organization is run by ‘Commodity Coordinating Committees’ which serve as the communication mechanism for producers in setting policies and pricing goals.
The model of farmers joining together to share information about prices and supply can be translated to other producer groups that see a broad market with some control over the supply. Most useful in a commodity situation, this model will not work for all types of production.
The thing I like best about MAC’s is that their success relies entirely on the loyalty and commitment of their producer members- members of production groups need to consider the ‘general welfare’ of producers rather than their own ‘individual welfare’. At times it is tempting to look out for just yourself, but don’t forget, "united we stand, divided we beg".
Please contact me if you are interested in more information about OFARM or Marketing Agencies in Common.
Jody Padgham is an outreach specialist with the UW-Center for Cooperatives. She may be contacted at 230 Taylor Hall, 427 Lorch St., Madison, WI 53706; telephone 608/262-0705, e-mail email@example.com