John & Susan Merrell
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Scio, OR 97374
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The Coooperative Model

Cooperative efforts in agriculture, and other areas, can be traced to some of the earliest records of human history. Babylonians practiced cooperative farming and that the Chinese developed savings and loan associations similar to those in use today. Alpaca fiber producers are uniquely positioned to take advantage of the concept of cooperative agriculture in the United States.

In the United States cooperative agriculture has been demonstrated in activities as simple as barn raisings and wool pools, or as sophisticated as multi-million organized cooperatives such as Land O Lakes and Ocean Spray Cranberries.

The cooperative movement is the alpaca industry’s best hope to adopt a sustainable, value added model. As we plan for the alpaca’s future, we should pause to learn from the past.

The cooperative as a modern business model really began in response to the Industrial Revolution’s effect on the way business was organized and on the working and economic conditions of the working class in eighteenth century Europe.

In 1844 the birth of the modern cooperative movement took place when in Rochdale, England a group of unemployed weavers formulated the principals of the first successful cooperative. These principals were:

  1. Democratic control, one member one vote and equality of the sexes.
  2. Open membership.
  3. A fixed rate of interest payable on investment.
  4. Pure, unadulterated goods with full weights and measures given.
  5. No credit.
  6. Profits to be divided pro-rata on the amount of purchase made (the divi).
  7. A fixed percentage of profits to be devoted to educational purposes.
  8. Political and religious neutrality.

These principals continue as the basis for virtually all cooperatives.

In the United States, the cooperative movement was closely associated with the Populists in the late Nineteenth Century. The Populists (involving millions of southern farmers and northern industrial workers) were the last mass movement in the United States to challenge the growing domination of society by burgeoning corporations. Prior to their defeat, history reveals that even a powerful industrialist by the name of Leland Stanford had come to support the idea of cooperatives. As a United States Senator (1885-1893), a large part of Stanford's legislative efforts were toward bills that would give worker cooperatives the necessary legal structure and sources of credit in order to flourish. His advocacy of worker ownership was a prominent part of his newspaper interviews and his oratory in the Senate. In founding Leland Stanford Junior University, he made the cooperative vision "a leading feature lying at the foundation of the University," and he repeatedly reiterated this goal in his addresses to the Trustees, the students, and in the legal documents founding the University. (see Beyond Capitalism: Leland Stanford's Forgotten Vision for a fascinating examination of this story.)

By 1900, at least 1,223 cooperatives were active in the United States, and the United States government began to pass laws that provided a favorable environment for cooperative development. A commission established in 1908 by President Roosevelt noted that the country lacked adequate credit for the agriculture sector, and their findings helped lead to the passing of the Federal Farm Loan Act in 1916, legislation that led to the creation of the Farm Credit System. In 1922 Congress passed the Capper-Volstead Act which granted limited anti-trust immunity for agricultural cooperatives. Government encouragement for agricultural cooperatives was highest during the 1920s and 1930s. Most state legislatures established agricultural cooperative acts during this time. America's agricultural sector went through a difficult period as prices collapsed after World War I ended. As part of the response to the adverse economic conditions, Presidents Harding, Coolidge, and Hoover all strongly endorsed the use of agricultural cooperatives. The Agricultural Marketing Act of 1929, which included the establishment of a fund for cooperative loans, also helped to strengthen the cooperative movement.

Agricultural cooperatives have been solidly established in American agriculture. In its 1997 survey, the USDA reported that 3,791 farmer cooperatives generated a net business volume of $106 billion, equal to the record high set in the previous year. The net income was near the record high of $2.36 billion reported in 1995. The number of farmer cooperatives has decreased through various activities including dissolution, mergers or consolidations, and acquisitions as cooperatives, like other businesses, adjust to a changing economic environment.

Cooperatives and alpacas have come full circle. The cooperative movement began with the English textile industry at about the same time that Titus Salt was building his fortunes with alpaca fiber. Early on, the US alpaca industry adopted a pseudo-cooperative model with the establishment of AOBA, which has effectively become a marketing cooperative for the industry. With the establishment of the Alpaca Fiber Cooperative of North America (AFCNA) the circle was completed. The vision of 28 unemployed weavers in Rochdale, England is now realized in a textile cooperative with the potential to build a vertically integrated industry based on alpaca fiber.

 
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"As she came into the small business-section she inspected a broad-beamed grocer in an alpaca coat who was bending over the apples and celery on a slanted platform in front of his store..."

- Sinclair Lewis
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