All photos courtesy of the Tuscarora Organic Growers

Tuscarora Organic Growers is a farmer-owned marketing & distribution cooperative in Hustontown Pennsylvania that has survived and thrived for eighteen years, helping to stabilize the marketplace for farmers and give them a livable return for their hard work. Farming & the Environment (F&E) programmer staffer, Wendie Dyson, interviewed their manager and sales representative, Chris Fullerton, to learn how they did it and what it’s done for the farmer.

• What motivated the farmers to start the Co-op?
• What investments did farmers have to make?
• How does the distribution system work?
• How do you handle competition between farms?
• Does this cooperating vs. competing model work well for growers?
• How do the finances of the Co-op work?
• How quickly is the Co-op able to pay the growers?
• How does the Co-op set its prices?
• Is the Co-op able to return more money to growers by "cutting out the middleman?"
• Is there a way you’ve been able to make a connection between the grower & consumer?
• What are some of the greatest lessons learned over the years?
• What are some of the greatest rewards farmers have reaped from being a part of the Co-op?

Wendie Dyson: What motivated the farmers to start the Tuscarora Organic Growers Co-op back in 1988?

Chris Fullerton: Individual growers were having frustrations wholesaling their products. They saw there was a demand for fresh, organic produce but it wasn’t working well selling as individual farmers. Growers were running into each other selling to the same customer, competing against each other and then each driving their own half-filled trucks to the same location. Retailers were also losing time making calls, invoicing & managing relations with multiple farmers and wanted one point of contact. There were also problems with overproduction of some products and no one growing other products.

So, the co-op model allowed the farmers to get economies of scale, greater efficiencies through cooperation, and provide a more diverse product mix and better customer service to retailers. And, as the farmer-owned co-op grew and was able to manage all the marketing and distribution, it’s enabled the farmers to focus on farming.

WD: What investments did farmers have to make to get started?

CF: A larger grower, Jim Crawford of New Morning Farm, really was the one who started the Co-op along with five other farmers. They looked for grant money and other growers to join them but didn’t find either. Jim had a shed, extra space in his coolers, trucks, and a farmer apprentice who took orders and made deliveries in the early years. They ran a phone line to the shed and used handwritten spreadsheets to keep track of product availability & customer orders. They didn’t even have a computer yet. Price lists were handwritten as well, which they photocopied at their local grocery co-op - their first delivery stop. One important point for the grower's Co-op was that Jim never provided these resources as a favor but always leased them for a fair fee that he worked out with the other growers.

After about five or six years, they hired me as the one full time, year round staffer and invested in their own warehouse, coolers, computers, database & accounting systems. We’re still next door to New Morning Farm and still lease our trucks from them. We’ve since grown to twenty-two farms with twelve or more part-time staff people during the height of season.

WD: Practically speaking, how does the distribution system work in a typical week?

CF: We have very strict schedules on how things happen. Each season, growers commit to growing certain products. And, each week growers specify what and how much of each of those product they have to offer for sale that week. This information is then pooled together and a list of available products is sent out to the customers. Two to three days before delivery, we give each grower a heads up on what we expect we’ll need from them based on other grower’s offerings and how things have been selling. The drop dead order deadline for customers is 11 a.m. before the day of delivery and a final, confirmed order is sent to the grower by 1 p.m. Growers then bring in their products that afternoon. Except for winter, we deliver twice a week and, generally, we have exactly what we need for each order day with very little hold over to the next week.

WD: You said each season growers commit to growing certain products. How do you handle competition between farms and determine which farms grow what products?

CF: We go through a detailed planning process each year with growers to coordinate a production schedule and determine what share of each product each farm will commit to for the coming season. In the beginning, farmers fought out what share each farmer would get of the market. Now, each year after Thanksgiving, we review with each farmer their "commitment chart" of the past growing season. This shows in detail what products the grower projected to have, what they actually offered up for sale, and what they ultimately sold. They then tell us, in an ideal world, what they’d like to produce for the coming season.

We take all this information, compare it to market demands, and identify where there is too much or too little of a product. If a grower has successfully fulfilled their crop commitment, then they have the right to continue producing that crop. But, if they’ve failed for a few seasons, then they step down from growing those products they’re having trouble with or agree to share their commitment with another grower.

WD: Does this cooperating vs. competing model work well for growers?

CF: Growers produce a variety of products and most are pretty satisfied with their production. It starts with what each grower thinks they can do well on their farm.

WD: How do the finances of the Co-op work? How much of the sale goes back to the grower and what is paid to the Co-op to cover costs?

CF: The Co-op reinvests 25% of each sale into the Co-op for its marketing, overhead, and distribution costs. At the end of the year, the Board of Directors, which is 100% growers, decide what to do with any net profits. Typically, the Co-op will pay a portion back in cash directly to the growers, allocate a portion to individual grower equity accounts, and reinvest the remainder in the Co-op as a whole.

WD: One of the challenges growers have had in working with grocers & restaurants is not receiving payment for up to three months after the sale. This places a tough cash burden on the farmers. What is the turn around time like at the Co-op?

CF: One of the benefits of the Co-op is the cash flow we provide to our growers. Our invoices require our buyers to pay within 10 days but, in reality, we generally receive payment within two weeks to a month and we never let an invoice go unpaid for more the 45 days. Regardless of when a buyer pays, the Co-op has enough cash reserve so that we always pay our growers on the second Friday following the week their products were delivered & sold. So, growers are always paid by the Co-op within 14 to 20 days.

WD: How does the Co-op set its prices? Is the Co-op able to get a fair price from the wholesale market?

CF: Pricing is more of an art than a science. It’s based on quality, perception of quality, a customer’s level of commitment and whether or not they feel price is most important to their customers. It also has to be based, to some extent, on "the market." We don’t get to set market prices for most items we sell, because we try to be competitive with other organic distributors. Competing with organics does mean, however, that we come in at a price point that’s above conventional. One of the benefits to growers of working with the co-op is that the prices we pay do not fluctuate as dramatically as they tend to do in other wholesale markets. We don’t pay retail prices but our farmers seem to be satisfied with the wholesale prices we can pay, which do deliver an organic premium.

That said, we listen closely to our customers and can often capitalize on non-commodity "specialty produce" that is not widely available and which sells for reasons beyond just price – in these cases we can be price-makers instead of just price-takers. Working closely with our own members also lets us maximize the freshness and quality we deliver, which is our key competitive strength. When it comes to selling and negotiating price, it’s important that our Co-op has a good mix of growers – small to larger sized farms, growing a range of specialty & standard products, with some growers able to offer larger volumes at relatively lower prices.

WD: Is the Co-op able to return more money to growers by "cutting out the middleman?"

CF: In our business, we’re competing with distributors who globally source a full line of products on a year-round basis. Because we’re selling only a fraction of the product mix available and we do this seasonally, we will probably never be able to operate as efficiently as our competitors do – that is, at a gross margin that would allow a greater percentage return of sales revenue to our members.

I think that we should pat ourselves on the back for operating at roughly the same margins as our competitors, given the built-in disadvantages. Rather than cutting margins or delivering above-market prices, the main benefit our co-op offers to our members is the security and control that growers get as a result of being owners. We’re not economically significant enough to dramatically rewrite the rules of the marketplace; but we can offer access to that marketplace in a manner that is fair, supportive and responsive because we’re a business for growers that is owned by growers.

WD: Is there a way you’ve been able to make a connection between the grower & consumer?

CF: I’ve found there’s a lot of romance and enthusiasm for that relationship. But, in terms of sustainability for marketing, that one-on-one relationship falls apart so often due to outside factors – a chef gets fired or the farmer is hit with a hail storm. It’s true that a negative thing about a co-op is it creates a layer between the growers and customers. Growers aren’t making deliveries and getting the praise from customers. So, what we’ve done is created situations to get growers & buyers together through farm tours, posting growers profiles on our website, and hosting special events. There’s something chefs love about leaning up against a dirty farm pickup and chatting with a farmer. And farmers love going to an elegant restaurant and being served a delicious meal from their own produce.

WD: What are some of the greatest lessons learned over the years?

CF: From the very beginning, establishing packing & production standards and going through a deliberate & exhaustive annual planning process of the Co-op’s production has been critical. Good accounting systems are really important and go a long way in establishing trust with the growers. They need to feel they’re being treated fairly and things are being managed well for them. Along the same lines is good record keeping. It’s important to have concrete facts about when product is short or overproduced and not selling, for how many weeks, etc - and not rely on memory. Our greatest cost is labor so people need to operate as efficiently as possible. To achieve this, we’ve invested in good infrastructure over the years – good coolers, dock, pallet jacks to move boxes around, and technology, like our database.

WD: Lastly, what are some of the greatest rewards farmers have reaped from being a part of the Co-op?

CF: [Laugh] Well, farmers love to complain. It’s a tough road. But good indicators for me are that growers keep growing for the Co-op -- a sign they’re satisfied with prices and service. They appreciate that they can focus on production and farming and have all the other detail work taken care of. Our standards are very clear and the Co-op is very transparent. And all the farmers know the commitment chart is our guide for all our purchasing. Growers get reports showing which products of theirs we’ve sold and they can see they’re getting their fair share as agreed upon.

I remember after September 11th, all the customers in downtown Washington DC weren’t placing any orders for a good six months because they had no business. But we had enough diversity in our customer mix and enough restaurants focused on neighborhoods versus the tourist trade that our growers were able to weather that time ok. But if one grower had been dependent on one restaurant, that grower would have really suffered. So, the Co-op offers them greater stability and a more consistent demand for their products.

Visit the Tuscarora Organic Growers at their website to learn more.