Do Organic Grain Growers want a Cooperative

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Do Organic Grain Growers want a Cooperative?
AuthorsChantelle LHoirEllen GoddardDesmond
NgMel Lerohl
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Industry Overview

• In Canada - organic sector since 1970s.
• AAFC involved in the development of sector since
  1989.
• Voluntary standard in Canada, over 40
  certification bodies. British Columbia and Quebec
  have provincial certification.
• USDA mandatory national standard in April 2001,
  until October 2002 to comply.
• U.S. is Canadas main export market. Also export
  to Europe Japan.
• Approximately 2000 organic farmers in Canada and
  150 processors.
• 350 organic farmers in Alberta.
• There are approximately 832,854 acres designated
  to organic production in Canada. Alberta
  accounts for 344,587 acres of which 29,910 are
  specifically for grain production.
• The majority of grain production is in Western
  Canada.

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Research Problem
To assess different organizational structures
that might assist Alberta organic grain producers
in optimizing market potential.
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Research Objectives

• Establish what types of organizational structures
  are used in the marketing of organic grain in
  Alberta, the rest of Canada and other countries.
• Define organizational structures that could
  potentially be used to market organic grains in
  Alberta.
• Understand the forces creating organizational
  challenges opportunities in the Alberta organic
  grain industry producer motivations,
  opportunities obstacles, and evaluate through
  focus groups.

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Existing Organizational Structures

• Entire organic industry private public
  companies, sole proprietorships, cooperatives
  (traditional NGC), marketing associations,
  partnerships.
• Most common in industry
• Alberta Canada private companies.
• Other countries cooperatives.
• Most common in grain market
• More developed markets marketing cooperatives
• Less developed markets private companies.

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Identifying potential organizational structures

• Based on - existing structures
• - producer motivations
• - obstacles that exist in the market
• - preliminary focus group discussions
• . The identified options, though not a
  complete characterizations of options, appear
  to be the most relevant at the present time.

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Potential Marketing Options

• Individual Marketing Strategy
• Private Corporation (Company) or Sole
  Proprietorship
• Cooperative Marketing Strategy
• New Generation Cooperative
• Association (marketing)
• Private Corporation (Company)

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Focus Groups

• Producers - OCIA Chapter 1
• Government (various levels)
• Industry members

Content of Questions

• Producer motivations
• Opportunities and obstacles
• Evaluate each structural option

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Previous Literature

• Boehlje (1992)
• Criteria in Selecting an Organizational Structure
• Control
• Cost
• Risk
• Maturity/permanence/liquidity

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Critical Success Factors
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Choice of Organizational Structure

• Focus Group Key Criteria
• Activities Performed
• Financial Investment
• Commitment to Deliver

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Producer Motivations for Producing Organic
Products
Concerns of 1) Health 2) The
environment 3) Financial profitability
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Findings - Obstacles

• Lack of price and market information
• Poor communication
• Lack of government involvement
• Constraining regulatory bodies
• Lack of consensus on standards
• Lack of local infrastructures to market to
• Producer independence

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Findings - Opportunities

• Growing demand in the industry
• Organic premium obtained from this high income
  niche market
• Potential to work collectively
• The Internet

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Conclusions

• Focus groups confirmed a lack of cooperation in
  the market stems from a lack of trust between
  participants.
• Lack of trust influences producers choice of
  organizational structure.
• Producers want minimal financial investment and
  delivery commitment.
• Producers want the benefits of working
  collectively but must be willing to work together
  must form trust within new organization.
• Association appears to be the choice of each of
  the focus groups.

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Critical Success Factors Their Relations to
Organic Grain Producers