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Keys to Successful Producer Group Collaboration: Insights from USDA Rural Development

Collaborating with producer groups requires thorough understanding and commitment. Recognizing economic needs, fostering leadership, and ensuring trust among members are crucial for success. It’s vital to navigate market complexities and consider various business structures while being aware of capitalization needs. Planning for variability is essential, as agricultural production is prone to fluctuations. Lastly, dealing with external pressures and understanding the role of outside agents can significantly influence group dynamics and project outcomes, making careful planning important.

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Keys to Successful Producer Group Collaboration: Insights from USDA Rural Development

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  1. Working with Producer Groups Gerald Ely Cooperative Development Specialist USDA Rural Development (PA)

  2. Issues/Keys to Success • Recognition of Problem/Economic Need • Leadership Group • Commitment • Understand Complexity of Market/Industry • Different Business Structures • Capitalization • Understand & Plan for Variability • Common Development Pressures

  3. Recognition of Problem/Economic Need • It takes time to understand problem or economic need • Then need to reach agreement on solution • Time and effort increases with group size • Commitment requires group trust and confidence • Understanding and agreeing on expectations important for ultimate success

  4. Leadership Group • Appropriate Advisory Team • Clarify Roles and Expectations • Recognize Leadership will Change • Bottom Line - YOU NEED IT!

  5. Commitment • Commitment of those who will be participants in proposed business is Critical for Success • “Stop” points include: • Steering Committee • Producer Survey • Pre-Membership Agreement • Equity Subscription • Marketing Agreement

  6. Understanding Complexities of Market/Business/Industry • Desperation is a poor base for new business – yet this is reality • Markets/Business are Complex • Economic Phenomena of “supply/demand” “economies of scale” and “comparative advantage” are real & hard to defy • “Middleman” myth holds unrealistic promise

  7. Understanding Complexities of Market/Business/Industry (con’t) • Industry Concentration, world economy, political/regulatory issues are complex and create uncertainty • Must understand needs of customers and the distribution system • Regulatory issues complex, costly and difficulty to ignore • Learning/training is expensive

  8. Different Business Structures • There are alternatives to cooperative form • No matter what structure need to agree on mission, feasibility analysis, business plan, management • LLC’s may have advantage of “outside” capital but at what price • Stigma of cooperative failures resulted in increased interest in other alternatives – for wrong reasons

  9. Capitalization • Hi-tech facilities and equipment are hi-cost • Proper capitalization essential • Costs of “Doing it Right” are high • However, costs of “Doing it Wrong” may be higher

  10. Understand and Plan for Variability • Feasibility analysis usually based on “average” • Extremes occur in agricultural production frequently • Test the importance of variable factors on the project • “Plan B” can be critical for success – HAVE ONE!

  11. Common Development Pressure • Pressure to develop too quickly • Meet a crisis situation • Plant/facility/business closing • Market opportunity • Manager/staff availability • Business development steps are important to follow • Threat to competitors • Pressure to begin with minimal capital • Pressure to ignore pessimistic feasibility reports

  12. Role of Outside Agent • Important, but do NOT substitute local participants • Roles include: • Educator • Objective Observer/Skeptic • Project Champion • Technical Advisor

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