The Hunger Mountain Cooperative: Will Its Business Success Erode Its Democratic Governance?

by Nat Frothingham

At a time when two longtime and active member-owners of the Hunger Mountain Co-op—Billy Donovan and Stephanie Kaplan—have been insisting on the tradition of direct democracy in co-op governance, it would illuminating to go back to Vermont’s first co-ops: the Adamant Cooperative and the Putney Co-op. Both had humble beginnings.

Adamant and Putney

As we learn from an article by Sally Johnson published in The New York Times on February 7, 1990, the Adamant Co-op began when “eleven families sharing the common bond of Depression hardship, each contributed $5.00 to buy food in bulk and divide it among themselves.”

According to the Putney Co-op website, the Putney Food Co-op was founded in 1941 when fuel shortages, due to World War II, made it hard to obtain grocery items. To get the needed supplies, a group of Putney citizens, led by Carol Brown, formed the Putney Co-op according to the Cooperative Principles.

Those Cooperative Principles, first articulated in the town of Rochdale, England in 1844 and known thereafter as the Rochdale Principles, suggest the following values:

  • Voluntary and open membership
  • Democratic member control
  • Member economic participation
  • Autonomy and independence
  • Education, training, and information
  • Cooperation among cooperatives

Concern for community

Kari Bradley who is the General Manager of the Hunger Mountain Co-op had this to say about what led to the founding of those two early, Vermont co-ops, “Those co-ops were started because people needed access to food. There wasn’t enough access to food.”

The Adamant Co-op, though it thrived for a time, almost closed in 1990.

Describing that moment of near-closure, Sally Johnson wrote as much about the decline of farming and rural life as about the Adamant Co-op that nearly closed for the simple reason that it was a failing business.

She used these words to report on the business crisis that almost closed the Adamant Co-op in 1990, “Hours go by, when not a single customer wanders into the cooperative grocery, one of the oldest in the nation. It is 10 miles north of Montpelier, the state capital, at the crossroads that locals call Adamant.”

Johnson concluded her story with a crack of light, “Short of a miracle, the Adamant Co-op is likely to go out of business this spring. But a miracle of sorts has already happened. After the nine-member co-op board voted in December (1989) to close the store on January 31, fifteen neighbors promised to donate a total of $450 a month through April to keep the store running.”

Ultimately the Adamant Cooperative survived—but that’s a longer story.

Hunger Mountain Co-op

In its membership base, workforce numbers, marketplace and café and annual customer sales the Hunger Mountain Co-op is hardly in the same league as the Adamant or Putney Co-ops.

All three are co-ops. All three sell food. And all three enjoy community loyalty and support.

Many people remember the early days of the Hunger Mountain Co-op: no store, few if any staff, and humble tasks such as putting together an order and organizing a co-op space in a community hall or church basement, and then meeting and unloading the truck, breaking down the food from large bags and boxes, and putting such things as flour and nuts and raisins into smaller bags and boxes. Afterwards was the clean-up.

When the early co-ops became storefronts that was a big change. When the storefronts were succeeded by supermarkets, that was another big change. As Hunger Mountain’s Kari Bradley said during a recent interview, “Things have certainly changed. We do have a storefront. We have a staff. We have evolved as the industry has evolved. We’re 45 years old now. The base has grown to 8,000 members.”

He went on to note, “We’re still here to serve the community and our members. It’s still around organic, natural food, and local food. I also think the values have not changed.”

As the interview continued with Bradley, also with Scott Hess, the co-op’s new president, this question asserted itself in unmistakable ways. “When you are trying to run and expand a business like the co-op, with about $24 million in annual sales, 8,000 member-owners, and a workforce of 164 employees with union representation, won’t there always be tensions between adhering to the original principles of the co-op, like the co-op’s commitment to direct democracy and to member-owner inclusion in decision-making?”

With a competitive food industry and marketplace you’ve got to run a successful business. Then on the other side is the cooperative itself and its democratic principles.

The Co-op Superstructure

In the beginning, the fledgling food co-ops were largely isolated. But over time, co-ops across the country banded together to create institutions like the National Cooperative Grocers (NCG).

As Kari Bradley explains it, NCG is a secondary co-op. It’s a co-op whose members are co-ops. By aggregating the purchasing power of the 147 food co-ops that operate over 200 co-op stores in 37 states, NCG claims to get better deals on food and other items for co-op members. NCG is hardly a small potatoes business. It claims combined annual sales of $2.1 billion and over 1.3 million consumer-owners.

Another organization that serves co-ops in general is the Cooperative Development Services (CDS). CDS consultant Michael Healey is helping the Hunger Mountain general manager and co-op council prepare for an upcoming board and management retreat on February 3.

Defending Direct Democracy

In recent months, Hunger Mountain member-owners Stephanie Kaplan and Billy Donovan have taken issue with Hunger Mountain General Manager Kari Bradley and the (up to nine person) member-elected co-op council.

Kaplan and Donovan believe that the member-owners ought to be at the very top of the co-op’s governing pyramid. They are the member-owners; they elect the co-op council, and the co-op council hires a general manager, who serves at the council’s pleasure. But it’s the member-owners, Kaplan and Donovan believe, who ought to supply needed direction.

Certainly a part of what’s happening has its roots in language that appears in the co-op’s three-year business plan. One section from that plan states: “Prepare ourselves for potential expansion.”

As explained by Bradley, “prepare ourselves for potential expansion” gives the co-op some needed latitude in dealing with an uncertain future. “We may need to hang onto the market share that we have,” Bradley explained. “Competitors are growing. It’s a dynamic industry… and it may be in our interest to pursue a second location, a delivery service, and various other ways, perhaps an online e-commerce business.” Again Bradley said, “So there’s no plan, there’s no specific plan to expand the co-op.”

Stephanie Kaplan is cautious about any future expansion proposal at the co-op. “I have no position on whether or not an expansion is a good idea. Some expansion might be a good idea, some expansion might not be.”

But Kaplan has strong views on the importance of direct democracy. And she said, “What I strongly believe is that any proposal to expand must be sent to the members in advance and then brought up at a membership meeting where the members can ask question, discuss the pros and cons, fully understand the proposal, and then, vote at the meeting.”

She went on to say, “My understanding of the existing bylaws is that the way it is now is that voting can be by ballot via mail, electronically, or at a membership meeting. I think the best way would be to only be able to vote at the meeting, after hearing or participating in the discussion.”

Are Corporations Taking Over Member-Owned Co-ops?

Kaplan and Donovan worry about corporate influences taking over the food co-ops across the country and look at CDS as the leading edge of a growing corporate influence. That corporate influence they believe promotes expansion because expansion means more shelf space and more shelf space leads to distributing more product and more product equals more profits to distributors and consultants.

They also suggest that member-owners take a look at the website, takeback thecoop.com, which tells the story of how the 17,000-member co-op in Santa Fe, New Mexico got into serious financial trouble by listening to the consultants and expanding their co-op.

General Manager Bradley is not buying the idea that the outside organizations that assist Hunger Mountain Co-op are part of some conspiracy.

“I just don’t see it,” Bradley remarked. “It’s just that people are connecting the dots that aren’t really there.”

Bradley praised the National Cooperative Grocers for helping the co-op reduce its energy and water consumption and encourage members to purchase local and organic. He went on to say, “You shared with me the co-op principles. The fourth one on this list is autonomy and independence. What that means is co-ops, even though they have to work with each other and collaborate, at the end of the day, are here to serve their members. They must remain independent and maintain their autonomy. That’s a fundamental principle.”

Concerns about an Upcoming Retreat

Both Kaplan and Donovan expressed concerns about an upcoming Hunger Mountain Co-op Council and management retreat on February 3.

They point out that the retreat would be a meeting that’s not warned, not open to members and therefore a violation of the founding principles of the co-op and the bylaws.

Both Donovan and Kaplan observed that the agenda for the retreat was being developed by a CDS consultant Mike Healy. In a draft agenda, Healy used these words for an agenda item: “Membership Rift.”

When asked about the February 3 Co-op Council and management retreat, Bradley said that the coop council “does not view this as a typical business meeting. This determination was partly the result of advice from the co-op’s attorney, he said. “We’re not a public body like a school or a city council. We’re not subject to a public meeting law.”

Bradley said that the word “rift” (as in membership rift) “was not a word we have used.” Instead he said that what the council wants to achieve is good communications. “[The council] is talking about how it communicates with itself and how it communicates with members, he said.

It’s talking about how it communicates with itself and external communications (how it communicates with members). He said, “We are trying to be inclusive. The council wants to do a good job at communication with members—all 8,000 of them.”

A Vision for the Co-op’s Future

Billy Donovan shared his vision for the future of the co-op. He wants a co-op that understands the proper relationship between members and the council. The members own the business,” he said. The council members are their elected representatives. The council’s job is to represent the members. The council’s job is to make the general manager accountable.

“How can the Hunger Mountain Co-op compete?” he asked. “By being competitive, and we will be competitive by honoring our members. We can’t beat Wal-Mart, but we can involve our members.”

At the moment, Donovan feels we walk into the co-op, fill up a shopping basket, spend the money, and walk out the door. Donovan wants more from the co-op. He wants us to ask questions and get answers about natural food, local food, pure, unadulterated food: Where was it grown? How was it grown? Is it organic? “We can’t compete on price,” he said, “but we can create a local organization that’s democratic and transparent.”

Hunger Mountain Co-op by the numbers

  • Name of Co-op General Manager: Kari Bradley
  • Name of Co-op Council President: Scott Hess•
  • Founding date of Hunger Mountain Co-op: 1972•
  • Co-op membership 10 years ago: 4,950 — Co-op membership today: 8,675•
  • Percentage of local food sold: 40 percent•
  • Percentage of certified organic food sold: 40 percent•
  • Net Sales FY 2007: $13,262,532 – Net Sales FY: $23,909,666•
  • Storefront opened: 1978 — Stonecutters Way Store opened: 1997•
  • Number of Co-op employees today: 164•
  • Total annual Co-op payroll: $5,286,244•
  • Starting hourly wage: $13.05•
  • Coop’s Benefits Contribution to Full-Time Employees 100 percent health, dental, vision to Part-Time Employees: 50 percent•
  • Benefits Contribution to Part-Time Employees: 50 percent•
  • Paid Vacation, Sick, Personal Time Off: Four Weeks•
  • Time Off after 11 years: Seven Weeks

Join in Coop Conversations. Hunger Mountain Co-op is always balancing its limited resources with the goals of providing healthy food at affordable prices, being a good employer, paying fair prices to farmers and food producers, and meeting the diverse needs of the membership and community. Over the past year, the Co-op Conversations series has focused on member-owner discounts, which have been growing at rapid rates over the past few years. Based on the feedback gathered in meetings, interviews and surveys, a committee of members, council members, and staff has developed a revised set of recommendations for the discount programs and is again seeking feedback from members and staff.

Contact info@hungermountain.coop or (802) 262-3202 to attend one of these meetings:

Small Group Discussion Friday Jan. 19, noon-1 pm, Co-op Community Room

Community Forum Tuesday Jan. 23, 5:30-7 pm, Montpelier Senior Center

Small Group Discussion Thursday Jan. 25, 5:00-6 pm, Co-op Community Room

–Contributed by Hunger Mountain Co-op

 

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