Volume 14, Number
1
October 28, 2010
The Farmer
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Owning Community Supermarkets: A Growing Trend
By Sister Anne Mu’min Muhammad
Our idea in the Ministry of Agriculture (MOA) is to develop a chain of
cooperatively owned supermarkets in the black community. We intend to build our
own brand name and franchise. We believe that the cooperative corporation lends
itself to the development of businesses and an economy based on freedom, justice
and equality.
But first the co-op will have to depend on the masses or grass root people in
their community to go through the stages of food buying club to cooperative
corporation to supermarket ownership. As we have been discussing and working on
for the last four years in the MOA, the strategy is: after the buying club
reaches 25 to 50 members, it should incorporate as a “Cooperative Corporation”.
When the membership in a given location reaches a level, say 500 (that can
support a store), the internal finances of the co-op can be augmented with
additional debt financing in the form of loans, non-voting preferred stock,
bonds or other private placement instruments to either rent or purchase a store.
On Thursday, September 9th, I attended a meeting sponsored
by a community in Macon, GA. Called the College Hill Corridor Group, in
conjunction with Davis farm where they discussed organizing a co-op. The Davis
farm began a co-op using space in a church located in the College Hill community
as a distribution point. Church leaders and Mercer University (which surrounds
the church) faculty saw the response of the people to fresh-locally grown
products so now they are partnering with the Davis farm to plan for a
grocery/co-op.
Research has shown that it takes three to five years to start a co-op and
$1.5 to $2 million dollars. Feasibility analysis of the College Hill community
showed that it could not support a full-scale supermarket with floor space of
46,000 square feet, but could possibly support a smaller store of 11,000 square
feet. This assessment was based on the fact that the College Hill community
spends $6.6 million on food annually. Of this amount $4.5 million in food is
purchased outside of their community. If a grocery store could capture this $4.5
million, this would represent $409 per square foot annually for an 11,000 square
foot store. On a weekly basis this would mean that each square foot would have
to sell $7.87 of food each week. The national average in 2009 was $8.31 per
square foot which means that the proposed store of 11,000 square feet has a good
chance of staying open if the community supports the operation. The weekly sales
for such a store should be about $86,570 for a profitable operation. This means
that if an average customer spent $50 per week, this store would need 1731
customers per week to be successful.
The College Hill Corridor group used the Sevonanda market located in little 5
points in Atlanta as a model. Sevonanda is a natural foods market whose mission
is “To empower the community to improve its health and well-being.” They
began in 1974 and now have 3,000 members who pay $120 per year in membership.
The market generates $9 million dollars in sales per year and strives to support
farms within a 200 mile radius from the market. On their website they state that
since Georgia has no statutes providing for consumer cooperatives to be
incorporated as a cooperative corporation, they reincorporated in January 1995
under the state of Wisconsin’s cooperative statutes. Now members buy one class
“A” share (consisting of six individual shares) in the co-op.
The organizers of the proposed cooperatively-owned grocery store in the
College Hill community realize that they must get “community” support if
they are to be successful. By definition a community is a group of “people
with common interests living in a particular area.”
The two parts of this definition are very important for
business development. First, the people must have common interests. A
divided community cannot be expected to support a community owned business.
Secondly those people who have common interests must live in a particular
area, because if they live too far away you cannot expect them to support a
grocery store on a regular basis.
Let us give you an example. In the Hyde Park Co-op Market of Chicago, Ill., a
cooperatively owned food store started near the University of Chicago in 1932
and after many years of success, decided to expand in 1999 and set up a much
larger store just 9 blocks from campus. The 22,000 square foot grocery store in
the new location was subsidized by the more profitable but smaller store nearer
campus. However, by 2009 the Hyde Park Co-op Market had to declare bankruptcy
and close both store locations even though their smaller store near campus had
always been profitable. They over expanded and were not able to get the
community support they needed to keep the 22,000 square foot store afloat.
This is why we in the Ministry of Agriculture have been promoting the
development of buying clubs in cities across the country to be developed into
cooperatively owned grocery stores. However, we stress that before the group
even opens a small grocery store, they should have at least 500 members who can
be depended upon to patronize the store each week. This means that all of the
members must live close enough to the proposed location so that over time they
will not feel inconvenienced to come to the store and shop. The heart may be
willing but logistics and personal time constraints could prevent full
participation from a scattered group.
The Macon group have outlined what should be included in a development model
for the grocery/co-op: 1) vision, 2) talent, 3) capital, 4) on-going
communications and educational programs for your stake-holders and 5)a good
plan. Research shows that it takes three to five years to start a successful
co-op and $1.5 to $2 million dollars. Other suggestions include: 1) Put together
a steering committee, 2) begin mentoring with an already established co-op, 3)
make plans with a time-table and budget for the first stage and 4) get
incorporated. If your state does not have the proper statutes for incorporating
a “co-operative corporation”, you can incorporate as an out of State
Corporation in states like Wisconsin.
In the NOI, we have faltered on carrying out two major initiatives developed
by the Honorable Minister Louis Farrakhan that would have established a presence
in our local communities across the country. In 1995, Minister Farrakhan
introduced to us the concept of the Local Organizing Committees (LOCs) as a way
to keep the momentum going from the Million Man March. When those two million
Black men returned to their respective communities, organizing the LOC with a
program of community building and spiritual and economic development would have
us at the point of being ready to establish businesses in those communities.
Next, in 1997, Minister Farrakhan presented to us the Exodus Program. He
outlined the program in such a way that if we had implemented it, we would have
communities all across the nation, ready to go to work under the nine
ministries. Such an effort would have developed a potential customer base for
any type of business that could have employed our people and served their needs.
We pray that we are now ready to hear and obey the words of wisdom of our
Minister and develop co-operatively owned grocery stores and other
infrastructure needed to develop an independent, profitable and safe food
production and distribution system for our 40 million or more members of our
Black nation.
For more information go to www.MuhammadFarms.com
or www.NOIMOA.org.
(Sister Anne Mu’min Muhammad, former Social Services worker, Community
Activist and Assistant to the Manager of Muhammad Farms)