Volume 14, Number 1 October 28, 2010
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 towww.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)
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