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The Co-op - 2006/02/13 18:30
Larry raises a good question about the co-op in the thread about a SOJAA mini-mill. I will share what I can.
The financial condition of the co-op deteriorated under lax Board oversight and questionable management in the early years (when there was some capital to play with).
That is the legacy that the current Board labors under. I could say we are "highly leveraged" these days, and that effects most of our decisions.
On the upside:
1. We have just completed the training of classers that will reduce sorting costs by 50-80% while improving accuracy
2. We have contracted with a US mill to produce yarn for us at a significantly lower cost than the Candians were able to do.
3. We had over 7,000 pounds of fiber scoured by a company at lower costs and with less loss than previous vendors could provide.
The end result of the above is extremely high quality yarn at a cost to the co-op that is far lower than I could have4 hoped for.
How high quality? A very knowlegable yarn guru (unreleated to alpacaland) was given samples of our superfine yarn and some Peruvian baby fine yarn and concluded that the AFCNA yarn was softer.
But, "Where's the money?" I hear someone ask.
It is supporting the day to day operations of the co-op and paying off a significant debt load that was acquired under our previous management.
The co-op's finances are tenuous, even as the future is looking bright. Very frustrating.
We are currently working to better define the allocation of profits, particularly in terms of patronage dividends to the membership. Why is this necessary? Well, for one, it was never done correctly in the first place. Also, past income was derived from the sale of Peruvian sourced products while member submitted clip largely sat unused in a warehouse. Finally, it appears that some commonly held notions about the relative worth of different grades of fiber might not be reflected in actual profits that the co-op generates.
Just as an example, baby fine suri is generally thought to be the most valuable. In practice though, the co-op generates far more profit from adult grade fiber used in heavy boot socks, since we are seeing these far further through the value added chain. As another example, a year ago we were able to sell shorts for more than we could get for superfine (raw fiber), simply because of where the "motivated" buyers were.
I would love to sit down with you over a glass of wine and a cigar (only because you always have good cigars) and discuss in greater detail where we have been, where we are, and where we are going.
Money? I would like to be able to tell you that in 3 years we will be able to return $10 a pound (or more) to the member. It is possible, but I am not going to make any promises.
Do remember though - I am a member, and I share all the angst of every other member that has never received a cent back from the co-op. Were you to sit on a Board meeting you would hear me speak to this consistantly - providing tangible benefits to the co-op's members.
John Merrell
Gateway Farm Alpacas
http://www.gateway-alpacas.com
Alpaca, a natural elegance...
John Merrell
Gateway Farm Alpacas
Alpaca, a natural elegance... |
