A Cooperative Food-Buying Club Primer

by Lucy Parker Watkins
Originally published on Vegetarian Baby and Child Online Magazine.

Whether you are looking for more vegetarian, whole food options in your community or better prices on healthy foods, a cooperative consumer food-buying club could be your answer. These groups (also known as preorder co-ops or buying clubs) consist of a group of people pooling their financial resources in order to purchase bulk foods at wholesale prices. A buying club can be as small as 5 people or as large as 100. They work together to purchase, pick up, sort, and distribute foods, as well as to maintain the group in order to secure wholesale prices on groceries and build a social network with other health-conscious people.

There are two types of cooperative food buying clubs. The first purchases food products from a cooperative warehouse of which the group becomes a member. Cooperative warehouses specialize in packaged whole, organic foods, and staple produce. According to the National Cooperative Business Association, "cooperative food warehouses across the United States supply food to retail co-ops and buying groups, maintain listings of cooperatives within their service regions and provide technical assistance to groups interested in starting food cooperatives. These warehouses are owned and controlled by the local cooperatives they service." The second type of buying club works in conjunction with a retail distributor by initially making special orders through a retailer; then negotiating a direct relationship with the distributor. Because cooperative warehouses tend to focus on packaged items and staples, creating a buying club to work with a specific distributor is best suited for purchasing organic and chemical-free produce.

Buying clubs also mean buying power. Since most organic health food is more expensive than run of the mill foods which are full of GMOs and pesticides, there are many families who don't think they can afford it. A buying club makes these options more accessible to families who really would like to include more organics in their diet.

Although food buying clubs are in place worldwide, it is possible to start your own. The process involves doing research, finding and organizing a group of interested people, ordering, picking up the items, sorting, distributing, and maintaining the group.

Before doing anything else, it is important to find the cooperative warehouse or health food distributors in your area.Your research should also include the cost of opening a bank account, rent for using the local church basement, a room in the civic center, or other location for sorting, requirements for opening an account with a warehouse, and other items specific to the co-op you create.

Cooperative Warehouse - Once you've identified the cooperative warehouse serving your area, contact them for either a list of existing buying clubs or basic start-up information. The requirements vary from warehouse to warehouse. Some might require a credit check, membership fee, or initial payment of some sort. They will provide catalogs for the group, delivery dates, drop off locations, minimum dollar amount for orders, and minimum number of orders required per year. All of this information is available through customer service.

Distributor - Ask your local health food store or other grocer about health food and produce distributors in the area. Shari Withey, co-op coordinator extraordinaire (Families United and Abundance Organic Produce Co-op to name two) and long-time board member of the Denton Organic Society in Denton, Texas, stated that smaller distributors are more likely to negotiate an agreement with your group. The larger distributors often have a "no co-op" policy. It is also important to find out the retail store's policy on special orders and the retail mark up.

After deciding which type of group best suits your needs, it is time to find people to participate. According to Jim Sluyter and Jo Meller of Five Springs Farm in Michigan, groups should begin with a minimum of 5-6 interested people. Minimum orders range from $300-600. A group of 5-15 people can easily meet those minimums, even if the smaller groups need to order less frequently ("Join The Club", Sluyter & Meller, A Real Life, March/April 1998. For subscription information contact: A Real Life, 245 EIGHTH AVENUE, PMB 400, NY NY 10011 or call 802 893-7040 with questions).

According to Withey, the key to creating a viable, long-term food-buying club is to "support the market. Do not try to create one." In other words, when looking for potential members, focus on those who already use the types of products your group will be purchasing. "Do not try to convert anyone," warns Withey. It is also important that potential members are willing to actively participate in the club. If you don't already know anyone fitting this description, consider displaying flyers in your community soliciting members.

Once the group is formed, it is time to decide on the working details of the organization. A potluck organizational meeting of the buying club is a great way to meet everyone, present your research information, make decisions about the operations of the group, and decide the role each member will play. Some considerations for the group include deciding who will pick up the order, electing a treasurer, planning meetings, discussing surcharges and membership fees, and creating bylaws (a quick and easy list of rules).

When using a cooperative warehouse, consider splitting running costs evenly among the members.

For groups using a distributor, everyone pays equally, and the produce is divided equally. (Please see additional information on create your own order buying clubs at the end of article) Withey explains that by having one person make the orders, you are sure to meet your minimum and get full cases. "Then every order is like opening a Christmas present!"

The group should also decide on a retailer to use as the go-between and how to compensate them without taking on the full retail mark up of your order. Suggest offering the store a percentage of the order. This will be tacked on to the cost of the entire order by dividing it equally among members. When addressing the storeowner, note that your group will be there for deliveries on a regular basis. This will likely mean additional business for the store, which would be an added bonus for the store owner.

Each club will have a different system of writing and placing orders. This, in part, is due to the nature of the suppliers. Most orders will be made by the case. If you want a variation on that, consider ordering a "repack." Withey explains that a "repack" is a case of food that has been repacked, changing it from a full case to a split case (e.g. ½ asparagus, ½ squash). Unfortunately, a repack costs more per item than a regular case.

With a cooperative warehouse, each member of the group has his/her order as selected from the warehouse catalog. All the orders go to the coordinator (treasurer or other designated member) along with the individual payments. One person calls or faxes the order to the warehouse. Individual members should keep copies of their orders to ensure they are complete when they arrive.

Groups using distributors should consider starting with special orders as opposed to addressing the distributor right away for several reasons. First, it's a good way to test the waters with a distributor and see if they sell quality products. Second, it gives your group a chance to organize in a way that makes you reliable and viable. This will be important to the distributor when you finally approach them to begin a direct relationship as a buying club.

Withey recommends ordering one case of seasonal produce per family. If there are 6 families in the group, make the order for 6 cases of 6 different items. Divide the amount of the order by the number of members (remembering to add on any additional for the store owner), and everyone pays equally. When the order arrives, it is split the same way, "even Steven." Continue to make the orders this way until you have established a reputation as a consistent and viable group.

"Don't call the group a 'co-op'," warns Withey. Many distributors shy away from working with co-ops because of the conflict between the cooperative and retail philosophies. While it might be a matter of simple semantics, it may mean the difference between striking a deal and not being considered. However, just because a distributor says they don't normally work with buying clubs doesn't mean all bets are off. At the same time, be prepared to provide proof of viability (bylaws, constitution, and checking account information) when negotiating with the distributor.

Picking Up & Sorting
Where and when the order is picked up and who sorts it are issues that should be discussed during the initial meetings. The size and content of the order will be a factor in deciding how many people make the pick-up. The person in charge of picking up the order should always remember to bring a copy of the original order along to verify that the order is complete. If you choose a separate location for sorting and pick up, Sluyter and Meller advise groups to use a public place for sorting and distribution. "Using a member's home can become burdensome, because they end up becoming the caretakers of other people's food."

Keep in mind, whoever meets the truck should not only have a copy of the full order with them to verification purposes, but they should also have copies of the individual orders as a guide for sorting members' orders.

When using a cooperative warehouse, they will determine when and where the delivery occurs. If there is a retail cooperative on the delivery route, consider using that as the sorting and pick-up site. Otherwise, find a convenient location to take the entire order to for sorting and pick up.

The most likely delivery site for groups making special orders through a distributor will be the retail store. This probably won't change when your status with the distributor changes. Sorting is simply done by dividing the order evenly among the members. "When ordering produce, strike a balance between the staples (i.e., onions, potatoes, carrots, lettuce, broccoli) and the more exotic and expensive foods," Withey suggests.

The supplier determines the method of payment. Some cooperative warehouses require payment upon delivery, while others will bill the group later. This will be pre-determined for cooperative warehouse groups when opening the account. Distributors also vary on this matter. However, when placing a special order through a retailer, expect to pay upon delivery. Once the distributor recognizes your group as a buying club, other arrangements may be made. The general rule for both types of buying clubs, however, is that payments be made with a single check.

"Keep ordering. You can do this by making sure your members have a sense of the products whether that's through tasting fairs, general membership meetings, or potluck ordering parties," Withey recommends. The cooperative warehouses have samples and presentations specifically geared for some of these activities.

Sluyter and Meller recommend keeping the group small. It keeps the jobs easy. "You'll know right away when the group gets too large; it's not as much fun anymore and it's hard to get the jobs filled."

As the group grows, Withey recommends allowing sponsorship of potential members. Instead of allowing anyone to join, members include the interested person's order with their own. If the potential member likes the products and the system, then s/he can take the time to pay the membership fee and commit to working with the group. This is a good way of avoiding fly by night members.

More tips
Don't rely on any one person to do the work for the group. It's important to maintain the spirit of cooperation where everyone participates and has a good time getting the work done. In the short time I've been involved in co-ops, I've seen many a coordinator get burned out because they didn't delegate. Those who share the work load work longer and stay happier.

Whether it's organizing a group, talking with a storeowner, negotiating with a distributor or talking with a grower, Shari Withey says, "Always try to make it a 'win-win' situation." That will help your group get things done.

Withey also says that U.S. State agriculture departments maintain and publish lists of growers, classified according to their methods. Growers fall into categories such as "organic", "chemical free", and "transition" (in the process of obtaining 'organic' certification). Consider contacting growers within a 30-mile radius of your home and make arrangements to meet with them. They are very busy people, but you may be able to work out a purchasing program with them!!

The group can also serve as a social network. Sorting and pick- up days create opportunities to connect with fellow members. Potluck meetings also foster community spirit.

Note: Since originally writing this article, I've run across several thriving distributor co-ops set up for individually designed orders. Frequently, these co-ops are larger in membership and they require more organizational effort on the part of the coordinator; however, they are often ideal for people who already know exactly what they want and would like to plan ahead.

Because produce availability and prices are ever changing, order forms will be different each time. Co-op organizers must find a way to make the order forms available to members in advance. Furthermore, most distributors will not accept orders for partial cases and most co-op members will not order a full case of any given product. The co-op's order form can include per item and per case prices with the required minimums for each item listed, along with any other pertinent information. This allows for individuals to order smaller amounts and more variety making it more appealing to potential members. For example, if the co-op sets the minimum individual order for plums at 1/8 of a case, then other members must also order plums to make it a full case. This doesn't mean that each member of the co-op must order plums. On the contrary, it means that if a member order plums, they must order at least 1/8 of a case.

Create your own order cooperatives may better meet members' preferences, but they also require more effort on the part of the coordinators. Good communication is key to making any co-op work, and the create your own order co-op is certainly no exception.

All of this may sound complicated and demanding, but it doesn't have to be. There are no hard and fast rules for creating a buying group. These are simply guidelines and input from experienced members who've seen buying clubs thrive and die. The group you create can be tailored to suit your needs and the needs of your members.

Posted March 2006 | Permanent Link

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