DIY Cooperative Economic Growth: How to create a Cooperative General Store and Economic System.
Town of Baldwin Fl made a Municipal Supermarket-- I want to make a Cooperative General StoreBecause They Work Better...
In 2019 the little Town of Baldwin Florida population (1400 roughly at the time) was facing a major crisis it’s only IGA Supermarket closed down. This created a food desert. So its very Republican town board decided to create their own Supermarket called the Baldwin Market. They ran it for more than 3 years, before it closed down. And the primary reason it closed down is the way it was created— a for-profit Town Owned Store in a community with 45% of it’s population’s annual household income less than $50,000 is never going to work. The store couldn’t compete with the Dollar General in town in the long run. What we should learn from this is that the possibility is there and we just need to structure program differently to suite our community and engage the entire community and surrounding area.
Now before people in my hometown audience scoff at the idea and say Windham isn’t Baldwin, FL— the fact is they are shockingly similar. Here are the critical similarities.
Baldwin’s Population according the Census Data of 2022: 1,798 people
Baldwin’s Population Earning Under $50,000 per household per year 45%
Baldwin’s Population In Poverty 12%
Baldwin’s Commute Time 29 minutes
Windham’s Population Census Data of 2022: 1,611 people
Windham’s Population Earning Under $50,000 per household per year 33%
Windham’s Population in Poverty 3.1%
Windham’s Community Time 24.2 minutes
We are rather comparable in many areas given our similar sizes, similar economic conditions, and distances to population centers with larger supermarkets and career potentials. However where Baldwin’s median income is a lower $54,628 per household Windham’s median income is a gargantuan $70,774 per household given our population and our reliance on tourism this can work well for us. Another interesting factor is that Baldwin has only 745 housing units with 55% of them occupied by an owner compared to Windham’s 2,360 housing units and 75.7% vacant with 86% owner occupied. This sharp contrast in housing units , rates of owner occupancy and vacancy, and so on tells us that Windham’s tourism will give our Local-Cooperative Supermarket/General Store a leg up on the competition.
The fact that our population can bloom to more than 5 or 7 thousand people on a weekend consisting of Friday to Monday doesn’t hurt our cause either. Not to mention the fact that I am envisioning not just a supermarket with fresh local produce, meats, cheeses and so on but a true old fashioned General Store type of arrangement will greatly increase our marketability.
Our goal should be to capitalize on our rural character by creating a hybrid of the Old General Store combined with the Modern Zero Waste trends. In this case a trendy idea that our production of waste materials in the form of excessive packaging will create a cottage local industry of constructing recycled wood packing for consumers and town made tote bags instead of the pre-packaged plastic wraps that now clog our waste transfer station. In fact we might even be able to use grant money from the DEC in the future to help fund our project in the nascent stage of development since it would fall under waste reduction.
Creating An Integrated Economic Ecosystem In Our Region.
We have to think big— we aren’t just a town, we are part of a greater region i.e. Greene County and towns that make up the Mountain Top and that our own successes both as a town and region are ultimately interlinked. So, while I am first and foremost concerned with Windham’s future; I know that instead of competing with our regional neighbors a system of integrated mutually beneficial economic goals will provide greater strength and sustainable growth to all people in the region. This approach will our town to lead the way in the construction of successful micro-industrial sectors in the region. This Cooperative General Store is the first pillar in a multi prong approach to constructing town and regional growth.
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Above are two examples of totes and boxes that we would provide to our Cooperative Customers’ to purchase. They could also be sold regionally to other stores. The concept is simple using materials in small diversified businesses that make up a larger cooperative we strengthen our total economy. This concept is an adaptation of the Cottage Industry model that was so prevalent in the world before the take over industrialization in the Western economies after the 1780’s. We will focus on constructing things in prefabricated manner. So of example let’s say our first cooperative is making tote bags from recycled materials like Fast Fashion— you might have one group of people just making the straps for the bags, another group might just make the bag portions and then a final group will do final assembly. The designs from these materials will vary and the final products never identical and that will be part of our selling features that each tote bag is unique and therefore an Artisanal Product and not a mass produced one. All of which small batch workshops in homes will allow us to create the content.
Further more, since these products will be constructed in the town using local labor and possibly even local resources the extraction value of this product is low. What I mean by extraction is this, every time a resource is brought in from the outside it takes out a specific amount of value from the production area. For example if we buy most of fast fashion from clothing dealers that means whatever that amount is say $1000 per ton for example goes to an outside source. Where as if we purchase used clothing that cannot be donated due to stains, tears, and other damage from our own town or our region we can keep those dollars in our area and thus bolster our region’s economic growth . There’s an old joke and I believe it was told by Polish Economist Michal Kalecki about a counterfeit $100 bill being passed around a village— and by the time it gets back to counterfeiter after paying off all the debt in the village he uses it to light his Cigar— the point being that money is a social construction; but, in our case it also means that the most important feature of $100’s travel was that it was able to pay off all the debt in the village. And that is what we need more money traveling around our town not being extracted to the outside world.
Another Cooperative avenue I would like promote is Sunflower Oil. I’ve been researching is the production of Sunflower Seed Oil and it looks extremely promising — in our case I believe the most effective type is called “cold press”. Cold Press is literally how it sounds it is just a press that extracts the natural oils of seed or nut without causing damage due to heat or other chemical processes. While efficiency of Cold Press is less than chemical extraction processes, cold press creates a superior product that is both environmentally friendly and cost efficient for small operations like the one I see developing in Windham. For starters Cold Press machines are relatively simple devices that we can procure easily enough. The facilities required for such an operation are much simpler to maintain and use than facilities using hot-presses or chemical extraction methods. This will greatly increase our ability to produce products of high quality quickly with relatively new workforce.
Another reason I’m so keen on the sunflower oil concept has to do with the return on investment. Right now Sunflower Oil is roughly $896.00 per ton on the US Commodity Market. Which is an impressive figure but not as an impressive as the per 1 gallon price of cold pressed oil for cooking use of around $35-$48. That far exceeds its raw commodity value of $896 — at the low end of the scale 260.42 gallons of oil (1 ton) is worth $9,114.60 and at the high end $11, 718.75 . All from about 6.5 acres of land. As you can see that right there will equalize the fact our growing operation will not exceed 3,500 acres. We going to make up any disadvantages in size through efficiencies in production, packaging, and quality.
For this economic ecosystem to correctly function we need to create a series of interlinked Cooperatives that function on in manner that build on one another. So for example the waste of our the community i.e. glass bottles could be a great resource for creating the very containers that the Zero Waste General Store will sell to its costumers and the Sunflower Oil Cooperative to use to bottle its oil. Further more once we have a local supply of glass containers and jars we can market them regionally for example in NYS there are 400+ craft beer breweries in the state. I’ve counted around 40 within an 2 hour drive of Windham it self. Hundreds of bottles could be produced locally for everything from Sunflower Oil and Honey to local craft beer bottles. Think of the possibilities.
Why shouldn’t our home grown products be produce with our own locally sourced glass containers? In fact making them out of recycled glass from our own towns (i.e. free resources basically) is both better for environment and better for the town since it will remove yet another source of economic extraction from the production process. One of the most important features of Glass is that it can be infinitely recycled without degrading its properties.
We have two key factors are in favor one the US is facing a glass bottle shortage and that with the increase of environmentally friendly alternatives to plastic being sought by consumers— now is the time to act. This endeavor not only solves the long term problem of waste in our region but it also promises to create an interconnected revenue stream of recycling in the region. What I mean by this is that instead of throwing way our glass at the local Transfer Station our Cooperative Glass Works would employee people to pick up the glass from homes. I know that NYC throws away 182 tons of Glass of Bottles and Jars per day— I’m currently looking into Greene County’s waste figures. They will be lower. However, I wouldn’t be surprised if Greene County NY disposes of 100 tons of glass bottles and jars a month.
And this leads us into producing other local products such as Honey, Fruits and Vegetable, and of course Meats , Poultry and so on. These develop an economy of scope where each cooperative looks to create interconnected products or services that compliment each other in such a way as to reduce costs of each.
So, for example the Sunflower Oil Cooperative creates a supply of sunflower meal after the creation of the oil itself. This waste can be turned into several different products: Feed Stock for ruminants like Cows, Goats and Sheep , baking supplements and potential biomass for energy generation. But we must take this concept of economies of scope and expand it to the entire economic system— we need to create a system that identifies areas of economic growth potential and then provides the specific incentives to boost these endeavors.
Creating the Incentives.
We build up each cooperative slowly through the Mountain Top Development Corporation— the corporation ( 501C) and a perfectly legal entity for a town or county to operate is the key to this development scheme. The NYS will not let me create a credit union but a Community Bank is possible.
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What does a Community Bank offer? A community bank that is a true community bank is a financial institute that is centered within a community drawing its deposits from said community and thus reinvesting within that community. Although Community Banks have been traditionally difficult to categorize our above definition is the one that I feel best fits our goals and needs of a financial institution that is totally local in its scope. In a 2020 the FDIC made the following report on Community Banking found the following to be true: 1) Community Banks loaned to Multifamily residencies , 2) Small Businesses with a higher Frequency that required greater knowledge of local region than formula based loans, 3) Community Banks out performed the commercial counter parts in two critical areas 36% of their loans were small business and 70% to agricultural businesses. This why a true community bank , a truly Public Bank that is focused on the development of local businesses in Windham and the surround towns in the region will have such a positive effect on growth. This will be coupled to a new type of Development Corporation in the region. [ We would have the distinction of being only the Second Public Bank in existence in America after the Bank of North Dakota founded in 1919. ]
Creating A Development Corporation for Windham and The Mountain Top Region:
Further more what is required to ensure success of these plans is a development corporation that is focused solely on Windham and Mountain Top. Greene county has several development corporations already many might be saying to themselves. The problem is they are of the conventional type of institution that seeks out to give tax breaks and so on to attract large corporations that ultimately extract more wealth than they provide to the community. My case in point would be the current Greene County NY Industrial Agency that is promoting the development of a 92 room Hampton Inn in the town of Catskill, NY. The Incentive Package includes the following perks: Mortgage Recording Tax Exemption of up to $167, 418 and a Sales Tax expedition of up $1,144,000. Then a PILOT or (Payment in Lieu of Taxes) that is setup for a 20 year period that seems to keep tax rate reduced to about $1, 523, 021 per year I think ? However, it’s not exactly clear since the line item of PILOT has 20 in parenthesis and normally these types of agreements are graduated with the first years the lowest paid to the government and then it increases over time. So I’m not sure if that is life time projection of the incentive program or yearly.
The problem is the Hotel Industry while making great strides in pay scales is still on the lower scale for the most numerous jobs i.e. House Keeping and the like. Not to mention that once again the majority of the profits in this operation will be extracted out of the community and sent to the corporate portfolio of Hampton Inns a wholly owned Subsidiary of Hilton Corporation. And this is our big solution to entice large corporations into our region that leave only the most modest of profits normally in the form salaries in our region.
Instead, I envision a very different type of strategy with local Mountain Top Development Corporation— instead of looking for tax breaks to entice large outside corporations to invest in our community we look internally. Through a combination of State and Federal Grants which there are numerous ones to be had we can use the Development Corporation as a Clearing House for these types of programs to be administered through. Also since these moneys will not have to be paid back to the community in the form of Taxes— we won’t need to focus on tax reductions instead we can keep the tax base growing at the normal rate while also stimulating the growth of the economy.
These will be coupled with a Public Bank’s mission of investing within the community primarily allowing our own assets to be leverage to grow our economy. Every bank has a very special power within our economy and that is the power to increase the M 1 & M 2 Money Supplies through a complex set of calculation we call the Reserve Ratio that calculate the ability for the bank to loan out beyond the reserves in its vault and assets. So this example will be very simple let’s say you have $10 million in deposits in the bank and let’s say that Federal Reserve requires you to keep 10% of that $10 million in the Bank to cover most of your daily operations— the $9 million that your depositors have in excess of the $1 million reserve are used for Loans are now expanding the M 1 & M 2 Money Supplies. That is because each loan that is made becomes someone’s savings, or investment in short term securities etc and so on. My point is that the economic growth of the money supply just increased by $ 9 million dollars. Where should that money go?
Well, in most commercial banks i.e. banks with assets above $10 billion dollars that money is put into investments that are designed to maximize the growth of the bank. These types of investments usually become loans to large multinational corporations, larger regional corporations, and small businesses with very stable futures. What they don’t tend to do is invest in communities that need growth. This is especially true when you consider that 36% of all SBA loans come through community banks and 70% of all agricultural loans as well—meaning that while community banks only occupy 15% of the Banking Industry overall they are disproportionately investing their money in the communities they exist in.
We could take this idea of the Community Bank and expand it into an even more effective concept the Public Bank. The Bank would be owned by the people of the Town and even the region. There are some legal issues to this plan owing to the fact that New York State Senate Bill 1754 has not been passed. However, I’m not sure if this is total problem. I cannot see any provision that says a Municipality cannot create a Bank for its self and I think we have to be willing to take on this fight. It is important to our community that we be in control of the funds that will grow it.
The Function of the Bank:
A Public Bank in Windham (and eventually including the surrounding Mountain Top Area) could be the catalyst for a massive self-financed reinvestment program that benefits everyone in the Area. Instead of extractive processes the pull the greatest part of our incoming profits from the region and divert to them other regions of the country—Windham and ultimately the Mountain Top Region could be the final destination of these Profits!
Think of it this way in 2023 the top 10 most profitable institutions in the United States were the following: first JP Morgan Chase & Co with $245 million in profits , fifth Goldman Sachs with $105.5 million and finally 10th place PNC Financial Group with $45. 4 million. Those are the Profits after taxes. In 2023 the magazine called the Banker reported that JP Morgan Chase & Co posted a record profit of $61.6 billion dollars in pre-tax profit. These facts should worry you greatly when you consider the fact that our local funds are nestled into Banks like these that see our small time investments from the town’s coffers as only a small part of their overall global investment strategies.
Instead we should create this Public Institution that has one mission: The Growth and Stability of the Town of Windham and the Mountain Top Region. Through a strategy of investing local deposits directly into the community at large the possibility of financing growth is nearly limitless in nature because we maintain the majority of the funds within our town and region. Secondly, since our Public Bank is not looking for a maximized profit margin like the big commercial banks or even the smaller community banks like (NBT, Greene County, or Coxsackie National Bank) we can lower the interest rates on loans, bonds for financing municipal projects, and increase the rates on investment bonds all while providing careers in our towns as well. We can achieve these goals because we’re not providing our CEO or our board of directors a massive salary or making our stockholders wealthy based on dividends. Instead we are providing a financial institution in the community that develops the backbone of our future and sustainable growth through the development of community growth. Growth that is driven by our own deposits and our own investments in our communities with no outside strings attached.
Cooperation and Democracy:
But, the Town Cannot Own the Cooperatives. Part of the reason why the Baldwin Mart failed is due to the fact that it lacked a stable community support system. We want the community to be totally invested in the project. Co-Ops offer the town’s people this ability to become not only the consumer but the part owner of the Company as well. What is also critically different between the plan that Baldwin had and the one I’m proposing is that we’re not just building one Co-Op ,but, several that are linked together in the town, thus harnessing local resources and local talent to a productive outlet. Secondly, the entire process builds critical local infrastructure for long term sustainable growth that mirrors our towns population’s needs.
We are creating what is called an economy of scope— meaning that by producing specific goods locally that complement each other we can reduce the costs of all the goods in the process. So, for example we turn glass waste from our community into a raw-material for our glass production co-op to manufacture our containers for our Sunflower Oil Operation. The Sunflower Oil Operation waste byproduct is turned into Sunflower Flour for baking additives in the Cooperative General Store’s Bakery (and other bakeries in the area) and Biomass material from the Sunflower Meal for our organic Sunflower Farming as compost (for the Sunflower production and other agricultural businesses) and Glass Production as potential fuel source for generators that power electric furnaces. The waste heat from the furnaces for glass manufacturing can be turned into steam and stored in steam accumulators. This heat can captured by a series of heat exchangers and used for electrical generation in sterling engines or for heating the maintain street of Windham with low-cost steam.
We thus turn our natural town wastes into a comprehensive recycling and reuse program that generates new products and revenue streams for the town and the population. Saving ourselves money in the process while creating long term careers in the process.
And by focusing our production in the region we develop the entire region’s tax base which then boosts our tourist trade. And that means bring more dollars home and keep them home the majority of the money we produce instead of the majority being extracted by other Regions in NYS or even the Global Economy. We keep our dollars close to our region where they can become the economic power base in our town.
We can make these projects I’m talking about work for our town and our region. It starts first in our town and then we cooperate with other local towns and soon the entire Greene County is one big productive self-sustaining region. And when that happens that’s when we see real progress in our area. But, it all starts with turning our town into a productive center that then reaches its economic arms out into other communities bring them up and strengthening our own community in the process. This 21st century type of thinking we need to embrace in our lovely little town. Currently the town board has no plans for the future of Windham other than to essentially maintain the tried and true path of the last the 100 years! That amounts to sell off the land, complain about the transplants, and then do something to reassure ourselves that we the locals still run the town; and that often means we do something rash because it is an emotional response to general feelings of malaise in our community due to a seeming lack of real options. However, just maybe we can all see that the 21st century is giving us a great opportunity to change that patterns that have lead to monopolization of power in the town board and the economy as well, and thus we can really make Windham the Gem of The Catskills in every respect including increasing our Democratic Government!