Weaver Street Market Looks at Changes

Chapel Hill Herald, Saturday June 18, 2005

According to the International Cooperative Alliance, "a co-operative is an autonomous association of persons united voluntarily to meet their common economic, social and cultural needs and aspirations through a jointly owned and democratically controlled enterprise."

This is a definition that provides great flexibility of interpretation. Co-ops can be as small as a group of neighbors meeting their child-care needs or as large as the 1,000 orange growers who work together to market their products under the Florida Natural brand.

Unfortunately, the term cooperative has often been stretched so far that it is hard to distinguish a cooperator from an investor. Owners of Weaver Street Market who are currently considering proposed changes to the market's investment system would do well to contemplate this distinction.

Back in the 1970s, there was a phenomenon known as food co-ops. Typically they began with a handful of hippies, students and the health-conscious who could not find natural or organic food at conventional grocery stores. Perhaps after a start in someone's garage, they would look for a cheap storefront which would be filled with bins of bulk foods and shelves of products otherwise unavailable. To be a member above all meant to share the workload.

For many, these efforts reflected a desire to seek out new ways to connect economy to community, to replace the demands of the bottom line with those of personal and collective well-being, and to transform a competitive economy into more cooperative forms.

But, as these cooperators aged, they found less time for such idealistic endeavors. Co-ops increased their emphasis on investment and paid staff. Today, only a few food co-ops still have a work requirement for members.

In 1988, Weaver Street Market was founded with the idea that volunteerism would be a strictly optional and generally marginal activity for members. The store would be run by paid managers and staff.

Direct democratic control was further diluted by an ownership structure that melded one-third consumer ownership with one-third worker ownership and one-third appointed board membership. The general manager served on the board to hold it all together.

WSM was fortunate that, despite the lack of a cohesive ownership body, the founding and still general manager, Ruffin Slater, brought a strong commitment to the cooperative spirit and community values that have characterized the organization.

One of the principles of the cooperative movement is to work to support other cooperatives. WSM has done better than most in this regard, helping the Weaver Cooperative Housing Association get going and with the cooperative reorganization of Internationalist Books.

Now, despite the fact that the market is in a "stable financial situation," some major changes are under consideration. Two them bear directly on the nature of ownership in WSM. First is the raising of the membership fee by as much as 150 percent. The second is replacing the membership discount with a patronage dividend to be paid at year's end subject to the determination of the board of directors.

Both of these changes are geared toward a view of owners as investors rather than as cooperators. The patronage dividend removes the most tangible benefit of ownership -- the discount at the register -- and replaces it with an uncertain dividend that will be paid only after the board of directors evaluates the year-end balance sheet.

Owners have been told that their increased investment will be used "exclusively for the existing [businesses]" and that new co-op stores will use conventional loans as "bridge money" while their member equity grows.

Unstated is the fact that the availability and terms of these loans are dependent on the overall financial condition of the organization, conditions that improve with additional member equity as well as with the improved profitability and cash flow that elimination of the discount will likely provide.

These changes also will affect WSM's ability to serve lower-income owners. Many who now buy a $75 share on the installment plan would balk at shelling out $200. The 5 percent register discount makes a real difference for some who are challenged by the higher cost of organic food.

Some of the proposals do have merit. The proposed Community Investment Notes will put additional member capital to work by allowing owners so-inclined to underwrite new organizational undertakings.

Other proposals provide needed clarification to the ownership structure.

The unmistakable benefit of these proposals is that they give WSM members the opportunity to reflect on the organization, its place in their lives and their own economic roles whether as investors, cooperators or consumers.

Weaver Street Market calls itself "your community-owned grocery," walking the line between a true cooperative and a more typical investor-owned business. Now, it is up to the owners to decide just what that entails.

Learn more and give your input at WSM's owner forums next Monday at 7pm at Panzanella.