Case Story: The Ethical Co-op
From www.entrepreneurstoolkit.org
Summarised and updated from: Freeth, R. 2007. Cape Town Organic Produce Cooperative [1]
The Ethical Co-op was initiated in March 2005 by a group of Capetonians passionate about eating and distributing organic food in Cape Town and frustrated by the lack and high costs of organics. As an organisation, it is still feeling its way towards a formal vision, but, informally, it is to promote an organic lifestyle by providing access to organic goods and education and stimulate greater “self-sustainability”. Since March 2005, when co-founder Beau Hogan made the first delivery to four customers, the number of registered customers has grown to over 1000. Weekly orders peaked at 140 in January 2006. Delivery areas have been broken down into smaller units as each one has achieved a sustainable size. Customers order on-line, from a choice of vegetables, fruit, cereals, pastas, bakery items, dairy products, toiletries, household and hardware goods and can subscribe to local publications and food gardening courses. Information about the organic status and source of the products is available at the click of a mouse. The Co-op team comprises the two co-founders, an IT specialist, two financial managers, and a growing group of local distributors. The intention from the start has been to have a non-hierarchical structure, and to operate according to shared principles of integrity, transparency and free access to information. They meet on a weekly basis after completion of the delivery cycle to discuss their service, systems and relationships. In a time of significant growth, the Co-op has been constantly confronted with different problems to understand and address. The profit – sharing formula has recently changed from one in which the distributors received 75% of the profit on each product, IT 5% and the Co-op 20%. On the basis of a vote, distributors agreed to take a drop, to 50% of the profit, while the IT and accountants' share each increased to 7%. The remaining 36% will go to the Co-op towards rental, buying more stock and expanding its infrastructure. A wide range of producers, almost all of whom are small and local, supply the Co-op with goods. In many cases, the Co-op is their biggest outlet. The Co-op has opened up a market that didn't exist before, providing the potential to turn their smallholdings into viable concerns. The producers set their own prices and can access the website to control how their goods are displayed, check orders and do stock control. Orders close each Monday afternoon, suppliers prepare their stock on Tuesday and deliveries are made to customers' homes on Wednesday. (...) Given the bureaucratic constraints to gaining certification for organic food production, some of the small local producers are not yet certified. This is made clear on the website, but with the Co-op's endorsement that they use organic farming methods. The team knows the suppliers and their commitment to organics. They put their guarantee to it, which supermarkets wouldn't. The Co-op team is transparent with its customers about what has certification and what doesn't so that customers have the choice. Organic standards of food production have initially been the major stumbling block to township based community gardeners' participation in the Co-op. However, with the support from Abalimi Bezekhaya, a local NGO, the Co-op enabled several township growers to become part of the suppliers. Initially, this was a challenging task as people had to be trained and also needed to learn to produce according to time frames. Currently, Township producers have become some of the Co-op’s most reliable suppliers of (non-certified) organic produce. The Co-op is further planning to introduce a less complicated, alternative certification scheme for organic smallholders – a concept which is already evolving in Europe and North America as many small producers cannot afford the costs of organic certification and therefore remain excluded from the market.
See also: Civil society active in human rights and environment: South Africa
