(October 26, 2015)
The Philadelphia Area Cooperative Alliance (PACA), the latest cross-sector cooperative alliance to organize as a Cooperative Business Association (CBA), along with area food co-ops, has been awarded a $25,000 grant from the U.S. Department of Agriculture to study the feasibility of forming a purchasing co-op to better serve local food co-ops and producers. PACA Executive Director Peter Frank made the announcement in a recent blog post.
Members of the purchasing co-op would be comprised of Philadelphia-area food co-ops. The purchasing co-op would facilitate buying, warehousing and distribution of local food, and would make it easier for the region’s food co-ops to buy more local food.
The need for a purchasing co-op has arisen from both producers and food co-ops. Many producers within 150 miles of Philadelphia are unable to sell their products at food co-ops in the Philadelphia area because of delivery limitations, limits on storage at each store and lengthy vendor approval processes.
A purchasing co-op would be an excellent tool to boost local food production and distribution. Through a purchasing co-op, local food producers could sell more of their products in a large urban market and the food co-ops could receive better prices on those products by buying in bulk.
This grant funds a feasibility study for such a purchasing co-op. The Keystone Development Center, a cooperative business development center in Ephrata, PA, will assist PACA by conducting the feasibility study and assist with some of the business planning. The local food co-ops will be the main drivers of this project, as they will share ownership of the business entity. Results of the project will be shared, demonstrating the potential for cooperative purchasing between independent food co-ops.
Currently, the combined sales of Weavers Way Co-op, Mariposa Food Co-op, Creekside Co-op, and Swarthmore Co-op total $37 million annually. Each co-op estimates that between 25 and 30 percent of their total sales are from local products. PACA has estimated that a centralized purchasing, warehousing and delivery operation would allow food co-ops to increase their local sales by at least 10 percent.
After its initial years of operation, the purchasing co-op could expand to serve two other food co-ops that are further away, along with five start-up food co-ops. In total, the purchasing co-op could serve eleven independent food co-op grocery stores in the Philadelphia area, with potential annual purchasing co-op sales as high as $65 million.
PACA is delighted that the USDA has supported the further development of the purchasing co-op, which will be a major financial benefit for local food producers, food co-ops and the communities they serve.