Some fear the Co-op has been co-opted

SNFC tries to get competitive, but some longtime members say it has lost sight of its mission

SNFC is going through some growing pains.

SNFC is going through some growing pains.

Photo by Larry Dalton

When does a co-op quit being a co-op?

That depends on whom you talk to. Longtime Sacramento Natural Foods Co-op member John Rowntree thinks that a co-op shouldn’t be oriented toward growth or success, at least as it’s defined in the business world.

“There are two things that can happen to a co-op,” said Rowntree. “It can dissolve when it is no longer useful to its members or it can become a business success. The ones that become a business success really cease to become co-ops.”

Rowntree is a robust-looking gentleman, no doubt from being a member of the SNFC for over a decade. The retired international economist with a Ph.D. from UC Berkeley feels that SNFC is straying off course by going upscale, looking into opening more stores in Sacramento and cutting out the 5 percent discount that member/owners get at the register.

“The thing about a 5 percent discount is basically [it] pulls the surplus out of the Co-op,” he said. “It doesn’t leave that surplus in the hands of management.”

Yet management contends it is just trying to keep the popular store and gathering place healthy.

“John refused to believe the numbers,” said SNFC General Manager Paul Cultrera. “I don’t care how many degrees that you have. Why should we give away the profit before we made sure that there was one?”

Cultrera, a New England native, has been involved in natural food co-ops for over two decades. He came to SNFC a few years ago as the project manager for the remodeling project. He has been a consultant to co-ops nationwide for 20 years, is president of the Pacific Co-op Grocery’s Association and is on the board of directors of the National Cooperative Association.

“Co-op” is an abbreviation for a cooperative business supported by members, who are then entitled to discounts, control of leadership and share in revenues. The Sacramento Natural Foods Co-op (SNFC) began as a food-buying club in 1972 and because of expanding membership and interest, it incorporated as a consumer-owned cooperative in 1973.

According to the National Cooperative Association, SNFC is one of the most successful natural food cooperatives in the nation and has more than 140 union employees (Teamster Local 228). Its employee turnover rate of 48 percent is lower than the national average for natural food co-ops. At the last union negotiations, SNFC offered the union a 17 percent average wage increase when the union was only asking for 5 percent.

Rowntree is inquisitive, sharp and guarded in his answers. He feels that the management is too concerned with studies, shelf space paying for itself and profit margins and not concerned about the member/owners’ concerns. Rowntree feels that management uses the Co-op as a stepping-stone for career advancement and that the board of directors is in cahoots with the management.

“It gives them a lot of status to be a big store,” said Rowntree.

Some current and former members of the SNFC board of directors feel the same way. “There was a lot of effort to make the board speak with a united voice,” said former board member Julie Kelts. “I disagree with that as a philosophy. We don’t tell our Congress to speak with a united voice, we don’t tell our city council to speak with a united voice. … People have to have their own principles and not just shut up and adhere to the party line.”

Kelts, a Co-op member for about 10 years and a board member for two different partial terms, feels that there is no room for dissent in the inner circle of the SNFC. She participated in the planning process that resulted in the recent changes. Every board member was asked how they planned to vote before it was presented for approval, something Kelts felt pressured members to vote with the decision of the majority.

“I said that I expect to abstain and I was subjected to what I consider an extreme amount of pressure by most of the group to vote yes, and I feel that my voice at the Co-op was being silenced,” she said.

Located at 1900 Alhambra Blvd., the SNFC store has a warm brick exterior that blends nicely into the neighborhood. The inside is as natural and organic as the produce in the bins. The staff is friendly, knowledgeable and helpful. You can buy anything from an organic papaya to a can of Foster’s beer to a barrel of muesli.

SNFC moved to its current location in 1989 and it has already outgrown the site. Administration offices and storage are scattered among apartments, homes and other buildings around the block that the Co-op rents or owns. The building is less than halfway through a 30-year lease and it’s bursting at the seams. SNFC is currently scouting locations for future stores, further fanning the flames of certain members.

“If they get rid of the discount, it makes Paul’s life easier,” said Murial Strand, a current SNFC board director. “It put us on a stronger financial footing and put us in a better position to expand.”

Strand, an engineer by profession, has over the last 20 years belonged to several food co-ops in the Bay Area and has seen first-hand what happens to co-ops that expand unwisely. She has been a board member of the SNFC since 2000 and is not running for re-election. “I’m not pissed off, I’m disappointed,” said Strand. “I feel pretty burnt out and bashed up and I also feel like if I’m going to stick around, what good am I going to do?”

Cultrera doesn’t feel his black eye is deserved. “If a group came to me and said, ‘We really want to form another co-op and we want this co-op to help us out,’ why wouldn’t I?” said Cultrera. “The idea that we are corporate is just bullshit. I just have to be blunt about it: it’s a joke! If somebody wants to form a co-op, I’ll help them.”

Most of the fuss is over the D2K Plan, which was created by board, staff and owners during the Directions 2000 Strategic Planning Process to prepare SNFC for the future. With supermarket chains like Trader Joe’s and Whole Foods opening like-minded but non-cooperative supermarkets into their market, the co-op supermarket has to play by new rules, and that includes more locations.

SNFC no longer has a monopoly on organic and specialty foods. Members could just as easy shop elsewhere, but there is a difference with the Co-op. Members pay a $200 membership fee. With membership, owner/members receive a twice-a-year 10 percent personal discount day, sales on products for members only and the knowledge that you are supporting an environmental and employee-friendly shopping experience.

The SNFC vision in a nutshell is to provide natural foods and products, economic cooperation and sustainable practices to as many people as possible in their communities. SNFC’s current Vision, Purpose, Values and Goals were approved and adopted by the SNFC board of directors at the board meeting on March 20, 2001, and that included the elimination of the 5 percent time-of-purchase member discount.

“We have 7,500 owners and some of them like what we are doing and some of them don’t like what we are doing,” said Cultrera. “We need to be profitable to stay in business. We’re not here to make a profit, but we need to be profitable to stay here.”

Cultrera has personally seen what has happened to co-ops that aren’t competitive or make plans for the future. He cringes when he is accused of steering SNFC toward a corporate model.

“I believe in cooperative economics or else I wouldn’t be working here,” said Cultrera. “I could work at Whole Foods if I wanted to be corporate. I’d make more money and have fewer headaches, but I believe that people should own the economy and this is the way to do it.”

Cultrera feels that he is doing what needs to be done in the highly competitive world of natural foods. “We are changing the way we distribute our profits,” said Cultrera. “Every year when there’s a profit you’ll get a refund [at the end of the year according to how much you spend at the store] and each month there will be a category of products that you’ll get a 5 percent discount on.”

Over 2,000 member/owners were involved in the D2K Planning Commission, from answering surveys and working in planning committees, to the board of directors. Said Cultrera: “We need the bottom line or else we can’t replace equipment, we can’t face unexpected increases in such things as workman’s comp, which went up $100,000 this year. There will be people who do not like what’s going on and will use every argument and say the board is not listening to them, the management is not listening to them.”

So just when does Cultrera believe a co-op quits being a co-op?

“I think it would stop being a co-op if we said, ‘You know what, we got this discount system here and it works for the members now. We can play the shell game and raise the prices on the shelf in order to be able to support this discount. We had to cast a wide net and try to listen quietly and not focus on the people that are screaming, ‘Don’t do that, you are doing the wrong thing.’ ”

Heavy is the head that wears the crown.