Expanding your customer base: Marshall County Co-op
In Marshall County when you hear someone talking about the Co-op, it isn’t a commodity receiving station they are referring to; it is the long standing farm supply store.
Over the seventy odd years it has been in operation, the Marshall County Co-op has moved around the area and gone through several marketing changes but its status as a member based cooperative remains.
Building a Cooperative
The Marshall County Co-op, officially the Marshall County Soil Improvement Association, began in 1935 as a part of a program between TVA and the University of Kentucky Extension to test newly developed fertilizer materials produced by TVA. The local organization incorporated in 1940 and began providing agriculture supplies to farmers, along with the TVA fertilizer for testing.
In 1946, the farmer owners and the board of the cooperative decided that there was a need and a desire to expand the farm supply services. That fall the Co-op hired a full time manager and purchased a warehouse to accommodate the initial operations of the supply business.
Enthusiastic cooperation from farmer owners led to the Co-ops growth over the next thirty years, and by 1975 the Co-op had grown to realize an annual volume of business in excess of one million, enjoyed a solid financial rating, had more than 2300 members and operated in one of the finest farmer owned cooperative facilities in the entire area.
The next twenty years saw a dramatic change in the area’s agricultural operations, which had a impact on the Co-op. High interest rates in the 80’s led to the collapse of farms throughout the area, and many of those that remained were large commercial farms. Although the Co-op suffered several years of losses during this period, it was able to maintain its position as a viable agribusiness in the area and continue to grow into the new millennium.
A Cooperative Transition
In 2005, Tim Ferrell, manager of the Co-op, began looking to the future. He was seeing more and more changes in his customer base as the agriculture industry continued to change.
“In the area we had large commercial farmers that were going to larger farm stores or direct to a dealer for their needs,” explained Ferrell. “What we were seeing in our store were more and more mini-farmers, people who own 5, 10, and 20 acre parcels with a few animals and a garden.”
One day while Ferrell was having lunch with Lincoln Martin, the Marshall County Extension agent, Martin suggested that KCARD might be a good resource to help in the planning for the future of the Co-op.
Ferrell contacted KCARD and after an initial meeting with staff it was determined that a business management and operational audit would be the first step in the collaboration.
“KCARD came in and spent three days with our staff and customers, reviewing information, doing competitive shopping in the area, it was just much more than I expected,” said Ferrell “Then they presented the results to our board on that Thursday, it was a great experience.”
Beyond the efficient and thorough evaluation process, Ferrell was impressed by the information KCARD presented in the report. Ferrell, a former stock broker, felt the financial analysis was a key component in explaining business recommendations to the board.
“A cooperative is a business and for a business to survive it has to make money,” explained Larry Snell, Executive Director of KCARD. “In a Business Management Operational Analysis we try to show this to a board by explaining the finances of the cooperative.”
Ferrell said the Co-op has used the analysis results to improve on pricing at the store now that they have a better understanding of the price points for main products. It has also allowed them to branch out beyond the traditional items carried in the store, to meet the needs of the changing clientele.
“The one thing that was extremely helpful for me was that the KCARD study showed that our cooperative had major name recognition in the area,” said Ferrell. “We had been considering a name change, and these results kept us from committing marketing suicide.”
A Community Cooperative
Ferrell has continued to work with the KCARD team over the last several years as he and the staff at the Co-op have transitioned from the traditional commodity cooperative to include a lifestyle market to reach out to urban customer base.
In 2009, the retail market was expanded and renovated allowing the Co-op to meet the growing demands from their new urban customer base.
“I think our farmer base is only 20% of our customer base today, this is a big change in our customer base” said Betty Travghber, the Co-op bookkeeper. “Our gift department and our pet department are probably two of our biggest growing departments we have today at the Co-op.”
While the Co-op has diversified their products and expanded the retail market, they have continued to focus on providing services to those individuals that were the foundation of the business, the area producers.
The Co-op is still the source of information for the agriculture community. The hay bulletin posted at the store continues to be the best place in the area to find hay for sale. Special educational seminars and demonstrations are held throughout the year to provide a service to the community. Then there is the daily agriculture radio show Ferrell does on a local radio station that is a mix of agriculture news and entertainment.
“Meeting the needs of the Co-op’s members is the main focus of the Co-op,” explained Ferrell. “It has also been instrumental in the survival and is critical to the growth of the Co-op.”
Enthusiastic cooperation from farmer owners led to the Co-ops growth over the next thirty years, and by 1975 the Co-op had grown to realize an annual volume of business in excess of one million, enjoyed a solid financial rating, had more than 2300 members and operated in one of the finest farmer owned cooperative facilities in the entire area.
The next twenty years saw a dramatic change in the area’s agricultural operations, which had a impact on the Co-op. High interest rates in the 80’s led to the collapse of farms throughout the area, and many of those that remained were large commercial farms. Although the Co-op suffered several years of losses during this period, it was able to maintain its position as a viable agribusiness in the area and continue to grow into the new millennium.
A Cooperative Transition
In 2005, Tim Ferrell, manager of the Co-op, began looking to the future. He was seeing more and more changes in his customer base as the agriculture industry continued to change.
“In the area we had large commercial farmers that were going to larger farm stores or direct to a dealer for their needs,” explained Ferrell. “What we were seeing in our store were more and more mini-farmers, people who own 5, 10, and 20 acre parcels with a few animals and a garden.”
One day while Ferrell was having lunch with Lincoln Martin, the Marshall County Extension agent, Martin suggested that KCARD might be a good resource to help in the planning for the future of the Co-op.
Ferrell contacted KCARD and after an initial meeting with staff it was determined that a business management and operational audit would be the first step in the collaboration.
“KCARD came in and spent three days with our staff and customers, reviewing information, doing competitive shopping in the area, it was just much more than I expected,” said Ferrell “Then they presented the results to our board on that Thursday, it was a great experience.”
Beyond the efficient and thorough evaluation process, Ferrell was impressed by the information KCARD presented in the report. Ferrell, a former stock broker, felt the financial analysis was a key component in explaining business recommendations to the board.
“A cooperative is a business and for a business to survive it has to make money,” explained Larry Snell, Executive Director of KCARD. “In a Business Management Analysis we try to show this to a board by explaining the finances of the cooperative.”
Ferrell said the Co-op has used the analysis results to improve on pricing at the store now that they have a better understanding of the price points for main products. It has also allowed them to look at branching out beyond the traditional items carried in the store, to meet the needs of the changing clientele.
“The one thing that was extremely helpful for me was that the KCARD study showed that our cooperative had major name recognition in the area,” said Ferrell. “We had been considering a name change, and these results kept us from committing marketing suicide.”
A Community Cooperative
As the Co-op transitions to a lifestyle market, a focus will remain on providing services to the area producers.
Each Saturday in the summer, the Co-op opens it parking lot for members to hold a farmers’ market. The only cost to sell at the market is the $5 membership fee to the Co-op.
The Co-op continues to be the source of information for the agriculture community. The hay bulletin posted at the store continues to be the best place in the area to find hay for sale. Then there is the daily agriculture radio show Ferrell does on a local radio station that is a mix of agriculture news and entertainment.
“Meeting the needs of the coops members is the main focus of the Co-op,” explained Ferrell. “It has also been instrumental in the survival and is critical to the growth of the Co-op.”
Article first published in 2007, updated January 2011.