Solutions and Snacks at the Sitka Food Cooperative
Few topics cause as much shock and grief as the one of food prices in the rural Arctic: The famous $10 milk gallon, the $6 pack of flour and the $7 loaf of bread are only a few examples that contribute to the appalling $337 average weekly food costs for a family of four in Bethel.
The problem seems unbeatable: consumers are too few and supply is too difficult, elevating prices through the roof while pushing profit margins to the ground. The traditional response to this kind of conundrum has been state subsidies for transportation and purchasing, which often are unsustainable and problematic. Despite various public efforts, frustration continues to bubble up among rural residents, manifesting in movements like the January 31st 2015 boycott on AC stores, the Nunavut-based Feeding my Family website, numerous press features and public protests.
Sitka was one of the communities burdened by steep food prices where, on average, they were 37% higher than Anchorage’s. With food prices rising every year (and wages staying stagnant) a few of its residents decided to tackle this problem in their own fashion through one of the most interesting start-ups in the state: the Sitka Food Co-op (SFC).
In May 2010, a group of friends and neighbors organized to order food in bulk. They would purchase products at wholesale prices, share shipping expenses, and “split” case lots and bulk purchases (50 lb bags of beans, etc.) amongst themselves so as to get bulk-rate wholesale prices for smaller individual orders and amounts. A year later, the list of people who were interested in saving money while purchasing wholesome and natural foods grew rapidly, going from 20 to almost 200. The membership boom demanded a more formal and sophisticated organizational structure for the informal buying club. Public meetings were held and the group decided to incorporate as a cooperative under the State of Alaska in September 2011.
Wait a minute, how did they manage to offer lower prices? Aren’t cooperatives hippy stores that only sell expensive organic food? Well, no, they are not. What distinguishes a co-op from other types of businesses is its ownership structure, not the types of products they carry or what customers they cater to. Cooperatives are owned by their members and are controlled democratically. In the case of the Sitka Food Co-op, each person or household who wishes to become a member and place orders with them pays a $25.00 membership fee. This entitles them to voting rights and input within the business, discounts on their purchases, yearly profit dividends when available, and the ability to run for a board seat. Each member/owner also has full access rights to the company’s finances, where they can see just how and why food prices can stay representative to their true cost.
Prices also stay low due to the member’s strong involvement and volunteerism; according to the co-op’s 2014 annual report, members gave over 500 volunteer hours to help with order deliveries. In exchange, those members received a 10% discount on their orders for that month. Those 500+ hours translated into over $4,300 in savings for those members. Additionally, “behind the scenes,” their Board of Directors donated over 1,300 hours taking care of the administrative and operational details of the growing business.
As a result, co-op members now have access to organic apples for $1.34/lb rather than $2.99/lb for non-organics at the local grocery, organic brown rice for $2.77/lb versus $4.17/lb for non-organic, and organic lentils for $1.86/lb versus $2.45 for non-organic. Overall, prices generally average 20-30% less than what the local stores sell similar items. As of today, SFC’s membership has grown to 200 households and its sales have reached over $160,000 for the 2014 calendar year.
The Sitka food co-op is the second one in the state, the first one having opened in Fairbanks in 2013 with marked success, earning them the national Consumer Cooperative Management Association’s “start-up of the year award” last July. Both of these wonderful start-ups are setting the standard for prices and quality in their towns, as well as bringing neighbors closer to their food sources and to each other. We look forward to seeing more communities find autonomy, health, and sustainability through their example.
Special thanks to Keith Nyitray from SFC for his assistance in the writing this article.