Wednesday, June 20, 2012

Steve Vallus' comments on Ozark Natural Foods brouha

[hat tip to Craig Cannon for the Subject line]
No response from local papers on this, yet:

Date: Thursday, June 14, 2012, 11:34 AM

To the Editor:

While I have no interest in engaging in a debate per se, I do think the community deserves a fuller image of recent events at Ozark Natural Foods.
*Low prices for members* is at the top of ONF's Mission Statement (By-Laws) and this economic concept determines the cooperative structure and its reason for being.
At this point, the financial statements and management strategy all shout *profit maximization* rather than reasonable prices. While this banner may have a great deal of currency in the public mind, it ultimately undermines the unique advantage ONF has over its competitors—the membership. Obviously some profit is a sign of fiscal health and is needed for store expansion as well as to service debt. ONF’s net income percentage is almost double that of their peers in the grocery industry.  But the excessive profit strategy has no place in a true cooperative and we now see the result.
ONF has lost its way. By accumulating millions of dollars of members' funds first and then deciding, for example, to be *debt-free,* current board and management have created an upside-down situation (some board members saying they "work for the general manager" rather than representing the membership) and the attendant political strife. Board members were specifically told in July, 2011 not to discuss the mortgage payoff proposal and the accompanying $300k pre-payment penalty with the membership. Similarly, the idea of bringing in a debt management expert to lay out the long and short-term financial consequences of this idea was recently deemed not worthy of discussion by the board. 
Ralston and Graham's chief “crime” was to question the “debt-free” strategy. Of course it is politically inefficient to develop priorities in advance and open up to a wider membership the decision to expend $1.5m+ in working capital. It is much easier to have a compliant Board, thereby cutting off member participation in significant decisions. ONF will survive this crisis, but the cooperative economic spirit remains a distant memory.
Stephen Vallus