Growing pains: $85k grant in jeopardy

6/9/04

Sequim Gazette

Sequim, WA - The fledgling Sequim Growers Cooperative will have to work through growing pains before it receives an $85,000 grant awarded last fall.

After a leadership shake-up in mid-April - when four members of the six-person elected board stepped down - remaining co-op members are working to complete unfinished grant prerequisites so they can get the money.
Despite the shake-up, the United States Department of Agriculture - which administers the grant - is not giving up on the co-op and is working with the group's current leaders to meet the grant requirements.

John Bruegger, state administrator of the USDA grant program, said he met with co-op founding president Tom Mix and the new board to strengthen the organization and help it meet grant requirements that had not yet been met.
A lavender industry feasibility study done as a part of the Clallam County Economic Development Council's Agriculture Industry Cluster's work in 2002 lauded by Mix as the "professional business plan" was insufficient to meet the government's grant requirements to distribute the money.
Bruegger explained that the co-op needs to submit a more in-depth business plan - he characterized the plan submitted with the application as a "preliminary plan" - that includes the organizational structure and marketing plan before the $85,084 grant could actually be turned over. Until that happens, the money can't be given to the co-op, he said.
In the meantime, the department will continue to provide assistance to make sure the co-op continues, Bruegger said.
"We intend to continue to support this activity," he said. "We're not gonna pull the rug out from under them unless it becomes obvious that this isn't a viable organization."
So far, that's not the case, he said. It's just a new kid on the block and needs some nurturing to develop, he said.
To that end, the USDA will provide director training, marketing assistance, and "anything that would help them make the operation more viable," Bruegger said.
The co-op formed in February 2003 to enable small growers to band together, pool their lavender and other resources to produce a product line they could market, sell cooperatively, and share the profits. The concept was touted by state Sen. Maria Cantwell, D-Hoquiam, county commissioner Mike Dougherty, D-Port Angeles, and Art Greenburg of the Resource Conservation and Development Council. Members and supporters of the organization committed an additional $130,000 of "in-kind donations," mostly in time (sometimes called "sweat equity") to get the business running at the level required for it to turn a profit after the first year.
However, the co-op began to dissolve even before this spring.
Several early members drifted away from the group during the past year and a half dozen or so original board members stepped down in December for a variety of reasons.
Some resigned for mundane reasons like founding member Magdelena Bassett who said she merely needed more time for other activities and was still a co-op member, though not as actively as in the past.
"It's a great idea," Bassett said.
Paired with the April board resignations, a majority of the co-op lavender farmers left the organization when board members quit. Nine farms with about 80 percent of the co-op's lavender plants left, said former treasurer Robert Jewell. Jewell, who isn't a grower, resigned his post soon after the four board members quit. Others who left cited numbers in the same ballpark as Jewell, though Patricia Star - one of the founding members of the growers co-op who remained on the elected board along with co-founder Nancy Radich when the other four members resigned - said she disagreed with the numbers.
"I'm not comfortable with any of those numbers," she said, explaining that some co-op members haven't announced whether they are in or out and those remaining have planted new lavender that could alter the numbers. She said she thought seven farms, not four as Jewell claimed, remain in the co-op.
"It's still viable," she said. "It's just going a little slower."

A conflict brews
The dispute that led to the board resignations and withdrawal of a majority of the co-op's lavender growers boils down to issues of personality and power.
In short, they didn't like the way Mix had run things and continued to influence co-op business after the new board took office.
Jewell said when the new board took office in March they found the co-op's finances in shambles, obligated to some $40,000 debt with no way of paying for it without the grant.
Most of the debt was in the form of a $30,000 contract developed by the former board to market co-op product, Jewell said. Mix and the contractor signed the agreement immediately prior to interviews with three other potential marketing contractors, Jewell said. Co-op members and the new board didn't learn of the contract until March, and didn't learn when it had been signed until a few weeks later, he said.
Mix continued to act on the co-op's behalf without board authorization and members feared he would obligate the co-op to even more debt, Jewell said.
With the grant money in doubt and no money available to do the business plans and analysis needed to receive it, extra debt was something the co-op could ill afford, Jewell said.
"Any way you slice it, in my opinion, (the co-op) was mismanaged," Jewell said. Jewell, who said he has accounting degrees and was a government fraud investigator for 25 years, said his professional opinion is there was no fraud involved but that people had been misled.
Mix did not respond to telephone messages left the mornings of June 7 and 8 seeking his comments.
Star said that many of the co-op members who left the organization this spring hadn't been involved in the grant application process and lacked the background information to make an informed judgment.
"I knew most of the accusations were of their own imagination," Star said. "Just because a few people disagree with what's going on doesn't mean it's a bad thing."
Star said she chose to remain because the co-op was her "baby" and she didn't want to let it go.
Jim Brown - a current board member who was on the founding co-op board - echoed Star's sentiments.
"There was no reason to let it slide," he said.
Brown said many in the organization didn't want to let it go when the elected board resigned.
"We put too much sweat equity into it," he said, noting like any new organization or company there were bound to be growing pains that would have to be worked through.
Robert Couch, one of the four elected co-op leaders who resigned, said he had no comment on the events that led to his resignation. He later added: "It's a sad situation. Maybe someday you'll know the full story."
Couch, who is looking forward to his first lavender season, confirmed that he and several of the other lavender growers who left the co-op are working together and with other area lavender producers to market their product.
He has at least one thing in common with the remaining co-op growers: Lavender season is fast approaching and growers of the fragrant herb, co-op and otherwise, are working hard to prepare.
--by Leif Nesheim
Gazette staff writer
Published 6.09.04

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