MFC History: Rocky and Risky Beginnings

by Alexandria Lamont – Media Coordinator

Did you know?

  • The first efforts to establish the Medford Food Co-op were unsuccessful.
  • The first location for the Co-op was situated in downtown Medford.
  • Several local businesses acted as mentors and investors in the second round of fundraising.

It’s story time!

Over the next few weeks, we will regale you with the tale of how your now thriving Co-op was once the lovable underdog. We’ll entertain you with our failure, persistence, strokes of luck (and sometimes genius) and eventual success. We hope to highlight the power of the Medford community, and how it took thousands of Southern Oregon visionaries —like you— to make it happen. This is the story of an idea with a life of its own, fueled by the passion of a community that literally willed it into existence.

Rocky and Risky Beginnings

The groundwork of the Medford Food Co-op was first discussed by a small group of friends in Alba Park one afternoon in the summer of 2005. The handful of dreamers pondered why there wasn’t a co-op in a city the size of Medford. They learned that traditionally, co-ops are a grassroots endeavor— often beginning with a small group of locals that understand the importance of a growing desire in the community for a food co-op. This courageous troupe understood just that. 

To help conceptualize the demand for a local co-op, the group held a general interest meeting. They set out on foot dispensing flyers and posters to the local population. Roughly 25 people showed up to form an ad hoc group. The group determined the project would take years of effort, energy, and sweat equity. Over time, the initial 25 dwindled down to a core group of seven dreamers. The Co-op was officially incorporated on May 25, 2006.

The initial group was motivated and energetic. The group’s guerrilla marketing efforts included canvassing neighborhoods; giving away t-shirts, magnets, and promotional items; participating in the Pear Blossom Festival; selling shares; and organizing events. Their initial fundraising efforts led to the community pooling resources to fund the dream of local, organic, and natural products available for the people of Medford.  Medford’s first food co-op reached its sales goal of 1,000 owner shares, with shares selling for $100 each. A large loan from National Cooperative Bank was initially pre-approved for $2 million, upon the contingency of submitting and following through with a business plan. The bank gave the group $25,000 to begin and told them they would receive the remainder at a later date. All indications suggested the full asking amount would be approved. Successive actions ultimately led to the signing of a lease for a building in downtown Medford, and the Co-op began renovations. 

Traditionally, most new co-ops begin small, but this one backed itself into a corner when the group signed a 10-year lease for the old Hubbard’s Hardware building on the corner of Main and Riverside for $10,000 per month, prior to securing the capital to fund the rest of the endeavor. Despite their efforts, the freshly founded Medford Market Cooperative quickly found itself out of money.

By October of 2007, they had raised roughly $200,000 with a relatively low-key fundraising campaign. They initially estimated needing to raise $1.8 million to open the doors, and they were still $1.6 million short of their goal. On October 1, 2007, Board members shared a financial crisis with several hundred members: the large loan they were dependent on from National Cooperative Bank had been denied, because the bank had stiffened its conditions for lending in order to focus less on start-ups and more on expansion programs.  The group was strapped for cash and would default on their lease in ten days. The Board came up with a last-ditch fundraising campaign asking for $2,000 per household— which would allow them to raise $2 million dollars within a week’s time. The campaign was unsuccessful.

By November 14, 2007, the organization had racked up thousands of dollars in unpaid rent and received a reprieve when the landlord freed the failing Co-op from its lease. With cash reserves deteriorating at a rapid rate, the looming 2008 market crash, and limited business experience— the organizers had run out of options. Medford’s first food co-op had folded before it ever even opened its doors. After 2 ½ years of effort, a public meeting was held with an attendance of roughly 300 expecting supporters. The originators announced they were considering not only bankruptcy, but proposed dissolution of the newfound corporation to get out from under the lease and the initial $25,000 loan. 

What remained of the initial investment capital that had not been lost was refunded to shareholders who requested it. However, the majority of the money was spent on lease payments, contractor fees, and attorney fees. Many depositors did not obtain any of their money back. Forfeiture of incorporation was thought to be the most rational move by some of the core founders, given the situation. However, all ownership equity would dissolve and it was thought by some Board members the effort to begin from scratch would surely fall flat on the community. Part of the value of a cooperative, of a social economy, is to simply have a shared vision and foundation to build from. The unfortunate news disappointed their fellow supporters yearning for a thriving local, organic food economy. The owners passed the amended resolution for dissolution 77 to 4.

One Mail Tribune article stated: “Five co-op subscribers have been calling and visiting board members at their workplaces over the last week—urging them to be more open with the membership, and calling for the president’s resignation— and some board members are worried.”

Funding ceased. Plans dissolved. Five of the seven Board members stepped down from their positions within 24 hours, and some even left town due to harassment. The two remaining members were critical in making it possible for the co-op to continue and to eventually succeed.

People lost time, money, effort.

There was no hope left for the Medford Market Cooperative— or so it seemed.

Part 2: Tough Transitions and a Glimmer of Hope

"Rocky and Risky Beginnings" is part one of a three-part history of Medford Food Co-op. Part two will be published next week.

Written by MFC Media Coordinator Alexandria Lamont, with input and assistance from John Statler, John Miele, Jim Sims, Ben Truwe, Roger Noyes, Paige West, and Kira Lesley.