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Insurgency at La Montañita

Insurgency at La Montañita

'Take Back the co-op' group alleges corporatization

Group Seeks Special Meeting to Oust Leadership

BY DENNIS DOMRZALSKI

In the winter of 2015, a La Montañita Co-op member got home from shopping at the co-op’s Santa Fe store. She checked her receipt and thought she spotted a huge mistake: A single head of organic cauliflower had cost her $26.

She returned to the store to check if the price was a mistake and was told it wasn’t, as it was organic cauliflower that was out-of-season. She returned the cauliflower.

That incident exemplifies the complaints that co-op members had been leveling against La Montañita for years about produce being too expensive, and led the co-op’s management to decide to stock less expensive non-organic fruits and vegetables.

So earlier this year, it added 15 non-organic fruits and vegetables known as the “Clean 15,” which is conventionally grown produce that has the least amount of pesticide residue, as defined by the Environmental Working Group, a non-partisan nonprofit dedicated to identifying toxins in food, water and the soil.

The co-op’s critics objected, arguing that the difference in pesticide residue between the 15 cleanest and 15 dirtiest vegetables and fruits is insignificant, and demanded that non-organic food be removed from the co-op’s stores. The debate over the “Clean 15” decision sparked a movement among a small group of co-op members who call themselves “Take Back the Co-op.” The group’s goal is to impeach all nine of La Montañita’s board members and to fire its recently hired general manager, Dennis Hanley.

The insurgency has also put forth a rather sweeping conspiracy theory: A cabal of three for-profit and nonprofit entities are working to “corporatize” the 40-year-old co-op, minimize the decision-making authority of its 16,000 member-owners and turn the venerable Albuquerque institution into just another grocery store.

The dump-the-board movement is led by two Santa Fe residents and co-op members, Django Zeaman and Dorothy Finnigan. They’ve said that La Montañita’s new management direction will destroy the co-op and its democracy-based values. To prevent that, they’ve launched a petition drive that they hope will lead to the ouster of the co-op’s board members and Hanley.

Under the co-op’s bylaws, Zeaman and Finnigan need only 1,600 signatures to call a special meeting of La Montañita’s board and attempt to replace it with their own slate of candidates. They’ve already acquired 1,400 signatures.

Co-op officials and the board’s supporters deny the existence of any conspiracy. Its leadership argues that to survive in today’s highly competitive grocery market, in which national retailers like Wal-Mart and Trader Joe’s carry organic produce, La Montañita needs to offer a wider and cheaper variety of goods.

Co-op supporters said that if Zeaman and Finnigan get their way, La Montañita – a nonprofit business that operates six stores and employs around 280 people – could disintegrate.

What would also go, they say, is a warehouse and distribution system for local farmers that La Montañita has built over the past 10 years. The system gives farmers an efficient way to sell their goods throughout the state.

“What is at risk is stability, and people [are] making decisions without understanding the business,” said Martha Whitman, who has been involved in the co-op since 1982. She served as chairman of its board from 2004 to 2014.

“If you think there is a conspiracy, you are going to see it everywhere,” she said. “If they take over, we will go back to people making the decisions without understanding the consequences, and potentially, if we keep losing market share, we could go out of business.”

How it began

The trouble started in March when La Montañita began stocking the “Clean 15” non-organic produce. Some co-op members, including Zeaman and Finnigan, were infuriated and demanded answers from the board, which they said they never got.

“This was a violation of ecologically sound principles and a lack of transparency,” Zeaman said. “The board was not being responsive.”

But Whitman, who has managed stores for the co-op and oversaw its move in 1987 to its Nob Hill location, said not every decision on what to stock can, or should, be put to a vote of 16,000 members.

“We have made a lot of decisions to carry things that have not involved the members,” Whitman said. “Being a co-op means a lot of different things to different people, and it is never about small groups saying ‘This is how we want it.’”

She reiterated: “We have 16,000 members.”

La Montañita Board President Ariana Marchello said the board did offer to meet with Zeaman and other co-op members upset over the “Clean 15” in public meetings, but Zeaman refused because he wanted to meet privately with the board. Instead, the board held a series of meetings in Albuquerque and Santa Fe.

“I hear that a lot, that the board was unresponsive. You have to take that to mean that they did not like what the board’s response was,” Marchello said. “We called our own town hall-style meetings and invited Django [Zeaman] and his group to these meetings., But they wanted to meet only with the board. I said, ‘We don’t meet that way. We have a general manager, a senior management team and the board,’ and they didn’t want it.

“We went through these meetings and got to know a lot of people who had all kinds of views, people who were curious, but it wasn’t the kind of meeting Django wanted,” Marchello said.

She added that some Take Back the Co-op members who did attend those meetings suggested that people who wanted cheaper goods and conventional produce “could go shop somewhere else.”

After that failed attempt at detente, Zeaman and Finnigan expanded their list of complaints to include labor issues as well as the fact that La Montañita’s West Side store, which opened in 2013, hasn’t yet turned a profit. According to Take Back the Co-op’s website, that store has lost $500,000.

The conspiracy

One of the triad of accused co-conspirators is a Vermont-based consulting cooperative that is allegedly training co-op boards across the nation on how to de-democratize co-ops, according to the Take Back the Co-op movement.

Another is a co-op of 151 food cooperatives that allegedly is trying to standardize every single food co-op in the U.S.

The third is a private, for-profit natural foods distribution company that Take Back the Co-op alleges is bent on achieving monopoly status –to serve as the sole organic supplier to the 151 co-ops – which would have the effect of crushing local organic farmers, a mainstay of the co-op movement.

Zeaman said the lead conspirator is the CDS Consulting Co-op. CDS, he said, is persuading local co-ops to change their bylaws to strip members of their decision-making authority and leave power solely with the board. He said the company was active in La Montañita’s hiring of Hanley. He also alleges CDS subverts the traditional democratic process in co-ops by giving boards templates of sample bylaws that, if enacted, make special membership meetings “advisory” only.

But CDS is hardly a corporate giant. It’s a nonprofit co-op that relies on the advice of 40 consultants to help guide local co-ops on best practices. The Putney, Vt.-based nonprofit, founded in the 1980s, has just two employees, said its general manager Marilyn Scholl.

“We specialize in financial feasibility, store design, and we help with the capitalization of startups to try and get more co-ops to serve more people,” Scholl said. “We do provide templates and samples to make up bylaws, and we believe it is a service.

“We work with co-ops all over the country and see what works well, and are able to coalesce that into documents that represent the best of the best so an individual co-op does not have to go out and ask 30 other co-ops what they’re doing. All of our templates are clear that they are recommendations.; We have no decision-making authority at any co-op.”

ABQ Free Press watched a CDS webinar on bylaws. Its advice to local co-ops was, “Approach the task of drafting [bylaws] with the diligence and enthusiasm it deserves,” and “Never just copy another co-op’s bylaws. Instead, start with a solid template.”

Zeaman supported his allegations by saying that Whitman is a CDS consultant and CDS basically maneuvered to get her to briefly operate La Montañita’s North Valley store. Whitman became a CDS consultant in April and was named the interim manager of the North Valley store in May after the previous manager unexpectedly resigned. Her contract with La Montañita ended on Sept. 23, she said.

The second puppeteer, Zeaman said, is National Co+op Grocers of Iowa City, Iowa. NCG recently signed a deal with the third alleged conspirator, United National Foods, Inc., (UNFI) of Providence, Rhode Island, to supply NCG’s 151 member co-ops with food.

Zeaman argues that NCG wants to standardize co-ops across the U.S. It gained its position of influence with local co-ops by offering store design and other services, he said.

NCG is a cooperative of local cooperatives. It was formed in 1999 by 100 food co-ops that wanted to increase their buying power and share best practices, said NCG Chief Operating Officer C.E. Pugh. La Montañita was one of NCG’s founders and is a member-owner of NCG.

“NCG offers a variety of purchasing, management, development and marketing services, and facilitates direct co-op-to-co-op support and peer networking,” Pugh said. “While not a chain, NCG does seek to provide food co-ops with many of the advantages that large chain stores enjoy, while still enabling them to reflect the unique qualities of their local communities.”

Pugh said the deal with UNFI, which has $8 billion in annual sales, gives co-ops a cheaper and more efficient and unified way of buying products from UNFI, which most were buying from.   NCG’s role as a bulk buyer of groceries “is saving them money on the products they choose to buy,” Pugh said.

Evolution

All businesses, including food co-ops, evolve over time. If they don’t and insist on hewing to the practices of the 1970s when the co-op movement began, they’ll be out of business, Pugh said. Plus, with more competitors offering organic foods, local co-ops have to offer more variety and less expensive goods in order to be competitive. Basically, their monopoly on organic goods is long gone, he said.

Wal-Mart, for instance, is the largest buyer of organic goods in the U.S., Pugh said. In 2015, sales of organic and natural foods totaled $115 billion. Of that, less than 2 percent was from co-ops, he said.

La Montañita, which was formed in 1976 by a group of 300 vegetarian families, originally didn’t carry meat. It was housed in a one-story converted office building with low ceilings and cracked and falling tile that looked nothing like a modern grocery store.

In 1997, co-op members and the board realized that the Wild Oats natural foods store was coming to Albuquerque and that La Montañita had to change or go out of business. The co-op began carrying meat, and it moved to its present Nob Hill location.

“When we moved to Nob Hill I made the argument that we had to sell meat and become a one-stop location,” Whitman said. “We studied for a year before Wild Oats came, and we would not have made it if we hadn’t moved. There was an uproar that we had gone ‘corporate.’”

A local co-op that has gone through what La Montañita is facing is the Honest Weight Food Co-op in Albany, NY. When it was founded in 1976, Honest Weight didn’t carry meat, caffeine products or sugar products. Now it does, said its secretary, Rebekah Rice. And it also sells non-organic produce.

Marchello said La Montañita has to offer a wider selection of merchandise more cheaply than stores like Albertson’s and Smith’s because only 3 percent of its 16,000 members shop exclusively at the co-op. More than 50 percent of its members also shop for food at other grocery stores, she said. Not many people can afford to pay $14.99 a pound for out-of-season organic asparagus, she said.

“This is a complex situation with a lot of moving parts,” Marchello said. “Purity is not within reach of what we can achieve right now.”

Dennis Domrzalski is an associate editor at ABQ Free Press. Reach him at dennis@freeabq.com

 

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Dennis Domrzalski is managing editor of ABQ Free Press. Reach him at dennis@freeabq.com.
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18 Comments

  • Cletus
    September 28, 2016, 2:57 pm

    Thank you for helping to raise awareness of the situation. Regardless of the end result, the intentions are based in good faith and align with the values shared by the La Montanita Community. Overall it is clear that the membership on the whole doesn’t seem to care about it at all. The petition doesn’t have 16000 signatures and presence of opposition to the petition seems to be very small too. We need more members to get involved no matter what you agree or disagree with because La Montanita needs to work best for all it’s members and it’s community. There is a common ground that will work best for the community. La Montanita MUST maintain its presence moving forward into the future.

    REPLY
    • Patrick Boyles@Cletus
      September 28, 2016, 9:47 pm

      Take Back the Co-op is not an insurgency! If and when the board is recalled, a new board would be democratically elected. The possible board members that have been endorsed by Take Back the Co-op are beholden only to the owner members. Then, a forensic analysis of the finances can be done to see what is actually happening at the Co-op. We don’t know, the GM and the board are not releasing anything of substance.
      There is no intention to change anything that is working. There is no intention to shut down the West Side location, or fire workers. However, we do know that the stores are loosing profits, and will probably be operating at a loss this year. Shouldn’t someone know exactly why? All stores were profitable except the West Side last year!

      Secondly, here’s the list of federal labor violation that have been filed against La Montanita Co-op
      https://www.nlrb.gov/case/28-CA-174708?order=ds_activity&sort=desc.
      The workers were aware of Dennis Hanley, the new GM, long before Take Back the Co-op. The workers at the Rio Grande store were so concerned by both the direction and managerial style of Dennis that they decided to unionize. Then the GM used Co-op money to hire a union busting lawyer to go after the union. Ever since, there has been a consistent pressure to repress the Co-op workers. Many have quit, and some were hard working loyal employees for over 20yrs. We know some employees have even been fired for not keeping quiet. This past week they asked employees to sign a contract that stated they would not talk about Take Back the Co-op. They were told there would be no reprisals on employees, but management asked for the names of those who did not sign.

      Third, Martha Whitman, claims that Take Back the Co-op would not meet, but this is very deceptive. After gathering 500 concerned signatures of various owner members and customers, we asked that the board meet with us regarding the new GM’s approach to the store. Did we get a meeting, or even a response from the board. No! Dennis and Robin Sydel sent us a response. The board has never actually communicated with us. At board meetings you can ask questions, but you get NO RESPONSE.
      So why such secrecy? Ask to see how CDS consulting is related to the Co-op. They will tell you it’s very little, but ask to see what finances go to CDS. You won’t get it. Ask what the governance they supply tells the board to do. Better yet, see if the board will discus anything with you.
      The larger and more disturbing concern for TBTC was the lack of transparency regarding the real finances. Dennis used the idea that all the stores were failing, so he could support fundamental changes to the principles of the Co-op. They even went so far as to change the produce mission statement without telling anyone.
      You don’t need to believe about the larger conspiracy, but ask how much you know about what the Co-op is really doing. Ask them to SHOW US THE MONEY. Bonuses, high paying managerial salaries, lawyer fees, and consultant fees all are unaccounted for when all they show is yearly profits.

      Lastly, the reporter is correct that the Take Back the Co-op movement started after meetings began for the clean 15 and it was apparent that those who attended the meetings were overwhelmingly in favor of not bringing in "conventional" produce. Most of the Co-op customers shop at the Co-op because quality of food is ultimately important. I don’t believe that when people were asked about dropping the price, it did not include concessions to companies like Chiquita that have been responsible for murderous groups in Colombia. We have seen changes in shipping and growing price point manipulation between UNFI goods and vendors, vrs. smaller more ethical and sustainable business. Look at the store, look at the employees, look at the changes in products, and ask if something doesn’t seem off.

      REPLY
    • Patrick Boyles@Cletus
      September 28, 2016, 9:47 pm

      Take Back the Co-op is not an insurgency! If and when the board is recalled, a new board would be democratically elected. The possible board members that have been endorsed by Take Back the Co-op are beholden only to the owner members. Then, a forensic analysis of the finances can be done to see what is actually happening at the Co-op. We don’t know, the GM and the board are not releasing anything of substance.
      There is no intention to change anything that is working. There is no intention to shut down the West Side location, or fire workers. However, we do know that the stores are loosing profits, and will probably be operating at a loss this year. Shouldn’t someone know exactly why? All stores were profitable except the West Side last year!

      Secondly, here’s the list of federal labor violation that have been filed against La Montanita Co-op
      https://www.nlrb.gov/case/28-CA-174708?order=ds_activity&sort=desc.
      The workers were aware of Dennis Hanley, the new GM, long before Take Back the Co-op. The workers at the Rio Grande store were so concerned by both the direction and managerial style of Dennis that they decided to unionize. Then the GM used Co-op money to hire a union busting lawyer to go after the union. Ever since, there has been a consistent pressure to repress the Co-op workers. Many have quit, and some were hard working loyal employees for over 20yrs. We know some employees have even been fired for not keeping quiet. This past week they asked employees to sign a contract that stated they would not talk about Take Back the Co-op. They were told there would be no reprisals on employees, but management asked for the names of those who did not sign.

      Third, Martha Whitman, claims that Take Back the Co-op would not meet, but this is very deceptive. After gathering 500 concerned signatures of various owner members and customers, we asked that the board meet with us regarding the new GM’s approach to the store. Did we get a meeting, or even a response from the board. No! Dennis and Robin Sydel sent us a response. The board has never actually communicated with us. At board meetings you can ask questions, but you get NO RESPONSE.
      So why such secrecy? Ask to see how CDS consulting is related to the Co-op. They will tell you it’s very little, but ask to see what finances go to CDS. You won’t get it. Ask what the governance they supply tells the board to do. Better yet, see if the board will discus anything with you.
      The larger and more disturbing concern for TBTC was the lack of transparency regarding the real finances. Dennis used the idea that all the stores were failing, so he could support fundamental changes to the principles of the Co-op. They even went so far as to change the produce mission statement without telling anyone.
      You don’t need to believe about the larger conspiracy, but ask how much you know about what the Co-op is really doing. Ask them to SHOW US THE MONEY. Bonuses, high paying managerial salaries, lawyer fees, and consultant fees all are unaccounted for when all they show is yearly profits.

      Lastly, the reporter is correct that the Take Back the Co-op movement started after meetings began for the clean 15 and it was apparent that those who attended the meetings were overwhelmingly in favor of not bringing in "conventional" produce. Most of the Co-op customers shop at the Co-op because quality of food is ultimately important. I don’t believe that when people were asked about dropping the price, it did not include concessions to companies like Chiquita that have been responsible for murderous groups in Colombia. We have seen changes in shipping and growing price point manipulation between UNFI goods and vendors, vrs. smaller more ethical and sustainable business. Look at the store, look at the employees, look at the changes in products, and ask if something doesn’t seem off.

      REPLY
  • CindyO
    September 28, 2016, 3:38 pm

    As a former Working Member & 10+-year Board Member of the Bozeman, MT Community Food Co-op, I would ask the disgruntled petition originators if they are willing to work as volunteers at the co-op to contribute to policy-making on the board? If all board members & the GM are fired, then what? Are Zeaman & Finnigan willing to put in hours of volunteer labor on the board &/or GM position to run a thriving multi-store & distribution center? La Mantanita Co-op is highly respected nationally in the co-op world for its innovation, management, & expansion of its reach. Why are you throwing the baby out with the bath water, Zeaman & Finnigan? You are ill-informed & need to roll up your sleeves & put in some hours learning how a cooperative grocery actually runs, from the inside out!

    REPLY
  • Edward Lobaugh
    September 28, 2016, 5:16 pm

    Thank you for spelling out the truth of the complexities of what La Montanita Co-op goes through. As a small business owner I can appreciate your costs and attempts to manage your own costs while trying to attract new customers and maintain your current customers. Thank you for doing an awesome job and for carrying our products.

    Keep up the good work. Thank you for all that you do for small farmers. Many of us would not have survived without your support.

    REPLY
    • Elisa@Edward Lobaugh
      September 28, 2016, 9:55 pm

      Edward Lobaugh, Take Back the Coop, has no intent of discontinuing to carry the wonderful products of The Old Windmill Dairy, or of closing stores and firing workers. What we are asking for is a return to democratic member control and transparency. At this time the board is unresponsive to member owners.This situation is not unique to us, but has happened and his happening to many co-ops across the US, under the control of CDS. Are you aware of the worker right violations which have been filed by the NLRB against La Montanita Co-op? Member-owners have a right to ask for a meeting, and hold a democratic vote to recall and replace board members. After that we must conduct a financial review. At this time, there is no transparency about financials. Please check out http://www.takebackthecoop.com

      REPLY
  • James R. Baca
    September 28, 2016, 6:47 pm

    I am a member of the CoOP since they opened on Rio Grande. I fully support the board. That is democracy.

    REPLY
  • benay
    September 28, 2016, 9:22 pm

    This appears to be yet another one sided article that was printed without interviewing any of the people that it seeks to critique. The article starts with the charge that a head of cauliflower cost over twenty dollars. I find that very had to believe. Then it moves on to discuss the so called Clean 15 without giving a full account of exactly how clean this might be. Not only does it force our local farmers to compete with commercial produce, it does not take into account the amount of actual poison that is sprayed on the environment not to mention the pickers. The writer apparently did not interview Dorothy and Django, yet discusses their point of view? He also did not interview any of the workers, but then they have been so demoralized, intimidated, not to mention warned not to speak in public, that he might have had a hard time getting an interview. This is not about cheap vegetables and fruit. There is a price to pay for that–undercutting local farmers who we are supposed to be supporting; buying commercial, sprayed vegetables that harm the environment; and finally, implying that its the greedy farmers who are profiting. Before the co op expanded to the West Side it was doing quite well. But on the advice of the consulting firm, whose fee must also be factored into the price of produce, the co op bought into the idea that expansion is a good thing. It hasn’t worked all that well for Flying Star, and all of the other national stores who over expanded during the boom, only to bust. In the future, I suggest that you practice balanced journalism by interviewing all folks involved.

    REPLY
    • Lola@benay
      September 29, 2016, 11:18 pm

      The 1997 date in this article is wrong. It is 10 years off. I believe the Nob Hill location was opened in 1987.

      REPLY
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