Equal Exchange at the White House

The following post was written by Jessie Myszka, Director of Support Operations, after her meeting at the White House on May 4th

Jessie Myszka of Equal Exchange and Melissa Hoover, Executive Director of the U.S. Federation of Worker Cooperatives, at the White House meeting on cooperatives

In 2003, while meeting with coffee producers on an Equal Exchange visit to Guatemala, our farmer co-op hosts were proud to show us the power lines that snaked up the mountainside. Electricity had arrived just three months before our visit. I couldn’t help but wonder how life would change in Pueblo Nuevo; what unintended consequences would occur as a result?

This past Friday, I heard another side of the electrification story, this time recounted by staff of utility companies from the American midwest. Rural electrification in the 1930s took place through the formation of co-operatives because private companies believed the provision of electricity was not a profitable goal: electricity co-ops proved them wrong. During that time, 44 percent of the U.S. population was rural. Today, that percent has dropped to 16 percent. Still imagine: what would it be like if the power lines had never come?

Last Friday, I sat in a small auditorium on the White House campus with 150 cooperators from dozens of industries. White House staff and the National Cooperative Business Association (NCBA) had invited us to educate the administration, Department of Agriculture (USDA), and Small Business Administration (SBA) about what we co-operatives have done and what the federal government could do to help – or to get out of the way.

Now history repeats itself. Last week, the USDA announced a new loan program to extend broadband to rural communities. Access is important not only for schools and medical facilities, but also contributes to an infrastructure that supports both businesses and employment opportunities – thereby allowing communities to stay rural and sustainable. Customer call centers can be “insourced” to the countryside rather than exported abroad. This was just one example of the NCBA’s key message to the White House, USDA, and SBA: not only do co-operatives do better at sustaining the economy, but we co-operatives can offer solutions to the problems of the Great Recession. For example:

• Nationally, mortgages provided through credit unions have much lower foreclosure rates.[1]

• Of the hundreds of organizations who borrowed money from the Cooperative Fund of New England (CFNE) since 1975, 75% are still in business.[2]

• CFNE also boasts a loan repayment rate exceeding 99% – much higher than conventional loan repayments[3].
• Worker co-operatives contribute to individuals’ assets and are much more likely to redistribute hours than lay workers off during the recession.

• In a recent survey by the Consumer Federation of America, people rated consumer co-operatives more highly than for-profit businesses on quality and service. For example, 74% of respondents agreed that co-operatives “have the best interests of customer in mind,” compared to only 52% of for-profit businesses.[4]

The speakers – from the USDA, National Economic Council, Domestic Policy Council, to the Chief of Staff Jack Lew – often began their own presentations with an anecdote about how after reading the co-ops’ profiles prepared by NCBA, they discovered that they had several personal connections to the co-operatives. Like lamp posts turning on one by one on a dark road, the prevalence of co-operatives and the benefits provided was illuminated:  no single light could be sufficient on its own.

[1] http://www.cutimes.com/2009/09/02/cus-foreclosing-on-fewer-homes-than-banks-and-not-as-quickly “In general, credit unions appear to be foreclosing on a smaller percentage of their mortgage loans than other financial institutions and are usually taking longer to do it, according to credit union executives and NCUA data.”

[2] NCBA case study for this White House briefing.

[3] The rate for SBA loans in 2009 was 12%, but this is not a fair comparison as it is a single year. The rate was 2.4% in 2004 and 8.4% in 2007. http://money.cnn.com/2009/02/25/smallbusiness/smallbiz_loan_defaults_soar.smb/

[4] NCBA news release, May 2, 2012.