The cooperation

Ken and Ruth Covington were sacked last May, along with 144 co-workers at the Heinz factory at Girgarre in Victoria’s Goulburn Valley. It was the latest in a series of manufacturing job losses in the region, but after it happened, the Covingtons hosted two days of parties. The first day was a wake; the second, a surprise wedding.

After announcing the sackings, the managers had invited the workers to gather in the smoko room for tea and biscuits, but few wanted to stay. Many headed for the Covingtons’ farm instead. When Ken, a stout man with a grey-flecked handle-bar moustache, arrived home, cars lined both sides of the road, and his co-workers had already begun a long day and night of drinking and commiserating. In the wee hours, a colleague from the Australian Manufacturing Workers’ Union (Ken was the delegate for the site) wondered aloud about employees taking over the plant themselves. ‘There’s no way we could do that,’ Covington replied. ‘We put sauce in bottles, that’s as far as our expertise goes.’

The next day was Ruth’s fiftieth birthday party, at a local hall. At 9 pm, a celebrant took the stage. The curtain was drawn, revealing – to surprise and mirth – Ken wearing a suit. Their grandchildren wandered in holding flowers and their eldest son gave Ruth away. They’d been together for nearly three decades, but hadn’t got around to the formalities. The festivities continued; there was music and a dance floor, and a big bonfire outside.

I drove to the Covingtons’ farm in May this year. It happened to be almost a year to the day since Heinz’s announcement. Ken reminisced about his surprise nuptials. ‘The mood was still great,’ he told me. ‘Get a few sherbets into us and everyone forgot. We just put it behind us for the night – you got to.’

Just like the Covingtons with their wedding, the community has decided that the show must go on. When I visited, the current edition of the local paper, the Kyabram Free Press, carried five articles on the official launch of the Goulburn Valley Food Cooperative, its soon-to-begin training initiatives, its ambitious million members campaign, and the out-of-towners who blew in to support it.

The cooperative has only recently formed as an entity. It is not yet producing anything but already many people have taken an interest. ‘It is going to be a paddock-to-plate co-op, so everyone from the farmer through to the marketer is going to be a member,’ Covington said. ‘It’s radical in its concept. If we get this up and going, it could be a template for other places in Australia that want to do the same thing.’

On the day of the sacking, Covington told many of his co-workers not to worry, that they’d find another job. But, in truth he is worried about the lack of work. Before they started at Heinz, he and Ruth were full-time dairy farmers. They moved to the Goulburn Valley twenty-two years ago, hoping to establish a farm that could withstand generations. Back then, every property on their road, for fourteen kilometres north to Kyabram, was a dairy farm. Just seven of them are still milking.

Since the factory finally shut in January, Covington’s been unemployed, although he has hopes for a truck-driving job in a month’s time. Each day, he wakes at 5 am and spends an hour or two answering the co-op’s emails.

He can recite examples of hundreds of recent job cuts at local manufacturers, and list nearby farms that are now foreign owned. ‘I’m really scared of the future of this country,’ he said. ‘What are we doing, where are we going?’

Not far from the Covingtons’ farm is Chilgala, the property formerly owned by Sir John ‘Black Jack’ McEwen, short-term prime minister (twenty-three days, after Harold Holt vanished at Portsea) and long-term Country Party enforcer. When McEwen was twenty, he was unhappy about the prices that he and other local farmers were receiving from the nearby butter factory, and founded the Stanhope Dairy Cooperative.

In the evening, after I met the Covingtons, I drove to Chilgala to visit its current owner, Les Cameron.

Several graduate architects and their friends were there too, bunked in for a week, building an experimental rammed-earth studio and renovating the McEwen-era farmhouse, which is sometimes used as a training venue for Cameron’s business, the National Food Institute. The institute offers accredited training for food industry companies, including Heinz; for most of the week Cameron works from the head office, a converted foundry in Brunswick in Melbourne’s inner-north.

Inside the house at Chilgala, Cameron held court over the chaos, leaning over the kitchen bench, his reading classes dangling round his neck. ‘There’s nothing innately good about cooperatives,’ he told me. Some are run by well-intentioned folks who don’t charge enough to cover their costs; others by self-interested primary producers seeking monopoly rents.

‘Black Jack’s cooperative was a group with a common interest – they were all farmers on territory they’d stolen off the Aboriginals and they were there to maximise their own outcome. Not something particularly praiseworthy as far as I’m concerned,’ he said.

Cameron is fit and broad-shouldered and speaks in a low, insistent murmur. He wears woollen cardigans and has a habit of leaving sentences half finished while he pushes on to the next thought. On the Goulburn Valley Food Cooperative’s Facebook page, there’s a collection of photos from the launch in Kyabram, including one tagged ‘Our leader Les Cameron’ in which he stands behind a microphone, gesturing with an open hand.

Another day, when I interviewed him, Cameron protested at this notion. He rebuked me for asking too much about his past – as a teacher and principal in community schools and, until the early 1980s, as a member of the Labor Left (he once stood for preselection against Bob Hawke) – and warned me against overemphasising his role among the co-op’s many contributors. ‘It’s very important that it comes through that this is a huge collaboration,’ he said.

At the group’s first rally, in the footy sheds at Girgarre last August, Cameron called on the crowd to raise their hands and then step to the front if they wanted to join the committee that ‘takes it to the next level’. About three-dozen people stood up. The active members include farmers, food processing workers and engineers, as well as a food supply-chain academic from Sydney and a local who used to be a financial manager for a large multinational.

At first, the group proposed to Heinz that they’d run the factory for them, producing the same sauce lines. Later, they offered to purchase the site outright, drawing on funding from some members’ superannuation and a promise of two million dollars from a white knight investor. Heinz refused both offers. In early April, it sold the site to an undisclosed buyer.

Meanwhile, the group decided against accepting the large individual contributions in favour of funding itself through member-ownership. Lifetime membership costs $50. ‘Six of us could have bought it, but before long we’d turn into Black Jack,’ Cameron said. ‘This is a different sort of cooperative. Everybody in this community is dependent on each other, because all of a sudden it is not viable to run production here without collaboration.’

The cooperative’s model, described at the launch, is based in part on the Mondragon cooperatives from the Basque country in Spain. Beginning with two-dozen workers making paraffin stoves in 1956, the Mondragon Cooperative Corporation now comprises a web of over 250 businesses (including a university and a bank), half of which are owned by their workers.

‘We’re talking about production in the widest sense,’ Cameron said. ‘We’ve got to have the farmers, the workers and the distributors. We have an education arm, a fund that’s building up, and a manufacturing arm that will start up. That’s what links us to Mondragon’s philosophy: those three things. You can’t do just one.’

Within a fortnight of the launch in Kyabram, it had nearly 500 members, all signed up on the basis that they were willing to try another way. ‘Here’s the real story,’ Cameron told me. ‘This is not just a few people in the Goulburn Valley getting their act together. This is the end of global capitalism in the way we know it, and we’ve got to reform our society.’

Each year, the Australian Bureau of Statistics Year Book is threaded with articles on designated themes. In 2012 it features the United Nations’ International Year of Cooperatives. One of its diagrams, taken from the International Cooperatives Alliance, outlines cooperative values: democracy, equality, equity, solidarity, self-help and self-responsibility.

There is something disorienting about scrolling official websites and finding sanctioned celebrations of cooperation, so completely has the idea vanished from public debate. In a paper called ‘The disappearance of cooperatives from economics textbooks’, Finnish economist Panu Kalmi scoured the texts chosen by the University of Helsinki between 1905 and 2005. Before the Second World War, the analyses of cooperatives were extensive and complex; more recently, they were thin and unsystematic, if at all. Yet over the decades, cooperatives had continued to grow in Finland. Kalmi blamed the simultaneous rise of neoclassical economics and the increased reach of the state – solutions were only to be found by means of regulation or by the absence of it.

Cooperatives, he said, use local knowledge and seek local, institutional answers instead. In simplest terms, they are organisations in which each member has an equal vote. They exist to serve their members, rather than shareholders or customers.

The Year Book describes a sector in decline, but still much larger than you might think. There are about 1700 cooperatives, mutuals and credit unions in Australia. Last year, the largest hundred of them had over thirteen million members and employed over 26 000 people. Worldwide, more than a billion people are co-op owners, and nearly a hundred million people work in them.

One of the contributors to the ABS Year Book was Professor Tim Mazzarol from the University of Western Australia. He is a business academic with an interest in small business and entrepreneurism. Four years ago, at the behest of Cooperatives WA, he began researching cooperatives.

In the course of an extended literature review, he found himself reading through old economics and social geography journals. ‘In the United States, the peak of interest in cooperatives was from 1930 to 1933,’ he told me. ‘And I’m seeing the same trend now.

‘Since 2008–9 we’ve seen the collapse of the paradigm of conventional business, particularly in the finance sector, but increasingly in other places. It’s as big, if not bigger, than the Great Depression. I don’t know where it’s going, but it isn’t finished.’

The Year Book also describes the progress of an unheralded legislative reform: the Cooperatives National Law. After five years of negotiation among the states and territories – which are responsible for laws about cooperatives – the New South Wales parliament recently passed standardised rules. The rest must do the same before next May, and when they do, it will become much easier for cooperatives to register, trade and report.

‘The form has been around for a long, long time and in recent years it’s been overlooked. The new legislation gives it some new life: it’s old wine in a new bottle,’ Mazzarol said.

‘We have to understand a cooperative as a hybrid that is about generating economic capital and social capital. It is there for the community – that is embedded in its principles. And we need more of that because too often capital is very transient and footloose; it will come into town and set up, but as soon as the business model suggests there are better profits offshore, it’s gone.’

Last year, as the Goulburn Valley Food Cooperative surfaced, Race Mathews visited Mondragon. It was the fifth time he had travelled there since the mid-1980s. He wanted to see how the cooperatives were coping with the struggling European economy.

Mathews was the chief of staff to Gough Whitlam in opposition, and afterwards a long-serving Labor member of parliament. For decades, he has championed the mutual sector in Australia. ‘I’m a true believer,’ he told me. He is straight-backed when standing, but when he sits, he slouches deep in his armchair, in the manner of someone accustomed to lengthy deliberation.

‘There was a golden age of mutuals in Australia when they were a very significant part of the economy indeed. And that really came to an end with a bang in the early 1980s when the first wave of demutualisations hit the sector – initially, it was the big agricultural cooperatives, but it gradually fanned out to cover just about the lot,’ he said.

‘What you’ve got at the moment is a shrunken, demoralised, disorganised collection of cooperative businesses all going off in their separate directions. Signs of hope are few and far between.’

Mathews’ book, Jobs of Our Own, first published in 1999, makes a case for worker cooperatives as a means for distributing wealth and reinvigorating civil society. In it, he traces the growth of the Mondragon cooperatives, and the thinking of their founder, a Catholic priest named José María Arizmendiarreta, who argued that solidarity between classes was necessary to create a more just social order.

Arizmendiarreta died in 1976. Beginning in the late 1980s, Mondragon embarked on an aggressive growth strategy. At its peak before the global financial crisis, it was the seventh largest business group in Spain, employing more than 100 000 people. But only one-third of them were member-owners.

Throughout the 1990s, American academic George Cheney spent several months studying three of the cooperatives, interviewing members and observing meetings. Afterwards, he described a waning culture of solidarity and participation, one that missed ‘a forceful commitment to their social ideology’.

Both workers and managers tended to uncritically accept market dogma – the imperative to grow or die – and had adopted corporate management language. ‘When I next visit Mondragon,’ he wrote, ‘I would not be surprised to hear a description of different departments of a cooperative as “suppliers” and “customers”.’

Another American academic who studied the cooperatives in the mid-1990s, Sharryn Kasmir, went further. She argued that Mondragon’s workers didn’t meaningfully consider themselves owners, and also participated less often in the community’s wider struggles. One lesson, she wrote, was ‘to be sceptical of models that make business forms rather than people the agents of social change.’

More recently, however, the cooperatives’ general assembly resolved to offer membership to all the workers in its retail chain, Eroski, and to convert its international subsidiaries to worker-ownership, too, so far as possible.

Since the downturn these plans have been put on hold. Even so, to his great satisfaction, Mathews discovered that the group is proving more resilient than much of the Spanish economy. Employment has remained steady for the last three years, and the cooperatives are turning a profit. Their durability reaffirms Mathews’ belief that only the ownership of work provides strong enough motivation to hold cooperatives together ‘for the long haul’.

In October, a speaker from the Mondragon Corporation will present at a national conference on cooperatives in Port Macquarie. Australia has had many financial, agricultural and retail cooperatives, but so far, little experience with worker-ownership. ‘That’s really what Mondragon is about – a triumphantly successful exercise in the hiring of capital by labour, rather than vice versa,’ Mathews said.

Cameron and I left Chilgala and drove to the house of another of the co-op’s board members, Graham Truran. It was very dark and we got lost on the way. When we arrived, the others, including Ken Covington, were already there. It was the first board meeting since the group had been officially registered as a cooperative.

Six of us sat on leather couches in Truran’s large living room. Discussion centred on one key concern: how could they process memberships and respond to all the questions? Enquiries were coming in fast since the launch in Kyabram but there were glitches with their website’s system. ‘How will we deal with 100 000 emails, when we’ve just got Ken answering them?’ Cameron asked.

The money they raise will create a ‘food bank’, but for the time being, they don’t know exactly how it will operate. Their fledgling drive for members reminded me of a story I read about the first Mondragon co-op. In an interview forty years later, one of the founders, Alfonso Gorroñogoitia, had recalled that at the time, they weren’t really sure what they were embarking on; with hindsight it all seemed much clearer. But they were sure about their values and their commitment ‘to creating employment and more generally benefiting our community; that dedication made possible the great personal sacrifices that secured the position of the cooperatives,’ he said.

The British cooperative academic Johnston Birchall describes the importance of social capital – the trust and the deep civic connections among people in regions such as the Basque country and the north of Italy where most worker-run cooperatives are located. In the lounge room, the task of securing so many members seemed implausibly large. Two of the board members hadn’t turned up, without explanation. I wondered if those common values were strong enough, both in the room and the region.

The other matter for discussion was the introductory session, to be held the coming weekend, for people interested in becoming worker-owners of the co-op’s first project: a new factory in Kyabram, which aims to create up to sixty jobs, manufacturing niche lines from local produce. (At the launch they gave away samples of tomato bread and tomato sausages). Covington said he had invited the ex-Heinz workers, but he wasn’t sure how many would show up. Whoever signs on will complete a year-long training course with the National Food Institute, during which time they’ll collaboratively design the enterprise, from the equipment and logistics to the products and marketing. The Institute will donate its subsidy for the training – about $4000 for each graduate – to the newly qualified workers as their starting equity in the factory.

When I saw Cameron the following week, he was enthusiastic. About forty people had attended. ‘Almost all of them were ex-Heinz workers who are under some stress and it certainly gave them hope,’ he said.

There was something else too. The Indigenous unemployment rate in the Goulburn Valley is very high: in 2006, it was 20 per cent, well above the national Indigenous average, and three-and-a-half times the rest of the local population.

Recently, Cameron found out that the National Food Institute had over a hundred Indigenous students, most of them from the valley. Spurred by this information, he was buzzing with the idea of Indigenous membership in the co-op. ‘Think of the potential of that!’ he said. ‘It blows my head. Towards the end of the training session I actually said that to all these other whitefellas in the room: “How would you feel about that proposition?” And what I loved was that there was unanimous support for it. That notion of fairness is just a stunning opportunity.

‘I’m quite happy to say we’ve got a range of people here that could be called from the far Right to the far Left. What we have in common is the notion of cooperation and fair play. And that is very strong.’


(Hands image on previous page via Shutterstock.)

Michael Green

Michael Green is a freelance journalist who writes about environmental and community issues. You can read his articles at

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