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Catalyzing worker co-ops & the solidarity economy

The Old Salt Co-op

A Multi-Stakeholder, Regenerative Agriculture, Pasture-to-Plate Cooperative

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GEO Original
December 23, 2021
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An interview with Cole Mannix of Old Salt Co-op.

Transcript

Josh Davis: So, I'm here with Cole Mannix of the Old Salt Co-op, based out of Helmville, Montana, and also Helena, Montana. Cole, could you start out by just telling us a little bit about yourself and how this co-op got started?

Cole Mannix: Sure, yeah. Thanks, Josh. yeah. My name is Cole Mannix, and I grew up in ranching. My family, my mom and dad, and my dad's two brothers and their spouses, and then my siblings and cousins all grew up on the same place. And so, the first parts of the family came out in the 1880s, and we've basically managed the same place since then. And we, you know, I think we were raised to not think of ourselves as owners, you know, under ownership is a — we're here for a short time; land and what it supports is here for a long time. And that was part of just the way Grandma and Grandpa talked about the ranch. And you know, we all just really love the community Helmville, too. We love living there, all that, the beauty of what the place offers. And so stewardship is really important to us.

We had started — you know, agriculture has a lot of forces pulling against it and kind of forcing it to grow, or sort of grow or die if it if it needs to support livelihoods, on the land. Basically the trend is, as everybody knows, is that you've got to kind of increase the units you sell and decrease the price per unit. And basically, the thing that has been sucked out of agriculture is the labor component — the human component — and been replaced with other inputs of energy. And we know where that comes from. And so we, you know, as a as a family that loves just living in a place, and loves having a community there, our goal has always been to support more jobs. And it's so there's this tension between how profitable the ranch is and how many livelihoods it supports. And so we've always just tried to balance that carefully. Yeah, we might be able to be more profitable by going in one direction or another, but there's but there's a tradeoff there between how many folks it supports.

And so we've usually erred on the side of supporting more families and marketing local beef. I think we started doing that in the early 2000s. We've been a commodity operation for a lot of years. Used to be sheep back before the '70s, primarily with some cattle, but now primarily just cattle. And but — you know, we would sell calves out of state just like everybody would at the end of the year, and we still do that with the bulk of our operation. 90 percent of what we sell is still commodity. But we have, for 20 some years now, tried to build up our own more regional and local control over over the foods — over our own destiny as a way partially of just stepping outside of an industry that we don't like a certain extreme version of it. And then also as a way of hopefully just capturing a little bit more value, and driving it back to the stewardship of the land.

And so we we created a beef program, Mannix Grass Finished Beef, that is mostly sold in the Missoula area. And we grew to where we're at now, which is about a hundred and fifty animals per year, really quickly. But then the growth really stopped because you kind of reached this threshold where most of the early adopters have already been purchasing from you, or purchasing from another little small brand like you that — you know, the Good Food Stores of the world are very few and far between, especially in Montana. And so to grow beyond that 150 per year sort of threshold, where we market well over a thousand animals a year, takes this massive job in processing investment because that doesn't exist. That kind of processing scale doesn't exist locally, but you don't want to make that processing investment until you know you could sell it.

So there's this chicken or the egg problem of how do you go out there and build a market and a following without the processing capacity to really create a beautiful product that people like, and deliver it conveniently, and have the ordering process be streamlined? And so Old Salt Co-op was a — my family, like many others, has had that experience, so we teamed up with a couple of others: Seaborn Livestock Company, which has a local lamb program but, like us, sells most of what they produce out...anonymously. And then another one called J Bar L. And we thought that together we could make the processing investment, if we if we got outside help, and also would have significant scale between the three of us. And yet we could start from a place where it was just three.

And the way that we produce livestock, the way we manage land, our values is really aligned. So we would have both kind of a small, tightly knit set of values to start with, but also some significant scale. And then that wasn't enough — on the co-op side, you know it really appealed to us the one share, one vote. But it wasn't enough because we really feel like meat is not like bread or clothing where you buy it and you take it home and it's just, you know, it's a great loaf of bread. You don't have to do anything, you just eat it or it's a great piece of clothing. I mean, meat is something that you have to then beautifully prepare and it can really be ruined, even if the whole process was great before that. So we we teamed up with basically a whole range of talent on the culinary and butchery and marketing kind of creative side that we think will give us hopefully the the horsepower to to reach people locally in a way that makes them fall in love with what we're doing and want to stay.

And so, we have created this business that is direct-to-consumer. The goal is sell meat to individuals; not to grocery stores, primarily, not to other restaurants, primarily. But if we can sell to enough individuals, let's say five to ten thousand people. Then we can both have enough margin, but also keep it reasonably priced enough to — excuse me — to basically work for both sides of it. We get enough margin that we can return more value to the ranch and they — because there's not this big distributor and retail margin in the middle, they get a reasonable enough price on their end.

Josh Davis: And so you're running — this is as sort of a CSA model, is that right?

Cole Mannix: Yeah, we're calling it like an Old Salt share, but it's essentially that. It's basically we will deliver these shares direct door-to-door, and you can sign up for kind of a more basic share, which is, you know, made up of primals that rotate. You know, what those primals are, based on the relative portion that they show up on an animal. So traditionally...

Josh Davis: Can you explain what primals are, for me and other people not familiar with the terminology here?

Cole Mannix: Yeah. So one of the biggest challenges of selling meat is that, by far the majority of meat by percentage basis from an animal is ground beef, right? And you only have a very small percentage of that carcass that is ribeye or tenderloin. And so it's really easy to sell out of that. And then you've got this back up of inventory from ground beef and trimmings that is hard to move at a price point that can still allow you to be whole on the overall animal. And so selling shares of an animal basically just allows you to sell proportionately to people based on what the relative percentages that come on an animal. And so we expect at least now, at least at the outset here — but the program hasn't launched yet — we expect to sell the middle meats — the steaks, the New Yorks, the tenderloins, the rib-eyes — on a share basis. And then within those sort of shares that you sign up for, you can sign up for one that arrives weekly, monthly, or annually, right? Where you can sign up for one that is a higher value share that is going to have more pounds per meat in it — weekly, monthly or annual.

And then we'll also put, you know, things like a beef ragu, sauce in there and tallow to cook with and things like that. And then there'll be other things that are a la carte like ground beef, jerky, things that we can offer on just however much you want basis. And then here in Helena, we'll have a butcher shop where you can buy all a cart, even rib-eyes and New Yorks, and it'll be just really a showcase of the meat. And it'll be one place where we can just say, 'Hey, we can sell you whatever you want to buy.' But in general, the way we succeed in flipping this problem, which is that 95% of the stuff we produce is sold out of state somewhere, to someone who can't know the integrity behind this production. Now our goal is to sell 95%, you know, to people that actually do have a chance of knowing these landscapes we produce in, knowing the integrity behind the production, and even knowing us.

And we think that the way we reach those folks is a little bit like what Sarah Calhoun and Red Ants Pants has done for her brand, and for White Sulfur Springs, is we can bring people out. Our plan is to have an annual festival that will be essentially a meat festival. We're thinking about calling it Four Fires. And that festival would be, one evening, the fire centers around beef, and one morning — the next morning — it centers around chicken, and then pork, and then a finale with lamb, let's say. And basically, it would include music, but it would be centered around a culinary experience, and it would allow people — you know, one year they come out to the ranch in the Blackfoot; the next year they go out and experience the landscape near Cascade, where Sieben livestock is at. The next year, maybe they go out and experience that same thing near the Crazy Mountains near Melville. And they have beautifully presented food, they connect with each other, they connect with the ranches. We have some content that basically allows us to share something about land management, wildlife conservation — all those kind of values — and allow people to engage with kind of the deeper 'why' behind all of this.

We are working basically on an adaptive re-use of an old stone masonry warehouse, here in Helena. That would be this flagship butcher shop and public house restaurant. Again, basically just marketing. A way for people to experience what we are...The values, I guess, not only the food, but the values that we're trying to share. And that's why we launched the outpost restaurant just a couple of months ago to do the first part of the first component of that. It's a little burger and fries concept with chili and a salad. Super simple. The fries are Bausch potatoes, from Whitehall. They're cooked in beef tallow, and the chili is all sourced from our meat. Basically everything — the wheat Montana buns — everything's local except the greens. And it's a way to just show up in Helena, begin telling the story. It's our only business currently. It's the only actual enterprise we're running, and it gives us a chance to just begin telling a story.

And then the goal is to put a livestock harvest facility in Winston, Montana between Townsend and East Helena, which would allow us to ship our livestock a much shorter distance. It's very centrally located to where these ranches are at, and we — basically just a much lower stress process on them. And that not only is good for humane reasons, but it's really good for meat quality as well.

Josh Davis: So obviously you guys are still in the early stages here. You've got, you say, three landowning families, three people raising livestock. Is everybody doing beef specifically? Is it all beef or do you have a variety right now?

Cole Mannix: The meat program will likely start with just beef, and maybe incorporating lamb as well. The Sieben livestock raises lamb as well as beef, and they sell that as a local locker program. But we both: Mannix — excuse me — both Mannix and Sieben have sheep on their ranches every summer. We have an arrangement with the Helena family where they bring out twelve hundred sheep every summer from early July through the early part of September, and we get the weed control — the multi-species weed control — and it decreases the — basically don't have to use chemical on knapweed anymore. So they get the grazing and we get the weed control. We'd love to own those sheep, own our own herd and market them, if we had the market. And so there's basically a lot more where that came from, if we can develop the market.

Josh Davis: Right. So you've got your three ranching families now, who are members of the Co-op, and it sounds like you're wanting to sell, as you were saying, shares in this kind of CSA program. And I know that you haven't got quite the details figured out yet, but is your idea right now that people buying those shares will be official members of the Co-op, and have some kind of vote on on something within the Co-op? Or is it more just like, you know, paying for your portion of the of the meat? What are your thoughts on that?

Cole Mannix: Because the Co-op is structured as a — there's two classes of membership. There's A and B. A is the producers, and B is the workers. And we decided not to create, for now, a Class C membership that would be customers.

I think the first reason for that is just that a multi-stakeholder co-op was already so unknown to lawyers and accountants, and we have had some good help from the Montana Cooperative Development Center. And yet multi-stakeholder co-ops are still — especially in this neck of the woods — not common. And there's also a little bit of tension between — right now, we just feel like the when it comes to meat, the national supply chain is so weighted towards lowest cost-to-consumer. And we really are trying to turn that around and say, 'Look, the cost to the customer does matter, but the imbalance right now is most heavily an imbalance that doesn't pay workers enough, and doesn't return enough value to land stewardship. So we felt like there was a little bit of a conflict of interest there if we put in all everybody as a member.

But we do — it's really — I mean, part of the name Old Salt is trying to get us out of a brand that says, "Hey, here's a bunch of ranches and cowboy boots and cowboy hats and lariats," and here's this kind of weird world that most people just don't, maybe, interact with, and say, "look, we're all..." The purpose of being a human being is to enhance land and community around you rather than to — we certainly can do the opposite of that — and yet the beautiful thing about human beings — not that this is what we usually do, but what we can do — is we can actually be productive, and inhabit an economy at a reasonable size, and be smart in the way we use resources, and we can actually enhance those resources. And so that 'salt of the earth' kind of sentiment is where Old Salt comes from.

And it's not — we really don't want it to feel like, 'hey, it's these ranches that are doing these amazing things and we just all passively participate in that.' It really takes an entire complete supply chain, where the customer intentionally participates, and says this is the kind of landscape and the kind of future I choose: the kind of quality of food, the kind of landscape I want my children to live in. And so together, we wanted Old Salt of feel like a brand that we're all in it together.

Josh Davis: Right. So you've got your two share classes, and how many of the Class B shares? How many workers are members of the co-op right now?

Cole Mannix: So right now, there's two founding worker members of the Co-op, and we also have — you know, we have 10 other employees, and those employees are eligible to, basically, apply for membership after a year of employment.

Josh Davis: A standard probationary period, that's a common thing. So are those two currently — the two worker members — are they working in the restaurant side or are they on the ranch with you?

Cole Mannix: The worker members are myself and a gentleman named Andrew Mayes, who currently lives in Portland. He's a chef and a whole animal butcher. He grew up in Montana, but he's moving back, and it's his menu that is being instituted at that restaurant. And I am spending, actually, a lot of shifts in the restaurant, but at the same time working to build the broader set of enterprises that we're trying to do.

So we — kind of, the Co-op is this umbrella entity. And one of the entities that it owns is the Outpost Restaurant, this little wholly owned LLC. And the Co-op employs all of the workers and then it bills labor services, essentially, back to the Little LLC that it owns.

Josh Davis: Right.

Cole Mannix: So all of the labor is run out of that umbrella co-op.

Josh Davis: Gotcha. And so over time then, it sounds like, the hope is that the people working in The Outpost — in the little restaurant — they're going to be, you know...is the idea that everybody working there will be members? And is that the idea, I guess?

Cole Mannix: I think the idea is basically those employees who like what the Co-op is doing, they get it, they want it, they have the capacity to do it. They're fun to be around, they are people that they want to be involved long term. They want to have a vote for the board, they want to be eligible for the board, they want to share in profits. Then they can, you know, again, they can petition the board and the board can accept them as members. But if it's not that every worker ends up being a worker member. I mean, some people just don't want that. You want to — sort of the nature of the restaurant industry, too, is that you might just want something very part time. Very flexible if you're in school, you know?

Josh Davis: Yeah. And it can be a little bit of a contentious issue, sometimes with some of the more, I would say 'fundamentalist' types of worker co-op people. Usually people who don't have a whole lot of experience with actual worker co-ops, who think every person who works in this business needs to be a member or it's not a real worker co-op. And you know, the reality is, you know, are often that — it's not for everybody. Not everybody wants to be an owner. They don't have that ownership mentality. They just want a part time job to help pay the rent while they're in school, or something like that. So, you know, there are a lot of worker co-ops that operate like that. You know, some people are employees. There are some worker co-ops that it's, you know: you have your six month, or one year probationary period, and at the end of that, it's either you become a member or you go find something else to do. But you know, the kind of more flexible way of doing it like you guys are talking about seems — at least in my experience, from what I've seen — this is pretty common.

Cole Mannix: So, you know, the — oh sorry. I just thinking about what you're saying there, I mean, the first enterprise just happens to be this restaurant, but the the next one will really be a meat processing business, and that business will likely be another wholly owned LLC by the Co-op, and its employees will be employed by the Co-op.

Josh Davis: Right.

Cole Mannix: And and that's a profession where we've really lost a lot of meat processing talent — know-how, skills. But it's a longer term role, potentially. There's just some people that they do enjoy working with their hands, and we, as a company really need to partner with those people. And so that's the kind of job in the Co-op that makes much more sense for somebody who sees the long term potential, wants to be an owner, and you know...

Josh Davis: Yeah. So for that processing facility that you're helping to build, are you going to — do you foresee yourself expanding to more producers, trying to get more producers on as members to help finance that? I mean, I would think if nothing else, just to help finance the the facility, because that's got to be a multimillion dollar endeavor, right?

Cole Mannix: Yeah, we we actually decided to — so the first answer is that we do anticipate expanding our producer co-op membership, just like we anticipate expanding the worker co-op membership, particularly in the early days. It'll be a bit strategic. You know, we don't have a big market yet, and so there's no point in just adding a bunch of people who still we won't have enough customers to buy their supply. But we may add members who bring a species that we don't currently raise, that do really align with our values. Maybe their operation is near an urban area that we want to market to, but we don't currently have a local ranch location that is right by that urban area. So things like that may cause us to grow the producer membership sooner rather than later. But it probably won't be because we're trying to get more financing.

We have kept the the membership to buy-in at an incredibly low number, both for workers and for producers. And the way that producers invest over time, and bring capital to co-op over time, is they basically buy 'marketing units.' So, if you want the right to be able to market a hundred beef cattle per year through the Co-op, you buy these hundred slots that you own, and you own those every year. And we have priced that separately from membership, so you have to be a member to own slots. But once you're a member, if you own 100 slots and now all of a sudden the co-ops demand is growing and we've got the opportunity for you, the market even more then you buy your next hundred slots, and you add that to the 100 you already have. So each one of those beef slots, for example, is priced at $250. And so, you know, you buy buy 100 slots for 25,000, and that's the source of capital that, as the co-op grows, it can use that to pay down its debt, and pay off investors. But actually the main way at the outset that we're paying for this multi-million dollar investment is through a non-equity mechanism, which is revenue-based financing.

So it's essentially we're selling a promissory note to investors that says, you know, "you invest $100 today and we'll give you X amount back in five years." And that's it. It's an unsecured loan. Essentially, it's a risky loan that pays off really nicely, if we're successful. But it doesn't have any collateral. You know, it's not a loan in the sense that we are legally obligated to pay it back. If we fail as a business, they don't have recourse.

Josh Davis: Yeah. So this isn't a preferred share, then. This is something different.

Cole Mannix: We do have some preferred investment, which is, you know, this non-voting class of stock. But we really are viewing that as, number one, it's a way that — we're about to launch a preferred campaign, basically so that friends and family can help. People that are investing not for some big return. As you know, Montana co-op law caps the dividend on preferred stock.

Josh Davis: Six percent, I believe. Right?

Cole Mannix: Right. And so that's not really, you know, it's not some super attractive return, if all you're focused on is bottom line. But it's a way for friends and family to participate at small levels like $500 shares. And it's also a way for the ranches — which are very risk averse, understandably — as they see, 'hey, this is starting to work, let's buy down more expensive money." Now they can invest in that preferred stock, and we can use that investment to pay off the bank, or pay off this revenue-based financing, which is more expensive to the co-op.

Josh Davis: And so the revenue-based financing then does the — it has a repayment rate, so is it structured like a loan? And then there's some kind of a benchmark for profitability, that you have to hit before those loan payments get made back? Or is it like the more profitable, the more they get back?

Cole Mannix: So basically, the faster that we — it's a share of revenue, so in our case, it's three percent of gross revenue. And its gross revenue for the Co-op — not the individual enterprises, the overall co-op — its revenue. Our investors share in that pro-rata. So if, for example, if we've got if we've got a million dollar revenue based financing round and somebody invests $100,000, then they will share in 10 percent of three percent of our gross revenue.

Josh Davis: Gotcha.

Cole Mannix: Until they get paid back a certain rate. So we basically said you'll share in three percent of our gross revenue pro-rata until you get back 1.5x your money. And basically, their calculus is "OK, well, how big is their gross revenue? How quickly?" If they get back 1.5x their money in three years, that's a really good return on investment. If it takes us seven years, that's still decent, but it's not as good. And so that's their risk calculation, you know, how good is three percent of what the gross number is, and how likely are they to hit that, how quickly?

Josh Davis: Yeah. And just so I'm understanding this, the maximum amount that will go back to this revenue[-based] financing is three percent. And so whoever is investing in that, they're all just sharing in that three percent...

Cole Mannix: That's right.

Josh Davis: Of the gross. OK. Well, I think that's the first time I've heard about a co-op using that kind of system. So I'm kind of — it's very interesting to me, as somebody with an economics degree that has not been put to very good use. It's always super — it's the kind of stuff I love to hear about.

So, you've got your three producer members, a couple of worker members, and you've got some big plans, it sounds like, and a lot of different things that you want to get into. Do you have a timeline for, you know, building out the production facility? Or is this kind of as you can make it work?

Cole Mannix: Yeah, there's my hope is that by the end of January, we will have put the harvest facility on order. You have to have half the money down to put one on order. And then it could be operational as soon as November 20, 2022.

Josh Davis: Wow.

Cole Mannix: Basically, these units are built in northwestern Washington. They are modular, so they're built out of shipping containers. And you know, there's some customizability, but essentially they sit on concrete pads. You drill a well, you have septic. We're going to do composting of viscera, and anything that can't be marketed initially. And we already have raised enough money to do that. We have a really wonderful partnership that is developing between a bank called Steward and and the Co-op. They are a certified B Corp. They focus on regenerative agriculture and regional food systems. They they have a lot of staff in Portland and they have done a couple of projects there. And you know, they just placed their first staff member in Montana just this summer, and have been working with him. The owner of the bank, one of my advisors in the project, and good friends, grew up with him on the East Coast. Anyway, their values really align with ours. And so we continue to make progress, thinking that this is the right financier for us.

Josh Davis: Yeah, that's great. I mean, I, you know, I live in Hot Springs. I don't know if I mentioned that to you yet. Out here in a little different part of the state, you know, up in the Flathead Valley, and we've — I know a couple of people who do, you know, livestock production around here, and finding a good local processor who can handle it has been tough. And I know, especially in the last couple of years of this pandemic, for some of our processors, you know, they're getting to a point where they're wanting to retire. Nobody was really wanting to take over for them. And the some of the producers around here really depend on it. They're just kind of freaking out a little bit, like, "what am I going to do now if you retire?" So I'm sure that the more processing facilities we have around, you know, just in the state in general, I think is only good. I mean, not only good for for business and for your co-op, and people like you, but also just in kind of the larger environmental sense. You know, one of the things that has never made sense to me, you look around, you know, we probably have more cows than people in this state. And and yet, all of the — you know, the vast majority of the the meat that you're going to see on the shelves in the grocery stores is probably being shipped here from Chicago or someplace like that, right? It's like we take all the cattle, put them on trucks, ship them maybe a thousand miles, slaughter them, wrap them in plastic and then ship them back here. It just makes no sense whatsoever. So this kind of localizing more of that supply chain is really great. So I hope it works out well for you and we'll all be pulling for you.

Cole Mannix: Thank you.

Josh Davis: Definitely be contacting everybody I know in Helena, Missoula, that might be interested one of your shares, or any place that you're selling, and encourage them to get on board with that as soon as you open up the CSA side of things.

Cole Mannix: Well, thank you. Yeah.

Josh Davis: Before we wrap it up here, is there anything else that you would like to to put out there? You know, we've got kind of a national audience of worker co-op people. And so if you've — I don't know — if there's a question that I didn't ask you that you wish I would have asked you, you can answer it now.

Cole Mannix: OK. Well, I don't think necessarily this is a question that you didn't ask. I guess I would just say that, you know, everybody out there who's working on co-ops, I just share those values of trying to increase our local and regional control of our own destiny, when it comes to food and land management. We really do value this, you know, decreasing that gap between the highest and lowest paid employees and trying to basically ensure that — there still needs to be a gap, there's really no way to solve that — but the gap needs to be much less than it is traditionally or, you know, relatively recently in our history. And when more people are doing good enough, that is security and fairness. And, you know, they're just less vulnerable, overall. And that makes each of us more secure, I think. And so those are values we share, I think, with the co-op audience across the country.

And then the last thing I'd say is that we — I think one of the one of the core reasons we created this co-op at this scale in Montana is, the global perception of livestock and its impact on climate and health. I believe it is really mistaken. And yet I share the values of a lot of the people who have those concerns, I think that they're concerned for good reasons. But I think that the actual facts about impact on climate, and impact on health are unfortunately not very well understood. And we really see livestock as an essential part of the foundation of any sustainable agricultural system, and the integration of livestock and cropping systems as a key soil health solution. And we really see meat as a nourishing component of the diet. And so we — I don't think we can necessarily win the global battle of perception over that. But we can just have as many thoughtful conversations as possible. And you can only have thoughtful, nuanced conversations, usually at the local level, at a smaller scale. And so this kind of, you know, I don't know: appropriate technology, National Center for Appropriate Technology, appropriate scale. Businesses that have enough scale to invest in the capital you need to operate, but not so much that people become anonymous. That's why we're doing that, and I'm guessing that that's why a lot of people out there have started co-ops, and restructure them that way. So thanks for the network of expertize that we're relying on to try to start this up. And even you sent me some great contacts that are already helping us out. So, yeah, I guess. Thank you.

Josh Davis: Yeah, yeah. Well, that's thanks for for spending the time today and sharing your story. And best of luck with the with the Co-op.

Cole Mannix: Thank you so much. It's a pleasure.

 

This transcript has been lightly edited for readability.

 

Citations

GEO Collective (2021).  The Old Salt Co-op:  A Multi-Stakeholder, Regenerative Agriculture, Pasture-to-Plate Cooperative.  Grassroots Economic Organizing (GEO).  https://geo.coop/articles/old-salt-co-op

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