The cooperative received a USDA Value Added Producers Grant (VAPG) planning grant in 2005 to write a new, more comprehensive business plan that addressed the changing landscape of the marketplace. After successfully writing a new business plan, the Oregon Woodland Cooperative applied for a VAPG working capital grant to implement several facets of the new business plan, including developing a bundled firewood product and providing members access to custom mills and sales expertise in niche lumber markets.
The price of lumber and the impact that the weak housing market has on demand for the product is an immediate challenge to the industry and to the cooperative. Volatility is a standard feature in this market. The past few years the lumber market has been strong overseas. The weak dollar has made American products a value in many markets. However, as the dollar strengthens, cooperative members are concerned that they may no longer be competitive in that market.
The cooperative members are also concerned about the impact of consolidation in their industry. This affects the market competiveness and their ability to get competitive bids for the products. Product innovation and quality are key elements to the future of this business. One of the primary features the cooperative offers to the marketplace is a product with a unique identity based around family forestry. Customers gain a connection with the resource and the people providing it.
The cooperative has to improve constantly. The cost of various transactions whether they are information, negotiations or completing business, represents the primary variable costs in this business. New innovative products are important to the future of the company. But also important will be improving the costs of doing business. Widespread and variable supply is a challenge today as it was back at the start. Dealing efficiently with that is a hallmark of the cooperative.
Many of the woodlands are located next to large population areas, so there continues to be pressure from housing developments and ratcheted that take the land out of production. Many of the cooperative members are also getting older and are trying to determine appropriate land succession strategy for interested family members.
Recently several large bug infestations have devastated forests in the state of Washington and Canada. The landowners are concerned about the potential migration of these infestations into Oregon. But if managed properly, the decrease in available timber from Canada creates a potential opportunity for woodland owners in Oregon.
Today the cooperative’s role is evolving as always. But the original mission remains, which is to help members improve production management and expand markets.
About USDA VAPG
VAPG funding has been offered by the USDA periodically since the early 2000s. A new round of funding is anticipated to be announced in the coming months. To be considered value added, projects must show how products are differentiated in specific ways from commodity crops. Typically, projects must also show how they may deliver greater returns to producers.
Independent producers, farmer or rancher cooperatives, agricultural producer groups, and producer-owned business ventures, including non-profit organizations, may apply. In previous cycles, applicants were required to be producers of the raw commodity who will maintain ownership of that commodity through the process of creating a value-added product. Grants have been available for planning projects (such as marketing and business plans and feasibility studies) and working capital projects (which might include wages or packaging supplies). (http://www.rd.usda.gov/)