How to Start and Scale a Farm Cooperative: From Barn to 25-Farm Distribution Network

When Christine Straley describes the early days of MI Farm Cooperative, the picture is charmingly rustic: farmers bringing their harvest to someone's extra barn, one person sorting orders, and growers focused simply on delivering their products to a central location.

Today, that same cooperative coordinates 25 different growers across Northern Michigan, operates customizable CSA boxes, maintains year-round wholesale relationships with restaurants and schools, and uses AI-powered route optimization software to efficiently deliver to customers across the region.

The transformation offers a roadmap for anyone looking to scale a food co-op — from the critical importance of grant funding to the technology that makes complex operations manageable.

🎧 Prefer listening to reading? Hear the full interview.

From barn to USDA-backed expansion

MI Farm Cooperative started out as a 521 nonprofit with the simplest possible model: farmers brought their produce to one location, and a single coordinator organized orders for wholesale accounts. “Really the growers were just responsible for bringing the product to the warehouse. And that worked out really great,” Straley explains.

The co-op found creative solutions to logistics challenges from the beginning. For example, Straley mentions a group of farmers in Leelanau County, about 30 minutes away, who consolidate all their product at one farm before bringing it to the co-op. “They have their own little cooperative going on up there, then they bring it down to us, and we distribute it for them.”

Like many other businesses, the co-op found itself forced to innovate during the COVID-19 pandemic. In 2021, the cooperative launched a Community Supported Agriculture (CSA) program with a compelling twist — instead of boxes from a single farm, they created variety boxes featuring products from multiple growers.

“What made it unique is that we're using multiple farmers in a CSA box instead of just one farm,” Straley says. "With so many different growers in the co-op, we could create a unique box that offered many different varieties of foods.”

The timing proved perfect: “Things really exploded. We had really big sales with CSAs, and we needed help to expand our operations to meet that demand.”

How a $250,000 USDA grant enabled rapid expansion

The breakthrough came with a $250,000 USDA grant specifically designed to help expand their community reach. Unlike many grants, this one covered operational costs, a rarity that made all the difference.

“The grant was able to help us pay for staffing. We brought on new people, we got a different warehouse location, we had an office, and we were able to focus on marketing,” Straley explains. “We were also able to reach more communities and go a lot further out, so we brought on more farmers as well. We currently have 25 different farmers, offering everything from meat to vegetables to flowers. We can offer a variety of vegetables and fruits year-round.”

💡 Pro tip: When applying for agricultural grants, look specifically for those that cover operational costs rather than just equipment or infrastructure, like Rural Cooperative Development Grants.

Scaling with a lean four-person team

MI Farm Cooperative operates with a lean, focused team:

• Christine handles daily operations.
• A sales associate focuses on expanding restaurant relationships and CSA sign-ups.
• A single warehouse worker manages CSA packing with assembly-line efficiency.
• One delivery driver handles the routes.

The sales role proved crucial as grant funding ended. “I'm not a salesman by nature, so we needed a little extra help. Our grant is up, and we knew that we still needed to keep pushing into different markets.”

Direct sales: samples, cold calls, and word-of-mouth

The cooperative's marketing strategy emphasizes direct relationship building over digital marketing.

“What we have been doing is actually getting samples of food from multiple farmers and then going into a kitchen: “Look what you could have. This would go great on your menu. I see that you already have these items on your menu — here's the local version.’”

For CSAs, word-of-mouth remains the primary driver. 

Building multiple revenue streams

MI Farm Cooperative has developed multiple customer segments: Individual households who order CSA boxes, restaurants and grocery stores, and schools. Orders work on a weekly cycle: customers have from Monday at noon until Friday at 5:30 to order for the next week's delivery.

Year-round CSAs with 50%+ customization rates

The co-op maintains an almost 50-50 split between CSA and wholesale revenue, with their year-round CSA setting them apart from seasonal competitors.

“We have several growers with hoop houses so they're growing year-round, and a couple of big growers with a lot of storage capacity. So we can offer storage root vegetables like  potatoes, pumpkins, squashes and daikon radishes all the way through the winter.”

They now also offer customizable CSAs, allowing customers to edit their weekly boxes online. “More than 65% of our boxes have been edited in some way; people really appreciate that ability to change things out.”

The co-op has drawn on lean manufacturing principles to ensure they can offer customization without chaos. “We set out all of the produce, and take a box down like an assembly line. All the produce is there.”

“Quality control relies on a large walk-in cooler with systematic product rotation. “We only bring out certain amounts of product at a time as we're packing and keep reloading as we’re going. It's like a fine little dance to keep everything quality controlled."

Restaurant partnerships and commissioned crops

The cooperative maintains 20-25 consistent wholesale accounts, primarily restaurants and small grocery stores scattered throughout Northern Michigan's peninsula communities. During tourist season (Memorial Day through late fall), numbers increase significantly.

What these wholesale customers value most is consolidation. “They really enjoy that we have so many different growers in one spot, so they don't have to spend time calling each local grower. They get it all with just the one delivery, one invoice, and one payment. We're the distribution hub — we help make it work.”

Some of the cooperative's most exciting developments come from direct chef collaborations. Restaurants can essentially commission specific crops during the January planning meetings.

“One of our farms works really closely with our restaurants, growing unique herbs, greens and baby vegetables. They're like, ‘Yep, absolutely, I'll get the purslane going. I'll get the anise hyssop. I'll get whatever it is that you want.’”

This collaboration creates visible menu changes. “We have a couple of chefs that will change seasonally based on whatever we have. One chef has specific greens mixed up just for them. It's whatever is growing in the greenhouse at that time, so every week it's something different.”

The cooperative works with notable establishments including The Mill in Glen Arbor, Bushell’s Kitchen in downtown Traverse City, and The Cook's House, which was recently nominated for a James Beard Award.

The sales team has become adept at connecting surplus with opportunity. When one grower found themselves with 300 pounds of cucumbers, the co-op quickly connected them with a local pickle producer who bought the entire surplus for three weeks. “She was done with her cucumber season, and he was set to go for six months,” Straley explains. “The idea of your food just going to waste is heartbreaking.”

Local schools provide off-season stability

As tourist season winds down, the cooperative shifts focus to local schools. “Working with schools is really great in that we're bringing local food to our kids, and we know how much better it is for kids to be eating real food that's fresh”.

Schools do present challenges:  “Each one has their own little ecosystem of how much money they have, what kind of workers they have, what their kitchen capabilities are”. But they provide crucial revenue stability during slower periods.

The technology that makes complexity manageable

With 25 farms, multiple product categories, and complex delivery schedules, technology becomes essential rather than optional.

A farm-focused e-commerce platform

MI Farm Cooperative uses Local Food Marketplace (LFM) to manage both wholesale and CSA operations on a single platform. “Being able to offer both smoothly is really important. People who log in with a wholesale account only see the wholesale market, and people who have a CSA account only see the CSA market.”

The platform allows individual farmers to set their weekly inventory, enabling dynamic responses to surplus situations. 

Route optimization and delivery management

For delivery efficiency, the cooperative uses the Routific  integration with Local Food Marketplace. “It's so easy for us to be able to input the orders and then understand what is our most efficient route. We're not wasting miles on the van, we're not wasting gas, we're not wasting employee time.”

Managing 25 different stops manually would be overwhelming. “It just is another stressor that's off of our shoulders trying to figure out 25 different stops — what's the best way to get there? It really makes it a little bit easier for us.”

💡 Ready to optimize your food cooperative's delivery routes? Routific integrates with Local Food Marketplace and other platforms to streamline delivery planning. Start your free trial today.

Making it work for farmers

The cooperative model succeeds because it solves real problems for small farmers who often struggle with the business side of farming.

Revenue sharing: 70-80% to farmers

Members pay yearly dues plus a joining fee. Growers receive 80% of wholesale revenue and 70% of CSA revenue, with the remainder covering cooperative overhead. Any annual profits get distributed back to member farmers.

Lowering marketing and delivery costs for small farms

The cooperative eliminates major farmer pain points.  “Our members don’t have to focus on sales and marketing, making all those phone calls, visiting wholesale accounts, and then the cost of delivering,” Straley explains.

Without the support of a co-op, the numbers can be daunting for small farms. “When you have a small farm and you're having to consider paying $100,000 for a van and then paying someone a living wage to deliver just one day a week, it's really tricky.”

Instead, farmers can “focus on growing their vegetables, growing it well, and not have to worry about sales.”

Challenges and realistic expectations

Straley is candid about the ongoing challenges in farm cooperative management. 

Beyond the weather, which will always be a wild card, “It’s also challenging working with multiple different farmers, constantly figuring out where the food is coming from, who has what, when, when are things supposed to be coming. It's a big coordination effort.”

The cooperative's diversification helps. When one farm loses crops, others can often fill the gap. “I can always go to another farm and say, ‘Hey, do you have potatoes?’”

The biggest challenge is economic: “Just not having enough money in general to support local food. We'd love to pay our growers more, and we'd love to charge more for our food, but the consumers won't pay for that.”

The fundamental tension in local food systems remains: farmers deserve living wages, but consumer price sensitivity limits what cooperatives can charge.

The bigger picture: supporting farming as a profession

Straley brings perspective from her own experience working directly with farmers. “I was a farm hand for a little while,” she explains, giving her insights into the complexities farmers face daily and why cooperative models matter.

“Farmers have one of the most complicated jobs I've ever witnessed. Farmers need to be able to project, they need to understand finance, they need to be able to forecast. They have to be able to be flexible when weather comes in. They're hard workers.”

Despite this complexity, “farmers do not farm because they make a lot of money. That's for sure.”

The cooperative model helps address this by handling the business complexities that often overwhelm small farmers, allowing them to focus on what they do best: growing food.

Lessons for scaling food cooperatives

MI Farm Cooperative's journey from barn to 25-farm network offers several key insights:

1. Start with operational simplicity: The barn-based model established proof of concept before adding complexity.
2. Leverage grant opportunities aggressively: The USDA grant provided the capital needed for transformational growth rather than incremental improvement.
3. Diversify customer segments strategically: CSA, wholesale restaurants, grocery stores, and schools create year-round stability.
4. Invest in technology that eliminates manual work: Platform integration and route optimization free up time for relationship building.
5. Build flexibility into operations: Multiple farms provide resilience when weather or other factors affect individual producers.
6. Focus on solving real farmer problems: Sales, marketing, and delivery logistics are often bigger barriers than production for small farms.

For anyone considering launching or scaling a food cooperative, MI Farm Cooperative demonstrates that strategic growth is possible — but requires patient capital, operational discipline, and a clear focus on creating value for both farmers and customers.

The model works because it addresses fundamental inefficiencies in local food systems while creating sustainable revenue for everyone involved. As Straley notes, even small improvements in delivery efficiency help: "We're getting food where it needs to be as efficiently as possible. It really makes it a little bit easier for us."