New Minnesota co-op law could let a good idea “Wedge” through

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Minnesota has a new cooperative business model that might help the Wedge food cooperative, based in Minneapolis, to buy the Gardens of Eagan, an organic vegetable farm in Dakota County.

The Wedge announced Monday it has agreed to buy the 97-acre farm from the Diffley family for $1.5 million. The purchase will preserve the Diffley’s metropolitan-area farm as an organic vegetable supplier to the food co-op.

The Diffleys began farming in Eagan in 1973 and later relocated to Farmington. Coincidentally, the Minnesota Legislature passed a tough anti-corporate farming law in 1973 to protect family farm ownership. It bans corporations from owning farmland and operating farms.

Cooperatives like the Wedge are also corporations, incorporated under a separate Minnesota business code. The St. Paul Pioneer Press reported Tuesday that current and former state legal officers suspect the Wedge’s plans would violate Minnesota’s anti-corporate farming law. It would be a stretch to consider the Wedge’s 13,000 members as “family farmers,” so attorneys are scrambling to find a way around the legal barrier or if the deal must be scrapped.

There is, however, a new law in the state’s business code that might help the purchase go through. The 2003 law allows outside investment in cooperatives under some conditions. It could be used by the Wedge to form a joint venture subsidiary cooperative with co-op members who buy one-acre or half-acre “farms” within the Gardens of Eagan.

The plan would expand on the community-based-agriculture concept in which urban consumers contract with farmers to buy fruits, vegetables and other food. In this case, the Wedge members would buy small parcels of Gardens of Eagan, pool them together and the Wedge will manage it. The new law allows the cooperative to receive modest returns on its investment and secure a reliable supply of fresh vegetables.

The Wedge plan is similar to the New Generation Cooperative business model used by some ethanol and sugar beet processing co-ops where members invest in crop delivery rights instead of land itself.

The 2003 law is often referred to as “The Minnesota Model” in the nation and as the “308B” law in Minnesota, since it expands on the 308A business code.

The law was shaped by the Lindquist and Vennum and Dorsey and Whitney law firms in Minneapolis, modifying draft legislation they first prepared for the Wyoming Legislature. Minnesota now has more than 30 new co-ops incorporated under the new code, said Amy Fredregill, vice president of the Minnesota Association of Cooperatives .

State law ought to encourage Minnesotans to buy local produce and the Wedge has an idea that would provide it. This new law might give them the chance.