While at TxOlan I was told by a member thatit is important for the membership tohear the bad news as well as the good news. Seemsyou all don't like sugar coating and politics any more than I do - it the truth and performance that counts.As, president so far I have heard more bad than good. But lets start with financial news, the number one thing I have struggled with. Some of you may or may not know that your Co-op is in serious debt. Something that occurred 6 years ago. 50 generous folks lent monies to the total of $300,000. This with promise of getting it back in 3 months. It was used to obtain product from South America with the idea that its sale would generate profit to capitalize the cooperative.Then it was negotiated with those members with the promise to repay them in one year, at an interest rate of 7.5%.At the end of the year, when the notes came due, sales were at record highs. AFCNA had generated over $1.5 million in gross sales. Unfortunately, when the books were balanced, AFCNA had lost over $500,000 in the process of making those sales. Our Cooperative was effectively bankrupt, and it was only through the heroic efforts of a small group of Directors that our doors remained open. The disastrous foray into retail and catalogue sales,perhaps well intentioned, led to a number of immediate changes, including the dismissal of the Co-op'sGeneral Manager and a change inthe makeup of the Board of Directors.We continue to struggle with the legacy of the loss of a half million dollars. But thereare hard lessonslearned.
The success of AFCNA rests not with imported products, but with generating profit from member produced fiber.The marketing and sales of finished products at the retail levelcan quickly surpassthe potential profits and lead to significant losses.The development of finished goods - especially high fit and finish goods (i.e. products of multiple sizes and colors) is difficult and expensive. The associated costs, coupled with inventory over and under-runs will erode profits and might well lead to losses.Credit carries consequences, especially for a member owned Cooperative. Anything beyond normal business lines of credit necessary to even out cash flow in a seasonal business shifts influence to the creditors and risk to the member/owners - a double whammy, as it were, that is not in the members' best interests and only complicates managing the Co-op.While the annual balancing of books is an essential business practice, it is even more important to have a clear picture of day to day finances in order to make good decisions and to adapt to the changing business climate when needed.Many of the above lessons have already been put into practice. Examining our books one can see that profits centers have inexorably shifted towards member submitted fiber and away from high fit and finished imported products. The focus has been on the sales of low fit and finish goods, such as our ever popular Extreme Alpaca socks and hand knitting yarns. Efficient accounting systems have been put in place, are monitored by an accountant, and are reviewed by the Board of Directors monthly. The vast majority of AFCNA business is conducted at the wholesale level, And, your Board finalized a written business plan that will carry us into the future.That still leaves us with the unpaid promissory notes thatAFCNA issued over half a decade ago - debt that now totals over $360,000. We have made good faith payments towards the interest on these notes for the past 4 years, butat a heavyimpact on AFCNA finances and distribution of profits to members. The debt represented by these notes hasimpeded both out growth and our overall success.Your current board has approach these people to alter the terms of their notes. Im happy to report that 80% of the note holders have agreed to a lowered interest rate of 2%; fair in todays economic environment. Some have graciously forgiven their notes, believing that the Co-op will serve them better in the future. There are a few current note holders that are willing to sell their promissory notes at the2% interest rate. Anyone like to purchase a note?Contact me for more information.Thats the money part and bad part of this email. Let me tell you about the great stuff.Most members are very energized, the industry is energized. We found, at the TxOlan show, many new people wanting to join the Co-op. We had a booth with product that the staff brought in along with new membership marketing literature . Another blast about that will be forth coming. We also, talked to many people that are seriously thinking about getting into the alpaca business and using the co-op as their source for fiber, product or return. So, tell the naysayers to take a hike. The Alpaca industry on on the rebound.I promise that during my term as President, I will be completely honest and upfront about AFCNAs situation, challenges and progress. Your Board is here to help and to answer your questions. You have a paid staff that gives AFCNA their heart and soul daily, and even more when needed! We are working hard to get your fiber into the product pipeline. Although Peruvian imports continue to pay the bills while we continue to educate and assist the membership to increase fiber contributions, you should understand that 60% of our sales consist of products primarily socks manufactured right here in the United States. Other North American products are being considered as well, but our primary concern must be our ability to provide an attractive return to our members.Remember, you need to get on the website and up date your profiles. The members site has some new features and your information and participation is needed. One new feature is the implementation of discussion forums where AFCNA business and other issues can be discussed. We have current and former Directors that regularly check these forums prepared to give knowledgeable answers questions about Co-op issues. We also have advertising opportunities on the members' site, so let the staff know if they can be of some assistance.Finally, I ask that any of you with skills in banking, advertising, marketing (retail and/or wholesale) or product research/development contact me or the Decatur office. Your skills and talents would be valuable contributions to our various committees. I need your help. Your Board needs your help. YOUR Co-op needs you! Remember, we can only grow so far without your energy, your fiber contributions, and your support.
Larry VellozziPresidentAFCNARanchguy@yahoo.com541-660-0811
You may automatically unsubscribe from this list at any time by
visiting http://afcna.com/cgi-bin/dada/mail.cgi/u/[list]/.
The Alpaca Fiber Cooperative of North America,
Inc.
1-877-859-0172
P.O. Box 349, Decatur,TN 37322
All rights reserved
News 
