Types of Cooperatives
Cooperatives usually perform any one or a combination of three kinds of service functions, but with varying emphasis. They are generally classified by their major activity.
Marketing cooperatives market products members produce - milk, fruit, vegetable, grain, livestock, rice, poultry, cotton, sugar, cane, sugar beets, and many specialty products. Marketing includes assembling, processing, and selling raw or processed products in retail or wholesale markets for members. Several cooperatives market on a regional or national basis.
Purchasing cooperatives, often called farm supply or supply cooperatives, provide farmers with many production supplies for their farm operation. Major items include feed, fertilizer, petroleum, seed, farm chemicals, as well as building materials and farm equipment. Many local cooperatives have formed regional cooperatives to obtain or manufacture supplies.
Purchasing cooperatives cut out the middle man by buying directly from the wholesaler. The savings are passed on to the members.
Farm supply cooperatives provide the farmer with seed, and farm equipment.
A petroleum cooperative provides people with gas, oil, tires and other supplies.
One thing to remember is that it is difficult for a cooperative to give credit to its members. This is especially true for low-income cooperatives. The reason is that the cooperatives operates on a low margin and it doesn’t have a lot of extra cash on hand and why the cooperatives encourages members to buy on a cash basis.
Consumer goods can also be purchased wholesale by cooperatives in a manner similar to a buying club. Items could range from wearing apparel to household furnishings.
As we view cooperatives as a vehicle for providing services to consumers, let us not overlook the value of the cooperative to the producer. The cooperative can provide the producers with essential marketing services as well as other operating needs. Each cooperative in this category is essentially unique. The goods produced, the environment, and the size of the organization may vary, but the underlying cooperative principles are still embraced.
Service cooperatives provide services related to the production and marketing of farm commodities, or common needs in other areas. These other services include credit, electricity, telephone, insurance, irrigation, artificial breeding, plant and animal re- search, pest management, grove care, forest management, housing, credit unions and many more. The new cooperative will have a better chance to survive if it begins by marketing a few products, selling a few supplies, or providing a limited range of services in a well-defined geographic area. As members and management gain experience, new products and services can be added and its operating territory expanded. The purpose of the cooperative is not to make profits but to provide services and benefits to its users. The cooperative serves its members by providing them with quality products at fair prices.
Any money left over at the end of the year is surplus, not profit. The surplus belongs to all members because they have helped to make it. It can be used to expand the cooperative, to hold as an investment for expansion or to give back to the members according to how much they used the cooperative s services the last year.
People who own their own business would not cheat themselves. They want a business that gives them services and savings. The cooperative managers and employees are hired by the Board of Directors to provide these services to the members.
A cooperative could expand to provide more than one service to its members. For example, a farmer marketing cooperative can also set up a credit union. A small deduction can be made from a member’s sales to go into his or her savings account. Many members of low-income cooperatives need better housing. Since cooperatives are people who are organized to solve their own problems, the cooperative may help develop self-help cooperative training. The cooperative can also help provide day care centers and recreational programs.
Some of the more common cooperatives are described briefly below.
Agricultural cooperatives are organized to help farmers gain market power by: collective marketing of crops, increased bargaining power by achieving economies of scale, processing commodities to add value, and to purchase supplies and services. More...
Cooperatives offer distinctive benefits to artists of all types. By working together, they can gain marketing advantages, reap quantity discounts on supplies through joint purchasing, share studio space and equipment, and maintain control over the distribution of their work. More...
Childcare and preschool cooperatives can be organized in a variety of ways. Workers can form a cooperative to offer childcare or preschool services (see worker cooperative). More...
A credit union is a member-owned, nonprofit, financial cooperative organized to provide financial services to benefit consumers. Credit unions usually encourage savings and offer competitive rates for loans. More...
The member-owners of food cooperatives are typically consumers, however some are worker-owned or share decision making among both workers and consumers. More...
Housing cooperatives are democratically controlled corporations established to provide housing for members. Each household owns a share in the corporation, which entitles the member to occupy a unit of housing. More...
Utility cooperatives provide services such as communication services, electricity, and water to their members. Additionally, the cooperatives benefit from the lower rates that result when users are also owners. More...
A worker cooperative is a democratically managed business that is owned and controlled by the workers. The cooperative form of organization allows ordinary people to combine their energy, capital, and skills to gain steady employment and income, participate in the ownership and management of their business, and share the profits made from their investment and labor. More...
A variety of other types of co-ops serve the needs to their members--including business, insurance, retail, and student cooperatives. Members are the users of these services and elect elect the board of directors. More...