Cooperative, << koh OP ruh tihv, >> is a business owned by the people who use its services. Some cooperatives sell goods or services produced by their members. In other cooperatives, farmers or other consumers buy as a group directly from suppliers. By reducing expenses, these organizations often provide lower costs for consumers and higher earnings for producers.
How cooperatives work
Cooperatives around the world operate under seven basic principles adopted by the International Cooperative Alliance in 1995. These principles are: (1) Voluntary and open membership—the cooperative is open to any person who will use its services and accept the responsibilities of membership. (2) Democratic member control—cooperatives are democratic organizations controlled by their members, who actively participate in setting policies and making decisions. (3) Members’ economic participation—members contribute equally to, and democratically control, the capital of the cooperative. (4) Autonomy and independence—cooperatives are self-governing, self-help organizations controlled by their members. (5) Education, training, and information—cooperatives provide education and training for members and inform the public about the benefits of cooperation. (6) Cooperation among cooperatives—cooperatives serve their members and strengthen the cooperative movement by working together through local, national, regional and international structures. (7) Concern for community—cooperatives work for the sustainable development of communities through their policies and programs.
Kinds of cooperatives
The chief kinds of cooperatives are (1) purchasing and shared services cooperatives, (2) marketing cooperatives, (3) housing cooperatives, (4) worker cooperatives, (5) credit unions, and (6) service cooperatives.
Purchasing and shared services cooperatives
are owned and governed by independent business owners or small municipalities. These cooperatives buy goods from farmers, private manufacturers, or wholesalers. By buying in large quantities, they pay reduced prices. They then sell the goods, usually at regular prices, to the public as well as to members. Members later receive refund payments based on the amount of their purchases.
Marketing cooperatives
are groups of farmers who join together to get higher prices for their products. The cooperatives collect, process, sell, and ship the products of their members. Most of these groups have their own canneries, warehouses, and other facilities. Such cooperatives handle many well-known brands of food. For example, Sunkist is the trademark of a California citrus growers’ cooperative. Other well-known cooperative brands include Land O’ Lakes dairy products, Ocean Spray cranberries, and Sun-Maid raisins.
Housing cooperatives
are owned by people who form a membership-based corporation to buy the buildings in which they live. Individual members buy shares in the corporation. The shares entitle them to occupy an apartment or house in the cooperative, but they do not actually own their units. Members also share maintenance costs.
Worker cooperatives
operate in industries such as child care, commercial cleaning, food service, health care, technology, and manufacturing. Worker cooperatives across the United States provide their members with both jobs and ownership. These cooperatives can be traced back to the industrial revolution and the rise of the labor movement.
Credit unions
are the most common type of cooperative in the United States. A credit union is a member-owned financial cooperative that is democratically controlled by its members and provides financial services at competitive rates. Members pool their savings at a credit union. When one member needs credit, he or she may borrow from the union at a lower rate of interest than from a traditional bank.
Service cooperatives
are owned by the people who use the services they provide. Electrical cooperatives generate and sell electrical power in rural areas where private power companies cannot make enough profit. Service cooperatives also supply irrigation and telephone service in rural areas. Members of a group health cooperative receive medical care for a monthly or annual fee paid in advance. Other cooperatives provide automobile repair, legal help, and many other services.
Cooperatives around the world
Cooperatives are most common in the industrial nations, including Canada, Japan, the United States, and many countries of western Europe. Regions such as Africa, Asia, and Latin America have far fewer such organizations. However, cooperatives are helping to propel sustainable development in the agricultural sector of many developing countries.
In Canada,
cooperatives play an important role in many areas of people’s lives. Cooperatives provide communication, day care, health care, housing, retail, and student services. They also provide such products as farm supplies, insurance, and loans.
In other countries,
cooperatives are most widespread in the Scandinavian nations–Denmark, Norway, and Sweden. Most of the farmers belong to marketing cooperatives, and all three countries have much cooperative housing. Many Swedes regard cooperatives as halfway between capitalism, in which individuals own industry, and socialism, in which the government owns it. Other nations with many cooperatives include Finland, France, Iceland, Italy, Switzerland, and the United Kingdom.
Israel has two types of cooperative farming settlements, moshavim and kibbutzim. The farmers in a moshav have their own plots of land, but those in a kibbutz work on a communal farm. Both types of settlements buy supplies and market crops cooperatively.
In North Korea, most farms are cooperatives known as collective farms. These farms are controlled by the country’s Communist government. Workers on the collective farms receive cash payments and a share of the farms’ products. They also may help manage the farms.
History
Most historians trace the beginnings of the modern cooperative movement to the early 1800’s. Farmers who wanted more control over the prices they received for their products formed marketing cooperatives. Farmers also formed purchasing cooperatives, in which they pooled their orders for coal, seed, and other products so they could buy in large amounts. A farmers’ organization called the National Grange, founded in 1867, promoted both types of cooperatives. The Knights of Labor and other labor unions of the 1800’s established consumer cooperatives to provide cheaper goods for low-paid workers.
In the early 1900’s, the U.S. government began to support farmer cooperatives. The Capper-Volstead Act of 1922 recognized the right of farmers to form such organizations. It stated that organizing a cooperative did not violate antitrust laws. The Cooperative Marketing Act of 1926 established what is now the Cooperative Services Program. This program of the U.S. Department of Agriculture helps organize farmer cooperatives and improve their effectiveness.
The National Cooperative Business Association was the first national organization for cooperative businesses in the United States. It was founded in 1916 and was initially known as the Cooperative League of America. Now called NCBA CLUSA, the organization provides education, support, and advocacy to U.S. cooperatives and for its international development work worldwide.
During the 1960’s and 1970’s, rising prices created an increased interest in consumer cooperatives. Many people formed small neighborhood cooperatives called buying clubs to save money on groceries. The members took turns buying fruits, vegetables, and other foods from farms or wholesale markets and distributed the items among themselves.
