What Is a Cooperative? The Basics

What exactly is a cooperative?

An autonomous association of persons united voluntarily to meet their common economic, social and cultural needs and aspirations through a jointly owned and democratically controlled enterprise.

What do Cooperatives Provide?cooperatives

  • Credit
  • Transportation
  • Facilities
  • Recreational Equipment
  • Food
  • Housing
  • Healthcare
  • Childcare
  • Wholesale goods and supplies
  • Electricity
  • Telephone and telecom services
  • Farm production supplies and services
  • Farm marketing

Many of the biggest American cooperatives are agricultural enterprises, what is the history of U.S. Agricultural co-ops?

  • 1752: Benjamin Franklin forms first successful U.S. co-op
  • 1800s: Basis of co-op governance takes shape
  • 1810: First formal farmer co-op forms in the U.S.
  • 1900: 1,223 farmer co-ops active in the U.S.
  • 1922: Congress passes Capper-Volstead Act, which gives limited antitrust immunity to farmer co-ops

What is the state of Agricultural Co-ops Today?agcoops

  • 2.2 million farmers own the nearly 2,300 farmer cooperatives in the nation.
  • $213 billion annually in economic activity and
  • Generate 184,000 full-time, part-time and seasonal jobs.
  • Total payroll in excess of $8 billion
  • A majority of the nation’s farmers belong to one or more cooperative.

Are there any high-profile nonagricultural co-ops?

TrueValue, Ace Hardware, REI, and Best Western are all co-ops.

What are the different types of cooperatives?

1) Marketing Cooperative

  • Assist members in maximizing returns from goods they produce
    • Handle, process and sell
    • Grade, transport, bargain
    • Add value
    • Research new product development
  • Ag, Forestry, Horticulture, Crafts
  • Takes members products
  • Runs the products through a function of some sort:
    • Processing
    • Transport
    • Bargain
    • Distribute
  • Provides a member benefit – added value by controlling product delivery to market

2) Purchasing Cooperative

  • Allow members to gain access to affordable production supplies and goods
    • Purchase in bulk to reduce costs and increase purchasing power
    • Provide direct ownership of refineries, plants, retail facilities, research facilities
  • Hardware, independent grocery stores, restaurants (fast food)
  • Allows members to reduce costs of producing products by collecting functions
  • Functions include:
    • Refining
    • Plants
    • Bulk purchasing
    • Delivery systems
    • Warehousing
  • Members benefit from reduced costs, quality control, increased access

3) Service Cooperatives

  • Provide needed services:
    • Meet many needs
    • Custom application of purchased supplies, transport of products, etc.
    • Provides utilities, credit, housing, health care, technology, etc.

This article was written by attorney Kim Lowe.