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.

Attorney Kim Lowe helps enterprises in both the for-profit and nonprofit sectors, navigate the complex legal and business issues faced by the modern company. Utilizing decades of legal, business and leadership experience, as well as her nationally recognized unique cross-sector expertise, Kim helps business and thought leaders create, fund and operate for-profit enterprises, benefit corporations, cooperatives and/or nonprofit organizations.