Cooperative

Cooperative 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

Members of the cooperative share equally in control­ling the organization. They purchase or earn shares in the cooperative, providing the capital necessary to oper­ate the business. Profits are used to improve the busi­ness or are returned to members. The members hold meetings annually to elect directors from among them­selves. The directors employ managers to run the day- to-day activities of the cooperative.

Most cooperatives operate under the following gen­eral principles. These principles are: (1) The cooperative is open to any person who will use its services and ac­cept the responsibilities of membership. (2) Each mem­ber has one vote, regardless of how many shares the member holds. A few cooperatives assign the number of votes according to use of the cooperative. (3) The co­operative pays limited interest on its shares. (4) All prof­its are returned to members according to how much they use the business. The cooperative usually pays the returns both in cash and in cooperative dividends. (5)

The cooperative educates members to help them in making business decisions. It also helps the public un­derstand how cooperatives operate. (6) Cooperatives work together at local, regional, national, and interna­tional levels to promote the cooperative movement.

Kinds of cooperatives

The chief kinds of cooperatives include (1) supply, or purchasing, cooperatives, (2) marketing cooperatives, (3) housing cooperatives, (4) credit unions, (5) service coop­eratives, and (6) worker cooperatives.

Supply, or purchasing, cooperatives are retail stores owned and operated by some or all of their cus­tomers. 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 normal trade prices, to the public as well as to members. Members later receive refund payments based on the amount of their purchases.

The main types of supply cooperatives are consumer cooperatives and farm supply cooperatives. Consumer cooperatives sell food, household supplies, and other goods. Farm supply cooperatives specialize in farm sup­plies, such as feed, fertilizer, and seed.

Supply cooperatives have been most successful in the United Kingdom and the Scandinavian countries. During the 1980's, many cooperatives were started in Australia, Britain, and other countries to supply health foods and organic foods, often in bulk quantities.

Marketing cooperatives are groups of farmers who join together to get higher prices for their products. The cooperatives collect, process, sell, and transport the products of their members. Many of these groups have their own canneries, warehouses, and other facilities. They share expensive machinery which an individual farmer would probably not be able to afford alone. This form of cooperative is common in Denmark, France, the Netherlands, Norway, Sweden, the United Kingdom, and the United States. Australia has over 400 agricultural cooperatives. In Canada, most wheat farmers market their crops through large cooperatives called wheat pools. The Saskatchewan Wheat Pool is the world's larg­est marketing cooperative, in India, cooperatives are on the increase, particularly in rural areas.

In the Soviet Union, cooperative farmers not only share facilities but also hold their land in common and receive shares in the profits according to how much work they do. In Israeli kibbutzim (cooperative farm set­tlements), the land is held collectively and the profits distributed according to the needs of the members.

Housing cooperatives, or housing associations, are owned by people who form a cooperative to buy the buildings in which they live. The shares in the society entitle them to occupy an apartment or house in the co­operative, but they do not actually own their units. The members form a management committee and share maintenance costs. Housing cooperatives are most com­mon in large cities such as London, Melbourne, Sydney, Bombay, and Delhi.

Credit unions are a common type of cooperative in Australia, Canada, and the United States. They are formed by people with a common bond. For example, the members may work for the same company or be­long to the same church or trade union. The members of a credit union pool their savings. When one of them has to borrow money, he or she may borrow from the union at a low rate of interest.

Service cooperatives provide many services. Some mutual insurance companies are cooperatives jointly owned and controlled by the people who are insured by (hem. There are cooperative banks and funeral services. In the United States, 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 such areas. Members of a group health coopera­tive receive medical care for a monthly or yearly fee paid in advance.

Worker cooperatives are factories or other indus­trial organizations where the employees between them own the company and receive a share in the profits.

They have been most successful in Italy, France, and Spain, since the early 1970's. More recently, worker co­operatives have been set up in Australia and the United Kingdom.

Many people regard cooperatives as halfway be­tween capitalism, in which individuals own industry, and socialism, in which the government owns it. In Swe­den, which has both private industry and government- owned industry, cooperatives are often called the mid­dle way. Other nations with many cooperatives include Finland, France, Iceland, Italy, Switzerland and the United Kingdom.

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 may also 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. One of the first of these organizations was a cooperative cream­ery established in 1810 by dairy farmers in Goshen, Con­necticut, U.S.A. Farmers also formed purchasing cooper­atives, in which they pooled their orders fo^coal, seed, and other products so they could buy in large quanti­ties.

The first cooperative in Great Britain was the Roch­dale Society of Equitable Pioneers, started in 1844 in Toad Lane, Rochdale, Lancashire. The cooperative was set up to provide members with good quality, staple foods at reasonable prices. The organization laid down basic rules, which have been followed in cooperative societies ever since. The first Australian consumer coop­erative was set up in 1859 in Brisbane.

The Rochdale society was so successful that as well as paying dividends to its members, it used some of the profits to pay for clubs, libraries, and education for members. Later the Cooperative Wholesale Society (CWS) was started to buy goods from manufacturers and supply them to the cooperative shops. The society ‘.also set up its own banking, insurance, and funeral serv-

During the 1960s and 1970's, rising prices created an increased interest in consumer cooperatives. In some countries, people formed local cooperatives 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. Related articles: Credit union, Mutual company, Kibbutz, Owen (Robert).

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