Thousands of cooperative members are celebrating National Co-op Month this October. Secretary of Agriculture Orvill Freeman proclaimed it a national event in 1964 and it continues to serve as an opportunity to share the many advantages of cooperative membership and how great things happen when people join forces and collaborate.
In celebration of Co-op Month UNL Nebraska Cooperative Development Center will be posting a series of coop articles focusing on the basics of cooperatives, examples of people who are improving their lives and communities through the cooperative business model and steps in forming a cooperative business.
What is a Cooperative?
An association of persons (organization) that is owned and controlled by the people to meet their common economic, social, and/or cultural needs and aspirations through a jointly-owned and democratically controlled business (enterprise).
The people of the cooperative are those who use its products, supplies, and/or services. Profits are also often returned back to the members of the cooperative, based on their patronage of the cooperative, and are often more focused on services for members than for investments.
Cooperatives can be created for a number of different reasons or to fulfill a number of different needs: jointly process goods, split costs, split control over work, purchasing power (bulk buys), shared employees, shared wages, etc.
Types of Cooperatives
1) Retail Cooperatives
Retail Cooperatives are a type of “consumer cooperative” which help create retail stores to benefit the consumers making the retail “our store”. They allow consumers the opportunity to supply their own needs, gain bargaining power, and share earnings. They are organized as communities, or other “local groups”, owning their own retail stores. Retail cooperatives are often found in small communities where local businesses have shut down. Examples: hardware, food, agriculture products, and even movie theaters.
2) Worker Cooperatives
Members of worker cooperatives are both employees of the business as well as owners of the cooperative. This is one of the fastest growing segments of cooperatively-owned businesses. Possibilities for being organized as a worker cooperative include: New business start-ups, entrepreneurs sharing highs & lows of business, or a conversion of existing businesses. Examples: bakeries, retail stores, software development groups, and aquaculture.
Larger companies also have the option of Employee Stock Ownership Plans (ESOPs). This means employees will own a stake in the business, allowing for similar types of democracy in the workplace. For more information on worker cooperatives, US Federation of Worker Cooperatives website.
3) Producer Cooperatives
Producer cooperatives are created by producers and owned & operated by producers. Producers can decide to work together or as separate entities to help increase marketing possibilities and production efficiency. They are organized to process, market, and distribute their own products. This helps lessen costs and strains in each area with a mutual benefit to each producer. Examples: agricultural products, lumber, carpentry and crafts.
4) Service Cooperatives
Service cooperatives are a type of “consumer cooperative” which help to fill a need in the community. They allow consumers the opportunity to supply their own needs, gain bargaining power, and share earnings. They are organized to give members more control over the services that are offered. Examples: service co-ops such as childcare, health care clinics, and funeral services.
5) Housing Cooperatives
Housing cooperatives are a type of service cooperative which provide a unique form of home ownership. They allow homeowners the opportunity to share costs of home ownership (or building). They are organized as an incorporated business formed by people who wish to provide and jointly own their housing. The units in a housing co-op are owned by the cooperatives and cannot be sold for profit. Examples include: condominiums, rentals, single-family homes, market rate, and limited equity.
Next week: The 7 Cooperative Principles and Rural Nebraska Cooperatives