Introduction to Co-operatives

A co-operative is a member-owned business (at least five shareholders) and is a separate legal identity. Participants are expected to share responsibility in running the co-operative and the concepts of sharing, community, and democracy are central.

This section of the toolkit introduces you to the co-operative structures and principles, how to register a co-operative, sample documents and policies, a co-operative manual, case studies, and the different forms a co-operative can take.

As noted by Farming Together, On the surface, co-operatives might appear like any other business – commercially successful, productive, and profitable. What sets them apart and makes them a better way to do business for farmers?

Here are six important differences.

1. 1. Co-operatives bring together individuals, or businesses, for economic gain. Family farmers can increase their market power by working together and pooling resources for marketing, processing, or other activities. Co-operatives can aggregate purchasing power, capital, and other resources of their members.
   2. Co-operatives are owned and run by members. The people who benefit from the services of the co-operative are also its owners. As member-owners, they democratically control the enterprise; each member has one vote.
   3. Co-operatives are focused on member benefits, not external shareholder returns. They are able to focus on sustaining their members’ farm businesses in the long term through lower prices, better-quality services, and a share in profits.
   4. Co-operatives develop their members. Co-operatives don’t just pool capital for marketing or other operations but also provide non-financial benefits to their members, including education and leadership opportunities. Co-operatives can pool information relevant to production and help members learn about other parts of the supply chain they work in.
   5. Cooperatives are a self-help solution to remaining competitive. Co-operatives allow their members to keep their individual businesses competitive without relying on the government or other stakeholders.
   6. Co-operatives are an internationally recognised business model. There are agricultural and other co-operatives all around the world that adhere to the International Co-operative Alliance’s Values and Principles.