Agricultural Co-operatives: what’s the difference?
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.
- 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.
- 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.
- Co-operatives are focused on member benefit, 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.
- 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.
- Co-operatives are a self-help solution to remaining competitive. Co-operatives allow their members to keep their individual businesses competitive without relying on government or other stakeholders.
- 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.
Benefits for farmers
Co-ops can stabilise farming communities and food supply chains, even during an economic downturn. By focusing on members’ operations and capital, geographically focused producer co-ops can potentially move into other areas of the supply chain, including:
- Packing, manufacturing and processing
- Marketing, logistics/distribution/transport
- Information and services for members
- Data collection, research and analysis
- Collective input buying and bulk sales.
When a producer co-op moves into new parts of the supply chain it aims to benefit its members, that is, farmers.