What makes a co-op different?

Farming Together - Southern Cross University

Knowledge level: Introductory

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.

  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 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.
  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. 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.
  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.


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.

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