Agricultural cooperatives are organized to help farmers gain market power by joining together to market their crops, increase their bargaining power by achieving economies of scale, processing their commodity to add value, and/or to purchase supplies and services.
Why are cooperatives important?
Agriculture Co-ops. Agricultural cooperatives have made an impact on food systems around the world for generations. Farmers in a co-op make decisions together and share profits among all members, rather than outside investors. Income from farmer-owned co-ops is reinvested into the business or returned to the members.
What is a farmer co op?
existing agricultural cooperative. Likewise, many of the concepts apply to any type of cooperative business—agricultural as well as nonagricultural. As you consider an agricultural cooperative, keep in mind that not all business concepts fit well into a cooperative form of business. It is important to explore alternative forms of business for …
What is cooperative agriculture?
What Co-ops Do Agricultural marketing cooperatives per-form many functions. They may assemble the products of a number of producers into larger lots to facilitate more efficient han-dling and more competitive sales, and then grade and ship these lots to market. Some marketing cooperatives perform first-stage processing such as ginning cotton or hull-
How do cooperatives function?
Co-ops are producer- and user-owned businesses that are controlled by — and operate for the benefit of — their members, rather than outside investors. The co-op business model is highly flexible and can address a wide variety of needs. Farmer-owned co-ops help producer-members market and process their crops and livestock, and secure needed production supplies and …
What is an agricultural supply cooperative?
Agricultural supply cooperatives aggregate purchases, storage, and distribution of farm inputs for their members. By taking advantage of volume discounts and utilizing other economies of scale, supply cooperatives bring down the cost of the inputs that the members purchase from the cooperative compared with direct purchases from commercial suppliers. Supply cooperatives provide inputs required for agricultural production including seeds, fertilizers, chemicals, fuel, and farm machinery. Some supply cooperatives operate machinery pools that provide mechanical field services (e.g., plowing, harvesting) to their members.
How do agricultural cooperatives help the poor?
As agricultural production is often the main source of employment and income in rural and impoverished areas, agricultural cooperatives play an instrumental role in socio-economic development, food security and poverty reduction. They provide smallholder farmers with access to natural and educational resources, tools, and otherwise inaccessible marketplaces. Producer organisations can also empower smallholders to become more resilient; in other words, they build the capacity of farmers to prepare for and react to economic and environmental stressors and shocks in a way that limits vulnerability and promotes their sustainability. Research suggests that membership in a producer organisation is more highly correlated with farmer output or income than other standalone investments such as training, certification, or credit.
Where did cooperatives originate?
Origins. The first agricultural cooperatives were created in Europe in the seventeenth century in the Military Frontier, where the wives and children of the border guards lived together in organized agricultural cooperatives next to a funfair and a public bath.
What is Hays coop?
Hays Coop elevator and offices, one of hundreds of grain-oriented agricultural marketing coops in the U.S. Interior Plains.
What are the types of cooperatives in the U.S.?
Interior Plains. In agriculture, there are broadly three types of cooperatives: a machinery pool, a manufacturing/marketing cooperative, and a credit union .
Why are cooperatives important?
While the economic benefits are a strong driver in forming cooperatives, it is not the sole consideration. In fact, it is possible for the economic benefits from a cooperative to be replicated in other organisational forms, such as an IOF. An important strength of a cooperative for the farmer is that they retain the governance of the association, thereby ensuring they have ultimate ownership and control. This ensures that the profit reimbursement (either through the dividend payout or rebate) is shared only amongst the farmer members, rather than shareholders as in an IOF.
Is economic benefit a driver of cooperatives?
While the economic benefits are a strong driver in forming cooperatives, it is not the sole consideration. In fact, it is possible for the economic benefits from a cooperative to be replicated in other organisational forms, such as an IOF.
Why are agricultural cooperatives important?
In a cooperative, members would pool their financial resources and expertise to support each other’s farms. Today, as more independent farms function collectively, they can achieve significant long-term success.
How do agriculture cooperatives impact food systems?
Agriculture Co-ops. Agricultural cooperatives have made an impact on food systems around the world for generations. Farmers in a co-op make decisions together and share profits among all members, rather than outside investors. Income from farmer-owned co-ops is reinvested into the business or returned to the members.
What is farmer owned co-op?
In a farmer-owned co-op, like-minded food producers help build a better local economy in the communities they serve.
What is farm cooperative?
A farm cooperative involves a network of member farmers who reap many benefits of doing business as a unit. Individual farms work together to buy necessary supplies and services, as well as distribute, market and sell their products. Farmers save costs and access goods and services otherwise unavailable to them.
How much do farm co-ops make?
Farm co-ops generate about $6.5 billion in net income each year. More than 250,000 people are employed by farmer-owned co-ops. Most of the top agricultural cooperatives are based in the Midwest, especially Iowa and Minnesota. Examples: Florida’s Natural, Land O’Lakes, Ocean Spray, Blue Diamond, Organic Valley.
What is cooperative business?
cooperative is a special type ofcorporation that is owned andcontrolled by those who use itsservices. In furtherance of theirmutual benefit, members financeand operate the business. Byworking together, members may beable to meet objectives that theycould not meet as individuals.
What is an ACCO?
The Agricultural CooperativeCouncil of Oregon (ACCO) is atrade association of about 25 stateand regional agricultural coopera-tives that do business in Oregon.ACCO focuses on supportingeducational programming related toagricultural cooperatives and alsosupports lobbying efforts onlegislative issues of broad interestto its members. An annual meetingusually centers on educationaltopics of interest to agriculturalcooperative managers, directors,and members.
What is the purpose of USDA cooperative programs?
The goal of the Cooperative Programs of USDA Rural Development is to promote understanding and use of the cooperative form of business. This is accomplished through education (including a large library of co-op publications), research and statistics, and technical assistance. We also administer programs that provide financial support to co-ops. Please visit the Co-ops Programs website for a more in-depth discussion about USDA’s Cooperative Programs. You may also visit the Rural Utilities Service webpage for more information about the Rural Utilities Program of USDA Rural Development and the services it provides to utility co-ops.
What is a farmer owned co-op?
Farmer-owned co-ops help producer-members market and process their crops and livestock, and secure needed production supplies and services. Consumer-owned rural utility co-ops provide electrical power and telecommunications services. Financial co-ops provide credit and financial services.
What is the USDA agency that helps cooperatives?
Some other USDA agencies also have programs that help cooperatives, including the Agricultural Marketing Service (AMS ) and the Cooperative State Research, Education and Extension Service which is now known as the National Institute of Food and Agriculture (NIFA).
What is a co-op business?
Co-ops are producer- and user-owned businesses that are controlled by — and operate for the benefit of — their members, rather than outside investors. The co-op business model is highly flexible and can address a wide variety of needs.
What is a cooperative business?
The International Co-operative Alliance and National Cooperative Business Association define a cooperative as a group of people with a specific need who work together to create a company to meet that need.
What is worker cooperative?
Worker cooperatives are formed and owned by employee groups that generate profits for the company and its workers.
What is the National Agricultural Law Center?
The National Agricultural Law Center has a state-by-state list of Business Organization Forms and Filing Instructions that could be helpful. Also, the National Cooperative Business Association has a spreadsheet (Excel download) showing the cooperative business regulations in each state.
How much of a cooperative income must be used to meet losses?
Conduct business as set by the tax code and IRS regulations. It must receive 85% or more of its income each year from its members and use the income solely to meet the cooperatives’ losses and expenses. Taxes for cooperative businesses are complicated and getting non-profit status from the IRS is not for amateurs.
Is a cooperative business subject to federal tax?
The IRS allows several different federal income tax options for cooperative businesses. One variation is exempt from tax and another is subject to tax.
Do you have to be a co-op to use the word “cooperative” in your name?
Some states have regulations specifically for cooperatives ( New Mexico, for example.) In some states, you must be formed under co-op status to use the word “cooperative” in your name.
What is a producer co-op?
Producer co-ops, like Sunkist, owned by and operated for their member-growers. Cooperative buying clubs, in which a group of households gets together to buy foodstuffs in bulk and divide the orders among the members. Retail co-ops like Ace Hardware, which was formed in 1924. The company is still owned “solely and exclusively by …
Why did farmers start cooperatives?
Farmers first turned to cooperatives as economic tools to gain advantage of qual-ity and quantity of farm production supplies such as feed, fuel, fertilizer, and seed. These early efforts often became business-es having full-time managers and ware-houses to handle other production supplies and services such as farm chemicals, ani-
Why are cooperatives classified?
The classifications do not mean that one type may necessarily be better or worse than another. It simply means that there are distinguishing differences among the types, and shows the wide variety of cooperatives and the differences in their operations, management, control, etc.
Overview
An agricultural cooperative, also known as a farmers’ co-op, is a cooperative in which farmers pool their resources in certain areas of activity.
A broad typology of agricultural cooperatives distinguishes between agricultural service cooperatives, which provide various services to their individually-farming members, and agricultural production cooperatives in which production resour…
Purpose
Cooperatives as a form of business organization are distinct from the more common investor-owned firms (IOFs). Both are organized as corporations, but IOFs pursue profit maximizationobjectives, whereas cooperatives strive to maximize the benefits they generate for their members (which usually involves zero-profit operation). Agricultural cooperatives are therefore created in situati…
Origins and history
The first agricultural cooperatives were created in Europe in the seventeenth century in the Military Frontier, where the wives and children of the border guards lived together in organized agricultural cooperatives next to a funfair and a public bath.
The first civilagricultural cooperatives were created also in Europe in the second half of the nineteenth century. They spread later to North America and the other continents. They have bec…
Supply cooperatives
Agricultural supply cooperatives aggregate purchases, storage, and distribution of farm inputs for their members. By taking advantage of volume discounts and utilizing other economies of scale, supply cooperatives bring down the cost of the inputs that the members purchase from the cooperative compared with direct purchases from commercial suppliers. Supply cooperatives provide inputs required for agricultural production including seeds, fertilizers, chemicals, fuel, an…
Marketing cooperatives
Agricultural marketing cooperatives are cooperative businesses owned by farmers, to undertake transformation, packaging, distribution, and marketing of farm products (both crop and livestock.)
New Zealand has a strong history of agricultural cooperatives, dating back to the late 19th century. The first was the small Otago Peninsula Co-operative Ch…
Production cooperatives
These are cooperative farms, jointly owned or managed by a cooperative society.
See also
• Winemaking cooperative
Further reading
• McBride, Glynn (2014), Agricultural Cooperatives: Their Why and Their How
• Derr, Jascha (2013), The cooperative movement of Brazil and South Africa
• Zvi Galor