What is a Cooperative?

Make your Voice Heard

A cooperative or co-op is a business that is owned and controlled by the very same customers who use its products and services. The voice of every person makes a difference. The economic benefits of a cooperative are given back to the members, reinvested in the co-op or used to provide member services.Those returns are called patronage.

Immigrant expansion westward in the first half of the 19th century created a surplus of agricultural production as those lands were settled and cultivated. Adverse economic conditions for farmers included low prices, wide marketing margins, high freight charges and high interest rates. Marketing cooperatives were organized by farmers to counter these conditions.

Throughout the years many industries ventured into different types of cooperatives. Modern day co-ops provide services and products such as natural foods, electricity, hardware, financial services and, of course, farm products. In all cooperatives, it's the people who have the power.

Full service ag cooperatives like Viafield deliver agronomy, energy, feed and grain products and services to members. We are small enough to listen and yet big enough to serve members' needs through state-of-the-art technology.

An Agriculture Cooperative:

  • is locally owned and operated
  • puts members first
  • is responsive to local needs

Co-op Principles

The International Co-operative Alliance has established seven Principles that define co-ops as part of their Statement on the Co-operative Identity.

1st Principle: Voluntary and Open Membership

Cooperatives are voluntary organizations, open to all persons able to use their services and willing to accept the responsibilities of membership, without gender, social, racial, political or religious discrimination.

2nd Principle: Democratic Member Control

Cooperatives are democratic organizations controlled by their members, who actively participate in setting their policies and making decisions. Men and women serving as elected representatives are accountable to the membership. In primary cooperatives members have equal voting rights (one member, one vote) and co-operatives at other levels are also organized in a democratic manner.

3rd Principle: Member Economic Participation

Members contribute equitably to, and democratically control, the capital of their cooperative. At least part of that capital is usually the common property of the cooperative. Members usually receive limited compensation, if any, on capital subscribed as a condition of membership. Members allocate surpluses for any or all of the following purposes: developing their cooperative, possibly by setting up reserves, part of which at least would be indivisible; benefiting members in proportion to their transactions with the cooperative; and supporting other activities approved by the membership.

4th Principle: Autonomy and Independence

Cooperatives are autonomous, self-help organizations controlled by their members. If they enter to agreements with other organizations, including governments, or raise capital from external sources, they do so on terms that ensure democratic control by their members and maintain their co-operative autonomy.

5th Principle: Education, Training and Information

Cooperatives provide education and training for their members, elected representatives, managers, and employees so they can contribute effectively to the development of their co-operatives. They inform the public - particularly young people and opinion leaders - about the nature and benefits of co-operation.

6th Principle: Co-operation among Co-operatives

Cooperatives serve their members most effectively and strengthen the co-operative movement by working together through local, national, regional and international structures.

7th Principle: Concern for Community

Cooperatives work for the sustainable development of their communities through policies approved by their members.

This information is from cooperation works!

 
 What are the Advantages of a Cooperative Business?

Co-ops' organization and function are based on three core principles that focus on the owners - as users - rather than pure investors. Those principles are user benefit, user control and user ownership.

User benefit: Most business structures transfer the benefits, such as profits, to their owners based upon percentage of ownership. However, a cooperative transfers benefits to owner/members based upon the percentage of use - or patronage. A co-op's benefits focus on the users, and are distributed according to usage, not ownership.

User control: The control, or governance, of a cooperative remains with the owner/user who has primary responsibility for the long-term success and growth of the cooperative business.

The members elect a board of directors from within their membership and empower them to oversee the running of the business and represent their interests in the operation of the business. The members also vote on major changes to the business function, structure and governance.

User ownership in a cooperative is achieved by purchasing one share of voting stock and doing business with the cooperative. The cost of the voting stock can be as little as one dollar or as large as a few hundred dollars.

Owner equity of most open traditional cooperatives is accomplished through withholding a portion of the profit earned by the member/user as retained patronage. The "new generation cooperatives" also require members to purchase equity shares that are tied to product delivery requirements. Some of the profits are returned to members in cash with the remaining amount being retained in an individual equity account for each member, thus increasing their equity in the cooperative. Co-ops are unique in that this retained equity is eventually returned.