Cooperative Functions

A cooperative exists to fill a mutual need of its members. Depending on the need, a cooperative may serve one or multiple functions.  

Review the presentation to learn more about the functions a cooperative can serve.

  • The goal of a marketing cooperative is to benefit members by helping them increase their margins, maintain control of their product to point of sale, and secure a reliable and consistent market for their goods. Marketing cooperatives may negotiate sales contracts, including prices and terms, with buyers. Some marketing cooperatives aggregate product from members to achieve a volume sufficient to access larger markets, such as institutions and intermediaries. The co-op may further process and then sell the products with added value. For example, agricultural cooperatives market farm products for members. Examples include CHS, Inc. (grain, energy), Dairy Farmers of America (milk) and United Producers Inc. (livestock).
  • Purchasing cooperatives achieve discounts on bulk purchases and pass the savings on to members. Farmers, manufacturers, and builders benefit from purchasing cooperatives to buy inputs. Purchasing cooperatives such as Ace Hardware purchase bulk product and resell product in smaller quantities to members and non-members.
  • Service cooperatives provide members access to services. Credit unions provide members with access to credit. Healthcare cooperatives provide care to thousands of patients each day. Insurance co-ops provide members with risk management policies for home and business. Electric cooperatives brought power to rural America.

 

   

Rick Petty, Logan County Electric Cooperative General Manager, shares the cooperative’s history.

References

“Understanding Cooperatives: Cooperative Business Principles”(2011). U.S. Department of Agriculture Rural Development, Cooperative Information Report 45, Section 2. Retrieved from http://www.rd.usda.gov/files/CIR45_2.pdf