A cooperative is a business enterprise that is owned, controlled and operated by individuals with a common bond of interest. Being a voluntary organization, they are open to all to provide goods and services so long as the individual is ready to accept the responsibilities of a membership.
A cooperative largely operates via democratic control where equal voting rights are upheld. This is practically a one member, one vote policy. Generally, members contribute equitably to the capital and this capital in turn is subjected to democratic control. In order for the members to contribute effectively to the growth and development of the cooperative, the cooperative provides them with education and training. Moreover, the cooperatives work with local, national or international structures and aim for sustainable development of the community.
There are different types of cooperatives and they can be categorized in two ways. One is according to governance. The other is according to sector.
Cooperatives categorized under type of governance include:
Consumer cooperative – This is defined as a cooperative that is owned by the customers. Basically, it is the people who conduct business to the cooperative and who buy the goods or use the services that are the owners of the cooperative. The purpose of this cooperative is to procure and distribute commodities and services to its members. Examples of a consumer cooperative are those that sell food, provide electricity, offer housing, provide childcare services and even offer financial services as in credit unions. If the consumer cooperative is owned by businesses instead of individuals, it becomes known as a purchasing and shared services cooperative.
Producer Cooperative – This is defined as a cooperative that is owned by the people who produce the same types of goods or raw materials. People who grow similar types of crops or farm animals or produce similar crafts unite together to eliminate the presence of the middlemen and the capitalists. This type of cooperative is highly useful for its members who can take advantage of shared facilities so that production and distribution of goods can be done at the most economical way. If the members of the producer cooperative are individuals, it is otherwise known as workers cooperative, whereas, if the members are businesses, it becomes known as retailers’ or marketing cooperative.
Cooperatives categorized under sector type can be seen in either consumer or producer cooperative. This is a classification that is based on the industry where the cooperative operates. Examples of which are cooperatives that fall under the sector of agriculture, child care services, housing, utility, credit union, cooperative banking, food, healthcare, insurance and marketing.
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