Consumers' cooperative

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A consumers' cooperative is a cooperative business owned by its customers for their mutual benefit. It is a form of free enterprise that is oriented toward service rather than pecuniary profit. The customers or consumers of the goods and/or services the business provides are often also the individuals who have provided the capital required to launch or purchase that enterprise.

In some countries, they are also known as retail co-operatives or retail co-ops, though they are not to be confused with retailers' cooperatives, whose members are retailers rather than consumers.

There are many types of consumers' cooperative. There are health care, insurance, and housing cooperatives as well as credit unions, agricultural and utility cooperatives. The major difference between consumers' cooperatives and other forms of business is that the purpose of a consumers' cooperative association is to provide quality goods and services at the lowest cost to the consumer/owners rather than to sell goods and services at the highest price above cost that the consumer is willing to pay. In practice consumers' cooperatives price goods and services at competitive market rates. The difference is that where a for-profit enterprise will treat the difference between cost (including labor, etc.) and selling price as financial gain, the consumer owned enterprise returns this sum to the consumer/owner as an over-payment.

Large consumers' co-ops are run much like any other business and require workers, managers, clerks, products, and customers to keep the doors open and the business running. In smaller businesses the consumer/owners are often workers as well. Consumers' cooperatives can differ greatly in start up and also in how the co-op is run but to be true to the consumers' cooperative form of business the enterprise should follow the Rochdale Principles.

Consumers' cooperatives may, in turn, form Co-operative Federations. These may come in the form of co-operative wholesale societies, through which Consumers' Co-operatives collectively purchase goods at wholesale prices and, in some cases, own factories. Alternatively, they may be members of Co-operative unions.

Contents

[edit] Governance

Consumers' cooperatives utilize the cooperative principle of Democratic member control, or one member/one vote. Most consumers' cooperatives have a board of directors elected by and from the membership. The board is usually responsible for hiring management and ensuring that the cooperative meets its goals, both fiscal and otherwise. Democratic functions, such as petitioning or recall of board members, may be codified in the bylaws or organizing document of the cooperative. Most consumers' cooperatives hold regular membership meetings (often once a year). As mutually-owned businesses, each member of a society has a shareholding equal to the sum they paid in when they joined.

[edit] Role of government

While some claim that surplus payment returns to consumer/owner patrons should be taxed the same as dividends paid to corporate stock holders,[1] others argue that consumer cooperatives do not return a profit by traditional definition, and similar tax standards do not apply.[2]

[edit] Problems of consumers' cooperation

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Since consumers' cooperatives are run democratically, they are subject to the same problems typical of democratic government. Such difficulties can be minimized or eliminated by frequently providing member/owners with reliable educational materials regarding current business conditions.[3]

[edit] A historical account of consumers' cooperation social goals

Consumers' co-operation has been a focus of study in the field of Co-operative economics. The Co-operative Federalist school, in particular, has advocated such organisational forms, claiming a broad set of benefits including economic democracy and justice, transparency, greater product purity, and financial benefits for consumers.[4]

[edit] Consumers' co-operatives in different countries

[edit] Australia

  • University Co-operative Bookshop Ltd, Co-op Bookshop, Australia's largest Consumers' co-operative. Established by students in 1958, has grown to become the largest provider of educational, professional and lifelong learning resources in Australia. With over 40 branches across Australia, a comprehensive website and presence on the internet since even before the web, numerous additional services and over 1.3 million lifetime members, the Co-op is more than just a bookshop.
  • The Wine Society (Australian Wine Consumers’ Co-operative Society Limited) The Wine Society Established in 1946,now has over 58,000 members. Also sources and sells premium wines under the Society label, runs comprehensive wine education courses and recognises excellence from young winemakers.

[edit] Europe

In the United Kingdom, the nationwide Co-operative Group, formerly the Co-operative Wholesale Society (or "CWS"), owns many of its own supermarkets, as well as supplying goods wholesale to the majority of British co-operative societies, providing a common branding and logo.

In Scandinavia, the national cooperations of Norway, Sweden and Denmark joined as Coop Norden in January 2002.

In Italy the Coop Italia chain formed by many sub-cooperatives controlled 17.7% of the grocery market in 2005.

In Finland the S Group is owned by 22 regional cooperatives and 19 local cooperative stores, which in turn are owned by their customers. In 2005 the S Group overtook its nearest rival Kesko Oyj with a 36% share of retail grocery sales compared to Kesko’s 28%.[5]

[edit] Japan

Japan has a very large and well developed consumer co-operative movement with over 14 million members; retail co-ops alone had a combined turnover of 2.519 trillion Yen (21.184 billion U.S. Dollars [market exchange rates as of 11/15/2005]) in 2003/4.[6] In Japan, Co-op Kobe (コープこうべ) in the Hyōgo Prefecture is the largest retail cooperative in Japan and, with over 1.2 million members, is one of the largest cooperatives in the world. In addition to retail co-ops there are medical, housing and insurance co-ops alongside institutional (workplace based) co-ops, co-ops for school teachers and university based co-ops.

Approximately 1 in 5 of all Japanese households belongs to a local retail co-op and 90% of all co-op members are women. (Takamura, 1995). Nearly 6 million households belong to one of the 1,788,000 Han groups (Japanese Consumers' Co-operative Union., 2003). These consist of a group of five to ten members in a neighbourhood who place a combined weekly order which is then delivered by truck the following week. A particular strength of Japanese consumer co-ops in recent years has been the growth of community supported agriculture where fresh produce is sent direct to consumers from producers without going through the market.

[edit] North America

In the United States, the PCC (Puget Consumers Cooperative) Natural Markets in Seattle is the largest consumer-owned food cooperative.[7]. The National Cooperative Grocers Association maintains a food cooperative directory.

Seattle-based R.E.I., which specializes in outdoor sporting equipment, is the largest consumer cooperative in the United States.

Similarly, outdoor retailer Mountain Equipment Co-op in Canada, is one of the country's major consumer cooperatives.

All credit unions in the United States and Canada are financial cooperatives.[8]

[edit] Notes

  1. ^ "The Farmer Takes a Town", Time, Monday, Dec. 25, 1944. 
  2. ^ "Attacks Splutter" (DjVu) (January, 1946): 17. CO-OP Magazine. 
  3. ^ James Peter Warbasse (1942). Problems of Cooperation (DjVu). Retrieved on 2007-11-22.
  4. ^ "What Consumers' Cooperation does" (May, 1934). Cooperation. 
  5. ^ Retailing in Finland, London, UK: Euromonitor International, October 2006, <http://www.euromonitor.com/Retailing_in_Finland>. Retrieved on 28 June 2007 
  6. ^ Japanese Consumers' Co-operative Union., 2003
  7. ^ Cooperative Grocers' Association website
  8. ^ "The Credit Union Movement: Origins and Development 1850 to 1980" by J. Carroll Moody and Gilbert Fite

[edit] See also

[edit] Further reading

[edit] External links

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Co-operatives
Types of Cooperatives
The Rochdale Principles
Political and Economic Theories
Key Theorists
Organizations