What is a cooperative?

Cooperatives are businesses owned and controlled by the people who use them. Cooperatives differ from other businesses because they are member owned and operate for the mutual benefit of members. Like other businesses, most cooperatives are incorporated under state law.

More than 40,000 cooperatives exist in the United States. Their member/owners include more than 100 million Americans - nearly one out of three. These include agriculture, child care, credit, health care, housing, insurance, telephone and electric cooperatives, just to name a few.

Why are cooperatives organized?

    • Strengthen bargaining power
    • Maintain access to competitive markets
    • Capitalize on new market opportunities
    • Obtain needed products and services on a competitive basis
    • Improve income opportunities
    • Reduce costs
    • Manage risk 

What are farmer cooperatives? 

In agriculture, there are nearly 3,000 farmer cooperatives whose members include a majority of our nation's two million farmers and ranchers. These include:

    • Marketing cooperatives - which handle, process and market virtually every
      commodity grown and produced in the United States.
    • Bargaining cooperatives - which bargain to help their farmer members
      obtain reasonable prices for the commodities they produce.
    • Farm supply cooperatives - which are engaged in the manufacture,
      sale and/or distribution of farm supplies and inputs, as well as
      energy-related products, including ethanol and biodiesel.
    • Credit cooperatives -  which include the banks and associations of the
      cooperative Farm Credit System that provide farmers and their cooperatives
      with a competitive source of credit and other financial services,
      including export financing.

Farmer cooperatives exist for the mutual benefit of their farmer members with earnings returned on a patronage basis. Such patronage dividends help boost the income of farmers directly or by reducing the effective cost of the goods and services provided.

Farmer cooperatives also help contribute in another way to the economic well being of local communities, particularly in rural areas where they are an important source of jobs and payrolls - accounting for as many as 300,000 jobs and a total payroll of over $8 billion.

Being farmer-owned and controlled, farmer cooperatives are governed by a board of directors elected by their farmer members - generally based on one member one vote rather than on the basis of shares or percent ownership as in other types of businesses. This provides for a unique accountability.

Farmer cooperatives are farmers.

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