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.
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.
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.
Role of government
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There is no unusual government role needed in a consumer owned and operated business and practically considered there is less
requirement for government involvement than there is with a business established to maximize monetary gain for its owners. This
is because there is no incentive for a consumer-owned company to misrepresent the quality or value of what it offers for sale to
its owner customers, so there is little utility or need in having inspectors who work for a government policing this form of
business. However there is a need to oversee the actions of the board of directors. In Minnesota statute 308a governs
cooperatives there is no government organization to turn to when the board of directors ignores state statute. The Wedge Co-op of
Minneapolis is an example of this. Statute 308a gives the member/owners the legal right to nominate candidates for the board of
directors. Unfortunately Sarah Wovcha of the board of directors and H.R. Manager Sara Zaag decide whom may receive a nomination.
During the 2006 annual meeting hundreds of votes were not counted, the votes were not counted because the candidate John Palmer
was not approved by the board of directors. As the consumer ultimately provides the capital for all business
enterprise[citation needed] it is unfortunate that the
consumer ownership form of endeavor is not better understood and utilized. There is no reason why most large enterprises could
not thrive if they were owned and operated as consumers' cooperatives rather than businesses designed to provide financial gain
for stock holders who may have no personal involvement in the enterprise beyond monetary profit. For example Time reported in an
article -The
Farmer Takes a Town, Monday, Dec. 25, 1944:
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"Private business is most alarmed by the fact that cooperatives seem to be able to go into any business and make it pay.
Example: the Consumers' Cooperative Association of North Kansas City, Mo., which started on $30,000, now owns 289 oil wells, 867
miles of pipeline, two refineries, two canneries, two sawmills, a feed mill, a soft-drink bottling plant, an insurance agency, a
paint factory, etc. Another irritation to private business is the fact that marketing cooperatives are seldom prosecuted under
the antitrust laws.
Help the Corporations.
This year U.S. co-ops will do over $4 billion worth of business, more than ever before. Private business fears that, at their
present rate of expansion, the co-ops will some day be a serious threat. For this reason anti-co-op organizations, such as
Chicago's National Tax Equality Association (formerly the League to Protect Free Enterprise), are plumping for a change in the
tax laws."
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In the United States detractors of consumer owned business have often tried to imply that consumers' cooperative businesses
are subsidized by government allowed tax breaks but this is actually a dispute about whether surplus payment returns to
consumer/owner patrons are considered as being the same as dividends payed to corporate stock holders[citation needed]. As the Time article quoted from
above states, the National Tax Equality Association (NTEA) launched a protracted campaign to convince the United States
government to enact laws that would be unfavorable to consumer owned business.
Problems of consumers' cooperation
Because consumers' cooperatives are run democratically they are subject to some of the same problems experienced by democratic
government: the selection of incompetent or dishonest management, poor business planning, deficit spending, etc. Consumers may
prefer to vote with their feet than to do detailed superisory work of an organisation they do not work for, for example at
The Equitable Life Assurance Society in the UK. Problems such as
these can generally be avoided by providing member/owners with educational materials that inform often and honestly as regard to
business conditions. A helpful study of practices that are detrimental to a consumer owned business is provided by Problems of Cooperation, by James Peter
Warbasse.
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.
Consumers' co-operatives in different countries
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,
numerous additional services and over one million 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.
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 A/S 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%.[1]
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.[2] 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.
North America
In the United States, the PCC (Puget Consumers
Cooperative) Natural Markets in Seattle is the largest consumer-owned food
cooperative in the United States.[3]. 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.
Notes
- ^
Retailing in Finland, London, UK: Euromonitor International, October
2006, <http://www.euromonitor.com/Retailing_in_Finland>. Retrieved on
2007-06-28
- ^ Japanese Consumers' Co-operative Union., 2003
- ^ Cooperative Grocers' Association website
See also
Further reading
- Consumers' Co-operative
Societies, by Charles Gide, 1922
- Co-operation 1921-1947,
published monthly by The Co-operative League of America
- The History of Co-operation, by
George Jacob Holyoake, 1908
- Cooperative Peace, by
James Peter Warbasse, 1950
- Problems Of Cooperation, by
James Peter Warbasse, 1941
- Why
Co-ops? What Are They? How Do They Work? A pamphlet from the G.I. Roundtable series by Joseph G. Knapp, 1944
External links
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