Cooperatives -- Silent Giants

COOPERATIVES ARE A SILENT ECONOMIC GIANT, CORNELL STUDY FINDS

January 25, 1994
Contact: William Holder
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ITHACA, N.Y. - Cooperatives are a silent giant in the Northeast
economy,spreading into areas as diverse as aquaculture and high-tech
manufacturing, according to a new Cornell University study.

At least 9,955 cooperative enterprises throughout the region serve 9.9
million members and account for $37 billion in business activity, said
Brian Henehan, a Cornell Cooperative Extension associate, and Andrew
Ferguson,  a cooperative  development specialist.

Cooperatives - organizations owned and operated for the benefit of their
members - range from local farmers markets to multibillion-dollar groups of
supermarkets that pool resources for purchasing goods and services.  New
ones have formed to produce and market specialty vegetables, venison, lamb,
rabbits and farm-raised trout.

Some are long-standing organizations in the agricultural and farm credit
areas, while others are new consumer food groups and employee-owned
businesses, according to Henehan, who is in Cornell's Department of
Agricultural,  Resource and Managerial Economics.

"A growth area has been in cooperation among small business entrepreneurs,"
he said.  The Windmill in Yates County, N.Y., for instance, is a farm and
craft cooperative that has turned 20 acres of brushland into a nearly
year-round outlet for 120 food and craft vendors, resulting in a
significant economic impact on a rural area.

Other cooperative business activities in the Northeast that are cited in
the study include:

* 1,709 credit unions with 6.9 million members and $29.5 billion in
  assets;

* 234 agricultural and farm credit cooperatives serving 108,534
  farmers and accounting for $4.5 billion in sales;

* 13 rural electric cooperatives with 94,000 members and $128
  million in business;

* 842 consumer food cooperatives marketing $70.3 million to more
  than 79,000 members;

* 1,159 firms that are full or partially owned by employees;

* 5,780 housing cooperatives with 595,000 members in the Northeast.

Businesses of all kinds are leveraging purchasing power by forming
cooperatives to lower health-care costs, obtain expertise in areas such as
telecommunications or negotiate better contracts for purchases of supplies,
Henehan  said.

"Cooperatives often have been formed as a defensive move when a group of
people with a common interest perceive a failure of the market or lack of
service," said Bruce Anderson, Cornell associate professor of agricultural
economics.  "In the future, however, we expect to see new ones forming to
create market opportunities."

Among these may be flexible groups of small manufacturers that come
together for specific contracts and then disband, he predicted.

The U.S. Department of Agriculture has recognized the economic importance
of cooperatives in rural America by funding eight regional projects for
rural cooperative development.  As part of this effort, the Northeast
Cooperative Council is providing Cornell with $39,600 for a one-year pilot
project to serve New York and the New England states, according to
Anderson.

The Northeast Cooperative Council is a membership organization comprising
rural and agricultural businesses, including rural electric, insurance,
service, supply, credit and marketing cooperatives.

The Cornell Cooperative Enterprise Program will use the funds to expand a
regional training program for managers of cooperatives, Anderson added.
Other goals include developing an educational program that focuses on using
cooperatives to address issues related to business and economic
competitiveness, stimulating the adoption of new information technologies,
expanding a cooperative business information clearinghouse and developing a
volunteer  network to assist new and emerging cooperatives.

"Small gains in cooperative profitability can translate into significant
benefits for the region when hundreds of thousands of members or billions
of dollars are at stake," Anderson said.  "But cooperative leaders face
tremendous challenges in providing strategic direction for their
organizations in the '90s.  The goal of the project is to stimulate rural 
economic development."