Co-operatives and the Consumer (Note 9)

  ------------------------------------------------------------
   This document has been made available in electronic format
           by the International Co-operative Alliance.
  ------------------------------------------------------------
                           Background Information Note 9


  THE INTERNATIONAL CO-OPERATIVE ALLIANCE AND THE UNITED NATIONS
            A PARTNERSHIP FOR SUSTAINABLE DEVELOPMENT


                 ********************************
                  CO-OPERATIVES AND THE CONSUMER
                 ********************************


The United Nations has stressed from its inception the need for
every human being to be able to satisfy her or his needs for
goods and services, both as inputs to an efficient household
economy and for final individual consumption.   Indeed these have
been established as fundamental human rights.

More specifically, and following adoption by the International
Co-operative Alliance (ICA) in 1969 of its 'International
Declaration of Consumer Rights', the General Assembly, by its
resolution 31/37 in 1976, recognized the "social and economic
benefits accruing from producers', consumers', credit,
multipurpose and other kinds of co-operatives to all sections of
society".

In the late 1970s,  the United Nations also recognised that
consumer protection had an important bearing on economic and
social development, and in 1985 the General Assembly, by its
resolution 39/248, adopted the United Nations Guidelines for
Consumer Protection.   Among other things, these proposed that
governments consider "encouraging the establishment of consumer
co-operatives and related trading activities, as well as
information about them, especially in rural areas".

In his most recent in a series of biennial reports to the General
Assembly on co-operatives (document A/49/213 of 1 July, 1994) the
Secretary-General concluded that "Co-operatives contribute
substantially to the common good in market economies, principally
by improving the efficiency and quality of the market".

       CHARACTERISTICS OF CONSUMER-OWNED CO-OPERATIVES AND
       DIMENSIONS OF WHOLESALE AND RETAIL CO-OPS WORLDWIDE

Consumer-owned retail co-operatives are an effective
organizational means whereby the consumer is able to enter the
marketplace on more advantageous terms than would otherwise be
the case. They provide goods and services specified by customers
themselves at affordable prices. Many are small enterprises,
limited to a single outlet, or to a few outlets within a limited
geographical area, or to a special group of employees of a large
enterprise, or students at a university.

Others, particularly in developed market economies, have combined
into business groups which extend throughout national territory
and serve high proportions of the population, both  members and
the general public. Many have established their own wholesale,
transportation, financing and advertising subsidiaries, their own
common services and, in some cases, their own manufacturing
plants. They collaborate directly with producer co-operatives.

In Europe, national organizations have set up international
business federations:  NAF, in the Nordic countries, and the
associated but wider federation INTER-CO-OP (the International
Organization for Consumer Co-operative Distributive Trade), an
ICA specialized body. These increase member influence in the
market by joint purchasing, use of common facilities and services
and promotion of trade between members.  Here and in North
America individual co-operative groups extend their own
operations across international frontiers, or enter into business
partnerships with counterparts in adjacent countries. 

Independent retail and service enterprises have also set up their
own purchasing and common service co-operatives.  While benefits
accrue directly to the non-co-operative owners, consumers benefit
through lower prices and the continued existence of local small-
and medium-size retailers.

Consumer-owned co-operatives have set up national representative
and service organizations. EURO-CO-OP (the European Community of
Consumer Co-operatives) represents, defends and promotes their
interests within the European Union. The International
Co-operative Consumer Organisation (until 1993 the ICA Consumer
Committee), a specialized body of ICA, began work in the 1960s
as an ICA Consumer Working Party, formulating the International
Declaration of Consumer Rights adopted by the ICA Congress in
1969. Having taken this lead, subsequently followed by the United
Nations in its Guidelines for Consumer Protection, the Committee
promoted full participation by ICA members in observance of the
International Consumers' Day on 15 March each year, in
collaboration with the International Organization of Consumer
Unions (subsequently Consumers International). In 1988 the ICA
adopted its own "Guidelines for Co-operative Consumer Policy"
which, among other things, recognized them to be the world's
largest mass movement of consumers.  

ICA, through its regional offices, and other international and
national co-operative organizations operate significant technical
assistance programmes, designed primarily to promote counterparts
in the developing countries and to restructure and modernise the
former "parastatal" systems in Central and Eastern Europe.

The dimensions of the consumer-owned co-operative movement are
now very large, having grown from the first modern co-operative,
itself a consumer co-operative, the Rochdale Society of Equitable
Pioneers, established in 1844 by 28 persons. In 1994 14 per cent
of the total individual membership of ICA comprised members of
consumer co-operatives: about 106,000,000 persons world-wide.  
Taking average household size at four, this implies a total of
424,000,000 persons.  To these may be added a proportion of the
205,000,000 members of multi-purpose co-operatives, and the many
million employees.

Dimensions in European developed market economies are
considerable. In 1994 members of EUROCO-OP had 21,367,000
individual (or household) members, and a turnover in 1992 of
46,500,000,000 ECU. The Association of Retailer-owned Wholesalers
in Foodstuffs (UGAL), the association of national wholesale
buying and service co-operatives set up by 175,000 independent
retail enterprises had an annual turnover in 1989 of
27,490,000,000 ECU. In some countries consumer-owned retail
co-operatives account for large shares of the retail food market:
in Switzerland over half, in Denmark between 30 to 35 per cent,
in Finland 30 per cent, in Norway 25 per cent. 

In most developing countries such co-operatives have not achieved
the dimensions they have in many developed countries. In some
they were elements of parastatal structures, and are now being
privatised. Elsewhere, they are important in localised areas,
often as part of the services offered by community development
and other multi-functional co-operatives. Although often of very
small scale, they provide a valuable service, particularly in
poor neighbourhoods. In some countries they have been promoted
by trade unions.

In the transitional economies a high proportion of goods and
services were formerly distributed to consumers through systems
termed 'co-operatives'. These were not, with some exceptions,
owned or controlled by members, but were state agencies
distributing almost all essential goods and many services.  In
some countries they still function as the principal, if not the
only, means for distribution. Elsewhere, former 'co-operative'
systems have been partly privatized, partly transformed into
genuine co-operative distribution systems. 

      THE SIGNIFICANCE OF CONSUMER-OWNED RETAIL AND WHOLESALE
            CO-OPS FOR ECONOMIC AND SOCIAL DEVELOPMENT

This type of co-operative business enterprise provides
affordable, relevant and quality goods and services to members
and their families, as well as, in many countries, to the general
public in the areas in which it operates. This has been an
important means to alleviate, eradicate or avoid poverty among
poor households, and those at risk of becoming poor, assuring
them of basic necessities they might not otherwise be able to
afford. It has been of special significance for poor women, but
also more generally for the advancement of women engaged in the
household sector. Directly in co-operative enterprises and their
subsidiaries and indirectly in the independent enterprises whose
viability they protect, they provide substantial employment.

For consumers in general the co-operative movement has promoted
beneficial marketing innovations, such as unit pricing and
nutritional labelling. They have contributed significantly to
consumer awareness and education. In some countries they have set
up their own advertising enterprises, governed by ethical
guidelines. Elsewhere they have acted to bring about a reduction
in consumer indebtedness. More generally, responsive to their
members' concerns, and having both the economic weight and
organizational structure, the have constituted an energetic lobby
in favour of consumer rights at national and international
levels.  For example, EUROCO-OP, assigned formal responsibility
by the European Union, drafted its directives on foodstuffs and
lobbied successfully to have a consumer protection section
included within the Treaty of the European Union. 

By these and other means the consumer co-operative movement has
been able to improve the quality of national economies for the
benefit of large sections of the population. They have been able
to break monopolies and cartels, thereby reducing prices and
rationalizing production and distribution. Purchasing
co-operatives protect the viability of member enterprises,
contributing to market diversity and viable local services.

Consumer-owned co-operatives contribute significantly to
environmental protection and sustainable development.  Responsive
to the environmental concerns of their owner-members, they are
able as businesses of introducing their own environmentally
sensitive products and operations. They act as market leaders in
both independent innovation and response to governmental
regulation, lobby for policy change, lead in persuading producers
to adopt ecologically sensitive methods. The ICA Consumer
Committee has been active in the formulation of ICA's own
environmental policy, including the Co-operative Agenda 21. 
Conversely, they diffuse information to, and help to mobilize the
citizens who are their members.

This part of the co-operative movement emphasises consumer health
and safety protection. For example, EUROCO-OP laboratories,
recognized as centres for consumer information and policy
development, collaborate with the European Union, undertaking
studies and symposia as a basis for European legislation.     

----------------------------------------------------------------
This Note has been prepared jointly by the International
Co-operative Alliance and the United Nations Department for
Policy Coordination and Sustainable Development. For further
information contact the ICA at 15, Route des Morillons, 1218
Grand-Saconnex, Geneva, Switzerland. Tel: (+ 41 22)  929 88 88,
Fax: (+ 41 22) 798 41 22, E-mail: icageneva@gn.apc.org.
----------------------------------------------------------------
                                                June, 1995