Co-operatives and the Consumer (ICA/UN 1995)

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   This document has been made available in electronic format
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                                     Background Information Note 10


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


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                  CO-OPERATIVES AND THE CONSUMER
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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.
                                                                  

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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.
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                                                June 1995