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Types of Cooperatives

Cooperatives can be broadly grouped into several categories, depending on the needs of their member patrons.

Marketing cooperatives are businesses that are owned by and benefit members who use the cooperative to help sell their products. By pooling member products, a co-op can negotiate better prices and provide access to larger markets. A co-op can also add value by further processing member products, which increases the product price and demand. Many varieties of agricultural cooperatives fall into this category. Some examples:


Consumer, purchasing and farm supply cooperatives are all organized to provide the specialized goods or services that  their member patrons want to buy. By combining member demand, a co-op can provide better availability, selection, pricing, or delivery of products or services to individual consumers, businesses or farmers.

Cooperatives of this type are found in many sectors. They supply consumers with financial services (credit unions), affordable housing (housing co-ops), phone and electric service (utility co-ops), and food (grocery co-ops). Purchasing co-ops are used by hospitals, independent retail stores and educational institutions for cost-effective wholesale purchases. And farm supply co-ops cost-effectively supply input, fuel and agronomy services to farm business owners.  Some examples:

 

Farm supply cooperatives provide service and inputs to farmers to help them produce their goods. Many farmers purchase basic inputs suchas seed, fertilzer and farm chemicals from a cooperative.  Farmers collectively establish a firm to negotiate better terms of purchas for basic agricultural production inputs.  Some examples:

 

Worker cooperatives are businesses that are owned and controlled by the workers, rather than the end-users, of a business' products or services. In this way worker members directly benefit from the business' success. Profit distribution is based on some combination of job position, hours worked, seniority and salary. Worker cooperatives are found in a wide variety of sectors, from transportation to manufacturing to home health care. Some examples:

 

Multi-stakeholder cooperatives are organized around a broadly defined goal that encompasses the specific interests of a combination of multiple member types. Consumer (either individuals or businesses), producer, and worker members all use the same cooperative to facilitate buying, selling, or employment transactions between the members.  There may even be a class of membership for investors.

The multi-stakeholder cooperative is a newer variation of the cooperative structure, and is built around the interdependencies of a particular set of competing economic interests.  This unifying function is counterbalanced by the challenges in meeting member needs that are inherently different.