Main Principles of Agricultural Cooperatives
Agricultural cooperatives are nothing new and have been around for generations, impacting food systems all over the world. It is a group of farmers that get together to collectively offer a means of marketing their products and learn new techniques for managing their livestock and crops. Farm cooperatives generate a wide variety of local, high-quality products for the customers and assist the farmers in moving their goods more efficiently instead of selling them individually. It takes the burden of marketing for the farmers, letting them spend more time on their farms. The farmers in the cooperative share common values and principles.
How It Works
Cooperatives are created to potentiate the actions of individual farmers. So, together, they can perform better than when working individually. Agricultural cooperatives are created for different purposes. Some are to get and provide inputs like seed, feed, fertilizer, and petroleum more economically. Others are made to reduce risks associated with farming and ensure the availability of products and services.
These cooperatives provide their members with bargaining power and fulfil their needs with minimal cost. However, to meet capital needs and cover all costs, the cooperative has to make the prices of their products competitive. Some of the main principles governing cooperatives include:
Worker concept: As the name suggests, this type of cooperative is owned and operated by the workers. They are formed based on the desire to have more economic independence and share in the risks and rewards of the farm and have a more significant community impact. Members in this type of cooperative are required to contribute capital equitably.
Service, supply, and marketing: It is owned by the producers, and they are commonly formed to achieve economies of scale, to get better pricing, and to address a shared service need. It allows producers to have greater control over the supply chain.
Consumer: These co-ops are owned by consumers. They are formed to gain control over the type and quality of product, as well as also to achieve better pricing.
As a member of a farm cooperative, you will enjoy the following benefits:
- Share in any profit earned by the cooperative
- Elect and serve on the board of directors
- Not individually liable for any debts or legal obligations brought against the co-op
- Product from members have a higher priority than those from non-members
Cooperatives are able to raise capital and finance their projects in different ways. Some of the most popular include:
- Direct investments by members of the farm cooperative.
- They can also retain some net income to raise capital rather than distribute it out as patronage refunds.
Cooperative Farming Advantages
As the cooperative members work together to create plans of operations, arrange finances, set objectives, and share benefits, their separate actions may bring about increased returns, which come from lots of different factors. Here are some of the advantages of cooperatives:
They help farmers in developing countries sell their products and give them a stronger presence in the global supply chain.
Financial cooperatives such as credit unions grant loans to local farmers who conventional banks have otherwise rejected. This is because the credit unions are run by people who understand the farming process and are closer to the farming community.
Since the co-ops are managed by and for local people, they acquire and pass on their skills to the younger generation. The profits from the businesses remain at the local level, which is then reinvested or distributed to the members.
Cooperatives have a high degree of cooperation with a strong desire to grow and help members attain economic independence. They can also form strong networks with other cooperatives worldwide, granting them more knowledge and experience.
Farm cooperatives create jobs and secure the livelihood of over 3 billion people worldwide. They seek to provide farmers with good working conditions and job security.
As a democratic and open platform, agricultural co-ops enforce gender equality. Lots of women are in senior positions or have even created their own cooperatives to ensure reasonable income. For example, in Malawi, women are at the core of cooperatives and the agricultural sector in general.
Farming cooperatives are an integral part of the agriculture sector. They are among the key factors that will help supply food to the growing population. Also, they help to provide small farm owners and agric workers with better working conditions, profits, and economic independence.
