Consumer cooperative

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A consumer cooperative is a cooperative business owned by its customers for their mutual
benefit. It is a form of free enterprise that is oriented toward service rather than pecuniary profit.
Consumers' cooperatives often take the form of retail outlets owned and operated by their
consumers.[1] The customers or consumers of the goods and/or services the cooperative provides
are often also the individuals who have provided the capital required to launch or purchase that
enterprise.

In some countries, consumers' cooperatives are known as cooperative retail societies or retail
co-ops, though they should not be confused with retailers' cooperatives, whose members are
retailers rather than consumers.

There are many types of consumers' cooperative. There are health care, insurance, and housing
cooperatives as well as credit unions, agricultural and utility cooperatives. The major difference
between consumers' cooperatives and other forms of business is that the purpose of a consumers'
cooperative association is to provide quality goods and services at the lowest cost to the
consumer/owners rather than to sell goods and services at the highest price above cost that the
consumer is willing to pay.[citation needed] In practice consumers' cooperatives price goods and
services at competitive market rates.[citation needed] The difference is that where a for-profit enterprise
will treat the difference between cost (including labor etc.) and selling price as financial gain for
investors, the consumer owned enterprise may retain this to accumulate capital in common
ownership, distribute it to meet the consumer's social objectives, or refund this sum to the
consumer/owner as an over-payment. (Accumulated capital may be held as reserves, or invested
in growth as working capital or the purchase of capital assets such as plant and buildings.)

Large consumers' co-ops are run much like any other business and require workers, managers,
clerks, products, and customers to keep the doors open and the business running. In smaller
businesses the consumer/owners are often workers as well. Consumers' cooperatives can differ
greatly in start up and also in how the co-op is run but to be true to the consumers' cooperative
form of business the enterprise should follow the Rochdale Principles.

Consumers' cooperatives may, in turn, form cooperative federations. These may come in the
form of cooperative wholesale societies, through which consumers' cooperatives collectively
purchase goods at wholesale prices and, in some cases, own factories. Alternatively, they may be
members of cooperative unions.

The Neo-Capitalist economic doctrine seeks to transfer the provision of almost all government
provided public goods and the conversion of any large privately owned monopolies into
consumer cooperatives.

Contents
  1 Governance
 2 Role of government
 3 Problems of consumers' cooperation
 4 A historical account of consumers' cooperation social goals
 5 Consumers' cooperatives in different countries
o 5.1 Australia
o 5.2 Europe
o 5.3 Japan
o 5.4 North America
 6 Notes
 7 See also
 8 Further reading
 9 External links

[edit] Governance
Consumers' cooperatives utilize the cooperative principle of Democratic member control, or one
member/one vote. Most consumers' cooperatives have a board of directors elected by and from
the membership. The board is usually responsible for hiring management and ensuring that the
cooperative meets its goals, both financial and otherwise. Democratic functions, such as
petitioning or recall of board members, may be codified in the bylaws or organizing document of
the cooperative. Most consumers' cooperatives hold regular membership meetings (often once a
year). As mutually owned businesses, each member of a society has a shareholding equal to the
sum they paid in when they joined.

[edit] Role of government

While some[who?] claim that surplus payment returns to consumer/owner patrons should be taxed
the same as dividends paid to corporate stock holders,[2] others argue that consumer cooperatives
do not return a profit by traditional definition, and similar tax standards do not apply.[3]

[edit] A historical account of consumers' cooperation social

goals
Consumers' cooperation has been a focus of study in the field of cooperative economics. The
Cooperative Federalist school, in particular, has advocated such organisational forms, claiming a
broad set of benefits including economic democracy and justice, transparency, greater product
purity, and financial benefits for consumers.[5]

[edit] Consumers' cooperatives in different countries

[edit] Australia

 University Co-operative Bookshop Ltd, Co-op Bookshop, Australia's largest consumers'

cooperative, established by students in 1958, has grown to become the largest provider of
educational, professional and lifelong learning resources in Australia. With over 40
branches across Australia, a comprehensive website and presence on the internet since
even before the web, numerous additional services and over 1.3 million lifetime
members, the Co-op is more than just a bookshop.

 The Wine Society (Australian Wine Consumers’ Co-operative Society Limited) The
Wine Society Established in 1946,now has over 58,000 members. Also sources and sells
premium wines under the Society label, runs comprehensive wine education courses and
recognises excellence from young winemakers.

[edit] Europe

In the United Kingdom, the nationwide Co-operative Group, formerly the Co-operative
Wholesale Society (or "CWS"), owns many of its own supermarkets, as well as supplying goods
wholesale to the majority of British cooperative societies, providing a common branding and
logo.

In Scandinavia, the national cooperations of Norway, Sweden and Denmark joined as Coop
Norden in January 2002.

In Italy the Coop Italia chain formed by many sub-cooperatives controlled 17.7% of the grocery
market in 2005.

In Finland the S Group is owned by 22 regional cooperatives and 19 local cooperative stores,
which in turn are owned by their customers. In 2005 the S Group overtook its nearest rival Kesko
Oyj with a 36% share of retail grocery sales compared to Kesko’s 28%.[6]

[edit] Japan

Japan has a very large and well developed consumer cooperative movement with over 14 million
members; retail co-ops alone had a combined turnover of 2.519 trillion Yen (21.184 billion U.S.
Dollars [market exchange rates as of 11/15/2005]) in 2003/4.[7] In Japan, Co-op Kobe (コープこ
うべ) in the Hyōgo Prefecture is the largest retail cooperative in Japan and, with over 1.2 million
members, is one of the largest cooperatives in the world. In addition to retail co-ops there are
medical, housing and insurance co-ops alongside institutional (workplace based) co-ops, co-ops
for school teachers and university based co-ops.

Approximately 1 in 5 of all Japanese households belongs to a local retail co-op and 90% of all
co-op members are women. (Takamura, 1995). Nearly 6 million households belong to one of the
1,788,000 Han groups (Japanese Consumers' Co-operative Union., 2003). These consist of a
group of five to ten members in a neighbourhood who place a combined weekly order which is
then delivered by truck the following week. A particular strength of Japanese consumer co-ops in
recent years has been the growth of community supported agriculture where fresh produce is sent
direct to consumers from producers without going through the market.

[edit] North America

In the United States, the PCC (Puget Consumers Cooperative) Natural Markets in Seattle is the
largest consumer-owned food cooperative.[8] The National Cooperative Grocers Association
maintains a food cooperative directory.

Seattle-based R.E.I., which specializes in outdoor sporting equipment, is the largest consumer
cooperative in the United States.

Similarly, outdoor retailer Mountain Equipment Co-op in Canada, is one of the country's major
consumer cooperatives. In the Canadian Prairie provinces, gas stations, lumberyards, and grocery
stores can be under the coop brand.

All credit unions in the United States and Canada are financial cooperatives.[9]

Leveraging Benefits for Producer, Consumer

Co-ops
Let’s work together to promote the Sixth Principle—cooperation among
cooperatives

By Kevin Edberg

#122 January - February - 2006

New markets, increased income for farm families, more children going to school, a new
generation of ranchers coming back to the farm: all come in part from co-ops doing business
with co-ops.

Many of us are familiar with work done by some individual co-op stores, such as Lakewinds in
Minnesota. As a result of a 2003 tour sponsored by the National Cooperative Business
Association (NCBA), this co-op has established direct relationships with Nicaraguan coffee
producer cooperatives to purchase Fair Trade certified organic, shade-grown arabica. The result
has been over a ton of coffee that has been exported to the U.S. under the “Small Farmer” label,
with price premiums of $3.25–$4.45 per pound, and the creation of new market relationships.
Impacts to individual producer-members have included a 40 percent increase in average family
income per year, allowing them to send their children to school, make house and water supply
improvements, and have increased self-esteem and pride in their work.

Others might know domestic stories like that of Oregon Country Beef, a cooperative of ranchers
that began selling natural beef to food co-ops and other retailers in the Pacific Northwest 20
years ago. As a result of success in establishing and maintaining those early accounts, the co-op
was able to establish a beachhead in the market for natural meat. Today, over 60 ranches are
members, and over 30 more are pursuing membership. All must be Food Alliance certified to
verify their commitment to environmental stewardship and humane husbandry. The success of
this producer co-op is leading to a renaissance of successful and certified sustainable ranching on
over 2 million acres in the western U.S.

The Sixth Principle

These stories highlight the possibilities that can become realities if more and more producer and
consumer co-ops were to recognize the power of the Sixth Principle: cooperation among
cooperatives.

As many of you know, I am executive director of Cooperative Development Services (CDS). In

addition to our work with food co-ops nationwide, CDS also carries on work in other sectors of
the cooperative economy, including value-added agriculture. Over the past decade, we have
worked extensively with farmer-owned co-ops trying to enter new markets with value-added
products, many of them in the natural and organic foods arena. We know firsthand the business
development challenges that these farmers face in trying to compete for shelf space in
conventional grocery stores or foodservice businesses. At the same time, we see the growing
competition that consumer-owned natural foods stores are facing from mainstream and big box
retailers. We believe there are tangible market benefits that could accrue to both farmers and
consumers through a deeper consideration and application of the Sixth Principle.

What’s in it for food co-ops?

Simply put: authentic stories and tangible cooperative experiences = market distinction and
customer loyalty.

Go into a Whole Foods, look above the cases around the perimeter of the store; what do you see?
Pictures of producers whose products are found in the store. Whole Foods is prominently selling
food with a human face, food with a story that is intended to make consumers feel good about
their purchase decisions. Why? Because, in other respects, consumers today can find the same
products and brands on the shelves of food co-ops, Whole Foods, Wal-Mart, and mainstream
retailers. The product mix itself is no longer our unique asset.

This means we have to work harder to differentiate the co-op shopping experience. While much
of this needs to happen in areas outside product selection, we do have to work harder to
differentiate our product mix and use it to tell authentic stories about local agriculture,
sustainable and organic production, and the impact of our customers’ buying decisions.

Featuring cooperatively produced products is one strategy that reinforces who we are and what
we value. Imagine the possibilities for using these products as object lessons in educating
consumers about the diversity of cooperatives, and our common cooperative principles. Picture
an October Co-op Month CAP promotion that features products from farmer co-ops, and imagine
the opportunities such an event would provide for member education in newsletters, in-store
signage, and workshops. The possibilities are substantial.