Republic of the Philippines

Northern Iloilo Polytechnic State College

SCHOOL OF INDUSTRIAL TECHNOLOGY
Electrical Technology Department
Estancia, Iloilo

MODULE 9
IT 7
TYPES OF COOPERATIVES AND THEIR
PLACES IN SOCIETY

Prepared by:
DMINGO O. DECREPITO, JR.
(Subject Teacher)
Module 9
Types of Cooperative and Their Place in Society

Introduction
In this module, you shall be introduced to cooperatives operate in all sectors of
the economy and in some lines of business their influence is considerable. Given the
great variety of sectors in which cooperatives operate, it is difficult to list them for
each sector. For a clearer analysis, we must choose a way of differentiating
cooperatives. Here we have chosen as our criterion the principal objective of the
members of a cooperative. Either the members enjoy services to which they have
so far not had access, or their goal is to get a job. In the first case, we mean service
cooperatives and in the second worker cooperatives. This distinction will then allow
us to evaluate the importance of cooperatives in the world.

Intended Learning Outcomes

Upon completion of this Module, you shall be able to:
1. Describe the types of cooperatives;
2. Explain the uses of the types of cooperatives;
3. Determine the different types of housing cooperative;
4. Appreciate the value of different types of cooperatives.

Learning Contents
Types of cooperative
Cooperatives offering a service to members
o In these cooperatives, the members join together with a view to enjoy
economic advantages by securing the goods and services they need to exist,
to carry out their occupation or to run their business.
o Service cooperatives can be made up of natural persons or corporate bodies.
o Thus by coming together in a service cooperative, members maximize the
effect of their own business.
o The cooperative then sometimes becomes an extension of the individual
business by effectively acting as a network.
o Financial cooperatives, consumer cooperatives, housing cooperatives,
o Producer cooperatives and marketing cooperatives are a few examples of
service cooperatives.

Financial cooperatives
o The term “financial cooperatives” covers credit unions and insurance
cooperatives.
o This category of cooperative offers its members financial services such as
savings and loans at favorable interest rates and insurance services.
o The credit union of the artisans of Thiès in Senegal was formed in 1999 and
has been operating since January 2000. Its object is to meet the financial
needs of the artisans through savings and loans, in all the urban and rural
parts of the Thiès region.
o Besides its general meeting, this cooperative is composed of three
constituent bodies, namely: the seven-member credit committee which
receives and considers loan applications; the seven-member supervisory
committee whose job is to monitor working practices and the integrity of
management; and a thirteen member education and training committee
which takes care of member training activities.
o In addition, from its central cash point in the worker village of Thiès, the
cooperative runs three collection points at Thiès-ville, Mbour and Tivaouane.
o From 402 members at the beginning with savings of 4 million CFA francs, the
cooperative has grown to 910 members today with savings of 54.6 million
CFA francs.
o Most of its members are artisans and joined on an individual basis or through
a business.

Agricultural or farmers’ cooperatives

o Agricultural cooperatives help growers with the marketing of their harvest by
obtaining consumer goods and farming input as well as helping with the
management of farming credit.
o Farmers can also form a distribution cooperative to centralize and market
farm produce.
o By reducing the number of middlemen, producers are in a position to
conclude a much better deal with traders or can quite simply do without their
services altogether and conclude a contract with any buyer they like.
o The cooperative association for rural development of Banikoara in Benin
(ACOODER) is one of several examples of cooperation among agricultural
producers.
 o Formed in 1971, ACOODER is an association of groups of producers involved
in the production, supply of materials for, and marketing of farm produce.
o It is one of the few regional associations of cooperative societies still active in
the service sector.
o Today ACOODER has limited its field of operations to representing and
defending the interests of farmers and artisans and providing financial,
technical and training services for them as well as for cooperative
organizations. ACOODER also sells the cotton produced by local growers.
o In 1998 it combined 71 cooperative organizations bringing together about
11,000 members.

Consumer Cooperatives
o Consumer cooperatives’ main object is to supply their members with goods
and services for their personal use at the lowest cost. They are to be found in
different sectors such as:
 food
 housing
 educational goods and services
 leisure
o This type of cooperative has been used above all in the food sector both in
developing countries struggling against insecurities of food supply and in
industrialized countries in the grip of unstoppable rises in the cost of
consumer goods.
o Thanks to consumer cooperatives, the member/consumer enjoys quality
goods and services at minimum cost. Grain banks have also played a major
role in the self-sufficiency in foodstuffs of several developing countries.
o These banks have a double function. On the one hand they supply people
with food, and on the other they allow their members to secure enough
money to let them buy produce from different regions.
o Members can be sure that their cooperative is listening to their needs
because they take part in the decision making.
o Although it was formed in 1965 by “ordinary“ housewives, the Seikatsu Club
Consumers’ Cooperative Union (SC) in Japan is not a consumer cooperative
like others.
o It all started when a housewife organized 200 women to buy 300 bottles of
milk so as to reduce the price. The cooperative that has since developed puts
the emphasis on the direct producer/consumer relationship to moderate and
humanize the market.
o The cooperative works on the basis of two rules: democratic and autonomous
management encouraging all the members to participate, and maintaining a
close relationship between SC members and the producers.
o Since 1965, the SC has devoted itself to the environment, to women’s rights
and to improving their working conditions. It is so successful that it has
managed to have had more than 100 of its members elected to various
political positions.
o More and more women in Japan are entering the workplace, and the SC has
therefore put in place cooperatives of female workers to undertake
distribution and other services such as recycling, a child-care service, an
insurance company, etc.
o There are at present more than 200 organizations and 8,000 female workers.

Housing cooperatives
o A housing cooperative is made up of individuals who have come together to
secure decent housing. Housing cooperatives are thus trying to respond to
their members’ needs regarding access to affordable good quality housing,
security of tenure and a safe community to live in.
o They offer the best possible service at an equitable price, the lowest possible.
o In more practical terms, a housing cooperative is e.g. an ordinary block of
flats, big or small, new or old - but always renovated - where the people who
live are both tenants of their home and collectively owners of the block.
o This collective ownership does not involve a huge financial investment.
o As collective owners, the members, i.e. the residents of the block, jointly take
upon themselves the entire management of their building and the
cooperative itself.
 o This collective management takes the form of democratic participation in
meetings, plus an active contribution to the tasks needing to be done to
ensure the successful operation of the cooperative.
o Thus each member exerts control over the quality of his environment.
o And since everyone participates in the management and maintenance of the
building, the resulting operating costs are minimal for the cooperative.
o Therefore it is usually in a position to charge much lower rent than the
market rate.
o Also, this involvement of everyone is explicitly recognized by several
cooperatives which offer their members a “member’s contract” comprising a
reduction in the rent stated in the signed lease. Thus a resident who
systematically refuses to carry out tasks could lose his status as a member
and have to pay the rent set in the lease.
o Advantages of the housing cooperative: a quality home at a good price, long
term security of tenure, control of one’s environment, involvement in the
running of the cooperative.
o The National Cooperative Housing Union (NACHU) is an organization that has
existed in Kenya since 1979. It is run by a Board of Directors composed of
one representative from each of the 8 Kenyan provinces and 3 administrators
elected so as to ensure a better male-female representation.
o The NACHU comprises 214 housing cooperatives sheltering about 200,000
people.
o The housing cooperatives in Kenya are construction cooperatives where the
members become owners both of their plot of land and of their building.
o However the cooperative provides collective services such as communal
toilets.
o There are seven forms of housing cooperative:
1. Worker cooperatives
 organized by building workers either to create jobs within their
enterprise or to provide services to other businesses;
2. Cooperatives of individually-owned houses
 Formed by members looking for a home.
 They confer on their members individual title deeds or retain
ownership of buildings and allocate flats to members with special
rights of residence which can be passed on to their heirs;
3. Collective ownership cooperatives
 Which build blocks of flats but do not give members title deed.
 On the other hand the member is given the right of shared ownership
of the building or group of buildings.
 This type of coop has been very successful in the United States,
especially in the city of New York;
4. Tenant cooperatives
 In which members are neither private owners nor co-owners, but
tenants who can participate with voting rights in the management of
the buildings they live in and which are rented out by the society of
which they are members;
5. Self-build cooperatives
 which are groups of people with a common housing problem who have
decided to organize themselves in a cooperative way into a team of
workers to build the houses they need;
6. Management cooperatives
 with the task of managing dwellings and organizing complementary
services;
7. Cooperative building societies
 Which provide mortgages of a certain percentage of the value of the
house to be bought or built.
 Their funds come from shares subscribed by members and deposits
made by these same members or by other people or institutions.

Public service provision cooperatives

o It can sometimes be beneficial for the State and the consumer for a
cooperative to take on the provision of services considered to be in the
“public” interest like electricity or water supply, communication and
transport.
o In developing and transitional countries for example, when the State takes
charge of these services, they are often badly run, costly and of bad quality.
 o In developed countries, the State sometimes leaves the provision of such
services to private companies.
o But these capitalist companies, out to make maximum profits, set prices
which rarely reflect the quality of the service they sell.
o In practice, the provision of public services by cooperatives is not at all new.
o It has been happening for some years now in Argentina, Canada, the USA and
Finland and is starting in a growing number of countries.
o It must be said that the cooperative form of organization possesses features
that predispose it to the supply of public services:
 The cooperative leaves the control of the service to its users and
guarantees that the product or services meet the users’ needs;
 The mandate of the cooperative is both social and economic. This
corresponds to the main function of the public sector which is to
balance socio-economic development with the best interests of the
public;
 Through its democratic structure, the cooperative makes the service
provider responsible for meeting the public’s expectations.
o In the United States, rural electricity supply cooperatives run more than half
of the electricity lines, carrying power to more than 25 million people in 46
States.
o Public service cooperatives have existed for several years in all regions of
Canada and supply households with electricity, gas, telephone services,
sewage and water supply services, fire-fighting services, etc.
o In this field more than 400 cooperatives offer services to about 150,000
households.
o Still it is important to stress that, bearing in mind the basic principles of a
cooperative, if, in the area of public service provision, the cooperative
supplies a service to a non-member, this is only consequential, the primary
aim of a cooperative being to meet the needs of members, not non-members.
o For example, a group of individuals can decide to form an electricity
cooperative in order to secure relief from the frequent power cuts affecting
their town. Of course, the cooperative cannot serve only its members;
nevertheless its primary aim being to meet the electricity supply needs of its
members, it is by the “domino effect” that it will improve the living conditions
of non-members. It is interesting to note that there is no contradiction at all
with the seventh cooperative principle of concern for community.
o In France, a new type of cooperative has appeared: La Société cooperative
’intérêt collectif (SCIC) or community interest cooperative society. This form
of cooperative has the objective of producing or supplying goods or services
in the community interest which are socially useful in nature: help in the
home, integration through economic activity, socio-educational activities,
tourism, etc. The title of social usefulness lets the coop enjoy tax breaks.
o At the same time the United Kingdom is about to create a new form of
enterprise equivalent to the SCIC, “Community Interest Companies”.

Shared services cooperatives or support services cooperatives

o A shared services or support services cooperative is a cooperative whose
members are private companies or public bodies which together acquire
goods and/or services of an assured quality at the best possible price.
o We are talking here about the organization along cooperative lines of
businesses wanting to benefit from certain services or activities that they
have in common. In the image of a consumer cooperative, the aim is to
obtain products and/or services at a lower price than the members (i.e. the
businesses) would have had to pay individually.
o The services offered by these cooperatives range from supplying raw
materials, marketing and distribution through to providing counseling
services, by way of education and training.
o In the United States, VHA is a cooperative whose members are on the one
hand health care institutions based in their community and on the other
independent doctors.
o VHA responds to the needs of more than 2,200 institutions, representing
26% of all the community health institutions in the United States, and about
175,000 doctors. VHA was founded in 1977 by 30 health care institutions.
o The main goal of VHA was to enable community health care institutions to
compete with private hospitals by a united effort to acquire communal goods
and services.
 o Each year VHA negotiates for more than 17 billion US dollars worth of supply
contracts for its members. In 2000, VHA members earned 1.15 billion US
dollars in refunds, savings and additional holdings, being a return on
investment of 56 to1.
o In other words. VHA members save or receive more than $56 for each dollar
paid in subscription charges to VHA.

Worker cooperatives
o The main objective of worker cooperatives is to create jobs for members.
o There are two categories of worker cooperatives: producer cooperatives and
labor cooperatives.

Producer cooperatives
o In this type of cooperative members are both co-owners and employees of
the cooperative whose aim is to produce goods and/or services.
o The employees together decide on the general direction and appoint their
leaders (manager, administrators, etc.)
o They also decide how to divide up any surplus.
o Another novelty of this type of cooperative is that it allows for the takeover
and restart of a bankrupt business.
o This option is one way of keeping going and developing the business and
existing jobs.
o To restart a business as a producer cooperative is to enable employees to
become players in the business, thanks to the participative style of
management.
o It was in May 1964 that the consumer cooperative society, later the producer
cooperative, “Chèque-Déjeuner” (luncheon voucher) was formed with a
capital of $1,500 collected by 24 people.
o This society sells restaurant vouchers that can be used in 150,000 eating
places in France. Set up in a very small area of Paris, the society had, until 31
December 1964, sold only 22,910 vouchers and had to take out successive
loans to survive.
o By the end of 1967 the willpower of the founders was finally rewarded and
proved its ability to develop.
o The publicity given to the restaurant vouchers, the security they brought to
businesses like restaurants, union action demanding vouchers for employees,
all gave a boost to the formula and to Chèque- Déjeuner.
o To ensure the future of SCOP, Chèque-Déjeuner opted as early as 1971 for a
strategy of diversification with the birth of Chèque-Vacances (holiday
voucher), run ever since by the national agency for holiday vouchers.
o In 1989, the 25th anniversary of SCOP, more than 100 million luncheon
voucher to the value of 570 million dollars were issued.
o The Chèque-Déjeuner group invested in Chèque de Services, formed to
improve job security, and Chèque Domicile, aimed at creating jobs for
domiciliary help and services.
o In 1996, the Chèque-Déjeuner group issued 200 million vouchers for a
consolidated business performance of more than a billion dollars, employed
176 workers including 159 members and enjoyed a presence abroad in Spain,
Italy, Turkey, the Czech Republic, Slovakia and Hungary.

Labor cooperatives
o Labor cooperatives are worker cooperatives whose members sell their labor
and skills to other enterprises.
o They generally operate in the fields of packing and maintenance of highways
and public buildings, etc.
o In Canada the FCCT, or Canadian federation of worker cooperatives, was
constituted in 1992 to act as an “umbrella” organization for the numerous
worker coops in the country.
o Based on the guiding principles of cooperation, FCCT’s vision is to develop
and sustain an integrated network of democratic worker coops which offer
great quality of life at work and which consult with each other to support
sustainable local economies.
o Often the members of worker coops are from the working class, without a job
and are not traditional entrepreneurs.
 o That is why the FCCT has a mandate to exert pressure on governments to
enable members of worker coops to participate in different government
programs.
o At the present time, the FCCT is very busy in the rural Atlantic Provinces of
Canada where the unemployment rate is very high.
o The Federation is doing its bit to breathe new life into the Atlantic Provinces
and to re-launch industry in that very needy part of Canada.

Cooperatives in the world

o Thanks to their variety, cooperatives play a major part in the economic
activity of every country.
o Today more than 700 million people in the world are members of
cooperatives.
o They employ more than 100 million people and, in some countries, they are
some of the principal employers, for example Colombia where the national
health care cooperative is the nation’s no 2 employer.
o In the United States, there are 47,000 cooperatives with a total of over 100
million members; more than twenty of these cooperatives have an annual
turnover of more than a billion dollars28.
o The impact of cooperatives on the national economy can also be measured
by their share of the market.
o Thus in 1996 the market share of cooperatives in agriculture reached 83% in
the Netherlands, 79% in Finland and 55% in

Agricultural cooperatives: the largest number of members

o Agricultural cooperatives enjoy success both in industrialized countries and in
developing or transitional countries.
o “Agricultural cooperation” makes up the largest cooperative movement in the
world in terms of the number of members.
o At present agricultural cooperators total more than 410 million in 540,000
cooperatives. Asia has more than 83% of the total number of cooperators
(situated mainly in India and China). But in terms of turnover, Europe is in top
spot (thanks to French, German, Dutch and Italian cooperatives) with 42% of
the total turnover, amounting to more than 600 billion dollars29 in 2001.
o In Europe there are 44,260 cooperatives with 14 million members and
720,000 jobs.
o In France for example, agricultural coops control important businesses in the
non-cooperative sector or create privately-owned subsidiaries.
o American agricultural cooperatives play an important economic role.
o In 2000, the American agricultural cooperative movement accounted for
3,085,052 members divided into 3,346 cooperatives.
o The cooperatives’ turnover amounts to 99 billion dollars. In developing or
transitional countries, although this type of coop is an assured source of
national income, the withdrawal of the State from the sector and
liberalization of economies have weakened the movement but it is
nevertheless still there.
o In 2001 the agricultural cooperatives of Kenya had a turnover of 100.6 million
dollars.

Credit unions: the most important in terms of turnover

o The ability of credit unions to finance income-generating activities is
enormous and explains the rapid expansion experienced by the financial
cooperative sector.
o The World Council of Credit Unions (WOCCU) alone accounts for 34,839 credit
unions with 95,926,879 members in 28 African countries, 11 Asian countries,
3 Pacific countries, 13 Caribbean countries, 16 countries in central and South
America and 5 countries in North America and Europe.
o The global assets managed by cooperative banks amounts to 5,588 billion
dollars.
o The European continent alone contributes 46.7% of the total assets of
cooperative banks, whereas Asia represents a second significant group with
44.6%.
o Cooperative banking institutions have more than 267 million members
among them. 51.4% are in Asia and 30% on the American continent. 71.8%
of credit unions are concentrated in Asia.
 o From an economic viewpoint, the cooperative banks of the industrialized
countries of the northern hemisphere are the most important but the premier
cooperative bank in the world in terms of members is Indian.
o Credit unions (CUs) in the world us to forget the development of other forms
of cooperatives.
o Already very much a feature in Europe, housing coops are enjoying growing
public interest in developing countries.
o In Ethiopia for example, there are 1,000 cooperatives of this type with 42,000
members altogether, Tanzania has 117 with 7,000 members, in Chili 20% of
low-cost tenancies are offered by cooperatives.

New features in cooperative affairs

o The flexibility of the cooperative formula means we can see novel and even
innovative applications in industrialized countries:
 Cooperatives
 were the first enterprises to think about Centres of Business
Development in the field of federations of services to cooperatives;

 Collective service cooperatives

 Have existed for a long time in the United States, where rural
electricity cooperatives, for example, provide electricity for 26
million members at rates based on real costs and supply more than
half of America’s electricity distribution lines.
 This kind of cooperative is also being developed in Portugal.
 In the United Kingdom, a telephone cooperative has recently been
set up with excellent results: it buys “communication time” at
advantageous rates and passes on the savings to its members in
the form of reduced cost or payment of dividends, calculated
according to the usage of the service;

 Social cooperatives
 Set up in Italy and central Europe provide lots of jobs for
handicapped members and other excluded groups including former
detainees and drug addicts;
 Franchising cooperatives
 Are being developed in the United States and are also appearing in
Europe, for example in the fast-food sector in Finland.
 A franchise is a contract whereby one enterprise (the franchiser)
allows one or more independent businesses (the franchisees), in
return for a fee, the right to use its trade name and logo to sell
products or services.
 This practice is becoming increasingly widespread in cooperative
circles.
 In fact the number of franchised coops keeps on growing because
of the opportunities offered by the cooperative form of organization
in the field of distribution, especially in terms of purchasing power.
 It can happen, as has been the case in the United States that some
franchisees take over their franchisers.
 The creation of sub-contractors cooperatives of the large Japanese
car manufacturers gave small sub-contractors greater power of
negotiation and meant they could avoid breaks in supply;
 In the United States and Japan, “campus cooperatives”
 Offer students numerous services, such as low-cost shops,
accommodation, and counseling services.
 The student cooperative of Harvard Business School in Boston in
the United States and the Higher Panafrican Institute of Cooperative
Economy of Cotonou in Benin are a couple of the best-known
examples.
 E-commerce cooperatives
 Allow small craft businesses and independent artisans in France
and Italy to market their products and sell them on the internet.
 In Colorado, for example, the Colorado Internet Cooperative
Association is an internet service provider run by its owner-
members.
 This cooperative was founded in January 1994 to give reliable
internet access at cost price and with no resale restrictions.
  In Finland, Katto-Meny, likewise a service provider, offers its
members user names, e-mail addresses, a mailing list, a directory
of web publications and access to a modem.
Exercises 9.1
Tell whether the following is what types of cooperatives?
1. It covers credit unions and insurance cooperatives.
2. It can be made up of natural persons or corporate bodies.
3. It help growers with the marketing of their harvest by obtaining consumer
goods and farming input as well as helping with the management of farming
credit.
4. The worker cooperatives whose members sell their labor and skills to other
enterprises.
5. It made up of individuals who have come together to secure decent housing.
Question to ponder
1. What is shared service cooperative?

Key points
 Cooperatives exist in all sectors of the economy.
 Cooperatives can be classified in two categories: those offering services to
their members (credit unions, consumer cooperatives, housing cooperatives,
agricultural cooperatives, etc.) and those whose aim is to provide jobs for
their members, the worker cooperatives (producer cooperatives and labor
cooperatives).
 Agricultural cooperatives and credit unions are the biggest forms of
cooperative in the world but other forms tend to appear in response to
members’ needs: social cooperatives, e-commerce cooperatives, electricity
cooperatives.

Test Yourself
Answer the following.
1. Explain briefly about public interest.
2. What cooperatives tend to response the needs of their members?
3. Why cooperatives play a major part in the economic activity of every
country?
4. How cooperative becomes an extension of the individual business?

Module 9
Types of Cooperative and Their Place in Society

Name: ______________________________________ Score: _________

Course/ Year & Sec: ___________________________ Date: _________

Assessment

I. IDENTIFICATION: Identify the following statement and write your answer on the
space provided after the statement.
1. Offer students numerous services, such as low-cost shops,
accommodation, and counseling services __________________________.
2. Makes up the largest cooperative movement in the world in terms of the
number of members __________________________.
3. With the task of managing dwellings and organizing complementary
services ____________________.
4. organized by building workers either to create jobs within their enterprise or
to provide services to other businesses
5. They confer on their members individual title deeds or retain ownership of
buildings
6. Which build blocks of flats but do not give members title deeds
___________________.
7. They live in and which are rented out by the society of which they are
members _________________________’
 8. Which provide mortgages of a certain percentage of the value of the house to
be bought or built______________________________.
9. Which are groups of people with a common housing problem who have
decided to organize themselves in a cooperative way into a team of workers
to build the houses they need ____________________________.
10.The ability to finance income-generating activities is enormous and explains
the rapid expansion __________________________.

II. ENUMERATION: Give the following.

A. Types of cooperatives
1. 4.
2. 5.

B. Types of cooperative in the world

6.
7.
C. Types of housing cooperative
8. 11.

9. 12.
10.

D. New features in cooperative affairs

13. 16.
14. 17.
15.

E. Features of service cooperative

18. 20.
19.

References
http://www.cda.gov.ph/frequently-asks-questions-faqs
http://www.cda.gov.ph/Images/Downloads/Masterlists_Asof_2015Dec.31.pdf
Tchami, Guy, Handbooks on Cooperatives