Cooperation is a simple idea—two or more people join forces to accomplish something they probably couldn’t do alone. People work together in thousands of ways each day. For example, parents take turns watching each others’ children so they can do errands, work, or have some time alone. Farmers help one another with barn raisings and at harvest time. By combining their efforts, by sharing responsibilities, by joining forces, people are able to accomplish many things.
A cooperative is an organization of people who work together for economic benefit. Cooperatives bring the idea of cooperation—working together—to the business world. The cooperative idea is one with many applications. For instance, to provide their children with high-quality preschool education, a group of parents may work together to hire a teacher and rent a facility. To borrow money at favorable rates, individuals and families may put their savings accounts together to create a credit union. Whether cooperation happens independently or through a business, the principle is the same. People working together can accomplish more than those working alone.
What is a co-op?
A co-op is an organization that takes the idea of working together and puts it into a business structure. A cooperative is a business voluntarily owned and controlled by the people who use it—its members. It is operated solely for the benefit of its members, to meet their mutual needs. When groups of people have similar needs—such as the need for lower prices, more affordable housing, or access to telecommunications services—cooperatives offer great potential to meet those needs.
At its core, a co-op is a business. It is subject to the same needs and demands of any business: co-ops require sufficient financing, careful market analysis, strategic and comprehensive planning, well-trained and compe-tent personnel. Co-ops are not immune to the market and economic forces that cause small businesses to struggle and fail.
But in several important ways, co-ops are also unique and different. Most distinctly, a cooperative business is owned by the people who use its services—the members. Co-ops may resemble other businesses outwardly, but the fact that they are owned by members makes them unique.
Although definitions of co-ops vary, they all contain the following elements:
- Co-ops are owned and controlled by those who use their services (the members).
- Co-ops are democratically governed.
- Co-ops are businesses, not clubs or associations.
- Co-ops adhere to internationally recognized principles.
A simple definition of a co-op:
A co-op is a member-owned, member-controlled business that operates for the mutual benefit of all members and according to common principles established for cooperatives.
There are three basic types of co-ops:
- Producer co-ops provide goods or services to members who are involved in producing products, such as farmers or artists.
- Worker co-ops are owned and controlled on a democratic basis by their employees.
- Consumer co-ops provide goods or services used primarily for personal consumption. Food co-ops are typically organized as consumer co-ops.
Values and principles common to all co-ops
Co-ops worldwide share a common creed. All co-ops share a fundamental respect for all human beings and believe that people can improve themselves economically and socially through mutual help. This basic philosophy has been developed into a list of seven principles that serve as guidelines for how cooperatives do business.
The principles were originally developed in the mid-1800s by groups struggling to provide unadulterated, quality food at fair prices when the market offered them very few options. As times have changed, the prin-ciples have been modified slightly, but the basic concepts have remained the same for over 150 years.
Recently, the International Cooperative Alliance (ICA) reviewed the cooperative principles and reformulated them. The “Statement on the Cooperative Identity,” approved by ICA members in September 1995, defines the standards by which all co-ops should operate.
The “Statement on the Cooperative Identity” begins with a values statement that describes the beliefs common to all cooperatives: Cooperatives are based on the values of self-help, self-responsibility, democracy, equality, equity, and solidarity. In the tradition of their founders, cooperative members believe in the ethical values of honesty, openness, social responsibility, and caring for others.
In addition to their common values, all co-ops share seven basic principles. These principles outline a demo-cratic structure that can be adapted to businesses providing many different kinds of services and products. Two of the seven principles describe who owns a co-op, two describe how decisions are made, and three list specific ways that co-ops put their beliefs into action. The seven co-op principles are:
1. Open and voluntary membership Co-ops do not limit, for any social, political, or religious reasons, who may join and become a co-owner of the co-op. Co-ops are open to anyone who can make use of their services and is willing to accept the responsibilities involved.
2. Member economic participation This principle combines many concepts, all based on the idea that co-ops—and their money—are owned and controlled by their members. Concepts covered: Members provide the basic capital (money) to start and operate the co-op. If co-ops pay dividends to their member-owners, the rate must be limited. Surplus, or profit, resulting from the operations of the co-op belongs to the members, and they control how it will be distributed. If a co-op’s surplus is returned to members, it will be distributed in proportion to the amount of business each member has conducted with the cooperative.
3. Democratic member control All co-op members have equal voting and decision-making power in the governance of the business, on the basis of one vote per membership.
4. Autonomy and independence Cooperatives are independent self-help organizations controlled by their members. They limit the influence of outside agencies or business partners to ensure their independence.
5. Education, training, and information Co-ops have an obligation and need to educate members about co-ops. This mandate also encompasses educating the general public, young people, and community leaders about the nature and benefits of cooperation.
6. Concern for community While member needs are their primary concern, cooperatives also work for the sustainable development of their communities.
7. Cooperation among cooperatives To bring the theory of working together full circle, co-ops recognize the vital importance of working with other co-ops—locally, regionally, nationally, and internationally. Through these efforts, co-ops try to help each other—to strengthen their economic positions and to contribute to the co-op movement. This prin-ciple of “cooperation among co-ops” extends the idea of working together to the organizational level.
What is a food co-op?
In simplest terms, a food co-op is a co-op that buys food and household items for its members. The co-op helps members obtain access to products of desired quality at the best possible price.
Food co-ops offer consumers a retail environment free of coercive sales influences and with full disclosure of product qualities and value. Food co-ops typically operate out of retail facilities. Most are open to anyone who wishes to shop there, though they may provide special services, prices, or benefits to members only. Food co-ops may also offer a wide range of products and services aside from groceries, including pharmacies, dry cleaning, travel services, cooking and nutrition classes, housewares, food service and catering, gas stations, etc.
Hanover, New Hampshire
In the mid-1930s in Hanover, New Hampshire—as in all communities across the United States—times were hard. Families struggled to make ends meet. Spending $8 or $9 per week on groceries was considered excessive and beyond the means of most families. Fresh fruit and vegetables were of poor quality or expensive luxuries. In 1935, 17 residents of this small, remote community gathered in the high school to discuss the idea of starting a consumer co-op. The co-op could help them reduce their grocery costs and would purchase products that were otherwise unavailable. In January 1936, the group formally established the Hanover Consumers’ Club. The club started by buying fresh citrus direct from Florida. Any savings were shared among all group members. Before long, the group also negotiated discounts for members on bread, table wine, canned vegetables, gasoline, and fuel oil. Members shared information on where to get good values for services such as haircuts, tailoring, and skate sharpening. The club was successful and quickly outgrew its space in a basement garage. One year after it started, the co-op moved into a retail location; its first-year sales were $11,400. Today the Hanover Co-op operates two supermarkets, a full-service gas station, and a convenience store. It employs over 300 people and serves 20,000 member households (31,000 members). In 2001, total sales reached more than $42 million.
St. Peter, Minnesota
Typical of many “new wave” co-ops, St. Peter Food Co-op was influenced in its early years by the social and cultural forces of the 1960s and 1970s. Interest in natural foods was growing, but there were few sources in St. Peter for these products. A group of residents decided to set up a co-op to meet the need for natural foods. For months, volunteers collected financial contributions from members, built shelves, located used equipment, and got things ready for a new store. When the co-op opened its doors in July 1979, its membership had grown to 60. The co-op’s early inventory consisted mostly of bulk foods, including beans, grains, flours, dried fruits and nuts, whole-grain baked goods, and occasionally local produce. For the first two years, member volunteers took care of ordering, receiving, stocking, bagging, cashiering, record keeping, and everything else. Today St. Peter Food Co-op operates a thriving store and deli in the heart of the city. Its 800 members enjoy a wide range of products, and the co-op employs a staff of 40. In 2001, sales totaled around $1,200,000.
In the early 1970s, a number of buying clubs in the Sacramento area helped people gain access to natural foods. The club that eventually became the Sacramento Natural Foods Co-op was formed in 1972. The group met once a month to place bulk orders from a wholesaler and met again a week later to split the purchases among themselves. In September 1973, the group incorporated as a consumer co-op. The co-op began retail operations at 16th and P Streets and quickly expanded into neighboring space. As the co-op grew in popularity and sales volume, it soon became obvious that a new location would be needed. In 1975 the co-op moved to a site with 6,100 square feet of retail, storage, and office facilities. Sales and membership continued to grow, until the co-op once again relocated in May 1989. The co-op now operates out of a 17,000-square-foot facility. It employs 130 staff members to serve almost 7,000 members. Annual sales are approaching $15 million.
Although there are no precise statistics, approximately 300 food co-ops operate in the United States. The majority of these co-ops sell primarily natural foods. However, some co-ops offer a full line of groceries, sometimes combined with natural foods. The total annual sales volume of food co-ops in the United States is estimated at $700 to $750 million.