Virtually any type of agri-business can be organized as a
co-operative. Traditional types of agricultural co-operatives
include supply, marketing and processing co-operatives. A
relatively new type of agricultural co-operative is the New
Generation Co-operative.
Purpose: To provide producers with inputs and
services at competitive rates.
Members: The producers who purchase supplies and
services from the co-op. That is, the customers or patrons.
Supply co-operatives sell a variety of goods to producers,
including petroleum, feed and fertilizers. Services such as
breeding, artificial insemination, and seed cleaning have also been
organized on a co-operative basis. Depending on the needs of the
producers involved, supply co-operatives can vary in complexity:
ranging from simple buying clubs organized by producers to access
bulk or volume discounts, to large wholesale and retail operations
which provide a wide variety of goods and services to a broad range
of customer-members. Supply co-operatives may choose to either
charge market prices for the services and products offered by the
business or they may choose to price at cost plus an operating
margin. In either case, any profits generated by the business are
typically returned to members at the end of the year in proportion
to their patronage. The members of supply co-ops can also decide
whether or not to sell goods or services to non-members. Allowing
non-members to purchase supplies or services can often increase the
level of profits generated by the co-operative.
Purpose: To market and process goods.
Members: The producers who deliver their products
to the co-operative.
Producers create marketing co-operatives to jointly market,
distribute and process their products. By pooling their resources,
producer-members can hire professional marketing specialists and
have their products processed in plants in which they have an
ownership stake. Many marketing co-operatives also facilitate
producer investment in the development of brand names, market
research and product development.
Co-operatives use many methods to account for, and track, the raw
commodities delivered to their facilities by their members. Some
co-operatives pay producers a market price upon delivery. Others
pay producers a pooled price based on the average returns earned by
the co-operative over a specified marketing period (see pg. 5).
Still other co-operatives simply facilitate the transaction between
the producers and the final buyer, charging the producer on a
per-unit basis for this service and never retaining ownership of
the product. In each case, members may receive additional payments
at the end of the marketing season, based on the co-operative's
earnings in excess of operating costs. Depending on their mandate,
co-operatives may or may not market the product of nonmembers.
Many co-operatives use marketing agreements as a way of specifying
the terms under which products will be accepted, processed or
marketed by the co-op on behalf of its members. This enables the
co-operative to operate on a more efficient basis. Processing
co-ops, in particular, can save costs if they match the volume of
their members' commodity production to their facilities'
capacity.