Agricultural cooperatives have made an impact on food systems around the world for generations. You may hear others refer to them as farm co-ops. Farmers join the organization and combine their agricultural resources to maximize them. Doing so allows producers to leverage their collective assets for the benefit of all participants and their communities.
Farmers in a co-op make decisions together and share profits among all members, rather than outside investors. Income from farmer-owned co-ops is reinvested into the business or returned to the members. In rural communities, farm co-ops are essential to support local communities and their economies.
ADVANTAGES OF AGRICULTURE CO-OPS
One of the primary advantages of agricultural cooperatives is the organizational structure, which allows for operational visibility and democratic member participation. Yet, there are numerous other immediate and long-term benefits gained from farm co-ops, ranging from social to economic.
IMPROVED RURAL DEVELOPMENT
In more rural areas, farm co-ops are often the sole source of community agricultural goods and services. They provide one of life’s most essential products in markets big producers don’t serve. These organizations help create local jobs and improve food security in their neighborhoods.
Farm co-ops are also consumers of nearby member-owned entities, such as utility cooperatives, and other businesses. This interaction supports a more robust local economy and higher quality of life for everyone in the area.
Agricultural co-ops enable farmers to be stronger together. Their pooled resources and experience can help each producer achieve higher crop yields and better market prices. Through economies of scale, growers can realize lower input expenses to enhance their profitability.
Banding together also lets agriculturists use their strong relationships to secure favorable financing on tools and equipment. In turn, the quality of their products improves, allowing them to command higher prices and compete with larger growers.
KEY FACTS ABOUT AGRICULTURAL CO-OPS
Every year, animal, dairy and produce farms choose to forego traditional ownership and adopt a cooperative business model. Here are a few key statistics on agricultural cooperatives:
- 2 million farmers are members of more than 2,100 co-ops in the U.S.
- There are more than 1.2 million agricultural co-ops across the globe
- Farm co-ops generate about $6.5 billion in net income each year
- More than 250,000 people are employed by farmer-owned co-ops
- Most of the top agricultural cooperatives are based in the Midwest, especially Iowa and Minnesota
- Examples: Florida’s Natural, Land O’Lakes, Ocean Spray, Blue Diamond, Organic Valley
HOW FARM CO-OPS WORK
A farm cooperative involves a network of member farmers who reap many benefits of doing business as a unit. Individual farms work together to buy necessary supplies and services, as well as distribute, market and sell their products. Farmers save costs and access goods and services otherwise unavailable to them.
A BRIEF HISTORY OF FARM CO-OPS
Agricultural co-ops have existed for as long as people have been farming. Early farmers needed to secure land and supplies to start their business. In a cooperative, members would pool their financial resources and expertise to support each other’s farms.
The concept first gained traction in the United States following the Civil War. Many of these organizations adopted the principles and values of the Rochdale Pioneers, one of the U.K.’s first and best-known co-ops. Groups like the Grange, the National Farmers Union and the Farmers Union Central Exchange (CENEX) nurtured co-op growth until antitrust legislation put a damper on the activities in the 1890s. As a result of many court rulings, co-ops became illegal, and farmers engaging in collective actions that influenced the market were subject to prosecution.
That changed in 1922 with the passing of the Capper-Volstead Act, which generally guaranteed growers’ rights to form co-ops and act in unison.
Today, as more independent farms function collectively, they can achieve significant long-term success.
THE IMPORTANCE OF AGRICULTURAL CO-OPS
In a farmer-owned co-op, like-minded food producers help build a better local economy in the communities they serve. Farm co-ops continue to play a pivotal role in agricultural production at many levels. Common types of modern organizations and their cooperative-supporting activities include:
- Credit co-ops: These entities are typically financial services institutions that are part of the Farm Credit System. They help growers secure competitive financing for many activities, including crop exports.
- Supply co-ops: These organizations manufacture, distribute or sell essential farming supplies such as fuel and fertilizer. They strive to provide competitive pricing an individual farmer may not be able to get on their own.
- Marketing co-ops: These cooperative associations handle all promotional activities on behalf of their members. Their negotiating power can help growers receive better prices.
In summary, agricultural co-ops enable producers to get more for less, increasing overall quality and profitability.
CO-OP ASSOCIATIONS IN AGRICULTURE
Many organizations help advance America’s farmers and support cooperative business models in agriculture. Some agricultural cooperative examples of support include:
- National Council of Farmer Cooperatives
- National Farmers Union
- International Co-operative Alliance
- Cooperatives for a Better World
- Farmers Cooperative Association
- Farmers Co-Op Society
Some regions have local organizations providing assistance, such as the Keystone Development Center in Pennsylvania and the Neighboring Food Co-Op Association in New England and New York. Many localities also have government agencies that offer co-op support, like county extension offices and state farm bureaus.
NCBA CLUSA ADVOCATES FOR AGRICULTURE CO-OPS
At NCBA CLUSA, we envision a better world through cooperative enterprise. As the largest cooperative business association in the world, we advocate for communities across the globe. We believe in advancing and defending the cooperative business model so more people and communities can prosper.
NCBA CLUSA partners with co-ops in the U.S. and internationally. In 2017, we worked with more than 400,000 farmers around the world to help increase yields and access global markets.
As a member of NCBA CLUSA, your organization will join our initiatives to promote advocacy, education and opportunity in the entire cooperative movement.