A cooperative is a business organization owned by a group of individuals and is operated for their mutual benefit. The persons making up the group are called members. Cooperatives may be incorporated or unincorporated.

Some examples of cooperatives are: water and electricity (utility) cooperatives, cooperative banking, credit unions, and housing cooperatives. Their features are:

  • All members have equal rights, no matter how much capital they invested.
  • All workload and decision making is equally shared, a manager maybe appointed for bigger cooperatives
  • Profits are shared equally.

The most common cooperatives are:

  • Consumer Cooperative Societies: are organized by consumers to eliminate middlemen & establish direct relations with manufacturer. They ensure a steady supply of high quality and reasonably priced goods.
  • Producer Cooperative Society: They help member to procure input for production of goods and services. They provide raw materials, tools & equipment and other common facilities to members and help market their produce.
  • Cooperative Marketing Society: A voluntary association of producers who find it difficult to individually sell their products at a profit. It ensures a steady and favourable market for output of its members. Their output is pooled and sold at best price & proceeds distributed in proportion to contribution of members. They eliminate middle men and dishonest trade practices.
  • Cooperative Credit Societies: They are formed to provide financial help(loans) to members on easy terms thus protecting them from exploitative money lenders who charge high interest rates.
  • Cooperative Housing Societies: They are formed to provide residential accommodation to member. They purchase, develop land and construct houses or provide loans at low rates to build houses.
  • Cooperative Farming Societies: Farmers join & pull their resources for cultivating their land collectively. They aim to achieve large economies of scale in farming & maximizing agricultural output i.e. better seeds, irrigation, fertilizers etc.
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