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Coop or Co-op? The Role of Cooperatives in the Global Food Supply Chain

Coop or Co-op? The Role of Cooperatives in the Global Food Supply Chain

While driving through the countryside, more often then not you will see a business with the word “cooperative” or “co-op” in the title. This isn’t a chicken coop by any means, but what is a co-op? What do they do? What’s their role in agriculture?

Since October is National Co-op Month, we’re dedicating this post to cooperative education and their vital role in the food supply chain – both nationally and internationally.

Contributions of Cooperatives

Cooperatives meet people’s needs in all aspects of daily American life across the country. They employ millions of people and serve even more. Cooperatives generate billions of dollars of revenue which supports the economy, and they market products, purchase supplies and provide many types of services that many people use day in and day out.

Today rural and urban residents use cooperatives to acquire goods and services such as housing, groceries, education, telecommunications, and more. Franchisees, governmental units, hardware and grocery stores, florists and many other businesses use cooperatives to market their products and secure the supplies they need at competitive prices.

Commercial Sales and Marketing Cooperatives

Agricultural marketing cooperatives handle, process and sell agricultural commodities such as cotton, dairy products, fruits and vegetables, grains and oilseeds, livestock and poultry, nuts, rice, sugar and many other products. Farm supply cooperatives provide producers with plant chemicals, feed, fertilizer, petroleum products, seed, and other inputs. Farm service cooperatives operate cotton gins, provide trucking and artificial insemination services, and store and dry agricultural products.

Many grocery cooperatives and other independent grocery stores are served by cooperative grocery wholesalers that provide them with the advantages of group buying power and brand names, helping them better compete with large grocery chains and discount stores. There are many other retail and service cooperatives, including restaurant supply purchasing co-ops, which conserve money and offer quality products for franchisees of large fast-food chains. Besides their bottom-line impact, purchasing cooperatives also help to build trust among franchisers and franchisees, particularly on pricing issues.

Utility Cooperatives

Another important cooperative activity in rural areas is supplying electricity. The nation’s rural electric cooperatives provide electricity to 12 percent of the nation’s population by serving 47 states, including millions of businesses, homes, schools, churches, farms, irrigation systems and other establishments.

Some of these cooperatives are called generation and transmission cooperatives (G&Ts) because they generate and transmit electricity to meet the power needs of other cooperatives that distribute electricity to homes, farms, and businesses.

Telecommunications services to rural areas are also provided by cooperatives. These cooperatives provide local telephone exchange services, long-distance telephone operations, direct broadcast satellite, TV, mobile radios, cellular activity, and internet access for rural America.

Water cooperatives are another type of utility cooperative serving almost 2 million people with their water needs. These co-ops provide safe, reliable and sustainable water at a reasonable cost. They provide drinking, fire protection and landscaping irrigation water, and in some cases, they provide wastewater services.

Financial Cooperatives

There are thousands of credit unions in the United States, serving millions of consumers. Building on their core services of member savings accounts and consumer loans and home mortgages, credit unions also provide credit cards, automated teller machines, tax-deferred retirement accounts and certificates of deposit to costumers.

The cooperative Farm Credit System is the nation’s oldest and largest financial cooperative. It provides real estate loans, operating financing, leasing, facility and equipment financing, real estate appraisals and crop insurance to farmers, rural residents, and cooperatives across the country.

Serving the Global Food Chain

Cooperatives, as economic engines, have been involved in the global supply chains since they have been in existence. The cooperative business model was created to shorten supply chains– and eradicate intermediaries, either by collecting producers or consumers in farmer-owned agricultural cooperatives and consumer-owned food retail cooperatives.

In addition to the assembling of producers, workers or consumers, cooperatives in various economic sectors attempt to vertically integrate their businesses to increase the efficiency and the benefits for their members. Cooperatives are values-based and people-centered enterprises, continually applying their values and principles to supply chain management. They work meticulously to make global supply chains more sustainable from an economic, social and environmental perspective.

Everyday cooperatives in various sectors of the economy are contributing to the promotion and advancement of global supply chains and job security. They provide scale to small and marginalized groups such as small-scale farmers, enabling them to access markets, information, technology and finance with conditions that they could not reap as individuals. They provide a governance model that allows participation and inclusion of all stakeholders, including workers, in the management of the enterprise. They redistribute the economic benefits of the operation of global supply chains to its members and stakeholders including small-scale producers, workers, and consumers.

Cooperatives remain a major component of the food and agriculture industry, and they are available to help people provide services for themselves in essentially all segments of the economy.

Do you know of another role cooperatives play in the food supply chain? If so, leave a comment below!

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