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UNDERSTANDING COOPERATIVES

UNDERSTANDING COOPERATIVES. UNIT 3 - The Structure of Cooperatives Slides for Unit 3 Rural Development – Cooperative Programs U.S. Department of Agriculture. Cooperative Structure Types. Financial Geographic area served Governance or control Functions performed Other arrangements. S 3.1.

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UNDERSTANDING COOPERATIVES

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  1. UNDERSTANDING COOPERATIVES UNIT 3 - The Structure of Cooperatives Slides for Unit 3 Rural Development – Cooperative Programs U.S. Department of Agriculture

  2. Cooperative Structure Types • Financial • Geographic area served • Governance or control • Functions performed • Other arrangements S 3.1

  3. Financial Structures Cooperatives are incorporated as stock or nonstock organizations. Stock Cooperatives • Issue one share of common stock (voting) as evidence of ownership interest. S 3.2

  4. Financial Structures Cooperatives are incorporated as stock or nonstock organizations. Nonstock Cooperatives • Issue membership certificates as written proof of a right to vote. Many stock and nonstock cooperatives also raise member capital by retaining earnings. S 3.3

  5. Structures by Geographic Territory Served Local Cooperatives • Operate in relatively small geographic area, typically in a radius of 10 to 30 miles. Super Locals • Operate in two or more counties with several branch facilities. Regional Cooperatives • Large mixed, federated, and centralized cooperatives often serving multi-state areas. S 3.4

  6. Structures by Geographic Territory Served Interregional or National Cooperatives • Cover two or more regions, which may serve a major portion of the U.S. International Cooperatives • Operating on an international basis with headquarters in the U.S. or other countries. S 3.5

  7. Centralized Structure Cooperative Member Member Member Individuals are members of a cooperative. S 3.6

  8. Federated Structure Cooperative Local Cooperative Local Cooperative Member Member Member Member Individuals are members of local cooperatives which are members of the federated cooperative. S 3.7 RBS, USDA

  9. Mixed Structure Cooperative Local Cooperative Member Member Member Member Member Both cooperatives and individuals are members S 3.8

  10. Cooperative Functions Three Core Functions • Marketing - extend control of members’ products through processing, distribution, and sale • Purchasing - providing affordable supplies and goods • Service - provide needed services S 3.9

  11. Marketing Cooperatives Assist members in maximizing returns from goods they produce • Handle, process, assemble, and sell • Grade, transport, bargain • Add value (new generation cooperative) • Research-new product development S 3.10

  12. Purchasing (Supply) Cooperatives Allow members to gain access to affordable production supplies and goods • Purchase in bulk to reduce costs and increase purchasing power • Provide direct ownership of refineries, plants, retail facilities, distribution chains, research facilities S 3.11

  13. Rural Service Cooperatives Provide needed services • Meet many needs • Custom application of purchased supplies, transport of product, etc. • Provide utilities, credit, insurance, housing, health care, technology, etc. • Other selected services S 3.12

  14. Other Structural Arrangements Subsidiary • A corporation organized, owned, and controlled either totally, or partially by a parent cooperative Marketing Agency in Common • Organized by two or more marketing cooperatives to market products or provide services for member cooperatives S 3.13

  15. Other Structural Arrangements (continued) Joint Venture • Association of two or more participants, persons, partnerships, corporations, or cooperatives to carry out a specific economic operation, enterprise, or venture Holding Company • A corporate entity with a controlling ownership in one or more operating companies S 3.14

  16. Other Structural Arrangements (continued) Contract Agent • A county or community cooperative may organize, owning nothing but contracts, and an agent to handle the goods and keep patronage records turned over by the agent. Private Dealers • As a franchise, the dealer keeps records. If the franchise makes money, patronage refunds are paid to the dealer’s customers. The dealer is paid a commission on sales. S 3.15

  17. New Generation Cooperative A new generation cooperative is a type of marketing cooperative that adds value (e.g., processing) to an agricultural raw product with the purpose of marketing that finished product in order to increase benefits to a finite (closed) membership. Membership shares can appreciate/depreciate and can be traded. Members shares are closely associated with contracted delivery rights. S 3.16

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