Co-operatives
Yvonne
Harvey, Contributor
Today
we will look at the final form of business in the private sector of a mixed economy,
co-operatives.
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| A
Bridgeport High School student draws an abstract character during art and craft
class, recently. -
Anthony Minott/Freelance Photographer | A
co-operative is a business organisation that is owned and operated by its members,
who have similar interests and objectives and, who pool their resources to establish
the co-operative for their mutual benefit. The
first co-operatives were agricultural co-operatives, for example, farm co-operatives
where tools, seedlings and other materials were bought in bulk at low costs for
farming purposes. The agricultural products were sold at reasonable prices and
the profits shared amongst the members of the co-operative. Membership
in a co-operative is gained by buying shares. These shares are usually of low
value. Irrespective
of the number of shares owned, however, each shareholder only has one vote at
the society's general meeting. A
board of management is elected to operate the business on behalf of its members.
Profits are distributed among members. Apart
from selling shares, the co-operative may raise funds by borrowing from commercial
banks, development banks and co-operative banks. The
co-operative is based on five co-operative principles, which are as follows: OPEN
MEMBERSHIP Open
to all, 16 years and over, on the payment of a small fee. However, for certain
types of co-operatives, there is a restriction where certain skills are required.
DEMOCRATIC
CONTROL All
members are equal, and the business is run for the benefit of all. LIMITED
INTEREST ON SHARE CAPITAL This
is so since there are usually many persons contributing relatively small amounts
of share capital. DISTRIBUTION
OF PROFITS TO BENEFIT ALL EQUALLY Profits
should be shared in such a way as to prevent one member gaining at the expense
of others. Therefore, profits are distributed in accordance with the amount of
share capital invested. PROMOTION
OF EDUCATION Members
of the co-operative should be educated on the principles of the co-operative so
that the business can be run efficiently. There
are five main types of co-operatives: 1.
Consumer co-operatives - These buy goods and services at wholesale
prices and sell to their members at lower than regular prices. 2.
Producer co-operatives - These purchase raw materials at low costs,
produce and then sell to make reasonable profits. 3.
Financial co-operatives - Members pool their
personal savings so they are able to qualify for credit at low interest rates
from financial institutions. 4.
Services - provide its members with services,
which under normal circumstances, they would not be able to access because of
the high costs involved, e.g. housing and health care. 5.
Worker co-operatives - members are allowed to determine and control
their choice of employment and the co-operative will find employment for them.
Legal
Aspects Any
group of people wishing to form a co-operative must register with the Registrar
of Co-operative Societies. They must pay a registration fee. Advantages
of Co-operatives 1.
Open membership. 2.
The form of management is democratic. 3.
Guaranteed markets are available for members. 4.
Co-operatives incur little or no advertising costs. 5.
Members benefit from economies in bulk buying. 6.
Employment is created within the organisation. 7.
They benefit from advantages in taxation. 8.
Many co-operatives are useful as agents of the government. Disadvantages
of Co-operatives 1.
Management is often poor and inexperienced. 2.
Over democratisation may lead to inefficiency. 3.
Lack of capital hampers the progress of co-operatives. 4.
Conflicts sometimes arise because in some instances, members are both employers
and employees. Next
week, you will be getting a multiple choice test on the businesses in the private
sector of a mixed economy. Ensure that you revise these businesses well. Bye for
now. Yvonne
Harvey teaches at Glenmuir High School. | 
