What Is a Cooperative (Co-op)?

Cooperatives can take many forms. Not all cooperatives were created for buying. You are probably familiar with credit unions and wholesalers that require a membership to bank or shop there. These are forms of co-ops. Another is mutual insurance companies (invented by Benjamin Franklin in 1752). A mutual insurance company is an insurance company that has no shareholders but is owned entirely by policyholders. In a mutual insurance company, any surplus funds for distribution are paid entirely to policyholders. In recent years, many insurance companies have and become public companies in part to help them acquire further capital.

Another cooperative whose name you may recognize is Sunkist. Their website tells us Sunkist is a not-for-profit marketing cooperative entirely owned by and operated for the California and Arizona citrus growers who make up its membership. As a member of a cooperative, each individual grower joins with other growers to gain a mutually larger market share. A cooperative of growers together can do many things that a grower alone cannot afford to do—develop a worldwide market, promote a brand name, access a global transportation system, develop comprehensive research capabilities, and gain governmental access to overseas markets—to name a few.

Food Cooperatives

In the simplest terms, a food co-op is a business that is owned and managed by a group of people for the purpose of purchasing the food they need at a price lower than they would pay to buy it elsewhere. Profits are not the goal. The first co-op was formed in England by a group of twenty-eight people who formed the Rochdale Equitable Pioneers in 1844. It operated as a store, which many co-ops do today, and the location of their first store is now a museum. From this small beginning, the co-op movement has grown to more than 47,000 cooperatives in the United States alone.

The number one purpose of a food co-op is to provide goods and services as economically and efficiently as possible. Co-ops also mean that members have a voice in what is sold to them. The first products that the Rochdale Co-op group chose were sugar, butter, flour, oatmeal, and tallow candles.

One of the principles that co-ops follow is a commitment to a limited return on investment. Because they are member-owned and operated, co-ops either gauge their selling prices so there is no profit, or they set a price and return any profits to members as dividends, usually in the form of a cash rebate. True co-ops are open to anyone who wants to join. You don’t have to work at a co-op to be an owner, but as in all true democracies, you get out of it what you put in. Members who choose to volunteer work hours enhance their membership benefits.

There are a number of different styles of food co-ops, but all of them share common values of group management and decision making, social responsibility, and equality. Towns of all sizes have food co-ops ranging from very small to quite large, and it is usually easy to find a food co-op near you.

Private food co-op: Only members may purchase from these. Some food co-ops require you to pay a small fee to join and an additional set amount of money to purchase a share. Some require an annual fee.

Often, members also contribute a few voluntary hours of work to running the co-op. This sometimes gives them an additional discount on food prices. These co-ops are also called buying clubs. They are often informal organizations of friends, members of church groups, coworkers, etc., who buy food together from a food co-op warehouse. In many cases, a food co-op offers reduced fees to people of low income, or allows people to trade work for membership. Open food co-op: These are much like a buying club except that they are usually formal co-op corporations and often have thousands of member-owners. Some allow anyone to make purchases, but only members enjoy the discounted prices. To be a member, an annual membership fee is required. Prices for nonmembers at an open food co-op vary widely, but they are often lower than other retail stores in the area to encourage people to shop at the co-op even if they cannot join.

Advantages of Co-op Membership

Members of a food co-op are able to vote on issues that are relevant for the co-op. For example, members may decide that the food co-op should stock only organic products. They may also have an influence on hiring decisions, remodeling, and other management issues. Because coordinating a big group of people can be challenging, a food co-op encourages cooperation, support, and honesty. Benefits of co-op memberships include

• • Lower prices: Member-owners can qualify for a range of discounts based on the number of volunteer hours they contribute.

• • Education: Member-owners who volunteer work hours at their co-op become more informed shoppers and gain valuable experience in cooperative member work.

• • Social network: Member-owners meet people with similar environmental and social values.

There are probably several co-ops right where you live. If you are interested in joining a co-op, do a little investigating. Search on your state website. Ask coworkers and friends. Information is not far away. It’s a great way to find healthy, fresh, quality food for less than supermarket prices.

Can I Start a Co-op?

• Yes, you can. Gather a group of friends, neighbors, or coworkers, and tell them about your idea. A co-op is only successful when all members are happy with the rules and the choices so it will be important to give everyone a chance to voice their opinion and make suggestions.
• One example we found was a group of twelve women who decided to work in teams of two. Each week, one team visits the local farmer’s market and purchases a set dollar amount of an assortment of fresh vegetables (their amount is $240). They return home and divide the vegetables into 12 grocery bags then everyone is telephoned to tell them their order is ready.
• Each one comes by during the day to pick up their order and put their money in the pot for the next week’s order. It works great because everyone has fresh vegetables every week but they only have to do their turn at the market every six weeks. It has a big social benefit, too, as the moms often stop to chat awhile when they pick up their order. Kids could also be involved to help them learn a little about money management and grocery shopping.
• If vegetables aren’t your thing, you could have a co-op that concentrates on bulk meat purchases or even grains. The sky’s the limit. If it’s just a group of friends operating their own co-op, no legal requirements for licenses, etc., have to be met. Be inventive and see what great ideas you and your friends can come up with for buying good, healthy food in bulk that results in a price everyone can afford.