The current situation in the world economy has not created the most favorable conditions for the development of small private businesses. It doesn’t matter what an entrepreneur does. For example, he may produce food, open an online store selling quality yarn or provide a unique service. In any of these cases, the risk of losing all investments is quite large.
Today, the cooperative movement is becoming popular in the world. The main goal of any cooperative is fruitful cooperation, exchange of experience, and protection of members from economic and social arbitrariness.
The essence of the cooperative
The term refers to a voluntary association of organizations or citizens based on the principle of membership for social or economic purposes. Cooperatives are not always formed for profit, so the main thing, in this case, is the interests of the participants.
There is popular opinion that the cooperative movement is the third sector of the economy since it is an alternative to enterprises in public or private ownership. Cooperatives are widespread in most developed countries of the world. In Japan, more than 90% of all farms are participants of cooperatives; in Finland, the cooperative system is actively developing in the food trade; In Canada, every third citizen has a membership in the cooperative.
You should know that the first cooperatives appeared in England in the early nineteenth century. Their main mission was to improve the living conditions of workers. As a rule, the structure of a cooperative is based on shared contributions.
Participants contribute their share to the common fund and recognize the possible risks that may arise during the operation of the enterprise and can lead to loss of investments. A member of a cooperative who contributes a share is allowed to vote in the general vote.
Types of cooperatives
Depending on the direction of work and the main mission, cooperatives are divided into several types. One of the main criteria is profit:
- Commercial cooperatives for income generation.
- Non-commercial cooperatives that respond to other needs of participants.
In addition, there are distinct forms of consumer, social, and production cooperation.
Experts use this type of cooperative when necessary to unite citizens and organizations on the basis of work. Their main goal is to make a profit from the realization of goods and services. A producer cooperative may include both legal and natural persons of five or more persons.
To join such a cooperative, the prospective participant must make a share contribution in the form of money, property, intangible assets, or securities.
Production agricultural cooperatives are the most popular that bring farmers together to buy expensive equipment, reduce production costs, or enter a new trading area. Agrarian cooperation is a popular type of that even in emerging countries.
They are a voluntary association of members to meet their needs for goods or services. Also, they operate on the principle of shared contribution. At the core of a consumer cooperative, there is an increase in the welfare of each shareholder as opposed to the maximum profit from the trade.
Food cooperatives are very popular. So, Park Slope Food Coop is one of the largest food cooperative organizations in the United States that has more than 17,000 members. They can purchase products at reduced prices and work in the cooperative for a maximum of three hours per month.
They originated in the European economic system through the Law on Social Cooperatives, which the Italian Government adopted. Their activities are aimed at solving social problems in society, including helping orphans and poor people or rehabilitating people who are in a difficult life situation.
In some CIS countries, the cooperative movement was highly developed and popular, so now, it has been in the past for a long time. However, in the EU, the US, and Japan, it is still of great importance to the economy. The fact is that it helps the State to overcome economic inequalities.