Transcript SARE’s 20th anniversary NEW AMERICAN FARM CONFERENCE “Why CO-OP” By: Ben F. Burkett, Marketing Specialist Federation of Southern Cooperatives/Land Assistance Fund MARCH 25-27, 2008

SARE’s
20th anniversary
NEW
AMERICAN
FARM
CONFERENCE
“Why CO-OP”
By: Ben F. Burkett, Marketing Specialist
Federation of Southern Cooperatives/Land Assistance Fund
MARCH 25-27, 2008
Mississippi Association
of Cooperatives
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A state association of the Federation of
Southern Cooperatives/Land Assistance
Fund (FSC/LAF)
Established in 1972 with a purpose to
serve limited resource and minority
cooperatives throughout the state
MAC Continued…

Parent organization of the Mississippi
Center for Cooperative Development


Chartered in 1997
Allows MAC to expand education, training,
and technical assistance to participating
cooperatives
Regional Crops
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Watermelon
Assorted Greens
Squash
Culinary Herbs
WHAT ARE
COOPERATIVES?
A cooperative is a business that is
owned and controlled by the
people who user it- its memberowners.
A Type of Business
Dependent On
Who owns the business?
 Who controls the
business?
 Who uses the business?
 Who gets the profits?

Who sparks the coop
Idea?
A compelling need and a few
leaders can spark the idea of
forming a cooperative.
What makes a successful
coop?

Successful cooperatives bring people
together who: ( 1) have a common need
or problem (2) want to do something to
help themselves; (3)are willing to support
the cooperative by supplying capital; and,
(4) patronize the cooperative by using it
when organized. In addition, a successful
co-op must have competent management.
What can cooperatives do for
people?
They market what people grow or
produce
 They obtain production supplies.

What does the coop do for the
members?
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Cooperatives help improve the quality
and reduce the cost of supplies and
services members use.
Cooperatives help improve net
returns to members from products
they market and goods and services
they provide.
What members do for the
coop:
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Members finance their cooperative.
If the
cooperative needs more money than the
members can provide, the co-op may borrow at
least part of it from outside sources, such as
banks.
Members control their cooperative through a
board of directors, that they elect. Directors set
policy and hire a manager to supervise the dayto-day cooperative operation.
Membership

Members, are the reason the cooperative
is organized. (owner-users). They justify
the existence of the coop through their
patronage, capital investment and decision
making participation. They should show an
interest in all the cooperative’s affairs,
present ideas to improve performance and
promote it to others who can benefit by
using it.
Survival
Cooperatives Are a Type of
Corporation
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Multiple owners who are user
members
Variety of goods and services
Physical facilities
State chartered
Members are investors
Owned and controlled by members
who use its services
Cooperatives
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Are primarily controlled by a board of
directors elected by and from members
Derive equity from member owners
Operate for the benefit of member
owners
Allocate earnings to members based on
use
Earnings from member business is
taxed once
Have perpetual existence
The Cooperative Form of
Business Is Prevalent
47,000 cooperatives in the United
States
 Serve 100 million people, 40 percent
of the population
 There are several types of
cooperatives serving many sectors

Types of Cooperatives
 Financial
 Consumer
 Business
Service
Cooperatives Have Unique
Principles
User - Owner
User - Control
User - Benefit
User-Owner Principle
The people who own and finance the
cooperative are those who use it.
User-Control Principle
The people who use
the
cooperative are those
who control the
cooperative
Members Exercise Control
By
Voting at annual and
membership meetings
 Electing Board of
Directors
 Making decisions on
major cooperative
issues

User-Benefit Principle
The cooperative’s sole purpose
is to provide and distribute
benefits to members on the
basis of their use
User-Benefits
Bargaining
Power
Reduced Costs
Market Access
Quality products
and services
Community
Strength
Economic
Enhancement
Political Action
Competitive
Yardstick
Cooperative Practices
Implement and Facilitate Basic
Principles

Patronage Refunds - distribute earnings to
members based on use

Limited Return on Equity Capital -
members form cooperatives for service, not for a
monetary return on investment

Cooperative Cooperation - joint
ventures, MAC’s, networks, alliances, working
relationships, etc.

Cooperative Education - promote the
cooperative way of doing business and educate
members, directors, and employees
Cooperative Governance
System Structure
Based on membership structure and
essentially defines who the members are and
how the cooperative is organized to serve them.
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Centralized Structure - Individuals are
direct members
Federated Structure- Cooperatives are
direct members
Mixed Structure - Individuals and
cooperatives both are direct members
Centralized Structure
Cooperative
Member
Member
Member
Federated Structure
Cooperative
Local
Cooperative
Member
Member
Local
Cooperative
Member
Member
Cooperative Functions
Three Core Functions
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Marketing - extend control of
members’ products through
processing, distribution, and
sale
Purchasing - providing
affordable supplies and goods
Service - provide needed
services
Participation Roles
Cooperatives operate through
the roles of principal parties
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Members
Directors
Manager
Employees
Organizational Make-Up
Members
Board of Directors
Manager
Employees
CONTACT
INFORMATION
BEN BURKETT
Marketing SPecialist
Federation of Southern Cooperatives/
Land Assistance Fund
Post Box 22786
Jackson, MS 39255
(601) 354-2750 OFFICE
(601) 354-2777 FAX
[email protected]