Business Studies

Types of Cooperative Societies

Cooperatives may be organised to bring together people of a specific occupation such as farming, mining and tradesmen. As a result, there are different types of cooperative societies which include consumer cooperative societies, housing and producer cooperative societies to name a few.

What are Cooperative Societies

A cooperative society is an association of people united voluntarily in order to meet a common social, cultural or economic need. These associations are jointly owned and democratically controlled. The main objectives of cooperative societies are established by its members. Normally, the objectives have to do with specific deficiencies in the marketplace. Hence, the function of any society is to intervene in the marketplace in order to fulfil the needs of its members. The various types of cooperative societies are described below.

Credit Cooperative societies

These types of societies are voluntary and mutual aid associations. They provide short term credit to members of the cooperative society at reasonably low interest rates. Credit cooperative societies sell shares to their members and obtain loans from outsiders in order to raise capital. Some members have unlimited liability for the debts owed by the credit cooperative. These members can be workmen or lower middle-class workers. Credit cooperative societies can be divided into 2; agricultural credit cooperative and non- agricultural credit cooperatives.

Consumer Societies

Consumer cooperative societies are types of societies that seek to solve the problems created by middlemen. Middlemen are known to increase the price of products as well as creating an artificial shortage of goods in the market.  Consumer cooperative societies are created by consumers who come together and set up stores or businesses in order to meet their basic needs. These cooperative societies can be distributors that sell goods at a fair price or they can be ration shops. However, only shareholders and subscribed members can purchase from the cooperative. Another function of a consumer cooperative society is to keep a check on the open market prices of goods and services. They play an important role in reducing the effects of monopolies. People from all walks of life can become members of consumer cooperatives. These types of cooperatives are controlled by the shareholders and members. Any person can become a shareholder by buying a share the same way anyone can become a member by paying a subscription fee but, the principle of one man one vote is applied regardless of the investment made by a shareholder or member. There is a four-tier system in consumer cooperative societies;

  • Primary societies at the base level
  • Central Wholesale Society
  • Cooperative federation at the state level
  • National cooperative at the national level

Producers cooperative societies

Also known as industrial cooperative societies, producer cooperative societies are types of cooperatives where producers come together. They assist mainly self-employed workers and artisans as well as small to medium producers who may find it hard to compete with large producers. Producer cooperatives can organise themselves and produce goods with the help of raw materials and necessary tools from the cooperative or they can become employees of the cooperative society and earn wages. The products produced can be sold by the society or can be distributed amongst the members. Such cooperatives have been useful in solving the problems of unemployment in many countries. On the other hand, producer cooperatives have not been successful in many countries due to lack of funding and government support.

Marketing Cooperative Societies

A marketing cooperative society is a type of cooperative society where members come together to sell their products at discounted prices by eliminating the middlemen. The proceeds from any sales are divided among members depending on the goods provided by each member. A marketing cooperative can be seen as a central sales agency for many producers. Some marketing cooperatives perform other functions such as processing, grading, storing and packaging. Others go as far as extending loans to their members. Marketing cooperative societies also perform market research for their members. Self-employed workers and artisans who lack sales skills benefit from such societies.

Housing Cooperative Societies

Housing cooperative societies are types of cooperative societies where anyone who wants to own a home can join. People interested in affordable rental homes or apartments can join the cooperative. Also, anyone who is interested in investing in the cooperative society is welcome to join. Members of a housing cooperative society pay deposits to the society and obtain interests on those deposits. The deposits can be lent to members in need of cash. Some housing cooperatives provide building materials in addition to financial assistance. Other civic amenities such as roads, streetlights, parks, water and sanitation can also be provided by housing cooperative societies.

Farming Cooperative Societies

A farming cooperative society is a type of cooperative society where membership is restricted to farmers who own or cultivate agricultural land. Like any other society membership is voluntary. Such cooperatives are especially beneficial to smallholder farmers who are unable to use improved technology or those that do not own the farms they use. The various types of faming cooperatives include;

  • Joint farming cooperatives
  • Tenant farming societies
  • Collective farming societies

Worker Cooperative Societies

This type of cooperative society is similar to a producer cooperative society. The members of the cooperative society are workers, entrepreneurs and start-ups. Examples of some of the members include bakeries, retail stores and software development groups. This type of cooperative society has been growing rapidly in some developed countries.

Service Cooperative Societies

This cooperative society is a type of consumer cooperative. Such cooperatives offer services such as childcare, clinics and funeral services. These cooperatives are organised to give members more control of the services they offer and allow consumers to supply their own needs. That way, they gain bargaining power and share earnings. Service cooperatives help fill a need in a community that is not met by local businesses.

Hybrid Cooperative Societies

Some countries have hybrid cooperative societies where a combination of cooperative societies come together, or where people with common interests join. These types of cooperative societies can be worker and consumer owned societies or even producer and consumer cooperative societies.

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