Cooperatives: a unique business structure

Brenda J. Reau, Michigan State University Extension, Michigan State University Product Center -

Cooperatives can offer great benefits to members but can be challenging to get established.

A cooperative is a unique business structure in that the major focus of the business is to serve the needs of the people who use it. The International Cooperative Alliance defines a cooperative as an autonomous association of persons united voluntarily to meet their common, economic, social and cultural needs and aspirations through a jointly-owned and democratically controlled enterprise.

There are more than 29,000 cooperatives in the United States serving 100 million people. The cooperative concept is based on need. Often the need is for some type of product or service. Cooperatives are a significant economic force in the agricultural economy. Cooperatives are also often organized around utilities or financial services.

Cooperatives are made up of members. It is the role of the members to participate in meetings, help make decisions, elect the board of directors and to patronize the cooperative. The board of directors that are elected are charged with strategic planning, setting polices, making operational decisions and hiring the cooperative’s manager. The manager implements the directions of the board of directors and makes decisions about daily operations of the cooperative including the hiring of employees. These employees carry out the daily activities of the cooperative.

Starting a cooperative can be a daunting task that requires a great deal of expertise. The Michigan State University Product Center can assist with the process. The Product Center has been funded by a Rural Cooperative Development Grant to assist groups in the state wanting to start a cooperative. The Product Center can provide a great deal of technical expertise and support in this area.

The Product Center has assisted in launching the Great Lakes Cheese Cooperative, Michigan Specialty Meats Cooperative, Farmers on the Move Cooperative and the Legend of the Lakes Cooperative. Persons interested in exploring the formation of a cooperative may visit the MSU Product Center website for more information.

This article was published by Michigan State University Extension. For more information, visit https://extension.msu.edu. To have a digest of information delivered straight to your email inbox, visit https://extension.msu.edu/newsletters. To contact an expert in your area, visit https://extension.msu.edu/experts, or call 888-MSUE4MI (888-678-3464).

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