Rural America Runs on Co-Ops
Tonsager, Dallas, Rural Cooperatives
The debate over healthcare reform has resulted in a great deal of renewed interest about the cooperative model of business in the United States. Regardless of whether co-ops ultimately have a major role to play in the healthcare plan Congress adopts, the increased attention to this infinitely flexible business model is welcome by those of us who promote the creation and expansion cooperatives--especially as we celebrate Co-op Month in October. But some information about co-ops contained in press reports and blogs of late should be corrected. Probably the biggest misunderstanding is that co-ops are "quasi-governmental" entities. They certainly are not.
Co-ops are a manifestation of all that is best about our free enterprise system and democracy. Simply put, co-ops give marketplace clout to people who on their own would wield little power. In the cases of farmers, ranchers and fishermen, co-ops are the business vehicle which helps them gain the leverage they need to earn fair prices for their products in markets dominated by ever fewer, larger buyers.
Co-ops not only help agricultural producers to market their products, but to develop brand names and build facilities that do value-added processing, thereby greatly increasing the returns on their products. Land O' Lakes butter, Ocean Spray cranberries, Blue Diamond almonds and Cabot cheeses are just a few examples of the hundreds of well-known co-op-produced foods in your local grocery store.
Farm supply co-ops also enable agricultural producers to do bulk purchasing of the fertilizers and petroleum products they run their farms on.
We are not talking small potatoes here. Agricultural cooperatives, which range in size from small country grain elevators to Fortune 500 companies, set a new gross sales record of $191.9 billion in 2008, $45 billion more than in 2007. The total would have been even higher had it not been for a sharp drop in grain, milk and fuel prices toward the end of the year. Net income before taxes also set a new record of $4.8 billion, $1 billion more than in 2007.
But farmer co-ops are only one sector of the co-op economy. Utility co-ops, credit unions, food store co-ops, building supply co-ops and dozens of other types of co-ops all play a huge role in the economy. …