Cooperatives exist in every sector of the economy, and cooperatives range from very small, local businesses to large multi-national corporations. Cooperatives can be classified by their primary business activity. Co-ops are often categorized as marketing, supply (or purchasing), consumer, service, and worker.
Marketing
In marketing co-ops, members market their products together. Marketing co-ops include bargaining co-ops where the co-op negotiates with processors and other end users for a better price of members’ products, but the co-op never physically handles the product. At the other end of the spectrum, some marketing co-ops grade, aggregate, process, merchandise, or distribute members’ products. An example of a marketing co-op in Kentucky is Hopkinsville Elevator, which is a grain elevator that grades, stores, and merchandises grain for its members.
Supply
Supply (or purchasing) co-ops provide its members with dependable supplies at competitive prices. Farmers often use supply co-ops to purchase farm inputs, such as feed, fertilizer, chemicals, etc). Supply co-ops can purchase items in bulk that individual members often cannot do. Southern States is a well-known example of a supply co-op. An example of a supply co-op in Kentucky is Kentucky Organic Farm and Feed, which provides a consistent supply of organic feed to organic dairy and livestock producers.
Consumer
Consumer cooperatives are a specific type of purchasing cooperative where consumers gain access to products and services. Food cooperatives are grocery stores that are structured as a co-op, and it is the most common type of consumer co-ops. Food co-ops generally exist to provide consumers with consistent access to products or services that did not exist before the co-op. Good Foods Co-op, which is a grocery store and deli in Lexington, is an example of a consumer co-op in Kentucky.
Service
There are a wide variety of service cooperatives that are formed for the purpose of providing a specialized service to its members, which can be farmers, consumers, businesses, or other groups. Common types of service cooperatives include finance, utility, insurance, housing, and health care cooperatives. Rural electric cooperatives, such as Nolin RECC, provide electrical service to residents and businesses in rural areas, and they are probably one of the most well-known examples of a service cooperative. Central Kentucky Ag Credit and Farm Credit Mid-America provide financial services and credit to farmers and rural residents and farmers, and they are both examples of finance cooperatives operating in Kentucky.
Worker
A type of cooperative that is gaining in popularity is the worker-owned cooperative. A worker cooperative is simply a business that is employee-owned and structured as a cooperative with each of the employees having the opportunity to become members of the co-op. Worker co-ops are democratically controlled with each worker who is a member having one vote, no matter their position within the business. Any type of business can be structured as a worker cooperative. Isthmus Engineering and Manufacturing who is a full-service engineering company in Madison, WI and Casa Nueva who is a restaurant in Athens, OH are examples of worker co-ops, and they illustrate the diversity of businesses that are structured are worker cooperatives.
For assistance in developing a cooperative or questions about the cooperative business structure, give us a call at 859-550-3972 or email us at kcard@kcard.info.