Agri 2301 part I ch 2 cooperative principles


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Describes Principles fo Cooperatives

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Agri 2301 part I ch 2 cooperative principles

  1. 1. <ul><li>Chapter 2: Cooperative Business Principles </li></ul>
  2. 2. Cooperative Definition Reviewed <ul><li>A cooperative is a business owned and controlled by persons who use its services. Benefits are derived and distributed equitably on the basis of use </li></ul><ul><li>It is mainly distinguished from other business forms by three contemporary principles </li></ul>S 2.1
  3. 3. Definition of a Principle <ul><li>A basic idea defining special characteristics </li></ul>S 2.2
  4. 4. Contemporary Cooperative Principles <ul><li>The User-Owner Principle </li></ul><ul><li>People who own and finance the cooperative are those that use it </li></ul>S 2.3
  5. 5. Contemporary Cooperative Principles <ul><li>(Continued) </li></ul><ul><li>The User-Control Principle </li></ul><ul><li>People who control the cooperative are those who use it </li></ul>S 2.4
  6. 6. Contemporary Cooperative Principles <ul><li>(Continued) </li></ul><ul><li>The User-Benefit Principle </li></ul><ul><li>The cooperative’s sole purpose is to provide and distribute benefits to users on the basis of their use </li></ul>S 2.5
  7. 7. Rochdale Principles <ul><li>Control 1. Members vote on democratic (one-member, one-vote) basis </li></ul><ul><li>2. Membership is open </li></ul><ul><li>Ownership 3. Patrons provide equity </li></ul><ul><li>4. Equity ownership share of patrons is limited </li></ul>S 2.6
  8. 8. Rochdale Principles/Practices <ul><li>Benefits 5. Net income is distributed to patrons as refunds on a cost basis 6. Limited return on equity capital </li></ul><ul><li>7. Exchange of goods and services </li></ul><ul><li> at market prices </li></ul><ul><li>Other 8. Duty to educate </li></ul><ul><li>9. Cash trading only </li></ul><ul><li>10. Assume no unusual risk </li></ul><ul><li>11. Political and religious neutrality </li></ul><ul><li>12. Equality of sexes in membership </li></ul>S 2.7
  9. 9. Traditional Cooperative Principles <ul><li>Service at Cost </li></ul><ul><li>The cooperative’s operations are reduced to an at-cost basis at the end of the fiscal year when surpluses are returned to members </li></ul><ul><li>Obligations/Benefits Proportional to Use </li></ul><ul><li>Benefits are received in proportion to use of co-op. Members also share responsibility for providing financing (or losses) in proportion to use </li></ul>S 2.8
  10. 10. Traditional Cooperative Principles <ul><li>Limited Return on Equity Capital </li></ul><ul><li>Members finance the cooperative in proportion to use. Returns to their financial investment are secondary to value of services. </li></ul><ul><li>Democratic Control </li></ul><ul><li>Member control recognizes that members can control either through one vote per member or a voting system that relates to the extent each member patronizes the cooperative </li></ul>S 2.9
  11. 11. Quote <ul><li>“ Important principles may and must be flexible.” </li></ul><ul><li>--Abraham Lincoln </li></ul>S 2.10
  12. 12. Contemporary Principles Explained <ul><li>User-Control 1. Members vote on a democratic or proportional basis and govern their cooperative </li></ul><ul><li>User-Owner 2. Members provide capital to finance their cooperative and returns are limited </li></ul><ul><li>User-Benefit 3. Cooperative provides needed services and net income is distributed to members as refunds on a cost basis </li></ul>S 2.11
  13. 13. International Cooperative Alliance <ul><li>The International Cooperative Alliance is an independent, non-governmental association which unites, represents and serves cooperatives worldwide. </li></ul><ul><li>The ICA was founded in London in 1895. Its members are national and international co-operative organizations in all sectors of activity including agriculture, banking, energy, industry, insurance, fisheries, housing, tourism and consumer co-operatives. ICA has more than 250 member organizations from over 100 countries, representing more than 760 million individuals worldwide. </li></ul>S 2.12