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Co-ops Everywhere
By Nancy Jorgensen

Every day, Americans bite into a pizza, flip a light switch, talk on the phone, take cash from an ATM or read a newspaper. When they do, they may be benefiting from a cooperative.

Even if you are not among the 120 million Americans served by at least one cooperative, you probably benefit from co-op products and services every day.

• Your burger may come from a co-op that purchases supplies for Taco Bell, Pizza Hut, Kentucky Fried Chicken and A&W.
  
• An electric co-op may distribute your power.
  
• A telecommunications co-op may deliver your phone service.
  
• A consumer-owned credit union may provide your cash.
  
• Associated Press, a co-op owned by news media around the world, might generate your news article.

At least 40 percent of all Americans belong to a cooperative, whether it's a small local operation or an international business. Co-ops provide a wide range of goods and services, from health care and housing to utility service and agricultural supplies.

From Wall Street to the Farm
More than 3,000 agricultural cooperatives operate in the U.S. While you may be familiar with your local ag co-op, you might not realize you are using other agricultural co-op products, such as those shown below, every day as well. Ag co-ops own more than 1,000 brand names like Blue Diamond, Welch's, Ocean Spray, Sunkist, Florida's Natural and Musselman's. The net business volume of all agricultural co-ops runs close to $100 billion, according to the U.S. Department of Agriculture.

Farmers formed many cooperatives in the early 20th century for one or both of these purposes: to build a reliable market for their products and to save costs on supplies. In recent years, however, farmers and ranchers have grown a new generation of co-ops - mostly to process agricultural products such as corn into ethanol or beef cattle into premium steak, allowing them to capture more profits. In fact, an ethanol plant recently broke ground near Dumas, Texas.

But you'll also find co-ops in urban settings, providing goods and services to people who have no connection to agricultural co-ops. Regardless of the nature of the co-op, the business structure is the same - it operates for the benefit of the member-owners.
No wonder cooperatives are everywhere.

What Is a Co-op?
A cooperative is a business founded, operated and owned by the people it serves. People with similar interests and needs usually establish co-ops to buy products and services at better prices and terms, or to market their own products and services more effectively. Typically, co-ops distribute profits to their owner-members.

The Country Is Full of Co-ops
There are more than 3,000 agricultural co-ops in rural America. For many farmers, cooperatives are an integral part of everyday life. For example, a farmer from Hereford, Texas, might:

• Buy tractor fuel at Consumers Fuel Co-op Association.
  
• Market grain and purchase supplies at Hereford Grain Corp.
  
• Gin cotton at Hereford Farmers Gin Association, which in turn might send cotton to Plains Cotton Cooperative Association for processing into denim and cottonseed to PYCO, an oil-processing co-op.
  
• Borrow operating funds from Great Plains Ag Credit, ACA at planting time, and finance a land purchase in the next county with Panhandle-Plains Federal Land Bank Association, FLCA. More than 400,000 rural Americans have loans through the Farm Credit System, a $125-billion nationwide network of lending institutions.
  
• Irrigate his fields with electricity from Deaf Smith Electric Cooperative, Inc., which gets its power from Golden Spread Electric Cooperative, a large regional generation and transmission cooperative in nearby Amarillo.
  
• Receive phone service from West Texas Rural Telephone Co-op, Inc.

The City Is, Too
The cooperative model is just as effective in urban areas. In the city, a person might:
Live in student co-op housing or own co-op apartments. More than 1.5 million American families live in cooperative housing.

• Buy food at a grocery cooperative. There are more than 300 food co-ops in the U.S.
  
• Shop in a grocery store that is part of a huge purchasing co-op, organized to gain buying power. Examples are Piggly Wiggly in Alabama and Associated Growers in Louisiana.
  
• Bank at one of the 9,300 credit unions in the United States. Like Farm Credit associations, credit unions were formed decades ago by groups of individuals who could not do business with traditional banks.
  
• Place their children in co-op day-care centers.
  
• Buy hardware at a store that purchased its inventory from a purchasing co-op such as Allied Building Stores or ACE Hardware.
  
• Purchase camping gear from REI, an outdoors equipment co-op.
  
• Use the services of a cooperatively owned health clinic, which might obtain its supplies from a purchasing co-op, such as VHA Inc. of Irving, Texas. VHA uses its purchasing power to lower costs for its 2,200 not-for-profit members.
  
• Purchase home, vehicle and life insurance from a mutual company, like Nationwide Insurance.
  
  

The history of cooperatives begins centuries ago in early societies when people worked together to gather food or build shelter to meet the needs within the group. The concept was more formalized into a business model during the Industrial Revolution in Europe in the late 18th and 19th centuries when the earliest cooperatives began to appear.

Since then, the cooperative business model has spread around the world. The co-op model enables people to pool their buying power to get better prices and terms and to market their products and services more effectively. From European laborers to rural Americans and Third World farmers, the people helped by the cooperative model are as diverse as the types of co-ops they have formed.

Story after story could be told about groups of people with similar interests and needs banding together to form a business that they both own and use. Although the details vary, the same theme carries throughout. It is a story of shared independence, when people display determination and cooperation in equal measure.

It's the story of:

• Benjamin Franklin uniting the citizens of Philadelphia in 1752 to meet at the courthouse and subscribe to the first mutual fire insurance company, "whereby every man might help another without any disservice to himself." The cooperative he started, the Philadelphia Contributorship for the Insurance of Houses from Loss of Fire, still exists today.
  
• Underprivileged textile workers saving money for a year to start a co-op store as an alternative to the company store that charged unfair prices. The Rochdale Equitable Pioneers Society opened their store at 31 Toad Lane in England in December 1844. It is considered the birthplace of the modern cooperative movement.
  
• Farmers pooling their money to buy supplies in bulk at lower prices and pooling their harvest to market their products at higher prices. Most early American co-ops were formed for the benefit of farmers, and many agricultural co-ops remain strong today.
  
• Rural Americans taking the initiative to persuade their neighbors to sacrifice $10 for a membership fee in the 1930s to bring electricity to their farms for the first time. Electric co-ops brought power to rural areas, when power companies would not.
  
• Working moms who get together to form a cooperative childcare center for their children. From housing to healthcare, cooperatives have been formed by urban citizens to meet a variety of specific needs.

Cooperatives are an interesting study for a business or economics textbook, and they are equally important to social studies. They are an enduring tribute to the human spirit and what can happen when people work together for a common goal.

Did you know?
When the first Continental Congress met in Philadelphia in 1774, the delegates chose to use the ground floor of Carpenter's Hall, which was owned mutually by its member-carpenters. At that time Carpenters Hall had rented out the second floor to the Library Company. Nine signers of the Declaration of Independence were also members of the Library Company. Both Carpenter's Hall (in 1774) and the Library Company (when it owned its first building in 1790) were insured by the first formal mutual in America, the Philadelphia Contributorship.

- From David Franklin's essay, 250 Years of Cooperation in America

The United States has…

• 30 cooperatives with annual revenues in excess of $1 billion
  
• 250 purchasing cooperatives that offer group buying and shared services to more than 50,000 independent businesses
  
• 270 rural communications cooperatives
  
• 300 cooperative groceries
  
• 900 rural electric cooperatives
  
• 1,000 mutual insurance companies
  
• 3,000 housing cooperatives that provide homes for more than 1.5 million households
  
• 3,000 agricultural cooperatives
  
• 9,300 credit unions
  
• 40,000 cooperatives total
  

Top Co-ops in the Tenth Farm Credit District
Data as of Dec. 31, 2003, gathered by the National Cooperative Bank as part of the Co-op Top 100 List. For more information, visit www.coop100.coop.