A very simple definition would be to say it is a business where a group of people get together voluntary to obtain a product or service. From this one can see that the members must do business with the co-operative.
For example the co-operative could buy in bulk the inputs the members need to produce a certain product (e.g. flour to bake bread and cakes). The members then produce the product and the co-operative market sells it on their behalf (e.g. the bread and cakes are sold to the public by the co-operative).
A co-operative is a distinct form of enterprise that provides services and/or products to its members. Profits, known as surpluses in a co-operative, are divided among members in relation to the amount of the business each member did with the co-operative.
Characteristics of a co-operative
- Association of persons
- Voluntary basis
- Mutual or common economic, social and cultural needs
- Jointly owned and democratically controlled enterprise
- Co-operative principles
The principles of a co-operative
- Democratic member control
- Voluntary and open membership
- Autonomy and independence
- Educational training and information
- Co-operation among co-operatives
- Concern for community
- Member economic participation
The benefits of a co-operative
- Achieve what one cannot achieve on his/her own
- Provide easy access to needed services
- Pay less for inputs, marketing, distribution and selling of produce
- Process products if necessary