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Agricultural cooperative

Autonomous association of farmers and food producers

  • 12 min read
  • 6 chapters

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A broad typology of agricultural cooperatives distinguishes between agricultural service cooperatives, which provide various services to their individually-farming members, agricultural supply cooperatives, which purchase and distribute farm inputs to members, and agricultural production cooperatives in which production resources (land, machinery) are pooled and members farm jointly.

Agricultural production cooperatives include collective farms in former socialist countries, the kibbutzim in Israel, collectively-governed community shared agriculture, Longo Maï cooperatives in Costa Rica, France, and some other countries, CPAs in Cuba, and Nicaraguan production cooperatives. In Southeast Asian developing countries such as Vietnam, agricultural cooperatives remain to play an important role in economic and social activities in rural areas, although they have relied mainly on government subsidies .

Notable examples of agricultural cooperatives include Dairy Farmers Of America, the largest dairy company in the US, Amul, the largest food product marketing organization in India, and Zen-Noh, a federation of agricultural cooperatives that handles 70% of the sales of chemical fertilizers in Japan.

Agricultural cooperatives are owned and democratically controlled by their members. The governance structure can vary between the different types, but in general members elect representatives to a board of directors and contribute to organizational decision making through a democratic voting process. According to the 2021 Cooperative Governance Research Initiative, "Democratic member control is built into the DNA of all cooperatives but how that DNA expresses itself varies substantially."

Origins and History

During the eighteenth and nineteenth centuries in certain areas of Greece, back then, under Ottoman rule, a particular form of cooperative organization was developed. Networks of adjacent rural communities were organized as a local production system designed to produce specific agricultural or craft products which were then destined for international markets. Derived from the Byzantine guilds, they were enabling better control of the production and tax collection by the Ottoman administration.

One of the first cooperatives was the Rochdale Society, formed in 1844 in Rochdale, England. The Society's first enterprise was a retail store, but it very soon also established a corn mill. The first agricultural cooperatives were created also in Europe in the second half of the nineteenth century. They spread later to North America and the other continents. They have become one of the tools of agricultural development in emerging countries. Farmers also cooperated to form mutual farm insurance societies.

Also related are rural credit unions. They were created in the same periods, with the initial purpose of offering farm loans. Some became universal banks such as Crédit Agricole or Rabobank.

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