cooperative

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Related to Co-operatives: Agricultural cooperatives

Cooperative

An association or corporation established for the purpose of providing services on a nonprofit basis to its shareholders or members who own and control it.

The nature and functions of cooperatives differ considerably—such as purchasing cooperatives, consumer cooperatives, and marketing cooperatives.

In the context of agriculture, a farmers' cooperative refers to an organization of farmers residing in the same locale that is established for their mutual benefit in regard to the cultivation and harvest of their products, the purchase of farm equipment and supplies at the lowest possible cost, and the sale of their products at the maximum possible price.

The term cooperative also signifies the ownership of an apartment building by a nonprofit corporation that holds title to it and the property upon which it is situated. Stock in the corporation is allotted among the apartment units on the basis of their relative value or size. The right of occupancy to a particular apartment is granted to each cooperative member, who purchases the shares assigned to the desired unit. The member subsequently receives a long-term proprietary lease to that unit. The rent payable pursuant to the lease is that member's proportionate share of the expenses the corporation incurs in operating the cooperative—such as insurance, taxes, maintenance, management, and debt service. The cooperative concept evolved in New York City during the early 1900s as a mode of accommodating the public's desire for home ownership; it subsequently expanded to other large urban centers.

In order to finance the purchase or construction of the cooperative building, the cooperative places a blanket mortgage on the property, which is pledged to support the given debt. Lenders usually are hesitant to accept an individual member's stock and proprietary lease as security for a long-term loan. The members' lien (a claim on property to satisfy a debt) on the lease would be subordinate to the blanket mortgage on the property. The purchaser of a cooperative apartment usually must have sufficient cash available to pay for the stock allotted to the unit he or she wishes to obtain. The initial price of the stock generally does not exceed the amount required for a down payment on a single-family residence. As cooperative members accumulate Equity (the value of property exceeding the total debts on it) in their stock, subsequent purchasers must either have a substantial amount of cash available or locate a seller who is willing to recoup the equity in installments over several years.

Cooperative members are also financially dependent on each other. The existence of a single blanket mortgage paid by rent receipts means that if several members default in their rent payments, the corporation might not have sufficient funds to pay a mortgage loan installment. Foreclosure will ensue in regard to the entire membership unless it acts to satisfy the default. Although special reserves and assessments are generally employed to cover such a contingency, the available funds might be inadequate to prevent default.

cooperative

n. an association of individual businesses, farmers, ranchers, or manufacturers with similar interests, intending to cooperate in marketing, shipping and related activities (sometimes under a single brand name) to sell their products efficiently, and then share the profits based on the production, capital or effort of each. "Sunkist" oranges is an example of a large cooperative. Cooperatives include dairy milk producers, cotton gins, and thousands of other enterprises of all sizes. There are also cooperatives in which consumers form retail outlets like grocery stores and share the profits based on the amount of patronage of each member, but they have found it difficult to compete with the giant supermarket chains.

cooperative

noun alliance, association, collective, communal business establishment, communal society, commune, concurrent effort, federation, guild, joint action, joint operation, joint possession, partnership, teamwork, union
See also: ancillary, associated, beneficial, benevolent, coadunate, collective, common, concerted, concurrent, consensual, constructive, favorable, harmonious, joint, mutual, synergetic, united
References in periodicals archive ?
The two societies activities are geographically complementary and together account for over 80 percent of co-operative retail trade in the UK.
One NorthEast director for business and industry, David Allison, said: "In a very short period of time, Young Co-operatives has grown from being an initiative involving just 12 young people in Hartlepool at the end of 2002 to a national organisation.
It reinforces the significance of looking at co-operatives and communes; as well as trade unions, in examining the history of collectivism in the US.
The cuts in the CDI program and the Rural and Co-operatives Secretariat send a very disturbing signal for all Canadian co-operatives," said Brigitte Gagne, executive director of the Conseil canadien de la cooperation et de la mutualite, which co-manages the program with CCA.
Research published in January by the Wales Co-operative Centre showed co-operatives in Wales generate an income of over pounds 1billion a year and offer a tried and tested way of developing a more sustainable economy, whilst tackling unemployment and inequality.
As well as providing affordability, households expressing an interest in co-operative housing in each of the three pilot areas said that this stemmed from their desire to develop and live in a new community.
A short drive over the Cumbrian border from Hexham is Alston, Britain's highest market town and home to the largest number of co-operatives per person in the country.
The Warwickshire-headquartered Co-op picked up the accolade at this year's Co-operative Congress held in Birmingham.
The report - The co-operative economy 2015 - also reveals there are 6,796 independent co-operatives in Britain, slightly up on last year's numbers.
I will continue to provide funding to specialist business support organisations in Wales, to enable them to support the development of new co-operatives and mutuals.
The co-operative model offers an alternative way to do business and provides a robust approach to enterprise that can help to restore a lost sense of community cohesion and can contribute to the re-building of a more balanced and sustainable UK economy.