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.

References in periodicals archive ?
Officiating at the Motswedi Savings and Credit Co-operative Society (SACCOS) annual general meeting on March 9, Assistant Minister of Youth Empowerment, Sport and Culture Development Mr Dikgang Makgalemele said the move would make co-operative societies more attractive.
the sole shareholder of the Co-operative Bank, had the power and the obligation to take drastic action to rectify the situation, something he failed to do, thus allowing the co-operative movement to collapse.
"The term of office of the members (of the committee) shall be as spelt out in the bylaws provided that a term shall not exceed three years and that a person (official) shall not serve for more than two consecutive terms," reads the section.Section 57 (5), of the Act directs all co-operative societies that have been in existence before the enactment of the Act, to "hold a special general meeting for the purpose of compliance with this section".
"Co-operatives UK supports all types of co-operatives and will be pleased to work with the Wales Cooperative Centre to make sure that this support is available to as many Welsh agricultural co-operatives as possible," added Mr Self.
Wooldale Co-operative Society was formed in 1886 by a handful of residents of the village to cater for the needs of the local community.
The funding will help to scale up the project which has already helped to deliver 99 homes across Wales and is supporting the delivery of a further 75 by developing expertise in different co-operative models and providing advice to developers and co-operative groups.
"Alongside this solid commercial performance, there has been a surge in the number of people who own and control the UK's co-operatives. With 17.5m members owning everything from high street retailers to credit unions, the co-operative sector is the largest open membership organisation in the UK."
"Whether it's increasing productivity, finding new ways to add value or to reduce costs, farmerowned co-operatives offer a tried and tested model for farm businesses."
The constitution and general rules put in place by the first co-operative, ULGOR, became the model for all new co-operatives of the Mondragon group.
The award, which is run by Cooperatives UK and was presented to the society at an award ceremony on Friday, recognises co-operative business excellence and rewards innovation in the industry.
Co-operatives worldwide operate according to seven core principles and values adopted by the International Co-operative Alliance in 1995: Voluntary and open membership; democratic member control; members' economic participation; autonomy and independence; education, training, and information; cooperation among cooperatives; and concern for community.
"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.