Cooperative


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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 ?
Deputy Governor Daniel Chemno said the cooperatives will help them pull their resources together for collective and individual growth.
The deputy registrar has also warned that in case of failure, the office bearers of all 603 cooperative societies will be liable to face penal consequences under section 65-B of the Cooperative Societies Act 1925, which defines that the office bearers of a cooperative society shall be deemed to be a public servant within the meaning of section 21 of the Pakistan Penal Code 1860 (XLV.of 1860).
" "Such recommendation was made without even giving due process to the electric cooperatives," Philreca said.
The first formal cooperative in Uganda was the Kinakulya Cooperative Society, established in 1913 in the Central region (Kabuga and Kitandwe, 1995; Kwapong and Karugyendo, 2010 a).
At present, the country has 1,74,700 cooperatives with 1,09,00000 members, she said, adding that peoples irrespective of different professionals are reaping the benefits from agriculture, fisheries, livestock, savings, distribution of credit, dairy and cottage industries, garments, housing, banks, insurances, commodity marketing, Asrayan and Ekti Bari Ekti Khamar under the cooperatives society.
For the Small Non-agri-based category, winners were the Jacobs well Savings and Credit Cooperative of Alicia (1st place) and LGU San Manuel Officials and Employees Credit Cooperative of San Manuel (2nd place).
As such Abdul Fattah hoped that the new government would continue to stay committed in developing and empowering the cooperative sector in the country to help members receive the appropriate benefits.
Theme of 2018 International Day of Cooperatives is sustainable consumption and production.
He further said, efforts are also being made to activate management of the cooperative housing societies.
Padre Garcia Development Cooperative, Pansol, Padre Garcia, Batangas
Dreyer was involved in the formation of a large fertilizer cooperative in India and was an advocate for the formation of the Southern Federation of Cooperatives.
What's the difference between the cooperative business model and the corporate business model?

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