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 ?
There were reports in the media that the government had planned to allot plots for the housing of the MLAs by forming a cooperative society in the posh area of Ashiyana Nagar-Deegha road of Patna.
The Cooperative Society also said that it is allocating Dh25 million to subsidise the consumer products during Ramadan, in addition to offering discounts ranging from 50 to 70 per cent.
Chesiro Farmers Cooperative Society from Bungoma County which had 33 bags of Grade AA fetched Sh43,767.50 ($427 ) while Grade AB realized Sh35, 875 ($350 ) per 50 kilo bag.
Earlier this year, an accountability court had indicted two former chairmen of the Fishermen Cooperative Society among 14 officials and private contractors on May 30 in a case pertaining to Rs343 million corruption in the society in 2014-15.
A field visit was organised to Al Rawda Cooperative Society in Hawally, where PEIE officials learned about the overall experience of the cooperative societies and their impact on the local economy in Kuwait.
Speaking to The Hindu, Kanthiah Mahadevan, president of a Jaffna-based credit cooperative society and an organiser of Tuesday's protest, said while many families in Jaffna receive financial support from a member earning abroad, it is the economically most vulnerable who are aggressively targeted by the companies.
Anambra State commissioner for agriculture, mechanization and export, Mr Afam Mbanefo, who received the team, said the state government had adopted transparency in its dealings with the various cooperative societies, adding that the era of one family dominating a cooperative society was gone.
The UAE Ministry of Economy has conducted an inspection of the Ajman Markets Cooperative Society's Al Jurf branch as part of its ongoing inspection visit programme covering markets and points of sale during Ramadan.
The Cooperative Society Council's future projects will encourage the establishment of new associations in pursuit of the Kingdom to be among the top ten countries in the cooperative sector, he said.
Summary: The Abu Dhabi City Municipality (ADM) has launched a new service for citizens offering subsidised food items on sale through the Abu Dhabi Cooperative Society in the context of mutual cooperation between the public and private sectors.
IF THE Congress party was feeling comfortable after candidates supported by it won 10 seats last month in the Kheda District Milk Cooperative Society or Amul, then that happiness has been short- lived.

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