Food, Financial, Farming, and Fuel
There are many types of cooperatives. Let’s look at three: supply, service, and marketing.
Supply Cooperative
Some of the first cooperative businesses started when people agreed to buy something together and share
in the savings. By buying larger supplies as a group, the co-op members could save money. They paid less for
these items because of discounts made for large orders. The co-op members also shared the cost of shipping,
packaging, and delivery. The savings added up. These supply or purchasing co-ops first focused on a single kind
of business, such as basic food items including canned goods or farm supplies such as fence posts and barbed
wire. In Colorado, farm supply cooperatives include CHS and Agfinity. When these co-ops were formed in the
early 1900s, they offered only a few products. Today, they sell hundreds of products to its members.
These products include fertilizer, fuel, feed for livestock, and even tools and tires.
Service
Cooperative
A service cooperative sells just what the name
says – a service. In Colorado, service cooperatives
include credit unions and rural electric associations
(which is another name for a cooperative). In the
1930s, electric companies and banks were not always
willing to extend service to farmers and ranchers
in rural areas. The owners of these companies
believed the risk was too great and the profits too
little. People in rural areas put their own money into
cooperative businesses that would deliver electricity
to the members. Credit unions would offer loans to
members. These cooperatives were able to do this
because the risks and rewards were shared by
the members who owned them. Providing an
affordable service was more important
than making a profit.
Marketing Cooperative
While a supply cooperative will buy things to sell to its
members, a marketing cooperative sells things for its
members. Let’s look at farmers again. Farmers working together
contribute money to build a cooperative grain elevator (a
place to store large amounts of grain). The farmers then
deliver their crops to the elevator at harvest. The cooperative
elevator will sell the crops to a single buyer and make the
farmers money. These profits go back to the farmers.
Three in One!
Some cooperatives do all these things. CHS and Agfintiy
are supply, service, and marketing cooperatives. They
sell grain for farmers, buy fuel for farmers, and can apply
fertilizer for farmers. Having one business do all these
things is why farmers are members of the co-op.
2 - Colorado Agriculture in the Classroom