Co-ops are a business structure, and like any business, they require hard work to be successful. They are unique in that they bring individuals together to solve issues they wouldn’t be able to solve on their own. Cooperatives can help communities by creating jobs, meeting social or economic needs, and improving community services. Despite a myriad of benefits, there are many myths that prevent people from recognizing their value.
Myth #1: Co-ops only operate in the agriculture sector. False. Cooperatives operate in more than just the ag industry. In fact, cooperatives provide some of the most vital services to rural communities, including health care, housing, electricity, internet, e-connectivity, worker cooperative businesses, and much more.
Myth #2: Co-ops are always non-profits or charities. False. Cooperatives usually operate as corporations but can also be limited liability companies (LLCs) or non-profits. Unlike typical corporations that return profits to investors, co-ops are businesses that operate at cost returning profit back to the members who use the cooperative.
Myth #3: Only co-op members can utilize services or goods provided by the cooperative. This is false. The main difference between a cooperative and another business structure is they operate for the benefit of the member-owners instead of outside investors. Many co-ops allow non-members to shop and use the services of the co-op.
Myth #4: It’s impossible for a co-op to be innovative and scale. Incredibly false! One such example is Ocean Spray Cranberries, Inc. The cooperative was formed in 1930 in Massachusetts by three cranberry growers who wanted to expand their product line. They were the first to introduce cranberry sauce to the retail market and the first to introduce juice boxes and sweetened dried cranberries. Today, Ocean Spray has grown to over 700 member growers and employs 2,000 people.
Myth #5: A co-op will save a failing business, or it will become successful because it is a co-op. This is false. A business cannot be saved if it is failing or underfunded simply by changing its structure. Choosing the cooperative structure may however allow additional business insight from its board of directors or bring equity into the business by adding new members which may result in success.
Myth #6: Co-ops only exist to help underserved communities. Cooperatives exist for a variety of reasons and forms when people develop a business with others who desire similar services and products that are not currently available. Oftentimes, the cooperative model can bring underserved communities together to create and build wealth or solve pressing problems in communities.
Learn more about cooperatives this National Cooperative Month! Visit the USDA Rural Development Cooperative Services page to learn about RD’s programs for cooperatives.