The advantages of joining a co-operative

What is a co-operative and why should a small-scale farmer become a member? These are questions that you as an emerging farmer may ask when confronted with the decision to become a co-op member or not. To consider the matter objectively, it is first of all necessary to know more about the co-operative movement and the mechanics of a co-op.

A Co-operative is based on four characteristics that sets it apart from other business types:

  1. Co-operatives are formed by groups and cannot be run by an individual. It implies that a group must co-operate to achieve their common goals.
  2. There must be a mutual goal that the group wants to achieve in their agricultural businesses. If members have different needs a co-operative cannot be established.
  3. It must make sense financially to achieve the goals as a group rather than as an individual. If it is viable and cheaper to do it alone, a co-operative will not be the answer.
  4. The co-operative must benefit all its members to be registered as one.

The idea behind co-operatives is for small scale farmers to pool their resources and produce higher yields in order to be more competitive in the market. This can help to save expenses or generate better profit. If, for example, a group of farmers all need fertiliser, it will make sense to purchase at a bulk price as a group. If harvests are then also marketed and sold together, it can allow the farmers to access bigger markets and share in better profits.

There are many existing co-operatives that farmers can join, ALZU and Kaap Agri to name only two. In addition to the above benefits, the members of a co-operative can also buy shares in their co-op and earn a dividend at the end of each financial year. Co-operatives can also provide venture capital in the form of loans for farmers who want to expand their enterprise.

Co-operatives can also provide training opportunities where members can be educated to improve their farming practices.

Below are seven advantages of becoming a co-op member:

  1. REAL OWNERSHIP

The co-operative system provides you with true ownership of the business you participate in, whether it is local or regional marketing, warehousing or processing services. The grower-owners of each co-operative elect a board of directors, making sure your business is run the way you see fit.

  • ADDED VALUE

When you are a user and an owner in each level of the supply chain, or each level of the co-operative system, it will add more value to your crop. You should receive dividends from the produce, as well as the warehousing, marketing and processing co-operative arms.

  • CO-OPERATION, NOT COMPETITION

When you join a co-operative, it competes in the market on your behalf. In working co-operatively with other grower-owners, your co-operative has a more prominent presence in the marketplace. This provides you with the best possible value for your crop while minimising your risk along the way.

  • VERTICAL INTEGRATION

Through true co-operation and participation in every level of the supply chain, you and your crop will be vertically integrated and receive dividends from each. As a grower-owner, you have a stake in each step your produce take to get to its final destination. This model makes money for you, not from you!

  • RURAL STRENGTH

True co-operatives keep your money local. The money that goes into the operations of the co-operative is distributed to grower-owners through dividends which go back into the farming operation and into other local businesses you patronise. Rural communities benefit from this economic cycle and become strong enclaves.

  • SUPPORT

The purpose of true co-operation is to provide grower-owners with the tools they need to keep their farming operations viable and profitable. Whether it is dividends that help carry you through a tough year, or opposing detrimental farm legislation and regulations, co-operatives stand up for and protect their grower-owners.

  • DECISION MAKING

Each co-operative, no matter the field (farming, marketing, warehousing, processing) always has experts available to make the right decisions about how to maximize the value of your crop.

Photos: Kaap Agri and ALZU are both examples of co-operatives that farmers can join to get access to financial benefits for themselves and their farms.

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