CO-OPERATIVE SOCIETY: This is a form of business organization set up by producers, consumers or financiers for the benefits members of the association. The proceeds of the produced goo are distributed among the participants.
TYPES OF COOPERATIVE SOCIETIES
CONSUMERS CO-OPERATIVE SOCIETY:
Is a society or business organization of consumers who pull their resources together to buy consumer goods on wholesale basis which the store for resale to both members and non members at the prevailing retail prices. They deal mainly with the sales of commodities
The consumer cooperative society is further broken into:
- Consumer cooperative wholesale Association whose dealings are all on wholesale basis, and
- Consumer Co-operative Retail Association whose dealings are purely on retail basis. The emphasis here is buying and selling.
In the cooperative society, profits can be shared among the members based on the purchases made by members. In this case, the higher the purchase, the higher the profit and vice-versa.
PRODUCERS’ CO-OPERATIVE SOCIETY
Is a combination of producers. The producers combine to pull their products together for the purpose of large-scale production, even at a reduced cost. The producers sell their products to the society and profits made are shared equally among them.
CREDIT AND THRIFT CO-OPERATIVE SOCIETY
This is formed by low-income earners. Here, its members encourage savings. Although, part of what is saved or contributed are given out as loans to their members at a very low interest rate.
BENEFITS OF CO-OPERATIVE SOCIETIES
- The co-operative societies bring about stability of trade.
- It is democratically managed since each member has only one vote.
- There is little or no expenditure on advertisement.
- There is free entry and exit Loans can easily be granted to the society by financial Institutions (banks)
- The amount of profits made by each member is subject to his purchases from the co operative store.
- Management training is encouraged.
- Savings ore encouraged and used efficiently.
- The members of the association fight and protect their own interest.
PITFALLS OF CO-OPERATIVE SOCIETIES
- Mal-administration resulting from inefficient managerial experience and skill among the members.
- Petty quarrels may lead to mutual distrust.
- People of questionable character may join the business because of the free entry and exit, and in most cases, their membership may lead to the downfall of the business.
ECONOMIC IMPORTANCE OF CO-OPERATIVE SOCIETIES
- They help to increase the income of their members.
- They offer loans to farmers at a reduced interest rate.
- They help in facilitating the marketing of agricultural products.
- They encourage savings especially among the low-income earners.
- They also make capital available for the development of the economy.