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8 Main Types of Cooperative Society

Types of Cooperative Society

There are different types of cooperative society which have been started in the capitalist countries of the world . Some of the cooperatives have been formed to help consumers and other have been established to help producers.

There are some societies which help the farmers in providing credit for the purchase of fertilizers. Seeds etc and some help them in the promotion of trade.

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The important types of cooperatives societies in brief are as under;

  1. Producers Cooperative Societies:

The producer cooperatives are established by small producers. The members of the society producer goods in their houses or at a common place. The raw material, tools money etc is provided to them by the society.

The output is collected by the society and sold in the market at the wholesale rate. The profit is distributed among the members in proportion to the goods supplied by each member.

The producer cooperatives are successful where.

  1. Business is on small scale
  2. Needs special skill of doing a work
  3. Work is labor intensive
  4. Management is honest and efficient. 

    2. Consumer Cooperatives:

Consumer’s cooperatives are established to remove middlemen from the field of trade. These societies purchase goods at the wholesale prices and sell them to the members at cheaper rates than the market. However, the goods are sold to nonmembers at the market rates. The profit, if any is distributed among the members in the shape of bonus.

The consumer cooperatives have been functioning very successfully in the advanced countries of the world. Their performance in developing countries including Pakistan , India & Bangladesh, however, it not satisfactory due to the following reasons.

  1. These societies lack capital
  2. Cooperative spirit is missing among the members
  3. There is no continuous supply of the coop.
  4. The goods are mostly sub-standard and lack variety
  5. The person appointed for selling the commodities lack initiative and do not treat the customers properly.
  6. There are complaints of wrong billing
  7. Prices of the commodities do no change with the prices prevailing in the market
  8. The goods which are short in the market are undersold.

    3. Cooperative marketing societies.

The cooperative marketing societies are formed by small producers for the promotion of trade. The small agriculturists and artisans voluntarily together for achieving two main objectives, firstly, to sell the goods at remunerative price by eliminating middlemen and
secondly, to make available permanent and ready market for the producer of the members.

                The marketing cooperative society collects the producer of its members. It grades them keeps them in its warehouses and sells at the whole-sale when the market is favorable

The sale proceeds are distributed among the members according to the quality and quantity of the product pooled with the society. The society also helps the producers in providing advance money for meeting their urgent needs.

The small procedures also get raw material. Tools etc from it. The society provides marketing information to this member. The marketing cooperatives thus greatly help the members in the promotion of trade by eliminating middlemen, selling goods at fair prices and making advance payments to meet the urgent needs of the producers.

  1. Cooperative credit societies.

The cooperative credit societies are established to provide financial help to small farmers and too low-income traders, artisans etc.
                In rural areas the rural credit cooperatives provide short-term loans of agriculturists at lower rates of interest for the purchase of inputs like fertilizer, seeds, cattle etc. in cities,
                The Urban credit cooperatives provide credit to their members for the purchase of raw material, wages payments etc. in urban areas , artisans, small trade and low-income businessmen mostly benefit from these societies.

  1. Cooperative insurance.

The cooperative insurance societies are formatted for the pooling of economic risks of its members. The cooperative society may take group insurance policy for its members. It may bargain with a sound insurance company for a lower premium. The cooperative insurance society can also be organized for issuing policies of a small amount.

                The cooperative insurance has not provided successfully because;

  1. The contribution to the pool of the society is normally not adequate to pay the claims of the members who suffer risk.
  2. The capital of the society is not looked after carefully
  3. Funds are not wisely invested
  4. The claims are not paid promptly. 

    6. Cooperative Housing Society:

The cooperative housing society is organized too;

  1. Procure land for the construction of houses on the homogeneous basis.
  2. Purchase of construction material in bulk and providing them on a nonprofit basis to the member.
  3. Supply of electricity, gas, and other social amenities to its members.
  4. Providing of loan for the construction of houses by mortgaging the property
  5. Levying of tax on the members of meeting expenditure of providing them essential services. 

    7. Cooperative Farming Societies.

Due to fragmentation of holdings, the area in possession of most of the farmer is too small. They cannot employ improved methods of cultivation.

The cooperative farming society enables the small farmers to consolidate their small units of land into large farms. It paves the way for mechanization of agriculture and the use of other improved input of agriculture.

  1. Miscellaneous Societies.

In addition to the major forms of societies mentioned above, there is a large number of an establishment which are organized into cooperatives, for instance, there are cooperative societies for processing of raw material into finished goods (processing cooperatives) there are cooperative societies for fisheries, could storage forestry, poultry farming etc.

About the author

Salman Qureshi

Salman Qureshi is an Accountant by profession & he loves to write on Commerce & Management Sciences Subject to assist Students. Hope you guys will like his effort.

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