3.4 | Cooperative

A cooperative (co‑op) is a member‑owned and democratically controlled business formed to serve its members’ common economic interests. Agricultural co-ops enable producers to pool resources for bulk purchasing of inputs (such as seed, fertilizer, and equipment) or collective marketing and processing, thereby increasing their bargaining power and reducing costs. Members elect a board of directors—one member, one vote—regardless of capital contribution.

Co‑ops enjoy pass‑through taxation on patronage dividends but must reinvest member contributions to expand services. Active member education and participation are crucial for maintaining democratic control and operational efficiency.

Recommendations for Image:

• Figure 3.4.1: Farmer‑members loading grain into a cooperative elevator.
  • Alt text: A group of cooperative member‑farmers unloading grain at a shared facility.
  • Caption: Cooperatives empower small producers by pooling resources for collective purchasing and marketing, driving down costs and increasing market access.

Real‑World Example: CHS Inc., the largest U.S. agricultural cooperative, began in 1931 when small grain farmers in North Dakota formed a co‑op to market their wheat. Today, CHS serves over 400,000 farmer‑owners nationwide. In 2020, the cooperative reported $36 billion in revenue, leveraging collective infrastructure—grain elevators, transportation networks, and marketing channels—to negotiate favorable prices for members and invest in renewable energy projects.