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What is a cooperative?

October 19, 2017

October is National Co-Op Month, a month dedicated to cooperatives and their unique, often hard-to-describe business models. People may not realize it, but some of their favorite foods and drinks are produced by cooperatives: Ocean Spray cranberry juice, Blue Diamond almonds, Land O' Lakes butter.

But what is a cooperative, and what makes it any different from a regular business?

Cooperatives are unique in that they are businesses owned by customers. They are formed when a group of like-minded individuals team to pool their resources, and jointly own and operate a business. Rather than focusing on making money for investors like many corporations do, cooperatives' sole focus is on making money for their members.

Members join their local co-op and can provide input on decisions that affect the cooperative. Each member gets one vote, regardless of the number of shares of stock held in the organization. A local board of directors is elected by the members to represent their local views and discuss local issues that affect the business.

The cooperative represents a strong business model that greatly contributes to both the national and local economies. There are a total of 40,000 cooperative businesses in the United States that generate $514 billion in revenue and more than $25 billion in wages, according to a study conducted by the University of Wisconsin Center for Cooperatives.

Local farm supply retailer Southern States is one of those businesses; it’s an agricultural cooperative that began in 1923.

"At the time, farmers in the state of Virginia were unable to buy any kind of seed that was guaranteed to grow in Virginia," said spokesperson Chris Carter. "So about 150 farmers met in Richmond, Va., and with just $11,000 in capital, two employees and a used typewriter, the company that would later become Southern States Cooperative was born." Today, Southern States has grown to become one of the largest agricultural cooperatives in the country, with over 200,000 farmer-members serving 1,200 retail outlets across 23 states.

Studies show that consumers want to do business with companies that share their values, making today's environment ideal for cooperatives and their commitment to the communities in which their members live and work. Cooperatives create an opportunity for local community members to join together and build - or be a part of - a local business that benefits the local economy.

Members in cooperatives tend to share common core values with one another, making it easier for companies like Southern States to relate to their customers. "Farmers instill very similar core values into their own farm business: a commitment to customers, high product quality and innovation, a positive work environment for employees, and responsible business practices," said Carter. "Those shared values allow Southern States to establish trusted, dependable relationships with local farmers in the community."

For more information about cooperatives and Southern States, go to www.southernstates.com.

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