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2.5: Principles of Cooperation

  • Page ID
    4256
  • The U.S. Department of Agriculture defines the three principles of cooperation as user-owner, user-control, and user-benefits. Users must own and finance the cooperative and are responsible for the control of the cooperative, and benefit from their use of the cooperative. Note that these are all joint decisions, That is, becoming a member of a cooperative to participate in the benefits also means participation in ownership and control.

    Some customers of a cooperative do not participate in these three roles, but do business with the cooperative as a non-member. The percentage of

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    non-member business is quite small in most cooperatives because boards of directors recognize that these members are free riders in the sense that they benefit from the cooperative’s presence in the market place but are not members. Thus, cooperatives tend to use pricing strategies that discourage producers from not being members.