The Cooperative Model for Sustainable Development
You have likely heard the term co-op before, and what comes to mind for many is often a local grocery store selling artisanal food. While this is certainly true, the cooperative model has been adopted by many different types of organizations, and has a high potential for creating positive social impact for its members.
What is a cooperative
A cooperative, commonly referred to as a co-op, is a group of people who come together in order to protect their economic, social, and cultural needs. There are several different types of co-ops, including commercial businesses, financial, agricultural, social or religious, and many more. A cooperative differs from traditional organizations in its distributed ownership model. In cooperatives, all members have ownership of the organization, and have influence over the decisions and direction that the company moves in.
Cooperatives were used throughout history for a variety of reasons, but the most common impetece was to fix a flaw in the supply chain, such as worker exploitation or price inflation that negatively impacted both consumers and producers. Because producers in a cooperative have a stake in the company, they are in charge of regulating prices and enforcing equitable workplace conditions. There are many historical examples of co-ops emerging in response to social issues in the workplace, from 18th century Scotland's cotton mills run by Robert Owen to address workplace health and safety, to the Taranaki farmers in New Zealand in the 19th century, who used the model to increase the export price of wool. Cooperatives gained popularity in the United states during the 19th and 20th centuries in response to worker exploitation and additional hardships brought on by industrialization and mechanization.
The cooperative model continues to have traction today, and the 2014 Global Census on Cooperatives found that one in every six people globally has membership in or is a client of a cooperative. In the last year that global data was collected, over $2.98 trillion in revenue was generated by cooperatives in a single year. There is also a strong correlation between social progress and the presence of cooperatives in a nation. Eight countries listed in the top 10 cooperative economies take up 8 of the top 12 spots on the Social Progress Index, which is an index of human wellbeing that measures factors that contribute to the quality of life in an area. The data from modern cooperatives show that not only are they financially sustainable, but are correlated with increased quality of life for producers. This correlation is historically demonstrated, and is reflected in the modern impetus for co-ops, which is to prevent inequalities in the supply chain and create distributed wealth for producers.
A modern example: Amul
One success story from India demonstrates the power that cooperatives have to achieve scale and profitability, while benefiting its producers as they receive fair shares of the profits. This example is the Gujarat Cooperative Milk Marketing Federation (GCMMF), also known as Amul. It has generated over $5 billion in revenue, and is co-owned by 3 million farmers. This model was so successful that it made India the world’s largest producer of milk. Amul operates with a distributed manufacturing model, where instead of all of the production of food taking place in one centralized location, it is spread out across the country. This cuts down on emissions from transportation of workers and of materials, making the model more sustainable than traditional industrial agriculture. The case of Amul is demonstrative of the potential for scalability of cooperatives, for agriculture and manufacturing in particular.
Scalability for social progress
In developing areas, including nations in Asia, Africa, and Latin America, commercial development will have to continue in order to bring people out of poverty and into the workforce. The traditional structure of manufacturing is not only harmful for the planet, but also leaves workers vulnerable to inequalities in the workforce. The cooperative model provides a viable option for inclusive growth that can be adapted for many different types of organizations, while also cutting down on the environmental degradation caused by traditional production.
If you haven’t already, look out for co-ops to support in your local area, and you can feel good about the fact that you are directly supporting producers. Be sure to look out for more tips in future articles, and feel free to contact us if there is a topic you would be interested to learn about; chances are people in the Flourish community are looking for the same information, and we’ll give you a shout-out for your participation!