TYPES OF CO-OPERATIVES
Consumer co-operatives
These are formed to protect and
strengthen the specific interests of
ordinary consumers of society by
making consumer goods available at
a fair price.
Marketing co-operatives
These are formed by producers and
manufactures. Marketing co-
operatives eliminate exploitation of
the middlemen when marketing their
product.
Farming Co-operatives
These are formed by small farmers
who carry on work together to
operate on a larger scale and thereby
share the benefits of large scale
farming.
PRINCIPLES OF CO-OPERATIVES
Producer/ Worker co-operatives
These societies are set up to
strengthen producers who operate on
a small scale who face challenges
related to resources for raw material
and available markets for finished
goods.
Credit Co-operatives/ Lending Co-
operatives
These societies are formed to provide
financial help to its members.
Service co-operatives
These exist to provide a service to
their members. This may seem to be
a simplistic statement but it is an
important part of the definition of a
service co-operative and provides
clues to its nature and its methods of
working. It means for example that it
does not provide services to other
than its members and therefore that
users of its services must become
members.
Additional Notes Pg. 444 38.4
Shania M. Alexander
08.02.2016
 They sell shares to their
members to make profits
 Membership is voluntary and
open without artificial
restriction to all who qualify.
 Capital invested, whether as
shares or loans, receives only
a limited return.
 All co-operatives should
pursue social as well as
commercial objectives.
 All co-operative organizations
should actively co-operate
with one another in every
practical way.
ADVANTAGES AND DISADVANTAGES OF COOPERATIVES
ADVANTAGES
 The members of a
Cooperative elect a Board of
Directors who will manage the
business on their behalf.
Members have equal voting
rights: one member one vote.
 Profits or surpluses belong to
the members and should be
distributed or otherwise
applied in such manner as
avoids one member gaining at
the expense of another.
 All co-operatives should
consider environmental issues
in their day to day running.
Additional Notes Pg. 446 38.5
Shania M. Alexander
08.02.2016
DISADVANTAGES
Easy Formation
Formation of a co-operative society is
relatively easy as compared to a
company. Any 10 persons can form an
association and get the entity registered.
Limited Liability
The liability of the members is only
limited to the extent of capital
contributed by them.
Open Membership
Any member of society may become a
member of a co-operative.
Limited Capital
Due to the specificity of co-operatives
the amount of capital that can be
generated may sometimes be limited.
This is because of the membership
remaining confined to a geographic area
or a particular group of people.
Lack of Motivation
Co-operatives are basically service
oriented more than profit motivated.
There might not be sufficient motivation
to manage the co-operatives effectively.

State Assistance
Co-operatives may have the advantage
of patronage in the form of exemptions
and tax concessions and financial
assistance from the governments.

Management
Decision making by members on specific
terms are democratized. Each member
has only one vote.
Additional Notes Pg. 447-448
Shania M. Alexander
08.02.2016