Cooperative Movement in USA

1. The Beginning
The cooperative movement in the USA is quite ancient. It started with the first
settlers in the country. In its initial stages it flourished only in the field of agriculture.
The settlers on the land faced enormous difficulties, like the paucity of funds,
construction of bridges, clearance of forests, drainage of land, harvesting of crops,
etc. Consequently, the farm families joined hands together and started undertaking
mutual exchange of work. This is how the seed of cooperation was sown in the
soil ofthe United States. The first cooperative organisations and gatherings were
known as 'bees' and had a purely rural background. With such a strong foundation
the cooperative movement has flourished more in the rural areas. Legally speaking,
the cooperative movement started in l1865 when the first cooperative law recognised
the sale and purchase cooperatives for the first time, although the buying and
selling associations had been in existence for the last 50 years. By 1867 there were
more than 400 dairy cooperatives in the United States. Prior to the enactment of
the cooperative law of 1865 the period is known in the history of the cooperative
movement as that of 'associationism. The period following the enactment of the
law is known as the 'grange movement. The national grange was established in
1867. The grange movement was started by Hudson Kelly who was deputed by
the government to study the agricultural conditions in southern States. Kelly was
farmer. Besides submitting his report, he also started cooperative unions
a
known as
granges. These unions were of three types, VIZ., local, state, and national.
The local
granges consisted of individual farmers, which were federated
into state granges
and the state granges were established in the States. The
movement took roots
and spread in many States. To start with, these granges
either took to cooperative
buying or to cooperative selling or both. After some
time they also entered into
business. Alongside the development of granges a
like The Farmers' Alliance, The
number of other organisations
Farmers Equity, The Agricultural Wheel, The
rarmers' Cooperative and Education Union
of America also developed. All these
 Cooperation: Principles, Problems and Practice
Pract
154

organisations lent a helping hand to the development of the

movement in the UsA
We shall study the main features of various cooperative
organisations in the States SU
urban cooperation
under two particular heads, viz., the rural cooperation and the af
WE

2. Rural Cooperative Movement WE

sO
2.1Marketing Associations
is
Cooperative marketing associations in the United States have been organised as
single commodity organisations. There are separate marketing associations for each Se
commodity, such as, foodgrains, cotton, oil products, Iivestock, woo1, dairy products, ou
poultry and eggs, etc. Such assoCiations have attained commendable success since de
they have tackled marketing problems in an efficient manner. Cooperative dairies CO
including cream pools, cooperative creameries, cooperative central creameries, de
and butter sale agencies were the first of cooperative marketing associations to be fra
established. In places where the production of cream is limited, local cream pools aft
have been established. The pool, after collecting the cream from individual farmers nu
dispose it off to the centralised creameries. The local cooperative creamery gets pre
the whole milk or cream from its members every day. The area of operation of the SOC

centralised creameries is quite wide. Such creameries are few in number. The butter Th
sales agencies deal in the sale of the butter products. Cooperative dairy societes have ha
achieved considerable success in the States of Wisconsin and Minnesota. There are prc
five large federations in the USA for the marketing of creamery products. These to
cooperative organisations have been handling about 25% of the total consumption by
of fluid milk and cream in the country, about 40% of butter, 16% cheese and 70% ha
ofmilk powder. Since the Second World War they have also started the manufacture
of milk powder. Regarding the sale of fuid milk there are two types of cooperative at
organisations viz., one which supply milk to the retailers directly and the other which as t
have business only with the traders. Most of the associations are of the second type. reg
The National Cooperative Milk Producers Federation of the Cooperative Dairies the
acts as a promotional and educational ageney. reg
In the field of cooperative marketing of foodgrains there are cooperative Sup
elevators at the local level which receive grain from the farmers either for storing or
cO
for selling. If the market is not favourable for the farmers, the grain is stored in the the
local elevators, till the market becomes favourable. The societies reg
also purchase wheat
from the members and despatch it to the terminal association which is a
federano
of the local elevators societies. They sell grain on commission basis. The termina org
associations have federated into the National Federation Whi
of Grain Cooperatives.
Its headquarters are at Chicago. It has been handling the Coc
export trade and for tn
purpose it has establishedits own agencies. It supplies hav
up-to-date information to tn
local elevators societies and the terminal associations about the marketing trends The
The Farmers Unionor Grain Terminal Associations is the largest association. slau
local and terminal associations also undertake the supply of seeds, fertilizers and Asse
other requirements to their members. Tend
of
 Cooperative societies have also been organised for the marketing and supply
of oil products. They undertake production, processing and supply activities. They
supply good quality seeds to the members. They have their own ginning plants
and oil mills. They have also set up cotton compressors. Large societies also own
warehouses
wa and fertilizer plants. The American Cotton Cooperative Association
which is the promotional and educational agency is the national organisation of these
societies. The Staple Cotton Cooperative Association of Greenwood, Mississippi
is the most important society. These societies after getting the produce from the
members, either purchase the produce outright or get it for storing purposes for
selling the produce at some future date. When the members decide to sell the produce
outright to the society the approximate market value is paid to them at the time of
delivery. The price paid to the seller is determined by the society after taking into
consideration the price which the sOCiety can get at a future date. It also makes certain
deductions for meeting the operating expenses and reserves. After purchasing cotton
from the members the society stores it in the warehouses and disposes it off later
after proper gradation. The members are paid patronage dividends according to the
number of bales delivered to the society. When the society does not purchase the
produce of members outright it collects produce and keeps it separately. In this case
society acts merely as an agent and charges some commission from the members.
The society retains the produce only up to 30th June of the year when the members
have to agree to sell the produce. The members are also advanced loans on their
produce by the cooperatives and for this purpose the cooperatives are authorized
to take "commodity loans" from the bank. In case the price of the cotton received
by the society is less than the advance made to the individual member, the society
has the right to call for the margin from the members.
In the field of wool marketing, cooperative societies have also been organised
at local, regional and state levels. At the top there is the national association known
as the National Wool Marketing Corporation with its headquarters at Boston. All the
regional and state associations get the supply from the individual members which
they sell to the regional associations. After the proper gradation of the wool the
regional associations sell it to the national corporation. The national corporation
supplies the local, regional and state associations with all types of information
connected with the marketing and production of wool. These associations receive
their finances from the National Wool Credit Corporation. It advances loans to the
Tegional organisations which, in turn, give loans to the members.
In the field of livestock marketing cooperative organisations have also been
organised in the United States. At the local level there are Trucking Corporation
which help the members in the transportation of livestock to the marketing centres.
Cooperative Packing Plants have also been set up in the country. These associations
Ve been arranging for slaughtering of animals, meat chilling, curing and smoking
hey also market these products. Central cooperatives have also been established ror
Slaughtering and processing by these associations. The National Livestock Marketing
Assocation at Chicago is the national organisation for these cooperatives. It has been
ng valuable service to all the livestock cooperatives, insofar as the provisi
o Credit facilities, marketing and processing of meat products is concerned.
 in the United States 2
Poultry and egg marketing cooperatives were organised s
only in the beginning of the 20th century. The marketing of poultry and eggs has PL
to their main business
also been undertaken by some other organisations in addition
Cooperative societies for the marketing of fruits and vegetables have been P
organised all over the country and are the most popular. They enjoy a high reputation
in the international market. At the local level there are local associations. Then,
there are district exchanges organised by these associations and at the top is the pl
Fruit Growers' Exchange which is a federation of the district exchanges. The as
central organisation deals with the wholesale dealers through its representatives
at important market centres. It employs the most modern means of advertisement,
and spends large sums of money for this purpose. It also carries on research. It has O1
its own transportation department. The initials packing and grading are done by
the local associations, while marketing of the products is the exclusive domain of the
the district and central exchanges. The district exchanges get guidance from the of
central exchange which has done a lot for the standardisation of the products. The CO
central exchange handles about 75 to 90% trade of the total produce of fruits. The ot
most important of the exchanges is the California Fruit Growers Exchange. In the Ea
Eastern States of the USA the associations are comparatively of a small size and (iim

they are engaged, besides marketing of fruits, in the supply of fertilizers, insecticides
and other important requirements. They have set up their own processing plants. SO
In the USA there are a number of other associations which are engaged in the ass
marketing of other commodities like tobacco, rice, sugar products, etc. In shor, U
the patterm of marketing associations is the same throughout the whole country. To ass
conclude, we can say that cooperative marketing is the most developed activity in Na
the USA in the field of agriculture. The marketing associations have been organised
ref
on commodity basis. Some of these associations also undertake the supply of secds Le=
and fertilizers. The local associations just act as agents of individual producers
while the central associations formulate policies, carry on research and arrange for
marketing and processing of the produce.
The government has been taking a keen interest in the development of these Tha
cooperatives and has provided financial as well as other assistance through the int
department of agriculture. In 1929, the Agricultural Marketing Act was passed. tele
The government also set up a Federal Farm Board for administering this law. The
chi
government made a provision for a revolving fund of $ 500 million for the Board to Inse
enable it to give loans to the various associations. The Board could advance loans
for a period of 20 years at low rate of interest. The associations grew satisfactorily
for
and their hnancial condition was sound. The Farm Board established six national
the
commodity marketing organisations and one Survey Agency in 1930, whose main not
function was to coordinate the activities of these associations. The functio1s f ad
suco
the Board were taken over in 1933 by a new organisation known as tn Far
Credit Administration. The government has also provided necessary facilities for
these assoCiations for research and guidance through the Bureau of Agricu al the
serv
Economics. The State governments have also passed special cooperative marketing
laws for these associations.
 Cooperative Movement in the USA
4. Chief Features of the
movement in the USA:
the cooperative
Following are the chief features of farmers movement, It
movement in the USA is primarly
1. The cooperative
success in rural areas as compared
to cities and towns,
has achieved commendable
phenomenal success.
Marketing cooperatives have achieved cooperative
2. Purchasing associations
occupy the second position in the list of
organisations and deal in the supply
organisations in the USA. These are centralised of
requirements to their members. They also undertake the distribution
of farm
commodities. The functions of marketing associations and purchasing
household
associations are somewhat overlapping. They
also undertake processing and
these associations is
manufacturing activities on a large scale. The working of
economical and etficient because of their large size.
3. The consumers' movement has not gained
much success in the USA. The
consumers retail societies carry on a large business on commission basis.
the development of the
4. The universities and colleges have also promoted
unions.
movement. They have also organised cooperative stores and credit
5. The movement is fully supported by the state
governments as well as by
federal government.
6. Cooperative banking has not developed in the USA and cooperatives
depend
largely upon commercial banks for loans.
There is no national cooperative law in the country and each state has enacted
its own legislation.
8. At the national level a number of cooperative organisations have been
established for carrying on educational activities.
Since the USA is purely a capitalistic country, the fact that the cooperative
movement has not achieved much success should not be alarming. Whatever success
it has achieved, is commendable. The credit for this success goes to the depression
of the 1930's, which produced severe and shocking effect on the poor people. The
movement was, therefore, started and developed to remedy the ills of the Great
Depression'. The most striking feature of the cooperative movement in the USA
is that the country, being a highly industrialised one, the consumers' cooperative
movement has not gained progress in the urban areas. One reason for this strange
situation can be that the American labour force has been very efficiently fed by
the extensive and efficient retail distributive system. Moreover, keen competition
among the retailers has kept the prices at a reasonable level and, therefore, the
consumers did not feel the necessity to organise consumers' stores. The retail traders
are also not interested in earning high profits. That is why they agree to work on
commission contract on benalr of the stores. Again, with a view to competing w
the retail traders cooperatives must be organised on a very big scale which 1s not
possible. Lastly, the Americans are shrewd businessmen and they do not believe
in future profits. The American workers are very well paid and
hence they do not
have the same problems which are faced by the working classes in other countne
The latest trend in the development of the cooperative movement in the USA
was towards business integration and contract farming. The farmers' cooperatives
Cooperative Movement in USA
165

were heading more and more towards vertical integration, i.e., the
cooperatives
started engaging themselves besides production or marketing, in the supply of farm
requirements, prOcesSing or distribution. The average farmer relies to an appreciable
extent on cooperativeorganisations for integrating his business operations. He is a
member of a number of cooperatives, and thus, he has maintained a commanding
position in getting the type of production, supplies and services, he needs for
operating his business efficiently. Contract farming is an integral part of this process.
This has been most prominent in the production of sugar-beets, fruits and vegetables.
The most important fact of this process is that the farmer is now controlled by the
contract and its provisions and not necessarily by the ownership of production
resources or marketing and processing facilities. This process of integration is
bound to go deep into the farmers' life because it enables them to take advantage
of the latest production and marketing techniques and earn high profits. Further,
this will help them in obtaining easily the help for improving the techniques of
production, more capital, increased marketing facilities and the development of
new enterprises in areas where the employment opportunities are limited. The
growing tendency towards integration has created a number of problems for
the cooperative societies in the sense that, () they have to adjust their operations to
new needs arising out of the changing agricultural conditions, (ii) develop broader
horizons, (in provide better management, and (iv) develop more disciplined and
better-informed membership. In any case, the scale is in favour of the farmers
and their cooperatives. The cooperatives have a bright future. They have greater
opportunities to serve their members more meaningfully and effectively because
of the larger scale, owing to integration, evolve better deal for their members and
hence better profits. They can also provide many new services to their members.
And hence they will play a more effective role in the life of the farmers.
ICA records provided the following profile ofAmerican cooperative movement
in 1995:
There were 27,599 cooperative societies with 150,692,000 members in all.
Sector wise the position was as given below:
Agriculture-4,224 cooperatives with 400,000 members; Child Care 650
cooperatives with 50,000 members; Consumer 350 cooperatives with 324,000
members: Healthcare- 11 cooperatives with 1,600,000 members; Banking
90 cooperatives (number of members not available); Credit Unions 12,560
cooperatives with 67,500,000 members; Housing 6450 cooperatives with