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Co-operatives: 'Schools for Democracy' -
  This document has been made available in electronic format
      by the International Co-operative Alliance ICA
           with permission of the United Nations 
        Department for Public Information(new York).

UNITED NATIONS IN FOCUS                    DPI/1716/COOP




      "Cooperative enterprises provide the organizational
      means whereby a significant proportion of humanity is 
      able to take into its own hands the tasks of creating
      productive employment, overcoming poverty and achieving
      social integration. They constitute a model for a people-
      centred and sustainable form of societal organization, 
      based on equity, justice and solidarity."

         - Secretary-General Boutros Boutros-Ghali
             Message on the occasion of the first
              International Day of Cooperatives
                         1 July 1995


There has long been confusion in the public mind as to what
actually constitutes a cooperative. Originally so named because
they provided a practical means for cooperation, true
cooperatives are simply a special type of business enterprise
within the formal market system, both economic and social in
character, which reflect a deep sense of social and environmental

According to the definition formulated by the International Co-
operative Alliance, cooperatives are,  "autonomous associations
of persons united voluntarily to meet their common economic and
social needs through jointly-owned and democratically-controlled
enterprises." In its own definition, the International Labour
Organization (ILO) also points out that members accept a fair
share of the risks and benefits of their cooperative

Clearly, these "genuine" private sector cooperatives, which are
member-run and member-financed, are not to be confused with the
state-run collectives, erroneously labelled "cooperatives", which
characterized centrally planned economies. 

There is another major difference between collectives and true
cooperatives. Cooperatives are often described as "schools for
democracy" because they are democratically organized from the
grassroots to the global level. Individuals, not governments,
direct and manage their day-to-day business and decision-making
is a shared process.


Historically, the foundation of the modern cooperative movement
dates back to the year 1844 when a small group of weavers set up
the first consumer cooperative in the British town of Rochdale
in Lancashire. This, the Rochdale Equitable Pioneers Society,
gave local working people their first taste of economic freedom
and independence. 

Fifty years later, in 1895, the International Co-operative
Alliance (ICA) was founded in London. When the United Nations was
created in 1945, the ICA became one of the first non-governmental
organizations (NGOs) to be granted the highest level Category I
consultative status with the Economic and Social Council. This
year, in celebration of its 100-year anniversary, the ICA will
convene a Centennial Congress in Manchester (UK) in September

From those humble beginnings just a little over 150 years ago,
the cooperative movement has burgeoned into a globe-spanning
alliance in over 100 countries, representing a vast range of
activities from agriculture and fishing to tourism and insurance,
to housing and banking. Today, the ICA boasts an individual
membership of 760 million people and it is estimated that, all
told, the total number of persons whose livelihoods are to a
significant extent made secure by cooperative enterprises
approaches three billion people, more than half the world's

Based on the original 1844 Rochdale Principles, adapted in 1995
to reflect the world's fast-changing social and commercial
environment, cooperatives apply the following principles as
general guidelines for their activities:

*     Membership: Cooperatives are open to all without regard to
      political, religious, gender racial or social affiliation;

*     Democracy: Cooperatives are democratic, participatory
      organizations actively controlled by their members. At the
      primary level, members enjoy equal voting rights while at
      higher levels, administrators seek to involve members in

*     Financial Structure: Members contribute equitably to the
      capital of their cooperative, a portion of which is usually
      collectively owned, and share in the results of its

*     Education: Cooperatives foster reciprocal, ongoing
      education programmes for members, leaders and employees.
      In addition to encouraging active collaboration between the
      cooperatives themselves, they also support information
      campaigns to raise public awareness, particularly for young
      people and opinion leaders;

*     Autonomy: Cooperatives are autonomous, mutual-help, member-
      controlled organizations. Any agreements with governments
      or others are entered into freely, on mutually acceptable
      terms that ensure the cooperatives' autonomy;

*     Community: Concerned about the communities in which they
      operate, cooperatives strive to align member needs with the
      overall goal of sustainable development.

The cooperative movement is grounded in a value system which
stresses self-help, democracy, equality, equity and solidarity.
Underlying these are ethical values: honesty, openness and social
responsibility for all. The complementarity between the values
of the cooperative movement and that of the UN itself is evident.

Especially today, in the light of new economic and social trends,
it is increasingly recognized that cooperatives play a pivotal
role in creating a sustainable society. They constitute "an
important means, often the only one available, whereby the poor,
as well as those better off but at perpetual risk of becoming
poor, have been able to achieve economic security and an
acceptable standard of living and quality of life."

In recognition of the invaluable contribution of cooperatives and
in observance of the centenary celebration of the International
Co-operative Alliance, the General Assembly, in its resolution
47/90 of 16 December 1992, proclaimed 1 July 1995 as the first
United Nations International Day of Cooperatives; however, the
ICA has observed its own International Cooperative Day on the
first Saturday in July since 1923. In addition, in the United
States, the entire month of October is celebrated as "Cooperative
Month"; the week of 15-21 October 1995 is Credit Union Week while
19 October marks the annual observance of International Credit
Union Day.


Cooperative enterprises contribute tangibly to the alleviation
of poverty, the creation of productive employment and the
enhancement of social integration. In fact, in its resolution
49/155 of 23 December 1994, the General Assembly acknowledged
that cooperatives are an "indispensable factor in the economic
and social development of all countries..." With their remarkable
range and diversity, they often stand out as examples of
efficiency and effectiveness, not to mention serving as tangible
models for social partnerships in progress. In many cases,
cooperatives are the dominant players in their industries. Below
are a few salient facts:


According to a report by
the Secretary-General (A/49/213 of 1 July 1994), an estimated 2.3
billion people, or 57 per cent of the total population in
developing countries alone, is "closely associated with
cooperatives". Cooperatives serve crucial functions and make
major contributions to national economies; for example:

*     India: Some 90,000 agricultural supply and marketing
      cooperatives existed in 1993. They helped to spearhead
      India's "green revolution" by supplying 34 per cent of
      fertilizer input. Simultaneously, the Anand dairy
      cooperatives, comprising over 57,000 dairy cooperatives
      with more than 6 million members, was the country's largest
      producer of dairy products.  

*     Brazil: Recognizing that access to adequate medical care
      collective healthcare businesses. Today it has 61,400
      doctors (about one third of the national total) and 8.5
      million patients.

*     Republic of Korea: In 1992, after only thirty years in
      existence, the largest credit union movement in any
      developing country, first in terms of assets ($ 7.7
      million) and second in terms of membership (2.8 million
      persons), was registered in the Republic of Korea.

*     Africa: In Burkina Faso, Cote d'Ivoire and Mali, the
      process of transforming  parastatal "cooperatives" into
      genuine private sector cooperatives was actively assisted
      by the International Labour Organization (ILO) through its
      Interregional Programme for Commercial Exchanges among
      Cooperatives (INTERCOOP) and its Organizational and
      Cooperative Support to Grass-roots Initiatives (ACOPAM)

*     China: In April 1994, 160 million Chinese were members of
      cooperatives under the ICA umbrella. Although parastatal
      "cooperatives" are still significant, many of them have
      embarked upon the challenging path of privatization, as
      evidenced by the fact that some 1,000 joint ventures
      involving $1 billion in capital had been set up by 1993
      between foreign enterprises and Chinese cooperatives.


What many people do not realize is that cooperatives are not
active exclusively, or even primarily, in developing countries;
on the contrary, an estimated 531 million (62 per cent) of the
total population in developed market economies is closely
associated with cooperatives in some way. For example:

*     USA: In 1994, the 100 largest US cooperatives employed
      750,000 persons and provided a combined contribution of $
      87.2 billion to the national economy;  Moreover, the 1993
      Fortune 500 list of major US industrial corporations
      worldwide included 14 cooperative enterprises while another
      six appeared amongst the 100 largest diversified service
      companies (see box). 




Farmland Industries (MO)        Harvest States Cooperatives (MI)
Agway (NY)                      Associated Milk Producers (TX)
Land O'Lakes (MI)               Roundy's (WI)
CENEX (MI)                      Ace Hardware (IL)
Mid-America Dairymen (MO)       Countrymark Cooperative (IN)
Gold Kist (GA)                  Servistar (PA)
Ag Processing (NE)
Ocean Spray (MA)
CF Industries (IL)
Tri Valley Growers (CA)
Prairie Farms Dairy (IL)
National Co-op Refinery Assn (KA)
Riceland Foods (AR)
Sun-Diamond Growers (CA)

      Note: US state in which the cooperative's headquarters
         are located is indicated in parentheses.

Further, a publication by the National Cooperative Bank entitled
A Day in the Life of Cooperative America, reveals that the lives
of almost half the American population - some 120 million people
- are affected by cooperatives.

      Shelter: Cooperative housing units provide shelter for 3
      million citizens while consumer-owned cooperatives provide
      electricity for 25 million people;

      Food: Independent food stores that are members of
      cooperatively owned whole-salers provide $123 million worth
      of groceries and household products each day;

      Health: Cooperatively organized community health centers
      provide medical care for more than 60,000 people daily, 
      while doctors at cooperative and non-profit health
      maintenance organizations see almost 220,000 patients;

      Media: Associated Press, a non-profit cooperative and the
      worlds's largest news service, disseminates news at 7,655
      media outlets, serving 98.8 per cent of all US daily

      Jobs/stock: 10,000 US companies provide not only
      employment, but also employee stock ownership plans, for
      11 million people;

      Finance:  Cooperative credit unions clear an average 13.3
      million checks daily with an aggregate value of $1.3
      billion while the Farm Credit System lends an average of
      $148 million per day to its members and the National
      Cooperative Bank extends $1.7 million in new financing to
      cooperatively owned businesses.

*     Europe: In 1993, agricultural supply and marketing
      cooperatives in the European Union, Austria, Finland and
      Sweden had 14 million members, 800,000 employees, a
      turnover of ECU 205 billion (European currency units), a
      55 per cent share of total farm inputs and a 60 per cent
      share of overall marketing. In 1993 cooperatives in Sweden
      had an aggregate annual turnover of 20 billion ECU (8 per
      cent of GNP) while cooperatives in the Basque region of
      Spain accounted for 15 per cent of 1989 regional GNP.

*     Japan:  Almost every Japanese farm enterprise is a member
      of supply and marketing cooperatives which handled 95 per
      cent of rice production in 1993. Cooperatives also
      accounted for approximately 90 per cent of Japan's 1993
      fisheries products; 

*     Canada: Quebec's "Mouvement des caisses Desjardins", one
      of Canada's largest financial institution in that province,
      established 12 regional investment corporations to help
      promote balanced development by stimulating entrepreneur-
      ship in economically disadvantaged communities in the


Poverty is the enemy of development. And, in today's world, one
in every five persons lives in poverty, an ominous omen for our
common future. In order to raise awareness and stimulate remedial
action, the United Nations has declared 1996 as the International
Year for the Eradication of Poverty, 

Moreover, the UN-sponsored World Summit for Social Development
- dubbed by the media the "Poverty Summit" - which took place in
March 1995 in Copenhagen, Denmark, had the eradication of poverty
as one of its core issues. 

The Summit's concluding Declaration and Programme of Action for
the formulation of national strategies to eradicate poverty
acknowledged the "potential and contribution of cooperatives for
the attainment of social development goals, in particular the
eradication of poverty...". 

And it is true: cooperative enterprises do contribute
substantially to the eradication of poverty, both directly
through members and employees, and indirectly through stimulating
the economies of the communities in which they operate: for
example, through income derived from employment; through the
provision of affordable goods and services to households; through
consumer protection practices, through effective management of
household and enterprise finance; through affordable insurance
packages; through the provision of adequate housing, utilities
and services; and finally through the provision of education and
training for human resource development. 


Women in particular find "membership in cooperative enterprises
a most effective means to achieve economic empowerment, to engage
in entrepreneurial activities and in employment, and, of great
importance, to retain the benefits thereof."

The upcoming Fourth World Conference on Women, to be convened
from 4 - 15 September 1995 in Beijing, China, along with its
parallel NGO Forum on Women 95, will provide a powerful platform
to highlight the contributions of the cooperative movement
towards the advancement of women. Of special interest are the
many different ways by which cooperatives help women to achieve
full de facto equality with men:

*     Alleviation of poverty: The "feminization of poverty" can
      best be counteracted by providing women with secure
      employment or livelihoods under acceptable conditions,
      including flexible labour practices and paid wages, as well
      as insurance and credit on non-exploitative terms. Sweden's
      Folksam is an award-winning example of insurance
      cooperative which has provided innovative services suited
      to women's needs in particularly difficult situation, such
      as divorce, widowhood, unemployment, single motherhood and
      female-headed households.  

*     Access to quality education and training: Cooperatives are
      paying special attention to improving the educational
      status of girls, women members and employees. By helping
      to reduce the burden of household work and providing
      opportunities for independent sources of income,
      cooperatives are paving a path to empowerment for women. 

*     Health care: Providing quality health care at affordable
      prices, nutritionally appropriate goods and safe household
      equipment and family health education programmes are other
      examples of ways in which cooperatives have addressed
      women's specific health needs;

*     Elimination of violence against women: By providing such
      essentials as housing, employment and child-care,
      cooperatives have been instrumental in reducing the degree
      of dependence and financial stress which may make women
      more vulnerable to abuse and violence.

*     Economic self-reliance: Cooperatives, by their very nature,
      promote the pooling of resources to protect assets and
      enhance opportunities for viable economic activity. Thus,
      they are especially beneficial to women who often lack
      access to productive resources;

*     Equal participation: Cooperatives offer women a channel for
      gaining experience and upward mobility, both within the
      movement itself and in the external world of decision-


Active promotion of an ethic of social responsibility in private
enterprise is another tenant of the cooperative movement which
supports UN social development goals. 

Certain cooperatives have demonstrated that, in this age of
increasing public awareness, even in business, it pays to be
socially responsible. The United Kingdom's Co-operative Bank
provides a case in point. In response to a customer/member
survey, it developed an ethical policy which prohibited the
bank's involvement with any regimes or organizations condoning
or tacitly permitting socially destructive practices, including
the abuse of human rights, the manufacture or sale of weapons,
degradation of the environment, financial speculation, money
laundering, drug trafficking or tax evasion. As a result of this
outspoken stance, the bank's customer membership has doubled
since 1988. 


As "schools of democracy", cooperative enterprises also
contribute to the promotion of social stability. For it is clear
that governments, although they may create an enabling
environment, cannot achieve or maintain sustainable development
without an interactive social partnership, actively involving all
of civil society in an empowered, democratic manner. 

This fact has been acknowledged throughout the decade of UN-
sponsored conferences devoted to development issues. For example,
in order to achieve its goals in the areas of poverty reduction,
employment and social integration, the Social Summit's Programme
of Action called for "comprehensive cross-sectoral strategies"
to be undertaken, inter alia, in partnership with "actors of
civil society, the private sector and cooperatives". 

This partnership is already reflected in the United Nations
Committee for the Promotion and Advancement of Cooperatives
(COPAC), an entity unique in the UN system in that it acts as
interface between the UN System and global NGOs reprsenting major
sectors of society and simultaneously serves as an inter-agency
forum within the UN System. 

Thus, with their globe-spanning dimensions and diversity, their
mutual insistence on social partnership, participatory democracy,
empowerment and "people-centred sustainable development", the
cooperative movement reflects a strong, deep current of
complementarity with the values and principles of the United
Nations. And this is the bedrock of social development.

* * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * *

Published by the United Nations Department of Public Information
DPI/1716/COOP - June 1995

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