What Is the Future of Cooperative Business? | AHA

Cooperative business is well established in the United States. It has had its greatest growth in helping farmers with their marketing and purchasing problems, and in rendering special services. Cooperatives have been less successful in large cities, where modern large-scale stores were already selling goods at low prices, and where there is less neighborly feeling and fewer common interests.

Wherever people are being well served by regular business, cooperatives grow slowly or not at all. If, after the present war, business is forced into keen competition, resulting in small profits and good service to consumers, the development of cooperation will be discouraged. On the other hand, widening of profit margins through price fixing or other causes will probably encourage the expansion of cooperative business.

Whether cooperatives expand in the future will greatly depend upon how efficient they are. Few people will be likely to join unless co-ops offer something competitors cannot: better products, lower costs, and facilities and services at least as satisfactory as those of other businesses. Much will depend upon whether cooperatives can get first-class managers. Important also is whether large numbers of people are familiar with and sympathetic toward the cooperative way.

Probably cooperatives will grow most rapidly in farming communities, where people are already used to the idea, where cooperatives have existed for a long time and have given efficient service. In cities, too, the likeliest fields will be among those people who are already being served efficiently by cooperatives.

In general, cooperatives of all types now have good leadership, trained personnel, and facilities which compare well with those of commercial businesses. Cooperative business is no longer seriously handicapped by lack of capital. Along with an increase in business efficiency has come an increase in understanding of cooperative business methods by members.

Also favorable to the future of cooperatives is the fact that their business operations are becoming linked together. For example, many marketing cooperatives do business both at wholesale and retail, and in addition prepare the raw product for the consumer. Many purchasing associations combine retail, wholesale, and manufacturing. This means that savings from wholesale marketing, transportation, processing, and manufacturing are added to those of local marketing or retail purchasing. Savings from these combined operations greatly increase the benefits of membership.

In the past, consumers’ cooperatives in towns and cities have been handicapped by lack of good wholesale service. Now there are several cooperative wholesale associations which can give consumer co-ops technical help in buying and selling similar to that available to chain stores or similar large-scale groups. Linking up consumer cooperatives with wholesale associations also gives the co-op stores a better chance to meet local competition.

As knowledge spreads of the ways in which cooperatives work, we may expect to see more cooperatives formed. Cooperative business thus offers a healthy competitive challenge to its rival and partner in the American system of free enterprise-commercial business.

From EM 23: Why Co-ops? What Are They? How Do They Work? (1944)