A Cooperative Society is a voluntary association of persons who have come together to achieve a common goal of promoting their economic interests as well as bettering their living standards. Cooperatives follow the principles of mutual benefit, self-help, and collective responsibility. The management of the cooperative societies is by the members, democratically elected irrespective of shares owned. This structure ensures that the target of the organization is service to members, rather than making profits. Cooperative societies also aim at eradicating intermediaries and maximizing economic well-being for all its members.
This article will delve into the concept of cooperative societies, their importance, functions, types, and the benefits they offer.
What is Cooperative Society?
A cooperative society is a body of owners/members who own and control the business organization; it implies that the people work together for mutual gains. Each member makes available a certain resource to the organization – in the form of capital, labor, or both-and the surplus generated by the society either serves to create more surplus for the society’s development or is distributed among the members. The basic objective of a cooperative society is to protect its members from exploitation by middlemen, thus enabling the members to engage in undertakings such as production, purchase, and sales under improved conditions that would have arisen had the members been acting independently.
- Voluntary Membership: Anyone with a common interest can join or leave the society freely.
- Democratic Control: Each member has one vote, ensuring equal decision-making power.
- Service Orientation: The society operates to fulfill the needs of its members rather than to maximize profits.
- Limited Return on Capital: Members receive limited dividends, with the emphasis placed on member service and the common welfare.
Importance of Cooperative Society
Cooperative societies are very important because they enhance economic cooperation, uplift the downtrodden, and avail self-sufficiency among its members. Indeed, cooperative societies solve a lot of socioeconomic problems as people can share resources, share profits, and work toward common goals.
- Promoting Economic Equality: Cooperative societies ensure that wealth generated by the collective effort is distributed fairly among all members, reducing income inequality.
- Eliminating Exploitation: By bypassing middlemen, cooperative societies allow members to buy goods and services at lower costs and sell products at better prices.
- Fostering a Sense of Ownership: Since the members are both the owners and beneficiaries of the society, they take active roles in the decision-making processes, promoting transparency and accountability.
- Providing Employment: Cooperative societies often create employment opportunities within their community, especially in rural areas, where job prospects may be limited.
- Enhancing Social Welfare: Beyond economic gains, cooperative societies often invest in the welfare of their members through education, healthcare, and housing services.
Functions of a Cooperative Society
Co-operative functions vary depending on the kind and size of the cooperative. However, the general functions revolve around improving their members’ welfare, enhancing the economic position, and offering competitive goods and services.
- Facilitating the Purchase and Sale of Goods: Cooperative societies purchase goods in bulk from producers and sell them to members at reasonable prices, thus cutting down the cost of living.
- Providing Credit: Cooperative credit societies offer loans to their members at lower interest rates than commercial banks, helping farmers, artisans, and small-scale businesses access capital.
- Offering Mutual Support: In case of emergencies, cooperative societies provide financial and other forms of support to their members.
- Promoting Savings: Cooperative societies encourage members to save regularly by offering attractive interest rates, fostering a habit of financial discipline.
- Providing Technical and Educational Assistance: Many cooperatives offer training programs and technical assistance to enhance the productivity and skills of their members.
Benefits of Cooperative Societies
There are numerous benefits of cooperative societies, which make them a popular choice for many individuals, particularly in rural and economically weaker regions.
Economic Benefits
- Lower Costs: Members can access goods and services at lower prices by pooling resources and eliminating intermediaries.
- Profit Sharing: Any surplus generated is either reinvested in the society or distributed among members in the form of dividends.
Social Benefits
- Community Building: Cooperative societies foster a sense of community and collective responsibility among members.
- Improved Living Standards: Cooperative societies help raise the standard of living for members by providing access to better resources, services, and opportunities.
- Access to Financial Services: Cooperative credit societies provide affordable credit to their members, thus supporting small-scale businesses and farmers.
- Promoting Democratic Practices: Cooperatives follow a democratic decision-making process where every member has equal voting rights, promoting transparency and accountability.
Types of Cooperative Societies
There are several types of cooperative societies, each serving a specific purpose or addressing a particular need within the community.
- Consumer Cooperatives: These societies are formed to provide essential goods and services to members at fair prices by purchasing goods in bulk and distributing them among members.
- Producer Cooperatives: These are created by small producers or manufacturers to process, market, or distribute their goods collectively, ensuring better market access and higher profits.
- Credit Cooperatives: Aimed at providing financial assistance to members, these cooperatives offer loans and credit at lower interest rates than conventional banks.
- Housing Cooperatives: These societies help members acquire land or houses by pooling resources and distributing housing units at affordable rates.
- Marketing Cooperatives: Formed by producers to sell their goods, marketing cooperatives eliminate the role of middlemen, ensuring better returns for members.
- Agricultural Cooperatives: These cooperatives focus on helping farmers access better resources such as seeds, fertilizers, and machinery, while also facilitating the sale of agricultural products at competitive prices.
Conclusion
A cooperative society is a voluntary organization of persons with common economic interests that holds democratic principles and offers services. The major objective of cooperative societies is to eliminate middlemen, improve the living standards of members, and achieve full economic self-sufficiency. It provides a number of benefits, from cost-cutting to profits and plays a significant role in development of rural areas, in banking and other financial sectors, and in the empowerment of communities. It is only through understanding the different types of cooperative societies and their functions that one can come to appreciate the importance of cooperative societies in the modern economic landscape.
Cooperative Society FAQs
What is cooperative society ?
Cooperative society refers to the ownership and control that comes among the members of an organization coming together to form and achieve an economic goal through member ownership, which can be buying affordable goods and services or obtaining credit.
What are the advantages of joining a cooperative society?
These, in turn, benefit the individuals by paying lower prices, profit-sharing, democratic decision-making, and financial support through affordable loans.
What are the functions of a cooperative society?
Some of the key functions include bulk purchases of products, availing affordable credit, mobilizing savings, and mutual aid to the members.
What are the types of cooperative societies?
Main types include consumer cooperatives, producer cooperatives, credit cooperatives, housing cooperatives, and agricultural cooperatives.
Why does cooperative society matter?
Co-operative societies encourage economic equality, remove exploitation, provide employment and ensure a sense of belonging and community among its members.
