A cooperative refers to an organisation that is owned and democratically run by its members. These members comprise of anyone that uses the organisation’s products or services. There are different types of cooperatives, ranging from small companies with a single shopfront to large commercial businesses such as Fonterra. At its essence, a cooperative society is a member-owned and controlled business whose benefits are distributed across its users.
The main reason people form cooperative societies is to pool their resources so that they are able to increase their productivity. Cooperatives have been around for a long time, but do you know when and how they started? Read on to learn more.
History of Cooperatives
Cooperative societies find their roots in nineteenth-century Europe, primarily in France and England. During the height of the industrial revolution, increasing mechanisation started transforming the economy and society as a whole. The livelihood of many workers was threatened.
A Welshman known as Robert Owen (1771-1858) is regarded as the founder of modern cooperative societies. Owen had made a fortune trading cotton. He believed in making his employees’ environment more comfortable in addition to providing them with access to education.
These ideas were successfully implemented in the cotton mills of Scotland’s New Lanark. It was in these cotton mills where the first cooperative society was formed. The success of this cooperative encouraged Owen to create ‘villages of cooperation’ where employees had a chance to get themselves out of financial distress by growing their own food, designing their own garments, and ultimately achieving a self-governing status. Even though it was Owen who came up with the idea of cooperative societies, it was people such as William King (1786-1895) who developed strategies to make cooperative businesses more practical and effective.
Cooperative Societies in New Zealand
The first recorded cooperative in New Zealand was formed in 1871. Nonetheless, efforts to form consumer cooperatives in New Zealand were documented as far back as the 1840s. The oldest record of a New Zealand producer cooperative reports the formulation of the Otago Cooperative Cheese Company at the John Mathieson’s Springfield farm on 22 August 1871 on the Otago Peninsula, near Dunedin.
The cooperative comprised of eight dairy farmers who bought shares from the company depending on the amount of milk that was going to be supplied. Each share had a value of £1, which represented about 10 quarts of milk supply.
Using the revenues generated from pooling resources, they were able to achieve the following. About three enamelled tubs, with each having a holding capacity of 50 pounds of curd, were placed in the kitchen area. Another wooden vat that could hold up to 100 gallons of milk was set in the barn. By the time the first season was ending, they had manufactured nearly three tons of cheese.
The Historic Places Trust regards this cooperative dairy factory as the first of its kind in the southern hemisphere. In fact, the only cooperative dairy factories that came before it were those formed in Switzerland and Norway. By the time the 20th Century was coming around, there were over 100 cooperative dairy factories in New Zealand and about 150 investor-owned corporations.
The principles that were used to govern those cooperatives largely remain the same to date.
Why Cooperative Societies?
As an individual, getting access to funds or influence that will help your business to grow can be incredibly difficult. For most people, this is the reason why their businesses fail. However, somewhere along the line, some individuals discovered that if everyone pooled their meager resources together, it would have more impact than if everyone went at it alone. A cooperative society and allows its members to achieve better financial independence since it leverages the power of individual contributions to get access to more lucrative opportunities. Additionally, cooperatives allow their members to be exempted from taxes, thus allowing them to achieve higher returns.
Joining a cooperative society, therefore, is a good move for anyone looking to expand their business and increase their productivity. Are you looking to join a cooperative society? Talk to us for more tips and advice.