A farmer’s marketing cooperative is a business organization owned by farmers to collectively sell their products. It allows producers to accomplish functions they couldn’t achieve on their own. Most agricultural producers have relatively little power or influence with large agribusinesses or food companies that purchase their commodities. Joining with other producers in a cooperative can give them greater power in the marketplace. In addition, cooperatives can give producers more control over their products as they make their way to consumers by allowing them to bypass one or more middlemen in the market channel. Farmers capture more of the returns that would otherwise go to others.
A Marketing Cooperative can be the most important part of a farmer’s business. Like any cooperative, a marketing cooperative also has its bylaws.
Marketing cooperatives provide the opportunity for farmers to pool their products and by doing so enhance their bargaining power in the marketplace. When the farmer’s market vegetables on their own, they are at the mercy of the buyer. The buyer will give the farmer the lowest price possible, which means greater profits for the buyer rather than for the farmers.
By joining together in a co-op, however, farmers have a way to market their vegetables and other crops at the highest price possible.
This means that the co-op can bargain for a better price because it has the strength of many farmers behind it.
Marketing co-ops also show the farmer new crops that they can grow year round. This can provide the farmer with a year round income.
Farmer marketing co-ops also provide members with seed fertilizer and their farm needs at considerable savings.
Specific Financial and Market Access Advantages to Marketing Cooperatively
There are numerous advantages to marketing cooperatively. There are also financial advantages to marketing cooperatively however, and they are:
• Promoting production of a more uniform product
• Facilitating production aligned with the market needs
• Helping cooperatives organize more efficient resource combinations
• Promoting greater integration and less uncertainty
• Giving producers an advantage in securing credit
• Reducing transaction costs of co-ops doing business with farmers
• Lowering procurement assembly and delivery expenditures
• No soliciting costs
• Can offer forward contracts with quantity, quality and schedule
• Ensuring a market for members
* USDA Rural Business Cooperatives Service, May 1998 - Marc Warman and Tracey L. Kennedy
The research was thanks to a RME-CSREES Cooperative Marketing Grant
