The Cooperative Advantage

When times get tough, people start looking for security, and co-ops offer a place where they can find it. Following the Great Depression, credit unions — another type of cooperatively owned business — grew exponentially. Many financial experts believe that credit unions will see a similar surge in the near future. The same could be true of Farm Credit lending co-ops.

It is estimated that 70 out of every 100 adults in America are co-op customers, and there are 800 million co-op customers worldwide. U.S. co-ops include Fortune 500 businesses such as Land O'Lakes and Sunkist, as well as the Associated Press. According to a comprehensive, USDA-funded study by the University of Wisconsin, co-ops hold over $1 trillion in assets and have more than 125 million customers.

Here are a few reasons people find co-ops so comforting and appealing.

Co-ops represent "business with a face."

Because most co-ops are locally owned and operated, people know who they are doing business with. And, because revenues stay local, a co-op's income represents gains for the community. People are drawn to co-ops because they offer advantages, such as strength, good deals, self-reliance and community focus.

The highest priority of a co-op is to provide value for its stockholder-customers.

Co-ops are owned by the people who use the business, not by outside stockholders. Therefore, co-ops can focus on providing better service at a lower cost.

As owners, co-op customers have a right to have a say in the business's governance.

When a co-op's customers exercise this right, there is a culture of transparency, a far cry from the culture of many investor-owned corporations.

Many co-ops have remained stable despite other bank failures.

Farm Credit organizations and credit unions have remained stable in the current wave of bank failures. These co-ops have made less risky moves than commercial banks and were not involved in sub-prime lending. Because every customer is an equal owner, there is no incentive for anyone — president, CFO or CEO — to try to manipulate stock prices. No single person stands to gain more than another.

To find out more about cooperatives and to find co-ops in your community, visit www.go.coop.