Relevance of Economics to Co-operative Marketing

Abstract

A cooperative enterprise is an economic unit as such it should be run as a "firm". Managers who are interested with the responsibilities of running a cooperative business should not overlook economic laws when making decisions. In this article, I am trying to show how economics is relevant to cooperative marketing. Definition: a cooperative marketing society is a voluntary business organisation established by its member patrons to market farm products collectively for their direct benefit. It is governed according to democratic principles and the savings apportioned to the members on the basis of their patronage. Members as owners, operators, and contributors of the commodities handled, are the direct beneficiaries of savings that may accrue. No intermediary stands to profit (or loss) at the expense of the members. (Bakken and Schaars p. 3). This definition emphasises the commercial aspects of the organisation. This is to say the cooperative marketing society is a business institution and its economic motives and its character distinguishes it from such associations as trade unions, political parties and purely social institutions; thus, it should be organised to conduct business according to sound business principles. A cooperative marketing society is different from governmental and private enterprise. Governmental and private commercial enterprise, their methods of conducting marketing operations may be radically different or vary only slightly from those of private tradesmen. What happens with a cooperative society is that instead of selling in-dependently and in competition with one another, farmers through their cooperative society consolidate their selling force, improve their bargaining position and pool their resources. Under this plan they no longer sell to a private middleman, but rather through their cooperative. However, an ideal co-operative must adhere to the voluntary aspects of the membership which are very important. Member's wishes and property rights must be recognised. No one should be forced to join cooperative. (Readers of this paper must bear with us in that this paper is general and it does not deal with specifics). This being the case a cooperative should stand or fall on its own merits. In this paper, definition of what a cooperative is will not be given to avoid starting a debate which is quite unnecessary because cooperative experts do not agree on a single definition of a cooperative; thus, it is better to stick to the relevant issues of the paper