Co-operative Societies: Meaning, Types, Advantages And Disadvantages

Table Of Contents
1. Meaning of Co-operative Societies
2. Basic Features Or Principles Of Co-operative Societies
3. Types Of Co-operative Societies
4. Advantages And Disadvantages Of Co-operatives Societies.
Meaning Of Co-operative Societies
A co-operative societies is essentially a self help system in whose those concerned (producers or Consumers) attempt to improve their lot by engaging directly in a business activity.
Basic Features Or Principles Of Co-operative Societies
1. A co-operative society is owned by the customers who render services to themselves.
2. It is run by a democratically elected group of members. Each member has only one role irrespective of the number of shares he has. There is a limit to the number of shares on individual member has.
3. A fixed rate of interest is paid on members capital but the profit made belongs to all members.
4. Profit or the trading surplus is shared on the basic of member direct participation of patronage if the business is not on the basic of capital contributed. For example, in consumer co-operatives, profits are distributed among the members in the ration not their purchases from the shops, in a producer co-operative profit are divide in the ration of each individual farmers and production sold though the co-operative.
Types Of Co-operative Societies
In Nigeria, we have the following types of co-operative societies:
1. Consumer Co-operative Society.
2. Producer co-operative Society.
3. Credit And Thrift Co-operative Society.
Consumer Co-operative Society
These operate on the basic of consumer control. Consumer co-operatives have not been very successful because of low capital, competition from low-cost trades and poor management.
Producer Co-operatives Societies
They are formed by small producers who pull their resources together for production or marketing their product. The most successful type has been the farmers co-operative societies. They farmers operate joint co-operative farms. They contribute, money to buy equipment and other inputs and market their product together. They are able to obtain farm credit fertilizers and other form research and extension services. They are also able to negotiate better prices for their product and that of they operate individually.
Credit And Thrift Co-operative Societies
These are formed mainly by low income earners. They contribute money periodically weekly or monthly to a common pool from which they can also obtain loans to finance their businesses. They may also decide to contribute for members on a rotational basis. These societies are a cheap source of loan of the members and have helped small business men who are unable to get bank loans.
READ ALSO: The Responsibilities Of A Consumer (Consumer Responsibilities)
Advantages Of Co-operative Society
1. They are run on a democratic basic i.e the members have equal say on the affairs of the business.
2. By cutting off the service of the middle men, they obtain the commodities cheaper. This reduces their cost of living.
3. The credit and thrift societies encourage the habit of saving which promotes production through cheap loans.
4. Members have a high sense of commitment to the success of the business since they save in the trading or profit surplus.
5. The farmers co-operative society helps to develop skill of individuals. Farmers obtain loans and government assistance more easily.
Disadvantage Of Co-operative Society
1. Co-operative face competition from ranger and better organized business.
2. Capital is limited as most of the members are low income earner who have low to invest.
3. They elected management committee members usually have their own personal business. They therefore give only partial attention to the co-operative. The may not be competent business managers.
4. The co-operative society is democratically controlled. In practice a few members in the management may hacks the business and exercise undue influence.
5. The level of corruption is high in many co-operative societies some members that receive loans fail to pay back either due to members are illiterates or people with little education, especially in the rural place, this make communication and co-operation difficult.