Types of Cooperative Societies

A cooperative society is an association of persons who join together and work voluntarily. The main motive here is to undertake the activities that promote the welfare of the members. These members are especially working to protect and promote their economic, cultural, social interests. These cooperative societies are set up to work on their mutual help and welfare values. 

The cooperative societies must be registered and run under the provisions of the Cooperative Societies Act, 1912. In the case of a cooperative society, the registration process is compulsory and requires at least ten members. There are many different types of cooperative societies.

Types of Cooperative Societies

There are different types of cooperative societies. Given below are some of them based on their nature of work and functions.

Consumers Cooperative Societies

The main objective of the consumer’s cooperative societies is to protect the interests of the consumers. Such cooperative societies are formed to make good quality products available to the consumers at reasonable prices. These societies eliminate the middleman from the entire process. They directly buy the products in bulk from the wholesalers and sell them at affordable prices.

If such cooperative societies earn any profit in the ongoing process, it is distributed among all the members in dividends. It is distributed based on the capital contribution of each member or purchases made by the members individually.

Producers Cooperative Societies

The producer’s cooperative societies are formed to protect the economic interests of small-scale producers. Such small producers can reach out to producer’s cooperative societies to compete with large-scale producers.

In this case, the society members directly obtain raw materials, tools, and required processing units and are supplied to small producers. Hence, the final product formed is either sold to the society members or sold to the outsiders without the middleman.

Profits earned by the society members are distributed based on the products purchased or sold by the society members.

Marketing Cooperative Societies

Marketing cooperative societies are somewhat similar to the producer’s cooperative societies. In these types of cooperative societies, the main objective is to support small producers to survive the cut-throat competition with the large producers.

The society aims at securing a favourable and sustainable market for the small producers by performing several operations such as transportation, packaging, warehousing, etc. The members’ profit depends on their contribution to value the output.

Farmers Cooperative Societies

As the name suggests, farmer’s cooperative societies are formed to protect the economic and physical interests of the farmers. Here, the ultimate goal is to increase farming productivity.

Farmer’s cooperative societies provide the farmers with all the necessary fertilisers, seeds, and tools to maximise returns. It also helps in the reduction of fragmented landholdings.

Credit Cooperative Societies

Credit cooperative societies are formed to provide their members with reasonable credit facilities. The main motive of these societies is to protect the interests of the people who get exploited by the high rate loan lenders.

Credit cooperative societies provide reasonable loan facilities to financial help seekers. The loans are provided by the collected capital and deposit amount by all the members. These societies avoid the exploitation of people by providing loans at low-interest rates.

Cooperative Housing Society

Cooperative housing societies are formed to help low-income people build up their houses at a reasonable price. The main motive is to provide affordable housing facilities to such low-income people.

These societies build houses for low to middle-income groups and give them an option to pay back the amount in several instalments. They also provide flats or plots to the people to build up their house with their own choices.

Merits of Cooperative Societies

• The cooperative societies have equal voting power to all their members irrespective of their capital contribution.

• The liability of the members is limited to the amount contributed in the capital.

• The cooperative societies enjoy the status of perpetual succession.

• As the producers or sellers are members of society, there is a very low risk of bad debts.

• Cooperative societies get enough support from the government through subsidies, low taxes, and interest rates.

• Cooperative societies are easy to perform and do not involve many processes.

Demerits of Cooperative Societies

• One of the biggest demerits of cooperative societies is it has limited resources.

• As there are limited resources (money), there is a lack of quality managers.

• Because all the members of the cooperative societies work together, they lack secrecy of operations.

• There is a lot of Government interference in cooperative societies.

• As there are many members and a lack of talent, conflicts may arise between the members because of differences in opinions.

Conclusion

Cooperative societies are formed to protect the interest of the common people. These societies prevent the exploitation of such low to middle-income groups in all aspects. Mainly, there are six types of cooperative societies based on their nature of operations and functions. These include consumer’s cooperative societies, producer’s cooperative societies, marketing cooperative societies, farmer’s cooperative societies, credit cooperative societies, and cooperative housing societies. All these types of cooperative societies help the common people by providing them with the required facilities at a reasonable price.

Other than these, some more types of cooperative societies support backward class people, women, workers, etc. In short, cooperative societies can be called jointly owned enterprises by the members who work voluntarily to protect the people’s economic, social, and cultural interests.