Monday, August 31, 2009

7 Types & 20 Benefits of Cooperative Societies

1. Producer Cooperative Societies

These are formed to eliminate the middlemen and capitalist groups from the industrial production. Its main purpose is to produce goods for the requirements of its members. Surplus productions are also supplied to out riders in the open market at profit. All the necessary activities as production, management and marketing are performed by the members themselves. Its members get dividend on the basis of the capital invested by them.


  • (a) To purchase the raw materials and other factors at most economical prices.
  • (b) To produce the goods at the most economical level
  • (c) To supervise the production most efficiently and effectively. 
  • (d) To dispose of the surplus production to non members at maximum prices.
  • (e) To eliminate the middlemen and capitalists. 
  • (f) To remove the worker's grievances in respect of working conditions, wages etc. 
  • (g) To arrange for the democratic control of the industrial unit.

2. Consumer Cooperative Societies

The society is the voluntary association of ordinary people formed with the object of obtaining daily requirements of the members. It directly purchases the goods at large scale from the producer or wholesalers at whole sale price. It thus eliminates capitalists, retailers and other middlemen from the channel of distribution and members are in a position to make their purchase at cheater rate. Anyone can become member by purchasing one share of the society. Sometimes goods are also supplied to non-members but they do not share in the profit of the society. Profit earned by the store are distributed among the members according to the value of the purchases conducted by the manager who is elected by the members. Generally its two types are popular in the world.

(a) Retail cooperative store.
(b) Wholesale cooperative store.

  • To eliminate the retailers, capitalists and wholesalers.
  • To promote the welfare of the members. 
  • To supply the daily necessities of life to its members at market price
  • To increase the purchasing power an standard of living of the members of the society. 

3. Marketing Cooperative Society

It is the voluntary association of producers formed for the object of arranging the disposal of their output. It pools together the output of the individual members and arranges to supply the product at highest possible price. The profit of the sale of the ~ products is distributed among the contributing producers according to their individual contribution to the pool. This kind of society is particularly useful for the small producers and agriculturists. It can be formed in two organization according to the local condition of the country i.e.

(a) Single purpose society
(b) Multi purposes society


  • 1. To eliminate the middlemen who are liable of the high cost of marketing.
  • 2. To pool together the output of the individual members. 
  • 3. To grade and process of the pooling products of the members.
  • 4. To dispose of the product at the maximum price.
  • 5. To adjust supply to demand. 
  • 6. To provide storage facilities to its members. 
  • 7. To procure the information relating to market for the member's product.
  • 8. To provide the financial facilities to its members.

4. Insurance Cooperative Society

This type of cooperative society is formed for the objects of providing group insurance facilities to its members. It makes the contract with sound insurance company on collective terms and conditions and thus pay lower premium rate to insurance company as compared with ordinary policy holders. These are other two forms of cooperative Insurance i.e.

1. Mutual office
2. Self concern

Mutual Office

In the Mutual office, the policy holders are the owners and the profit of the insurance company is utilized in the following ways:
  • (a) To strengthen the financial position of the company.
  • (b) To decrease true amount of premium.
  • (c) To distribute bonus to its members.

Self concern

Cooperative society is organized to provide insurance facilities like the private insurance company and issued policy to its members for reasonable amount.


  • 1. To provide insurance facilities to its members.
  • 2. To charge the low rate of premium. 
  • 3. To promote the welfare of the members. 
  • 4. To encourage the habit of thrift and investment.

5. Housing Cooperative society

It is an association of middle and low income groups of people. Generally it is formed in urban areas. The main purpose of this form of society is to protect its members against exploitation by landlords. It not only grants financial assistance to its members but also achieve the economics of purchase of building material in bulk. In order to become a member of the society one must buy at least one share of the society. The liability of the member is limited to his capital contributed. It is also called "Building Society" and may be divided into three types i.e.

(1) Housing Building Society
(2) Land Society
(3) Finance Society


  • 1. To receive deposits from its members. 
  • 2. To make loans to its members for the construction of house at low rate of interest. 
  • 3. To render technical services for its members. 
  • 4. To purchase building materials at economical rate. 
  • 5. To perform the welfare activities as water supply, roads, sewerage, electricity etc.

6. Cooperative Farming Society

This form of Society is formed with the object of obtaining the benefits of large scale farming and maximizing agricultural products. It is basically agricultural. cooperative which is confined to agricultural countries. Its members generally relate to the former including those owing land. The cooperative forming are of the following types:
  • 1. Cooperative collective farming Society.
  • 2. Cooperative joint farming society. 
  • 3. Cooperative better farming society.
  • 4. Cooperative tenant farming society.


  • (a) To consolidate holding.
  • (b) To introduce new technique of cultivation.
  • (c) To improve the irrigating system.
  • (d) To increase the area under agricultural operations.
  • (e) To make necessary steps for the improvements of the standard of living of the farmers. 
  • (f) To increase the production per acre. 
  • (g) To provide seeds manures and implements to its members.
  • (h) To dispose of agricultural output.

7. Credit Cooperative Society

Credit cooperative society is the voluntary association of .the financially weak persons organized with the object of providing short term financial requirements to them. This society performs important role in the rural areas where the dishonest money lenders have been exploiting simple villagers by charging high rate of interest.

The Funds of the society consist of (a) Membership fees, (b) Dispose of shares (c) Deposits from members and non-members (d) Loan from govt. and semi govt.

The liability of members is unlimited. This assists the society in raising funds and ensures that every member will take keen interest in the activities of the society. The society prefers the poorer members in granting loan and charges low rate of interest from them. Generally the society advances the amount for productive purposes but some loans are also given to members for unproductive purposes. Credit cooperative society may be divided into two types:

(1) Agricultural Credit Society
(2) Non-agricultural credit Society


  • (a) To get rid of the pressure of money lenders. 
  • (b) To provide the financial facilities for short term to its members.
  • (c) To keep the minimum rate of interest on loan. 
  • (d) To develop the habit of thrift and saving among the members.
  • (f) To encourage the habit of mutual aid. 

The advantageous factors of the cooperative type of organization are given below

1. Elimination of Middlemen

The management of the consumer cooperative society directly purchases the finished goods from the manufacturer and producer. Producer Cooperative society procures the raw material from the producer. Thus they try to free themselves from the grip of the middlemen and make the goods available to consumers at lower prices.

2. Saving in Management Expenses 

Cooperative society enjoys some economics in the field of management due to voluntary services performed by the members themselves. Thus, it is possible to minimize the expenses of management and supervision.

3. Minimum Stock 

Society Purchases the same goods which are actually demanded by its members. Thus there is need to have minimum stock at hand due to constant and regular demands.

4. Economy in Distribution and Production Expenditure 

Society is saved from any distribution and production expenses. It has got its regular customers, therefore society has not to face any trouble for marketing its goods. Thus it has not to incur any expenditure for publicity and advertisement, I which is a big item in the budget of the capitalist producer.

5. Integration 

Under this type of organization, complete integration between producers, wholesalers and retailers is always possible. This is thus a clear advantage over capitalist economy.

6. Employment Opportunities 

Thousands of people are engaged in different types of cooperative small scale and cottage industries. Most of them are not familiar with writing a perfect job application, Thus it removes the problem of jobless persons in developing countries.

7. Equal Distribution of Wealth 

With the growth of the cooperative society wealth has not been concentrated into a few hands. Thus this factor tends to equalize the distribution of wealth in the society.

8. Educative and Social Value 

Spirit of sacrifice, sense of mutual help and self help are developed among the members. They are able to adopt the principles of honesty and unity. It thus creates the economic and social aspects of human life among the members.

9. Financial services 

It renders financial services for its members for the purchase of seeds, manures, implements and house etc. It thus removes the financial problems of the member of the society.

10. Taxes Facilities 

Government provides certain concessions to this form of organization i.e. exemption from stamp duty, super tax, income tax and business registration fees.

11. Improvement of Standard of Living 

Its main aim is to bring about greater benefit for its members. It supplied daily necessities of life to its members at the lowest prices. Thus it is helpful for the improvement and progress of standard of living.

12. Equal Status 

It is a democratic organization where at members enjoy equal voice in the management of the cooperative business.

13. Extensive Market 

As the goods are supplied to its members at cheaper rates, the general public is attracted to become the shareholders of the society.

14. Rural Development 

Cooperative organization renders public utility services such as village communications, sanitation, water supply, drainage, education and undertakes the supply of various implements to the farmers.

15. Encouragement of habit of Saving 

Cooperative society supply the goods to its members at cheaper prices. It thus creates the attraction in the general public for becoming shareholders of the society. This tendency encourages the habit of saving and investment.

16. Miscellaneous Advantages 

  • It helps to eliminate the evils of capitalism from the society. 
  • It increase the business and economic activities in the country. 
  • It promotes the welfare of the community.


  1. This comment has been removed by the author.

  2. Thank you so much ! This is very useful article ! It helps my assessment a lot!


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