Cooperatives – a crisis-proof concept

Every year, all over the world, the International Day of Cooperatives is celebrated on the first Saturday of July. The cooperative movement is extremely powerful.

Consequently, there are almost one billion cooperative members worldwide, regardless of political systems or economic and social regimes. If three additional persons (relatives or employees) are estimated to be associated with each cooperative member, the number of people linked to the movement comes to four billion, that is, half the population of the planet! This immense contingent of humanity subscribes to the cooperative movement's doctrine, based on universally recognised principles and values in defence of peace and democracy.

Cooperatives have weathered the severe global financial crisis better than conventional business enterprises, a situation previously experienced in the Asian crisis of the 1980s, when cooperative banks coped far better than private banks. Cooperative banks run fewer risks because the money belongs to the members, who are owners, customers and investors all in one.
The International Cooperative Alliance (ICA) – the umbrella organisation of the movement, headquartered in Geneva – commissioned the ILO to conduct a study on the ability of its affiliates to resist crises. The results were interesting:
Credit cooperatives are maintaining their financial solidity; agricultural cooperatives in many parts of the world are yielding positive results; consumer cooperatives are increasing their turnover and workers’ cooperatives continue to grow. People are increasingly opting for the cooperative business model to face the new economic realities.

Now, why are cooperatives capable of surviving and thriving in situations of crisis?

  • The cooperative business model focuses not on profit but on people, increasing their power in the marketplace.
  • Cooperatives are making a significant contribution to maintaining and generating new jobs and securing family income. They ensure that retail prices of consumer goods are maintained at reasonable levels and that food and services remain safe, reliable and of good quality.
  • Cooperative financial institutions have seen their capital grow because customers appreciate their safety and reliability. They continue to grant loans to individuals and small businesses, demonstrating that enterprises based on ethical values can be successful and contribute to economic recovery.
  • Experts are critical of the current economic model in which a significant number of people have lost confidence. They are aiming for the regulation of markets and especially of financial institutions, in order to secure more ethical and transparent operations. In pursuing this goal they are realising the potential cooperatives offer in the creation of a new economic system, the “green economy”.
  • Many governments are considering the cooperative system option in this new economic context, and also in the reorganisation of national social protection systems, as can be seen in the debate on the healthcare system in the United States and the proposed creation of healthcare cooperatives.

Cooperative leaders should lobby politicians to ensure that the specific nature of cooperatives is recognised, which is essentially anti-risk.
The movement is facing a unique opportunity. It must therefore rise to the challenge of showing that the cooperative business model is an excellent alternative for the future. Cooperatives are demonstrating that they are the engine, not only of economic development but also of economic and political democracy, and of social accountability. Cooperatives offer a fairer way of doing business, in which social and environmental values count.

Roberto Rodrigues is Coordinator of the Getulio Vargas Foundation Agribusiness Centre (FGV), President of the Superior Council of Agribusiness of São Paulo’s Federation of Industries (FIESP) and Chair of Rural Economics at the São Paulo State University (UNESP) in Jaboticabal.

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