What is a Co-operative?

This guide explains the basic principles of co-operative business, including its advantages, types of co-operatives and a history of co-ops in Wales.

See this page in: Cymraeg

A guide to co-operative businesses

You can find co-operative businesses all over the world, operating in many industries. From housing to health care, retail to restaurants, co-ops come in all shapes and sizes. From the outside, a co-operative business looks like any other. It buys and sells products and services and strives to be successful. The difference is that a co-operative business is owned and run by its members.

Members of a co-operative business can come from a variety of sources and could be staff, customers, business owners, service users, residents, etc., depending on the nature of the business. Regardless of where the members come from, the amount of capital they’ve invested in the business or their time at the company, each member of a co-operative has one vote and one vote only. The ‘one member, one vote’ rule means that a co-operative business is democratically managed by its members, rather than being steered by external shareholders.

Co-ops are people-led businesses, driven by the values and aspirations of their members and guided by an internationally recognised set of seven ‘Co-operative Principles’. These principles promote fairness and equality, encourage collaboration between both members and other co-operatives and embed a concern for community. Because of these things, the economic and social benefits that are created by a co-operative business tend to stay within the community in which it is based, creating quality employment, stimulating the local economy and providing valued services.

The co-operative advantage – benefits of a co-operative business

Whether people are frustrated with their working conditions, want to strengthen their market position, or wish to save local facilities from closing, co-operative businesses can offer a solution by allowing people of a similar mind-set to work together to achieve their goals.

A great benefit of co-operative businesses is that they have a base of dedicated stakeholders. Whether they are employees or customers, co-op members are invested in the business and want it to succeed. If the co-op is owned by its staff, it tends to be more productive, as the workforce is both financially and emotionally invested.

According to a YouGov survey commissioned by the Employee Ownership Association, the public think employee-owned businesses are more trustworthy than non-employee owned businesses. At a time where public trust in corporations is falling, the public, and in particular young consumers, are turning to ethical, value led businesses for their goods and services – and they are willing to pay more for goods that they know are sustainable.

Young adults want to work for employers who care about more than just profits. According to the 2017 Deloitte Millennial Survey, young people want to make a positive difference to the world and feel like the workplace is the best place for them to achieve this. So by having a clear set of ethical values and by offering the opportunity to contribute to the direction of the company, co-operative businesses can attract passionate young talent with an energy for positive social change.

By working together and sharing resources, co-operative businesses can not only save money, but also compete with bigger companies which have larger budgets. By pooling skills and resources, a co-operative could scale up production, increase their marketing impact, and become a stronger competitor in their given arena.

The seven international co-operative principles

Co-operative businesses around the world are guided by the same set of seven core principles which are adopted by the International Co-operative Alliance. The principles trace back to the first modern co-operative, founded in Rochdale in 1844, but maintain the same core messages at their heart to this day.

Membership in a co-operative business is open to all who are willing to accept the responsibilities that come with it. Co-op membership is voluntary and does not discriminate.

Co-operative businesses are run democratically and operate on a ‘one member, one vote’ system.

Members contribute fairly to the capital of their co-operative and control that capital democratically. At least part of the money is the ‘common property’ of the co-operative business and members decide how the rest is used, whether that is for development, reserves or supporting a cause.

Co-operative businesses are autonomous, self-help organisations that are controlled by their members. If a co-op enters into agreements with other organisations, they must do so on terms that let them maintain the democratic control of their members.

Co-operatives provide education and training for their members, their elected representatives, managers and employees, so that they can contribute effectively to the development of their co-operatives. Co-operatives businesses try to inform the general public about the nature and benefits of co-operation and encourage others to adopt the principles.

By working with other co-operatives, learning together and sharing best practice, co-operatives can form positive links which can strengthen the co-op movement. This can happen on local, national, regional and international levels.

Co-operative businesses strive to sustainably develop their communities. Co-op members will put policies and processes into place that aim to create a permanent positive impact in their communities.

At the Wales Co-operative Centre we have a set of six values that guide our work. These principles are inspired by the international co-operative principles but are written in a way which speaks our language.

Types of co-operative business

There are many different types of co-operative business, but the basic models are as follows:

A co-operative business owned and run by its workers. For example Dulas, a renewable energy technology company from Machynlleth.

A co-operative business owned and run by its customers. For example the Co-op supermarket, the nationwide supermarket chain.

A co-operative business owned and run by other businesses which use the services of the co-operative. For example Calon Wen, a group of 20 family run farms across Wales that manufacture dairy products.

A co-operative that is owned and run by its tenants. For example Taf Fechan, a housing co-operative partnered with Merthyr Valleys Homes.

A mixture of any or all of the above. For example Cartrefi Cymru, a not for profit which supports people in Wales with learning disabilities.

A brief history of co-operative business in Wales

The history of co-operative businesses in Wales is rich and reaches back to the 1800s. Wales is in fact, the birth place of Robert Owen, considered by many to be the father of the modern co-operative movement.

Born in Newtown in 1771, Owen’s ambition to improve the health, education, well-being and rights of the working class took him all over the world. In 1799 he bought a cotton mill in New Lanark, Scotland. Under his management, the mill and village became a model environment. He improved the factory and village, built a school and provided a shop where quality goods could be bought at a fair price. Owen campaigned and lectured throughout his life. In 1812-13 he wrote “A New View of Society” which explained his vision for a society based on co-operation and profit sharing.

Owen’s work influenced many people including a group of followers in Rochdale. The group, which most people agree to be the first co-operative society, consisted of 28 weavers and skilled cotton mill workers. As the mechanisation of the industrial revolution was forcing more and more skilled workers into poverty, these tradesmen decided to band together to open their own store selling food items they could not otherwise afford. With lessons from prior failed attempts at co-operation in mind, they designed the now famous Rochdale Principles, and over a period of four months they struggled to pool £1 per person for a total of 28 pounds of capital. On 21 December 1844, they opened their store with a very meagre selection of butter, sugar, flour, oatmeal and a few candles. Within three months, they expanded their selection to include tea and tobacco, and they were soon known for providing high quality, unadulterated goods. Ten years later, the British co-operative movement had grown to nearly 1,000 co-operatives.

The first co-operative businesses founded in Wales were set up as early as the 1840s, but the Cwmbach Co-operative, guided by the co-operative principles set by the Rochdale pioneers, was the first co-operative society in Wales that was successful in the long term.

Based in Aberdare, it lasted for more than 80 years and was a retail co-op that provided local people with quality goods and services for affordable prices.

Many similar businesses formed over the years, mainly basing themselves around the needs of individual villages and by the 1950s, the co-operative movement in Wales had over 333,000 members and around 80 independent societies, most of which were retail co-operatives.

These societies gave people more control over their finances; without local banks to keep their money in, people invested in the co-ops, which in turn invested in expanding their range of services to meet the needs of their communities.

The co-operative retail movement in Wales took a downturn in the 1980s due to competition from national chains and the economic decline that occurred as a result of the miner’s strike and loss of large industry. By the late 1980s most of the co-op societies had become part of the national Co-operative Retail Society (The Co-op), and the growth of the independent retail co-operative sector had come to an end.

However, the co-operative spirit remains strong in Wales and recent years have seen a resurgence of businesses adopting the co-operative model. As of 2018 there were 478 co-operative businesses in Wales, with around 689,000 people being members of a co-operative. The movement in Wales is estimated to produce £1.1billion in turnover.

The Wales Co-operative Centre was established in 1982 by the Wales TUC and has been providing business support to co-operatives in Wales ever since.

Are you thinking of starting a co-operative, or need help growing your current co-op business? Get in touch and see what support we can offer you.

info@wales.coop

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