Using Cooperatives to Enhance Competitive Advantage

By Steven Richards

A cooperative is owned and controlled by its members. It can therefore negotiate on behalf of its members to increase competitive advantage by achieving efficient operational scale, negotiating better product and input prices, reducing production risk, obtaining better insurance, engaging the next generation, and handling the administrative red tape burden for its members. 

Marketing 

One of the most common uses of a cooperative is to aggregate farm products and collectively market these products on an efficient scale.  Many markets, such as wholesale and institutional markets, are not accessible to smaller, individual growers.  Value-added processing is another layer of risk management that newer, next-generation cooperatives employ to access markets and increase economic value to their members.  PYCO Industries is a good example: a cottonseed oil mill with over 50 cotton gin members.