For many farmers, the only dependable way of underpinning and building the value of their basic business – the family farm – is through ownership and control of the inputs, supply, processing and marketing of their farm products through a co-operative. This has been important for producers, particularly wholesale traders in perishable commodities such as fruit, fish and fresh milk or where prices or markets are volatile. The co-operative helps maintain farm profitability, adjusts production to demand, provides healthy competition for processors and helps farmers ride out adverse trading conditions in commodity markets.
By eliminating intermediaries from the economic cycle and providing a dependable vehicle for the distribution of produce to markets, co-operatives have given farmers a greater sense of security and confidence, especially in periods of gluts, economic downturn or drought and flood.
Co-ops also help farmers exercise quality control and to achieve crop variety and herd improvements, thereby enhancing productivity. Processing and manufacturing co-operatives enable farmers to add value to commodities through the supply chain, and to keep the benefits within the farming community.
Supply co-operatives help protect individual farmers against market forces as a ‘price-taker’. They positively influence post farm-gate prices by encouraging open markets so that other traders and processors compete for supplies and cannot set prices independently. In this way, co-ops deliver effective competition and keep markets functioning fairly.
Co-operatives provide a mechanism for small producers to hedge against risks associated with farming such as crop failure due to circumstances such as drought, fires and floods.