Agri Co-op: Definition?

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An agricultural cooperative is a group of farmers who pool resources to buy seeds, sell grain, store grain, and market their products. They can also offer petrol and diesel at better prices and help with branding and marketing efforts.

In general terms, a cooperative is a group of individuals who have come together to pool resources for a specific purpose. An agricultural cooperative, or farmers’ cooperative, does what all other cooperatives do, but it does it in a way specific to farmers. This may include gathering resources to buy seeds, sell grain, store grain, or even help with marketing efforts. Often, an agricultural cooperative is involved in all of these matters.

To understand the utility of an agricultural cooperative, consider grain elevators. These are often used to store or dry grain, but most small farmers don’t have the resources or time to purchase and build one of these structures themselves. Therefore, they belong to an agricultural cooperative. The money they put up with their membership, which is used to build an elevator and store grain for all members.

When it comes time to buy seed, farmers can also use a local agricultural cooperative. In this case, the cooperative acts as a discount dealer. He buys seeds in bulk and then sells them to farmers as needed. The cooperative is a non-profit organization, and therefore does not need to charge more than what the seed costs, along with a small fee for administrative fees and facility maintenance.

When it comes time to sell the product that the seed produces, agricultural cooperatives can also be a great asset. The site can serve as a central location for farmers to deliver their grains and beans. Once at the agricultural cooperative headquarters, the organization will distribute the grain and beans on the basis of contracts already purchased on the commodity market. Distribution can be done by truck, rail or barge, depending on location.

While these essential agricultural services are important, agricultural cooperatives often do even more for their members. For example, some cooperatives offer petrol and diesel where farmers can go to not only fill up their farm machinery, but also their personal vehicles. Due to the co-op being a non-profit organization, it can sometimes offer better deals than farmers might find at a traditional gas station.

Marketing can also be done by an agricultural cooperative. Members can sell through a cooperatively owned brand and thereby gain greater product recognition. While most such efforts are local, sometimes such efforts are so successful that they result in product brands that receive national recognition and that many consumers mistakenly assume belong to large corporations.

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