1. Give extensive answers to the discussion questions:

 What is a consumer cooperative?

 What elements do all cooperatives contain?

 What are the main types of consumer cooperatives?

 What principles must all cooperatives follow?

2. Explain the difference between consumer cooperatives and other forms of business.

WHAT IS A CONSUMER COOPERATIVE?

Cooperatives are member-owned, member-governed businesses that operate for the benefit of their members according to common principles agreed upon by the international cooperative community. In cooperatives, members pool resources to bring about economic results that are unobtainable by one person alone. In short a cooperative is a business voluntarily owned by the people who use it, and operated for the benefit of its members.

All cooperatives contain the following elements:

 cooperatives are owned and governed by their primary users (the member-owners);

 cooperatives are democratically governed (one member, one vote);

 cooperatives are businesses, not clubs or associations;

 cooperatives adhere to internationally recognized principles.

There are many types of consumer cooperatives: health care, insurance, and housing cooperatives as well as credit unions, agricultural and utility cooperatives.

Consumer cooperatives are very different from privately owned “discount clubs,” which charge annual fees in exchange for a discount on purchases. The “club” is not owned or governed by the “members” and the profits of the business go to the investors, not to members. In a cooperative the members own the business and share the profits.

The major difference between consumer cooperatives and other forms of business is that the purpose of a consumer cooperative association is to provide quality goods and services at the lowest cost to the consumer (owners) rather than to sell goods and services at the highest price above cost that the consumer is willing to pay. The difference is that where a for-profit enterprise will treat the difference between cost (including labor, etc.) and selling price as financial gain for investors, the consumer owned enterprise may retain this to accumulate capital in common ownership, distribute it to meet the consumer’s social objectives, or refund this sum to the consumer (owner) as an over-payment.

The specific goals of a cooperative are determined by its members, but all cooperatives adhere to the principles of cooperation that are based on practices of the first successful consumer cooperative in Rockdale, England (founded in 1844).

Ex. 15.

1. Look through the text below and say what principles of cooperatives are described in it.

2. Reread the text more carefully and:

· give the definition of a cooperative;

· explain what the principle of member economic participation means;

· say what values cooperatives are based on.

THE MAIN PRINCIPLES OF COOPERATIVES

A cooperative is an autonomous association of persons united voluntarily to meet their common economic, social and cultural needs and aspirations through a jointly-owned and democratically-controlled enterprise.

Cooperatives are based on the values of self-help, self-responsibility, democracy, equality, equity and solidarity. Cooperative members believe in the ethical values of honesty, openness, social responsibility and caring for others.

The cooperative principles are guidelines by which cooperatives put their values into practice.

First Principle: Voluntary and Open Membership.

Cooperatives are voluntary organizations, open to all persons able to use their services and willing to accept the responsibilities of membership, without gender, social, racial, political or religious discrimination.

Second Principle: Democratic Member Control.

Cooperatives are democratic organizations controlled by their members, who actively participate in setting their policies and making decisions. Men and women serving as elected representatives are accountable to the membership. In primary cooperatives members have equal rights (one member, one vote) and cooperatives at other levers are organized in a democratic manner.

Third Principle: Member Economic Participation.

Members contribute equitably to the capital of their cooperative. At least part of that capital is usually the common property of the cooperative. They usually receive limited compensation, if any, on capital subscribed as a condition of membership. Members allocate surpluses for any or all of the following purposes: developing the cooperative, possibly by setting up reserves, part of which at least would be indivisible; benefiting members in proportion to their transactions with the cooperative; and supporting other activities approved by the membership.

Fourth Principle: Autonomy and Independence.

Cooperatives are autonomous, self-help organizations controlled by their members. If they enter into agreements with other organizations, including governments, or raise capital from external sources, they do so on terms that ensure democratic control by their members and maintain their cooperative autonomy.

Fifth Principle: Education, Training and Information.

Cooperatives provide education and training for their members, elected representatives, managers and employees so they can contribute effectively to the development of their cooperatives. They inform the general public about the nature and benefits of cooperation.

Sixth Principle: Cooperation among Cooperatives.

Cooperatives serve their members most effectively and strengthen the cooperative movement by working together through local, national and international structures.

Seventh Principle: Concern for Community.

Cooperatives work for the sustainable development of their communities through policies accepted by their members.

Ex. 16. Read the text “The International Cooperative Alliance.”

1. Working in groups of two or three discuss the questions given below:

· What are the aims of the ICA?

· In what way does the ICA seek to achieve its aims?

· What types of organizations arc eligible for membership of the ICA?

2. Speak about the rights and obligations of the ICA members.

3. Describe the structure of the Board.

4. Describe the flag of the ICA and explain what each colour on it means.

5. Single out the main facts and present them in a short review. Use the following opening phrases:

· The text deals with the issue of … ;

· It is clear from the text that … ;

· The problem of … is of great importance … ;

· Great importance is also attached to … ;

· In this connection, I would like to say … ;

· One of the main points to be singled out is … .

THE INTERNATIONAL COOPERATIVE ALLIANCE

The International Cooperative Alliance is an independent, non-governmental association which unites, represents, and serves cooperatives worldwide. It was founded in London in 1895. English, French, German, Russian and Spanish shall be the official languages of the ICA. Its registered headquarters, since 1982, is Geneva, Switzerland.

The ICA, as a world-wide representative of cooperative organizations of all kinds, has the following objects: to promote the world cooperative movement, based upon mutual self-help and democracy; to promote and protect cooperative values and principles; to facilitate the development of economic and other mutually beneficial relations between its member organizations; to promote sustainable human development and to further the economic and social progress of people, thereby contributing to international peace and security.

The ICA seeks to obtain its objects by serving as a forum for exchange of experience and as a source of information on cooperative development, research and statistics; by providing technical assistance for cooperative development; by creating international specialized bodies in various sectors of cooperatives’ economic and social activities; by collaborating with United Nations organizations and with any other governmental and non-governmental international and national organizations which pursue aims of importance to cooperatives; by any other appropriate means.

Member organizations have the right to take part in formulating the ICA policies and work programs at the meetings of the ICA Authorities; to receive from the ICA all appropriate services, information and assistance; to participate in any Specialized Body of the ICA in accordance with its constitution; to appoint representatives to the ICA General and Regional Assemblies, to Congress and to nominate candidates for election to the Board.

Every member organization has the following obligations: to observe the aims and policy of the ICA; to supply the ICA with its annual report and a complimentary copy of all its relevant publications, as well as regularly inform the ICA on significant national cooperative developments, changes in its rules and bylaws, and all actions of the public authorities which affect the cooperative movement; to pay during the first three months of the calendar year its annual subscription; to take all such actions as shall be recommended by the Authorities of the ICA in support of its policy decisions.

Organizations which conform to the ICA Statement on the Cooperative Identity and observe the aims of ICA shall be eligible for membership of the ICA. The decision to admit to membership of the ICA lies with the Board. The Board shall consist of the President, four Vice-Presidents and 15 other members, elected by the General Assembly for a four-year term. The Board shall meet at least once a year. The member organizations from one country shall not have more than one representative on the Board, excluding the President of the ICA.

The President is the chief representative of the ICA and presides over the General Assembly and Board of the ICA. The President provides the policy and organizational leadership of the ICA in collaboration with the Director-General. The President meets once a year with the Audit and Control Committee to review the finances of the ICA. The President has the right to attend the meetings of the ICA Specialized Bodies.

The Vice-Presidents assist and support the President, and serve as the link between the Regional Assemblies and the Board.

The ICA leaders designed an international cooperatives symbol and a flag for the first “Cooperators’ Day.” After some experiments with different designs, the first rainbow flag was completed in 1924 and was adopted as an official symbol of the international cooperative movement in 1925.

In 2001 the International Cooperative Alliance decided to change its flag. During the 1980’s and 90’s a lot of “rainbow flags” became popular around the world.

The ICA decided to change its flag in order to avoid confusions between the Cooperative Flag and the other “Rainbow flags.” The new flag is white with an ICA logo inside it.

The ICA logo depicts doves of peace emerging from a rainbow which is the symbol of the Cooperative Movement and represents the unity of ICA’s diverse membership. Red stands for courage. Orange offers the vision of possibilities. Yellow represents the challenge that Green has kindled. Green represents growth, a challenge to cooperators to strive for growth of membership and understanding the aims and values of cooperation. Sky blue suggests far horizons, the need to provide education and help to unfortunate people and to strive towards global unity. Dark blue suggests pessimism, reminding us of less fortunate people in the world who are in need of the benefits from cooperation. Violet is the color of warmth, beauty and friendship.

Ex. 17. Look through the text “Consumer Cooperatives in the USA” and fulfill the following tasks:

1. Say in a few words what the text is about.

2. Say what you have learned from the text about consumer cooperatives in the USA.

3. Prepare a short talk on the role of consumer cooperatives in the American economy.

CONSUMER COOPERATIVES IN THE USA

Cooperatives are a vital element in the American economy. Consumer cooperatives are businesses which belong to the people who use them. America’s first successful cooperative was formed by Benjamin Franklin to provide insurance for homes. Today more than 100 million Americans participate in cooperatives.

Cooperatives are successful because they provide valuable services and save consumers’ money. Since the primary goal of cooperatives is to meet needs, not generate profits, they can serve their members at low cost.

Cooperatives often provide services to their communities that are not readily available from for-profit businesses. In other cases, cooperatives enhance the level of competition in the marketplace by providing consumers with an alternative source of products and services.

The central principle of consumer cooperatives is member control and participation. These member owners meet periodically to establish policy and elect directors. Directors, in turn, hire managers to administer the cooperative on a day-to-day basis.

Members control the business and provide capital for a strong and efficient operation. Members receive all net savings left after money is set aside for operations and improvements. Consumer cooperatives provide most important products or services a person might need.

The main types of consumer cooperatives are Credit Unions, Utility Cooperatives, Electric Cooperatives, Telephone Cooperatives, Housing Cooperatives, Food Cooperatives, Nursery (Child care) Cooperatives, Health Cooperatives.

Credit Unions. More than 9,000 credit unions supply financial services for over 86 million consumers nationwide. Using up-to-date technology, they offer a wide range of services at prices that are usually lower than those of for-profit institutions. For example, credit unions usually charge fewer and lower fees, and lower loan rates.

Since credit unions serve the broad middle class, they can meet the needs of an increasing number of underserved communities, including youth, seniors and minorities. As many banks abandon low-income communities, a growing number of credit unions are finding ways to serve low and moderate income households.

Utility cooperatives. Cooperatives provide electricity and telephone services to more than 30 million people. Cooperatives also offer television and telecommunications services at competitive prices.

Electric Cooperatives. Cooperatives were formed by citizens in communities where the investor-owned power companies would not provide service. Today, these cooperatives continue to find ways to provide better service at competitive prices.

Telephone Cooperatives. Cooperatives provide rural Americans with telecommunications services comparable to those available to urban residents and at reasonable cost. Through digital switching and transmission facilities they offer enhanced services, such as customer calling features, Internet access and other advanced services. Many cooperatives also provide cable TV, direct broadcast satellite TV and various forms of wireless communications services.

Housing Cooperatives. Over one million families are provided with affordable places to live through housing cooperatives. Owned and controlled by residents, housing cooperatives are an effective way to provide home ownership for low-income Americans.

Since families who own their own homes have a greater stake in their neighborhoods, private economic development organizations and local government are encouraging the development of housing cooperatives.

Food Cooperatives. Over three million Americans stretch their food dollars through membership in nearly 5,000 food cooperatives. Food cooperatives have been pioneers in unit pricing, nutritional labeling and the sale of bulk and natural foods. Price comparison surveys have found significant saving through food cooperatives.

Nursery School and Child Care Cooperatives. Nursery school and child care cooperatives provide quality care for half a million families. The cooperative structure gives parents a real voice in their child’s education.

In cooperative nursery schools and child care centers parents determine policy, participate as aides in the classroom and work in committees for such things as raising funds, purchasing supplies and maintaining equipment. This parental involvement cuts expenses so that the savings can by passed on to members.

Health Care Cooperatives. Cooperative health maintenance organizations (HMOs) provide comprehensive health care for more than one million Americans. Since they have been able to provide high quality care at the lowest cost these health care providers play an important role in American health care system.

Other Consumer Cooperatives. Cooperatives provide services such as mutual insurance, television satellites and funeral arrangements. Cooperatives on college campuses offer book, food and housing services for student members. Many of these and other cooperatives are locally owned and managed by members in communities across the country.

Ex. 18. Speak about consumer cooperatives in Belarus.