Cooperative is a form of association between individuals who aim at a common activity, and that is worked in a way to generate equal benefits to all members, the so-called cooperative members.
The basis of the functioning of a cooperative is mutual action, in cooperation. The investment for all parties is the same and the return as well.
One of the most basic activities in a cooperative is the purchase of supplies for small producers. For example, a group of several producers together can negotiate better prices with suppliers than alone, when buying in small quantities.
Among the most common cooperatives are the agricultural cooperatives, organizations of independent rural workers who, through the cooperative, sell their production. And also the Credit cooperative, a kind of bank or finance company, but whose objective is not profit for the company's investors, but rather the generation of income among all members.
A cooperative in Brazil must bring together a social or economic group that has the same purpose and interests, in the form of a joint action that must be voluntary, and the results must be common to all.
Cooperativism in Brazil is regulated by Law 5.764 of December 16, 1971.
Types of Cooperatives
Cooperatives can have different types of activities, depending on their purpose. The most common in Brazil are as follows:
Credit Cooperatives
Credit unions work as a kind of financial institution, but in which there is no account holder, but a cooperative member. They also act as a way to finance production, whether rural producers or urban businesses. Cooperative members can borrow at lower rates than banks offer, and also make investments that will return in value due to the cooperative's earnings.
A credit union is not a bank and cannot be for profit. Any and all profits must be analyzed at a meeting with all members, where it is decided what to do with the amounts left over from the movements. All credit union operations are monitored by the Central Bank.
Labor Cooperatives
In the work cooperative, individuals meet under cooperatives in order to achieve better general working conditions, qualification or higher income. Like for example taxi drivers. Work cooperatives can either be production, when the products of each worker, or service, when the cooperative members offer services to be performed and not products to be sold.
Production Cooperatives
Production cooperatives are those generally associated with the primary sector of the economy, an example being the agricultural cooperatives. These organizations process and sell grain production, for example, to small producers.
Consumer Cooperatives
Consumer cooperatives are the oldest type of cooperatives, and work through the contribution of members to the purchase of consumer items - originally for food. Purchases are made in large quantities, directly from the producers, and then transferred to the cooperative, which offers members at better prices than the traditional market.
Housing Cooperatives
Housing cooperatives can be used to build houses for members, on a joint effort basis, formed by professionals from the civil construction with the objective of building houses for themselves and/or others, and also the cooperatives that finance the houses for the cooperated.