agricultural processing cooperatives, fishery cooperative society, farmers consumer cooperative society, service cooperative society, e.t.c.
3.4 Advantages of Cooperative Societies
a. Encouragement of Savings: Cooperative thrift and credit societies encourage their members to save their money. This function is very important in Nigerian rural areas where commercial banks are very few. Left on their own, the individuals may not be able to save enough money for investment purposes.
b. Provision of Loans: Cooperatives can raise loans for agricultural practices or other forms of production easily and at low interest rates. Cooperatives can borrow money more easily in bank than individual farmers. This is because they are in a better position to offer more collateral than individual farmers.
c. Education and Training of Members: Cooperatives educate their members in the area of production, distribution, consumption and marketing of goods and services.
d. They are Democratic in Nature: All members of the cooperative society have equal right to vote and be voted for. They have equal right to say how the society should be organised.
In this way, cooperative society provides training in selfgovernmentand business management for its members.
e. They Prevent Price Fluctuation: The motive of forming cooperative society is not to make profit but to protect the welfare of their members. They buy most of their products in bulk and sell to members at low costs. This results in low prices of goods.
f. Avoidance of Cheating and Hoarding: Cooperative societies are known for open service.
The satisfaction of members is the ultimate goal of cooperatives. Since their members are their immediate customers, they can not afford to cheat their members.
Hoarding is also avoided by the society.
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g. Increased Standard of Living: Through cooperative societies, farmers have access to loans to increase their production capacity as well as to purchase essential items for the family.
Cooperatives also purchase some manufactured goods and distribute same to members. All these are aimed at improving the living conditions of members.
h. Promote Unity Among Members: Members of cooperatives are known to each other. They meet regularly and take decisions collectively. This personal interaction between members encourage inter- personal relationship among them.
3.5 Disadvantages of Cooperatives
i. Low Capital Base: This problem arises because of the poor background of most rural farmers who form the bulk of these societies. Another problem is the unwillingness of members to pay-up their subscriptions.
ii. Political Influence: Even though cooperatives are not supposed to be in politics. Many of the societies have found their ways into politics. Some were forced to declare for a particular
political party as against the wish of some members thereby causing conflict and rifts among them.
iii. Illiteracy of Members: Most members of cooperative societies in Nigeria are illiterates. The result is that most of them may be ignorant of the potential gains of cooperative. Apart from the gains, illiterate members may not understand the working and principles of these societies.
iv. Weak Management: Cooperative officers are drawn from among members who are mainly farmers; they may lack administrative and managerial competence to handle the business efficiently.
v. Possibility of Embezzlement: Reports of embezzlement of cooperative fund is very rampant.
Some cooperative officers connive to use societies‟ money for their selfish benefits.
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vi. High Rate of Loan Default: Occurrence of loan default is very common among cooperative members. Loan default occurs within the societies as well as the loan guaranteed by the societies from the banks. Most loans granted through cooperative societies are usually without much collateral security. Most members usually enjoy the loan but only few pay back the money in full.
vii. Low Membership: Unlike Limited Liability Company, there is still low membership of cooperatives in Nigeria. Even though there is no limit to the number of shareholders, only few people join cooperative business. This problem is probably due to lack of proper understanding of the principles and ideals of cooperatives.
SELF ASSESSMENT EXERCISE
1. Distinguish cooperatives from other forms of business organisation.
2. Describe the steps you would take to form a multi-purpose agricultural cooperative society.
4.0 CONCLUSION
In this unit, we have discussed the meaning of cooperative society. We have also discussed the characteristics of cooperatives that distinguish it from other forms of business. The various types of cooperative societies available were also discussed. The benefits derived from joining
cooperatives were highlighted. Finally, the problems associated with cooperative movements were equally highlighted and discussed.
5.0 SUMMARY
In this unit, we have learnt that:
· Cooperatives are business organisations jointly organised, funded and operated for the mutual benefits of members.
· Some of the features of cooperatives that distinguish it from other forms of business
organisations include: open membership, democratic control, limited return on capital, dividend