There are four main types of co-operative:
Often in agricultural markets, producers join together to share resources, expertise, and marketing. Adverts on the television for milk, beef or lamb are funded by these producer co-operatives - the farmers who produce that particular product will all contribute towards the marketing campaign in the hope of increasing their sales. Farmers may also decide that it is more economical to share expensive machinery that they would only use once or twice a year, such as combine harvesters.
In a worker co-operative the workers will own the factory and machines themselves. Some co-operatives were set up when workers bought out a factory that would have otherwise closed down. All of the members put in an equal amount of money, have an equal say in the decisions and take an equal share of the profit. Workers thus have a strong incentive to make the factory a success as they will take a share of the profits. To help maximise the amount of profit the co-operative makes, the workers will tend to take on tasks in which they have expertise.
The consumer co-operative movement in the UK was started by a group of people known as the Rochdale Pioneers. In 1844 a group of workers each contributed £1 and opened their own grocery shop in Rochdale, Lancashire. They called the co-operative the Rochdale Society of Equitable Pioneers. The aim of the business was to sell groceries to its members at fair prices. Any profits were divided up and given to its members.
The modern Co-op works on the same principles laid down by the Rochdale Pioneers, despite being a very large business with a turnover in excess of £8,000 million and 5,000 retail outlets nationwide.
A mutual society is similar to a co-operative in that it was set up for the benefit of its members. The most common mutual societies are insurance companies and building societies. As there are no shareholders to make a profit for, mutual societies can often offer lower insurance premiums and cheaper mortgages.