“Co-ops are the best kept secret,” according to the president and CEO of the National Cooperative Bank. “And we need to be more vocal.”
In an address to delegates at the Cooperative Impact Conference, Alexandria, Chuck Snyder made the call for co-ops to talk more about their impact in communities, as he unveiled the data behind the top 100 co-ops across the US.
The NCB research, released every October during National Co-op Month, shows the sector’s impact on the economy. In the latest analysis of financial reports (2016), the top 100 co-ops have revenues totalling $208bn, according to a report by the National Cooperative Bank (NCB).
During a discussion on co-op impact at the event, organised by sector body National Cooperative Business Association (NCBA CLUSA), Terry Barr, chair of the NCBA’s council of co-operative economists and senior director for knowledge exchange at CoBank, which serves US rural businesses, said it was important for co-ops to get their information out in an efficient manner.
Over 2,000 agricultural co-ops with 1.9 million members have a business volume of $212bn – and nine of the top 20 biggest co-ops by revenue are based in the sector.
Historically, agricultural co-ops have marketed up to one-third of total US agricultural commodities and marketed and accounted for more than a quarter of all input supplies purchased by farmers. The farm credit system also has assets totalling $320bn.
But, warned Mr Barr, co-ops struggle to explain their impact when they engage with Congress because there is a lack of data on rural areas, and statistics do not reflect the full impact of co-ops.
For instance, he said, farmer-owned co-ops in agriculture and finance generate jobs and infrastructure revenue throughout their supply chain.
He called for this to be addressed, adding: “It’s a big gap we would like to fill going forward.”
Non-financial benefit of co-ops
Jordan van Dijn, senior economist at the Credit Union National Association (CUNA) talked about at the non-financial benefits of credit unions, such as being member-owned, providing financial education for members and having fewer incentives to take risks. As a result of their democratic structure and focus on members’ needs, credit unions have lower delinquency rates and show more resilience during recessions, being able to maintain services while other banks tend to reduce lending and mortgages.
Mr Dijn described the direct, indirect and induced effects of credit unions on their members and their communities. They create jobs and enable members to use their earnings – which increases demand, household spending and investment in communities.
While the sector employs 300,000 people across the USA, a total of 883,000 jobs are indirectly related to the credit union economy, he said. Employees also earn a total revenue $93bn. Credit unions have an overall economic output of $192bn – greater than the GDP of 22 US states and 139 countries from across the world. Compared to other financial providers, credit unions offer lower interest rates on loans, fewer and lower fees, and higher saving yields.
Worker co-ops are also making a difference to people’s lives. Melissa Hoover, founding executive director of the Democracy at Work Institute, told delegates how worker co-ops generated 1,200 jobs in the low wage economy.
Her think-and-do-tank aims to expand worker co-operatives as a strategy to address economic and racial inequality. In New York, it is funding access to jobs through co-ops, with four other initiatives taking place outside the city. Two federal bills on employee ownership are also in the works. The institute is hoping to use the favourable momentum around worker co-ops and learn from examples in Mondragon or Emilia Romagna.
Russell Tucker, chief economist at the National Rural Electric Cooperative Association (NRECA), said electric co-ops looked at the importance of electricity for the rural areas served by electric co-ops.
“It’s important to have affordable electricity. Electric co-ops invest more than the rest of the industry,” he said.
In terms of consumer satisfaction, co-op utilities outperform the rest of the industry. They have a total revenue of $45bn, and distribute $5.5bn in wages, via 70,000 jobs. They invest $13bn in generation and distribution annually.
Dr Sonja Novkovic from St Mary’s University, Halifax, Nova Scotia, co-wrote an article examining the social impact of co-ops, featured in the NCBA’s Co-operative Business Journal. She argues the social and economic dimension of co-ops cannot be separated, and her article points to the positive impact of co-operatives in terms of risk reduction, enhanced social capital and the ability to internalise the externalities produced by market failures.
The lack of statistics on co-ops at a federal level is a challenge when it comes to showing the impact of co-ops, the session heard. In May, the Office of Management and Budget approved the main 2017 Economic Census package, which includes a question identifying co-operative businesses. NCBA welcomed the move, which will see co-ops back on the census after 20 years of absence.
“It is critical to pull together the sector and look at the impact, how many jobs are created, what’s the revenue distributed back to farmers, what are credit unions doing to provide low-cost accounts and services, how are purchasing co-ops enabling family businesses to stay in business,” said Judy Ziewacz, president and chief executive of NCBA.