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Powered by cooperation ~ the cooperative business model

Duane Highley
Written by Duane Highley

October is National Cooperative Month. So, just what is a cooperative, anyway?

A cooperative is an organization that is owned by its members, who share in its profits and benefits.

If you are a member of a local electric cooperative, you along with the other members own your cooperative.  Cooperative members elect representatives to the co-op’s boards of directors. Those directors oversee the operation of the cooperative, usually meeting monthly with staff to review revenues and expenses. Monies left over in excess of expenses are allocated and eventually returned to members.

There are other types of cooperatives. Ever heard of Ocean Spray? Tropicana? REI? Ace Hardware? The Associated Press? Blue Diamond almond growers? Carpet One? True Value? Do It Best? Farm Credit Bank? Your local credit union? Florida’s Natural juice? Land O’Lakes? MFA? Riceland Foods? Sunkist? Welch’s? These are all cooperatives, owned by and operated for the benefit of their members.

Nationwide, there are more than 40,000 cooperative businesses representing all sectors of the economy, including agriculture, retail, utilities, banking, health care and child care.

Across Arkansas, electric cooperatives deliver electricity to 500,000 homes, farms and businesses, representing 1.2 million ultimate consumers — over one-third of the population of the state. Because they were originally created to provide power where no one else would, serving the less-profitable remote and rural areas of the state, the electric cooperatives now serve almost two-thirds of the land in the state. That’s right, co-ops built facilities to cover two-thirds of the state, but serve only one-third of the population. That makes providing affordable service a challenge, and yet, because of our focus on cost and efficiency, in most parts of the state, co-ops provide power at rates that are comparable to, if not lower than, their for-profit counterparts that serve more dense, urbanized areas. That’s the cooperative difference!

In Alaska, a small community wanted a local grocery store. The big companies wouldn’t come in; the local market was just too small to attract investment, so community leaders got together, organized their own grocery cooperative, and now they have their store.

Other communities needed affordable child care. Parents organized under the cooperative business model to form child-care cooperatives. The co-op board sets the rates for child care, and at the end of the year, excess revenues are reallocated back to the parents.

In Guatemala, where our Arkansas linemen have volunteered to provide electric service, their communities organized water-supply cooperatives, trash collection cooperatives and coffee bean processing cooperatives.

So I ask, what is it that YOUR community needs? Is there some key product or service that you just can’t get? Health care? Financial services? Farm supplies? Is it possible that you could form a non-profit, member-owned cooperative to get it done?

As you look for ways to make our Arkansas communities better, I invite you to consider the cooperative business model. If you need help getting started, here are some resources: www.ncba.coop, www.cdi.coop, www.cultivate.coop/wiki/Starting_a_cooperative.

 That’s the cooperative way.

This article is reprinted with permission of Arkansas Living Magazine.

 

About the author

Duane Highley

Duane Highley

Duane Highley is President and CEO for Arkansas Electric Cooperative Corp. and Arkansas Electric Cooperatives, Inc. He is a registered professional engineer with degrees from the Missouri University of Science and Technology and has completed the Harvard Business School Advanced Management Program. Duane serves on the Board of the Electric Power Research Institute (EPRI), on the Southwest Power Pool Members Committee, and is co-chair of the Electric Subsector Coordinating Council (ESCC), working with cabinet-level administration officials on electric system reliability, security and resiliency. Duane has appeared in testimony before committees of the U.S. Senate and the U.S. House of Representatives. He is passionate about advancing the cooperative business model to provide essential services in developing countries around the world.
You can follow Duane at http://facebook.com/DuaneHighleyAECC.

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