What is a Marketing Cooperative?

A marketing cooperative provides a sales outlet for the products supplied to it by members. It is a cost-effective way for smaller farmers to sell products at more advantageous prices than they could achieve alone, especially when selling to large food companies.

Marketing cooperatives may deduct retains from the proceeds that are payable to patrons. These amounts are placed in the capital accounts of the patrons. These retained funds are essentially a form of financing for the cooperative. Retains are usually paid out over a number of subsequent years, and so can be considered liabilities of the cooperative.

Example of a Marketing Cooperative

For example, a farm sells livestock and crops on an ongoing basis through a cooperative that handles the marketing and eventual sale of products to third parties.