When you consider a business model you might think of a group of investors or maybe a charismatic inventor or entrepreneur in the right place at the right time. In the United States, the vast majority of investor-owned businesses form with the most powerful at the top and the most productive, or the people producing the labor or product, at the bottom. This structure incentivizes businesses to deliver profits to shareholders all while ignoring the needs of the consumer or worker.
At Pachamama, we live by a different business model; one where the distribution of power and wealth is parallel to your contribution and participation in the company's goals and mission. We believe in the power of cooperatives and the value of putting people before profits. We attribute our success to the cooperative business model, enabling farmers to pool their resources and democratically govern a global corporation. In doing so, Pachamama Coffee is able to provide stable pricing and services that make coffee farmers around the world more profitable.
Members of the La Unión Regional Coffee Cooperative stand in front of the cooperative offices in Huatusco, México (2021)
What is a Cooperative?
You may already be familiar with the cooperative model. There are many kinds of cooperatives (or co-ops). They range in size from small farms to large companies. In some ways, cooperatives operate like any other business, but they also have several unique characteristics:
They are owned and democratically controlled by their members — the people who use the co-op's services or buy its goods — not by outside investors. They return surplus revenues to members proportionate to their use of the cooperative, not proportionate to their investment or ownership share. They are motivated to meet their members' needs for affordable and high quality goods or services. According to specialists at the USDA, “the cooperative business structure can help members build wealth and increase a community’s economic power.”
Why Do Cooperatives Form?
Co-ops are formed by their members when the marketplace fails to provide needed goods or services at affordable prices and acceptable quality. They empower people to improve their quality of life and enhance their economic opportunities through mutual self-help. Throughout the world, cooperatives are providing their members with financial services, utilities, consumer goods, affordable housing, and other services that would otherwise not be available to them. Cooperatives make up a vast and quickly growing way to do business, not just here in the United States but also globally. According to the International Cooperative Alliance, “at least 12% of humanity is a cooperator of any of the 3 million cooperatives on earth.” As the first and only farmer owned coffee cooperative in the United States, we believe wholeheartedly in the economic value and necessity of cooperatives. We are proud that our business is built upon values that put people first, not profits.
Types of Cooperatives
The strength and resilience of cooperatives is defined by its members and owners. Just like how cooperatives can be formed for a variety of reasons, the types of cooperatives are just as diverse.
Consumer Cooperatives are owned by the people who buy the goods or use the services of the cooperative. Consumer co-ops may sell consumer goods such as food or outdoors equipment, or provide housing, electricity and telecommunications. Other co-ops offer financial (credit unions), healthcare, childcare and funeral services. Almost any consumer need can be met by a cooperative.
Producer Cooperatives are owned by people who produce similar types of products — by farmers who grow crops, raise cattle, or milk cows, or by craftspersons or artisans. By banding together, cooperating producers leverage greater bargaining power with buyers. They also combine resources to more effectively market and brand their products, connecting them to customer values. Pachamama Coffee is a producer co-op organized to roast and brand its members' coffee.
Worker Cooperatives are owned and governed by the employees of the business. They operate in all sectors of the economy and provide workers with both employment and ownership opportunities. Examples include food processing companies, employee-owned food stores, restaurants, taxicab companies, sewing companies, timber processors and light and heavy industry.
Purchasing and Shared Services Cooperatives are owned and governed by independent business owners, small municipalities and, in some cases, state governments that band together to enhance their purchasing power, lowering their costs and improving their competitiveness and ability to provide quality services. They operate in all sectors of the economy.
While our diversity makes us stronger, all cooperatives share the same core principles. These principles unite us. While our outcomes might be different, our purpose and foundations are the same. All cooperatives follow seven internationally recognized principles:
- Voluntary and Open Membership
- Democratic Member Control
- Member Economic Participation
- Autonomy and Independence
- Education, Training and Information
- Cooperation Among Cooperatives
- Concern for Community
Pachamama Coffee Cooperative partnered with Sacramento Natural Foods Cooperative to form the Cooperative Cafe in 2022. This partnership reflects the value and strength in cooperation among cooperatives.
With these guidelines anyone can form a cooperative and doing so in your community can be a revolutionary act. Pachamama Coffee is proud to be the first farmer owned coffee cooperative in the United States and hopes that in the ground that we break seeds of other cooperatives can be sown. We encourage you to engage with cooperatives in your community. Ask yourself, as a consumer, what needs do I have that can be met by a cooperative? When you engage with cooperatives in your community you become a part of a global community and movement building a more economically sustainable and equitable world.
