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Definition for

Cooperative

An enterprise or organization owned by and operated for the benefit of those using its services. In agriculture, such an organization is owned and used by farmers mainly to handle the off-farm part of their businesses (i.e., buying farm supplies, marketing their products, furnishing electric and telephone service, and providing business services) at cost. Essential features are democratic control, limited return on capital, and operation at cost, with distribution of financial benefits to individuals in proportion to their use of the services made available by the cooperative (called patronage refunds). In 2002, there were 3,140 farmer cooperatives in the United States. As a variation from the traditional design, so-called "new generation cooperatives" are characterized by limited membership, require substantial investment, and include delivery contracts. Producers are increasingly using this model to create their own value-added business enterprises. The Rural Business-Cooperative Service (RBS) assists in forming new cooperative businesses and improving the operations of existing cooperatives through technical assistance, research, and information products. Cooperatives are afforded certain antitrust exemptions by the Capper-Volstead Act. Many farming-related cooperatives are members of the National Council of Farmer Cooperatives.

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