Importance of Cooperatives — Why They Matter to the Global Economy

Cooperatives employ 280 million people worldwide, account for $2.2 trillion in global GDP, and provide financial services to 1 billion members across every inhabited continent. For the full history of how cooperatives reached this scale, see history of cooperatives. Those numbers establish the scale; the reasons they matter run deeper.

The importance of cooperatives comes down to a structural fact: the people who most need economic power — smallholder farmers, rural households, low-wage workers — are exactly the people cooperatives are designed to serve. A corporation serves its shareholders. A cooperative serves its members, who are its users.

Global Cooperative Economy at a Glance

Metric	Figure	Source
Total cooperatives worldwide	3 million+	ICA, 2024
Total cooperative members	1.2 billion	ICA, 2024
People employed or engaged	280 million	ILO / ICA
Share of global employed population	~10%	ILO
GDP contribution	$2.2 trillion	NCBA, World Cooperative Monitor
Top 300 cooperatives — combined revenue	$2.1 trillion	World Cooperative Monitor 2023
Countries with significant cooperative sectors	100+	ICA

Importance in Agriculture and Food Security

Agricultural cooperatives are the primary reason hundreds of millions of smallholder farmers participate in formal markets at all. A farmer with 2 hectares of land cannot independently negotiate with large processors, meet export certification requirements, or afford cold-chain logistics. Through a cooperative, they can do all three.

AMUL in India is the most cited proof point. In 1946, dairy farmers in Gujarat were paid below-cost prices by a private contractor. After forming the Kaira District Cooperative Milk Producers' Union, farmers gained direct access to processing and markets. By 2023, AMUL's network involved 3.6 million farmer members and generated ₹72,000 crore ($8.6 billion) in revenue. Average farmer income in AMUL districts is significantly higher than in non-cooperative areas, and the organisation has reduced rural poverty measurably in its service area.

The food security dimension operates at national scale in several countries:

New Zealand: Fonterra cooperative handles 80% of New Zealand's milk production. Its 9,000 farmer-members export to 140 countries, making dairy New Zealand's largest export industry.
Netherlands: Friesland Campina, a cooperative of 17,000 dairy farmers, is one of the world's five largest dairy companies, supplying infant formula and dairy products across Europe and Asia.
Kenya: Coffee cooperatives handle the majority of Kenya's specialty coffee exports, allowing smallholder farmers in Central Province to access the premium specialty market.

The UN Food and Agriculture Organisation (FAO) estimates that cooperatives are involved in handling 50% of global food production and 40% of global agricultural trade. Eliminating cooperatives from global food systems would require replacing them with corporations — which would extract profit from farmers rather than return it to them.

Importance for Rural Development

Rural communities face a consistent pattern of market failure: low population density makes services unprofitable for commercial providers, so they don't come. Cooperatives solve this by making service provision the purpose rather than a profit calculation.

Electric cooperatives in the United States are the defining example. In the 1930s, private utilities served 90% of urban households but refused to extend power lines to rural areas, where the return per mile of wire was too low. Congress established the Rural Electrification Administration in 1936, which financed farmer-owned electric cooperatives to build their own grid infrastructure.

Today, 832 electric distribution cooperatives serve 42 million Americans across 56% of the US land area. They operate 2.5 million miles of power lines. Without the cooperative model, rural electrification would have been delayed by decades — or would have required the federal government to own and operate the grid directly.

The pattern repeats in every country with a significant rural cooperative sector:

Country	Rural Development Contribution
India	650,000+ agricultural cooperatives serve 300 million rural members
Kenya	SACCOs provide financial services to 90%+ of rural civil servants and teachers
Philippines	27,000 cooperatives serve rural and semi-rural areas where banks don't operate
Canada	Desjardins caisses populaires have served Quebec's rural French-speaking communities since 1900
Bangladesh	Grameen Bank, cooperative-inspired, has disbursed over $27 billion in microloans to rural women

Importance for Financial Inclusion

1.4 billion adults worldwide are unbanked, according to the World Bank. Cooperative financial institutions — credit unions, SACCOs, cooperative banks — serve populations that commercial banks consider unprofitable or too high-risk.

Credit unions in the United States serve 140 million members, including significant numbers of working-class families, recent immigrants, and people with thin credit files. Credit union mortgage rates average 0.25–0.50 percentage points below commercial bank equivalents — a meaningful saving over a 30-year loan.

In Kenya, the SACCO Societies Regulatory Authority (SASRA) oversees 360 licensed SACCOs with combined assets of KES 990 billion ($7.6 billion). Kenya's SACCO sector is the largest in Africa relative to GDP. SACCOs serve teachers, farmers, civil servants, and informal sector workers — groups that commercial banks either exclude or charge punitive rates.

Credit Agricole in France demonstrates what cooperative financial inclusion looks like at full scale. Founded in 1894 to serve French farmers who could not access bank credit, it grew into one of the world's largest financial institutions with €2.1 trillion in assets and 10 million shareholder-members. It now operates in 46 countries while remaining cooperative in structure.

The financial inclusion importance extends to insurance. Co-operative Insurance in Kenya covers more than 2 million lives through group schemes, many of them low-income workers who could not afford individual commercial insurance premiums.

Importance in Housing

Housing cooperatives address affordability in high-cost urban markets by removing speculative profit from the equation. In a conventional market, each property transaction generates profit for sellers, agents, and developers — costs that accumulate into unaffordability. Housing cooperatives hold property collectively and resell shares at cost or limited-equity values.

New York City is home to approximately 3,000 housing cooperatives, comprising roughly half of all apartments in Manhattan. While many NYC co-ops are market-rate, limited-equity housing cooperatives like Rochdale Village (Queens) — 5,860 apartments, 25,000 residents — have maintained below-market housing for decades.

In Sweden, the cooperative housing model (bostadsrätt) covers approximately 50% of the country's apartment stock. The Swedish cooperative housing federations HSB and Riksbyggen, founded in 1923 and 1940 respectively, manage housing for over 1 million households and have prevented the kind of acute housing unaffordability that affects countries with purely speculative housing markets.

The importance of housing cooperatives grows as urban affordability worsens. The Community Land Trust model — which holds land in perpetual cooperative ownership while allowing individual home ownership — has been adopted in over 300 US cities and in the UK, Germany, Belgium, and Australia.

Importance in the Electric Sector

Electric cooperatives are economically significant beyond rural electrification. The 832 US electric cooperatives operate 42% of the nation's electricity distribution infrastructure — more than all investor-owned utilities combined in terms of geographic coverage.

Beyond geography, electric cooperatives matter because they reinvest in their service territories. When an investor-owned utility generates a profit, that profit leaves the community as dividends to shareholders who may live anywhere. When an electric cooperative generates a surplus, it is either returned to members as capital credits or reinvested in grid modernisation, outage reduction, and rate stability within the community.

Basin Electric Power Cooperative (North Dakota) supplies power to 3 million members across 9 states. Dairyland Power Cooperative (Wisconsin) operates a generation and transmission system serving 24 distribution cooperatives. These G&T cooperatives are cooperatives of cooperatives — owned by the distribution co-ops, which are owned by consumers.

Electric cooperatives in the US are currently the largest single builders of rural broadband infrastructure. The problem is identical to the 1930s electricity gap: commercial internet providers find rural deployment unprofitable, so communities go without. Cooperatives, whose purpose is to serve members rather than maximise returns, build the infrastructure anyway.

Importance for Democratic Business Ownership

Beyond the specific economic functions, cooperatives are important because they demonstrate that businesses can be owned and governed by ordinary people — not only by those with capital.

The corporation as an economic form concentrates ownership among shareholders, who are typically wealthy and geographically concentrated. A 2021 Federal Reserve study found that the wealthiest 10% of US households own 89% of US corporate equities. Cooperative ownership is different: it is distributed among millions of working members.

Mondragon's 81,000 worker-owners have median annual earnings approximately 20% above Spanish national averages, with a pay ratio of 6:1 between the lowest and highest earners (compared to 350:1 in the S&P 500)
US credit unions return approximately $8 billion annually to members in the form of lower rates and higher dividends versus commercial bank equivalents (CUNA Mutual Group estimate)
Agricultural cooperative members in the US received $28.4 billion in patronage refunds in 2022, according to USDA data

The democratic ownership model also means cooperatives are resistant to the kind of short-term financial decision-making that generates periodic corporate crises. Cooperative boards, elected by member-workers or member-customers, are structurally incentivised to take a long view — because the members they serve will live with the consequences.

Importance for Job Quality and Pay Equity

Cooperatives matter not only for the number of jobs they create but for the quality of those jobs. Worker cooperatives, in particular, consistently show lower pay inequality, higher job security, and greater worker wellbeing than comparable conventional firms.

Pay ratios are the clearest measure. The ratio of highest to lowest earner at Mondragon is approximately 6:1. The S&P 500 median CEO-to-worker pay ratio is 324:1. At Cooperative Home Care Associates in New York — a worker cooperative employing 1,800 home care workers — wages run 15–20% above the industry average because there are no shareholders extracting returns.

Retention and stability matter for the workers too. During the COVID-19 pandemic, worker cooperatives in Italy, France, and Spain reported lower redundancy rates than comparable private employers. The cooperative governance structure — workers voting on employment policy — creates a structural bias toward reducing hours and salaries collectively rather than making targeted redundancies.

Beyond worker cooperatives, agricultural cooperatives improve farmer incomes even when farmers are not technically "employees." A 2020 study by Oxford University's Saïd Business School found that AMUL farmer-members earn 15–25% more than comparable non-member dairy farmers in Gujarat, solely from access to cooperative processing and marketing infrastructure.

Importance for Consumer Protection

Consumer cooperatives offer members a form of market protection that commercial retailers cannot match: ownership. When a consumer owns the store they shop in, the store's pricing, product selection, and supplier relationships are subject to democratic governance by the people who use them.

REI (Recreational Equipment Inc.) demonstrates this in the US outdoor retail market. With 22 million members and $3.7 billion in revenue, REI consistently ranks higher than competitors in customer satisfaction surveys. For a broader look at what makes consumer cooperatives different from conventional retailers, see our consumer cooperatives guide. It stocks gear based on quality and member feedback, not on slotting fees paid by brands. Its dividend — roughly 10% of eligible purchases — returns millions of dollars annually to members.

Migros in Switzerland has been member-owned since 1941. It operates with a constitutional commitment to member service, not shareholder returns. The result: Migros charges 10–15% less than comparable commercial grocers while maintaining the largest grocery retail network in Switzerland.

Consumer cooperatives also protect against predatory pricing and oligopoly. In markets dominated by two or three commercial retailers, prices tend to rise. A cooperative retailer anchors local prices because its mandate is to serve members at cost — not to extract as much margin as possible.

Cooperatives and the Sustainable Development Goals

The UN explicitly recognises cooperatives as vehicles for achieving the Sustainable Development Goals (SDGs). ICA and the UN Secretary-General's report on cooperatives note that cooperatives contribute directly to:

SDG 1 (No Poverty): Agricultural cooperatives increase rural incomes
SDG 2 (Zero Hunger): Food cooperatives and agricultural cooperatives improve food access and production
SDG 8 (Decent Work): Worker cooperatives and SACCOs create quality employment
SDG 10 (Reduced Inequalities): Cooperative ownership distributes returns broadly
SDG 11 (Sustainable Cities): Housing cooperatives address urban affordability
SDG 17 (Partnerships for the Goals): The cooperative model of inter-organisational cooperation models international development collaboration

The ILO's Recommendation 193 (2002) calls on member states to support cooperatives as a key vehicle for employment creation and social protection — the most explicit international recognition of cooperative importance in labour policy.

Frequently Asked Questions

Why are cooperatives important in developing countries? In developing countries, market institutions — banks, insurance companies, commodity exchanges — either don't serve smallholder farmers and low-income workers, or charge prohibitive prices. Cooperatives fill this gap by pooling demand, providing collective credit, and marketing agricultural output. India's 650,000 agricultural cooperatives and Kenya's SACCO system are the primary financial and commercial infrastructure for hundreds of millions of people who have no practical alternative.

How do cooperatives contribute to GDP? The World Cooperative Monitor calculates that the top 300 cooperatives alone generate $2.1 trillion in revenue. When the full cooperative sector is counted — including the hundreds of thousands of small agricultural cooperatives in Asia and Africa — the contribution exceeds $2.2 trillion in GDP contribution globally. In individual countries, the share can be striking: New Zealand's cooperative sector (Fonterra and others) accounts for approximately 20% of GDP.

Are cooperatives more resilient than regular businesses during economic crises? Evidence suggests yes. During the 2008 financial crisis, European cooperative banks had lower failure rates than commercial banks. In Spain, Mondragon's cooperatives adjusted through internal labour reallocation rather than redundancy. A 2013 study by the ILO found that worker cooperatives in France, the UK, Germany, and Uruguay demonstrated significantly better employment stability during recessions compared to conventional firms of the same size and sector.

Why are cooperatives important for women's economic participation? Women constitute the majority of members in many agricultural cooperative systems. AMUL's dairy cooperative in India is built on women's participation — the village dairy cooperative society is often the first formal economic institution rural women join. Women's SACCOs in Kenya and the argan oil cooperatives in Morocco have measurably increased women's income and decision-making authority within households. The ICA Women's Committee documents that women are better represented in cooperative governance than in corporate boards globally.

How important are cooperatives to the US economy specifically? The US cooperative sector is larger than commonly known. NCBA CLUSA estimates US cooperatives have $700 billion in revenues, 2 million employees, and 350 million memberships (including credit unions, electric cooperatives, farm cooperatives, and retail cooperatives). The 5,000+ credit unions hold over $2 trillion in assets. Electric cooperatives serve 42 million people. Farm cooperatives handle over 28% of US agricultural marketing and supply.

What would happen if cooperatives ceased to exist? The most immediate impacts would be felt in sectors where cooperatives are dominant. Rural America would lose electricity infrastructure serving 42 million people. India's dairy sector — producing 230 million tonnes of milk annually, the world's largest — would collapse without AMUL and the National Cooperative Dairy Federation. Kenya's rural financial system, built on SACCOs, would lose its primary credit infrastructure. Globally, 280 million people would need alternative employment, and smallholder farmers across Africa, Asia, and Latin America would lose their primary route to market.

See also: