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HIS bulletin is designed to provide a comprehensive review of the many ways farmers use cooperatives to help meet their economic problems... the complex problems inherent in marketing their products, buying their farm supplies, and performing many other essential farm. business services.

The first publication of this type was issued by the Department of Agriculture in 1917. The present bulletin represents a complete revision of the latest publication in this series which was issued in 1947 as Bulletin 54, under the title, Agricultural Cooperation in the United States, by Ward W. Fetrow and R. H. Elsworth.

This revision, FCS Bulletin 1, portrays the growing strength and expanding use farmers are making of their cooperatives and discusses the principles, practices, and problems of such farmer organizations.

It is the responsibility of the Farmer Cooperative Service to make information available on the principles and practices of farmer cooperatives. An

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Act of Congress in force since 1926 instructs the Department of Agriculture to acquire and disseminate information useful "in the development and practice of cooperation," and "to promote the knowledge of cooperative principles and practices and to cooperate in promoting such knowledge with educational and marketing agencies, cooperative associations, and others."

In the spirit of this Act, this bulletin is issued primarily for use of educational workers in schools and colleges and for others who need general information on farmer cooperatives in the United States today.

The work of preparing this publication has been a joint effort of the entire staff of Farmer Cooperative Service, with responsibility for planning and editing placed in the Information Division directed by Mrs. Beryle Stanton. Among those who have made major contributions not credited in signed articles are Kelsey B. Gardner, M. A. Abrahamsen, and Anne Gessner. Joseph G. Knapp.

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ARMERS use cooperatives in this country for a wide range of jobs. They join together in these businesses to market their products, buy their supplies, and do many other related tasks essential in their complex midcentury farming.

This bulletin gives a picture of what cooperatives really are, how and why they have developed here over the past century and a half, and then goes into more detail on their selling, buying, and other service operations.

It shows how cooperatives touch the lives of nearly all the farmers in the country. To improve farmers' financial returns, these associations early took the lead in better grading, in putting the emphasis on quality products and supplies, and in translating research findings into practical application on the farms. In many instances this has meant the entire communitynot just the members-benefited from the greater individual income or better supplies the cooperatives have helped farmers to obtain.

The bulletin traces the course these farmer associations have taken over

the years and the reasons for the various shifts that have made them what they are today—the off-farm business enterprises of at least 3 out of 5 farmers.

It tells how cooperatives have helped protect the family-sized farm, basis of our agricultural life, by helping the smaller farmer compete in an agricultural economy that is becoming increasingly mechanized and commercialized.

It also shows how better rural leadership has been developing from the functioning of thousands of directors of cooperatives. For farmers working together toward their mutual benefit have developed a spirit of self helpof reliance, business know-how, pride of ownership, neighborliness, and greater community interest.

This publication then goes on to show the many benefits members obtain through their cooperatives-and how these benefits help the associations make substantial contributions to more efficient farm production and a higher standard of living on American farms.

53 crop year-showed 10,114 marketing, purchasing and related service. cooperatives with memberships of 7.5 million. Because many farmers belong to more than one association,

ciations, had a gross value of $12.3 billion in the 1952-53 season. (Fig. 2.) After eliminating duplication because of transactions between cooperatives, this represented a net value of $9.5 billion. [Appendix table 1.]

Farmers cooperatively provided themselves with many other services than these, however. [Appendix table 3.] About 3.5 million of them were protected against fire, windstorm, or hail through about 1,700 mutual insurance companies. Some 148,000 farmers got water for their land through 9,374 mutual irrigation companies in 1950. About 900 rural electrification cooperatives served more than 3.9 million farm homes in 1954.

And thousands of farmers received telephone service through mutual companies.

Farmers have also turned to cooperatives for financing their business. In 1955, they obtained both long-term and short-term credit through 1,100 national farm loan associations, 498 production credit associations, and about 1,000 rural credit unions. A good many of their cooperatives also obtained credit through the 13 banks for cooperatives.

In addition farmers use cooperatives for such services as frozen-food locker plants, certain forms of transportation, dairy herd improvement, conserving their soil, and the like.

THE
HE statistical story of coopera-

tive marketing and purchasing by farmers in the United States began about 1912. That was the year the U. S. Department of Agriculture began collecting data from farmer cooperatives by mail. It asked for information on kind of enterprise, cooperative practices, membership and dollar business. It received reports from 889 farmer organizations with a business of $123 million that year.

A similar survey for 1913 resulted in reports from 3,099 associations with a total business of more than $310 million.

The Department made similar tabulations in 1914 and 1915 and less complete surveys in 1916 and 1917.1 With the coming of the 1920's, interest in cooperative marketing and purchasing by farmers increased greatly. So the Department undertook an intensive survey in 1921.

This was followed by a comprehensive survey in 1925 which brought in reports from 10,803 associations with an estimated 2.7 million membership and an estimated $2.4 billion business.2

Beginning with the 1929-30 marketing season the Federal Government has made a nationwide survey by mail for each marketing year with one exception.3 In 1936-37, the Farm Credit Administration obtained the data in cooperation with State agencies, chiefly colleges of agriculture, and through personal visits to the coop

eratives.

The Farmer Cooperative Service, successor to the Cooperative Research and Service Division of the Farm Credit Administration, now collects. these statistics each year by mailing out questionnaires. Tables 1 and 2 in the appendix give a complete picture of the latest information it has assembled.

ARMERS have long worked to

enterprise known today. This section

in formal organizations. From colonial times on, they have been gradually evolving the form of cooperative

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what its principles and practices are, what types exist, and will trace its development from pioneer days.

GRICULTURAL cooperation implies the voluntary joining_together of physical, financial, and human resources to make it possible, or easier, to market farm products, obtain production supplies, and secure many needed farm services. Such collaboration started informally with two or more farmers helping each other with harvest chores, erecting fences, or doing other work which could be done better by joint effort.

The aim of formal cooperation is to bring the benefits of permanent and efficient business organization to farmers in ways that temporary cooperative arrangements of the informal sort cannot accomplish. This type of cooperation sometimes results in business enterprises whose membership extends into one or more States. Farmers are best served when some business activities are developed on a regional and national scale.

It is, therefore, natural that many definitions of cooperation have been formulated. Some are all inclusive; others emphasize particular aspects of cooperation such as economic, social, or legal phases. A few of the many definitions are given with the thought that they may be helpful to those seeking to understand the nature and objectives of farmer cooperatives.

"An agricultural cooperative association is a business organization, usually incorporated, owned and controlled by member agricultural producers, which operates for the mutual benefit of its members or stockholders, as producers or patrons on a cost basis after allowing for the expenses of the operation and maintenance and any

"A cooperative enterprise is one which belongs to the people who use its services, the control of which rests equally with all the members, and the gains of which are distributed to the members in proportion to the use they make of its services." 5

"Cooperation is organized working together for mutual benefits. Economic cooperation is a form of business with democratic ownership and control by member patrons having common needs, serving themselves on a nonprofit basis, and receiving benefits proportional to participation."

Definitions vary naturally according to backgrounds and viewpoints of those making them. At best they present only a general idea of what a cooperative is and how such organizations are set up and operate. Most cooperatives are incorporated. The minimum number of persons required for incorporation varies under the statutes of different States. In a few cases, 3 is the minimum, but under most State laws 5 is the smallest number of persons allowed to incorporate. Other requirements for an association are that it should have officers, a name ade