Agricultural co-ops are formed so that farmers can enhance their economic market power. There are three main categories of farmer cooperatives: supply, marketing, and service.
Supply co-ops furnish inputs necessary for agricultural production, such as fertilizers and pesticides. Supply co-ops purchase these inputs in bulk to enjoy the lowest possible prices and then sells directly to its members at a lower cost than if the farmer had purchased it on its own.
Marketing co-ops assist its members in the marketing of their agricultural products. It may either purchase its members’ agricultural products at the prevailing market price or act as a pooling agency that holds goods until a more beneficial price can be obtained.
Service co-ops provide services to its members, such as housing, finance or transportation.
