Aquaculture farmer organizations and cluster management: concepts and experiences

3.1.3 Cooperatives 
Cooperatives are the most well-known type of FO. Traditional cooperatives are 
controlled and owned by their members, who have equal shares and who each have a 
say in the running of the cooperative through equal voting rights. The main purpose 
of cooperatives is to provide competitively priced services to their members and to 
make a profit from the sale of members’ produce, which is then usually distributed to 
members according to how much they use the cooperative’s services. This is different 
from private companies, where ownership, decision-making and profit distribution is 
proportional to each member’s investment in the business. The Samroiyod Cooperative 
in Case Study 1 is a cooperative where members must buy a minimum amount of 
shares to join, have equal voting rights, and are offered services such as competitively 
priced inputs on credit and extension services. Unlike traditional cooperatives, 
however, profits will be distributed according to the proportion of members’ shares 
rather than according to patronage (how much they use cooperative services) as with 
traditional cooperatives. However, as the cooperative has not yet earned any profits, 
this may change. Because of the way profits are distributed in traditional cooperatives, 
they often find it hard to increase the level of investment from members, as there is 
little incentive for members to invest more than the amount required. Cooperatives 
usually have a particular structure requiring many rules and regulations, making them 
less flexible than associations and increasing their internal administration costs. In 
many countries, cooperatives are viewed negatively owing to past experiences with 
government-led cooperative promotion programmes. Even though those days are 
mostly over, governments still define cooperative structures, in some cases to allow 
them to maintain some control over their activities.
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