The other refers to a type of business organizations cooperative-which has characteristics distinguishing it from other business forms. Farmer cooperatives illustrate the second meaning, namely, a form of business organization with unique operating principles and practices. To accomplish economic goals, cooperatives have followed several business principles that give them their unique character and justify different treatment under the law. One is the owner-user character of the organization. Cooperative activities are related to services required by members and of direct benefit to them in their farming operations.
Owners are the users of the cooperative's services.
A second characteristic is that net benefits at the end of the operating year are returned to members in proportion to the amount of business transacted with the cooperative . Cooperatives operate by different pooling methods as evidenced in their bylaws and membership agreements, but the principle of patronage returns nevertheless holds. A third distinguishing characteristic is democratic control. There must be no doubt in cooperative organizations about who is in control. Election of delegates and board members at various organizational levels provides members with a say in ensuring that the organization is run in their interest as members.