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New Generation Cooperatives

New Generation cooperative or New Formula to view and operate a Co-op and they are the latest buzzwords in the co-op community describing a variation on the traditional co-op, yet, retaining the critical co-op principles. New Generation Cooperatives (NGCs) represent an emerging trend in agriculture, forestry, fishing and other industries that are supplied by producers. These are distinct types of cooperatives formed to enable members to process raw commodities. As a result, members not only receive market prices for their produce, they also gain the opportunity to profit from processing and marketing these value-added products.

It is primarily the financial structure and membership requirements that distinguish NGCs from the more traditional cooperatives. Typically, higher equity investments are required by members in order to establish a processing plant. Furthermore, the number of members is limited to those who purchase delivery rights, as well as by the processing capacity of the plant. Because of the unique structure of NGCs, members feel a greater degree of personal ownership and a stronger commitment to the cooperative.

These Cooperatives are referred to as new generation because of four distinct variances from traditional co-ops:

  1. The focus is on the value-added processing or manufacturing of raw commodities delivered to the co-op by its members and the marketing of the resulting products.
  2. A significant equity investment is required by each member, with the total initial equity contribution being a major portion of the gross project costs.
  3. A two-way contract between the member and the co-op requires each member to deliver, and the co-op to accept, an agreed-upon amount of the raw commodity for each delivery right (special investment share under Manitoba legislation) owned by the member.
  4. Membership is limited to the number of special investment shares (delivery rights) required to be sold by the co-op to its members in order to meet its processing capacity.

For more information please read about New Generation Co-ops (PDF).

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