
Writer Fadel M. Ibrahim, MICRA Program Assistant
Editor Regita M. Rusli, MICRA Program Development & Alternatives Manager
Cooperatives have the epithet ‘Soko Guru’ which means the pillar of the national economic system, therefore cooperatives are not only a mandate of the constitution but become a hope in building a people's economy. Before addressing this, let us first understand the definition of cooperatives and the types of cooperatives.
Definition of Cooperative
Cooperative is a legal entity established by individuals or cooperative legal entities, by separating the assets of its members as capital to run a business, which fulfils common aspirations and needs in the economic, social, and cultural fields in accordance with cooperative values and principles (Rohmat, 2015:140). According to Law No. 5 of 1992, a cooperative is a business entity consisting of individuals or cooperative legal entities by basing its activities on cooperative principles as well as a people's economic movement based on family principles.
In Indonesian, cooperatives are divided into several types based on their purpose, namely consumer cooperatives, producer cooperatives, savings and loan cooperatives, service cooperatives, and marketing cooperatives. This article will focus on producer cooperatives.
Producer Cooperative
Producer cooperatives are cooperatives whose members are producers or small and medium enterprises (SMEs). It aims to unite the capabilities and capital of its members to produce and market goods or services.
Type of Producer Cooperative Business
Producer cooperatives have various types of businesses depending on the field of production of their members. The following are some of the types of producer cooperative businesses commonly found in Indonesia:
Agriculture This cooperative business supports farmers in producing and marketing agricultural products. Product examples include rice, vegetables, fruits, spices. Service examples include the provision of seeds, fertilisers, farming tools, training in farming techniques, and marketing of products.
Livestock This cooperative business supports breeders in raising livestock and marketing livestock products. Some examples of products include milk, meat, eggs, and organic fertiliser from livestock waste. Other services include providing animal feed, vaccinations, technical training, and processing livestock products (e.g. into pasteurised milk)..
Fisheries This cooperative business assists fishermen and fish farmers in managing fisheries production. For example, its products include fresh fish, shrimp, seaweed, and processed fish products.
Work Pattern of Producer Cooperative
Producer cooperatives work patterns are based on the principle of mutual cooperation to support the business needs of their members who act as cooperative producers. It aims to increase the productivity, efficiency, and competitiveness of its members' businesses. The following is the working pattern of a producer cooperative:
Cooperative Members as Owners and Producers: Cooperative members are producers (e.g. farmers, ranchers, fishermen, or other business people). They deposit the initial capital and actively participate in the decision-making and activities of the cooperative.
Procurement and Production Supply: Cooperatives help provide raw materials, tools, or other production needs at more affordable prices such as fertiliser, seeds, animal feed, or other production equipment.
Production Facilities: Cooperatives often provide technical training, guidance, and technology to improve members' production capacity. This activity aims to increase the quality and quantity of production.
Collective Marketing: One of the main focuses of producer cooperatives is to market their members' produce collectively through member co-marketing. This can gain access to a wider market, obtain more competitive prices, and reduce distribution and middleman costs.
Product Processing and Diversification: In some cases, cooperatives are involved in processing the products of their members before they are marketed. An example is a coffee farmer cooperative that processes coffee into ready-to-sell powder.
Financial Management: Cooperatives provide savings and loan services to support members' capital needs so that members can avail of cooperative loans at relatively lower interest rates compared to other financial institutions.
Shared Profit: With the principle of ‘from members, for members, and by members’, the shared profits of the cooperative will be distributed back to members in the form of Sisa Hasil Usaha (Residual Income / SHU) according to each member's contribution. The greater the participation of members, the greater the SHU received.
Producer Cooperative Example
In Indonesia, there are many producer cooperatives with various business focuses, here are some examples:
Koperasi Produsen Gayo Highland
The cooperative was established in October 2016 and is located in Aceh Tengah, Aceh. It has more than 700 coffee farmers as members with a land area of 1,000 hectares and coffee production reaching 54 lots. They also partner with several exporting companies, including PT Royal Pacific Indah International with a capacity of 20 lots/container per year, PT Orion Gandatama Perkasa with a capacity of 15 lots/container per year, PT Mas Kawi Wijoyo with a capacity of 15 lots/container per year. In the future, Gayo Highland Producers' Cooperative would like to export independently to maximise the margin received.
Koperasi Produsen Mina Bangkit Bersama
The cooperative is located in Karangrejo Village, Banyuwangi Sub-district, Banyuwangi Regency. The main activity of the cooperative is to provide support to its members, who are mostly shrimp farmers. One of its businesses is the marketing of shrimp pond products and shrimp feed. As well as the cooperative also organises extension activities, education and skills training for members. The cooperative was established in 2024 with 30 members, with support from Yayasan Sinergi Akuakultur Indonesia and Konservasi Indonesia. In addition, MICRA was also involved in the process of establishing the Mina Bangkit Bersama Cooperative as one of MICRA's services, namely Establishment and Management Support..
The cooperative comes from Kaubun sub-district, East Kutai district, East Kalimantan. The main activities of this cooperative are managing Kepok Banana plantations and processing fostered MSME products into ready-to-sell products, both for local and international markets. Currently, the cooperative has 53 members. Among the cooperative's processed products are Pisang Kepok, Pisang Cavendish, Amplang Kaubun, Ikan Asin Biawan, Ikan Asin Haruan, and Lobster Prawns. Since 2022, the cooperative has successfully exported to Malaysia, Taiwan, Canada, Greece, Pakistan, and India. The transaction value reached billions of rupiah at the time.
Producer Cooperative Benefits
Producer cooperatives assist their members by providing the necessary raw materials and production equipment. Through collective purchasing, the cooperative can obtain more competitive prices, thereby reducing production costs for members. In addition, through cooperation within the cooperative, members can share knowledge and technology with each other, which has the effect of improving the efficiency and quality of members' production.
Conclusion
Producer cooperatives are platforms for economic collaboration consisting of producers or businesses engaged in the production of goods and services. The main objective of this cooperative is to improve the welfare of its members through the provision of raw materials, production efficiency, collective marketing, and strengthening of buying and selling positions. Based on the principle of mutual cooperation, producer cooperatives are able to create greater economic benefits for their members. Producer cooperatives are also an effective solution for creating sustainability and economic independence for producers in various sectors.
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Sources:
Aji Basuki Rohmat. 2015. Analisis Penerapan Prinsip-Prinsip Koperasi Dalam Undang-Undang Koperasi. Volume II No. 1
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