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The cooperative movement as a driver of socioeconomic development

May 29, 21:08 UTC+3
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The cooperative movement is a workable tool of a country’s social and economic development. It helps to generate cash for the money turnover, ease social tension by creating jobs and providing people with products and services. In Russia, a major focus is development of agricultural cooperatives.

As of 2015, the International Co-operative Alliance (ICA) brought together 284 cooperative organisations working in 95 countries. The cumulative turnover of the top 300 cooperatives has amounted to USD 2.2 trillion. In the G20 countries, almost 12% of the total workforce is employed by cooperative organisations, which adds up to nearly 800 million people across the globe.

The US and European countries are the leaders by the share of population involved in the cooperative movement. In Russia, about 20 million people are estimated to be taking part in cooperative activities to a certain extent.

Types of cooperatives in Russia:

Financial cooperatives are involved in credit cooperation, cooperative finance, reciprocal lending and insurance.

  • They are mostly needed at a time of an economic crisis.
  • Credit cooperation helps overcome a shortage of investment resources, which is currently one of the biggest challenges for Russia’s economy.
  • As of 2017, there are 3,584 credit cooperatives in Russia.

Agricultural cooperatives can work in production, trading, supply, veterinary, and many other areas.

  • According to the Russian Federal State Statistics Service, as of January 1, 2016, there were 8,313 agricultural production cooperatives and 6,293 agricultural consumer cooperatives in Russia. As of the end of 2016, the number of production and consumer cooperatives in villages went down by 31.8% and 32.9%, respectively, as compared to 2011.

Consumer cooperatives are mostly retailers and public catering service providers.

  • There are about 3,000 consumer cooperatives in Russia with around 4 million members.
  • More than 200,000 of Russia’s citizens are employed in consumer cooperatives.

Production cooperatives.

  • According to Russia’s Federal Tax Service, 320 production cooperatives were registered from January through November 2016, while 1,248 production cooperatives ceased to exist.
  • Possible reduction of income-based social fees down to 2.9% is expected to give a new boost to such cooperatives in 2017.

The cooperative movement across the globe is seen as an important economy development factor which helps narrow social and economic differences; that is why cooperation usually enjoys broad government support:

  • The US has preferential taxation policies in place coupled with its Farm Credit System, where loans are guaranteed and insured.
  • In Germany, all cooperatives enjoy financial aid and tax preferences from the government; e.g. internal transactions between the cooperative members are not added to the tax base.
  • Trading, supply, and service cooperatives in France are exempt from taxes (non-member transactions are only taxed).
  • The Italian legislation sees cooperatives as “mutual aid societies” and relieves them of all taxes over the first 10 years of their operation. Besides, there is no VAT on goods and services traded inside the cooperative either.

In Russia, the government supports cooperation by both offering tax preferences and allocating financial aid from the budget:

  • Credit consumer cooperatives may use the simplified taxation system.
  • A departmental special-purpose programme is in place, On the Development of Agricultural Cooperation in 2014–2017 and up until 2020.
  • In 2015, Russia’s Ministry of Agriculture signed an order which envisages providing grants to agricultural cooperatives to develop their facilities and equipment. It has been announced that RUB 1.5 billion is to be allocated from the budget in 2017. In total, 60 Russian regions will receive the support.
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