December 13, 2012

Co-ops work and have for decades

Utne Reader - Rural electricity and telephone co-ops are one of the great sharing success stories in American history—largely due to coordination by the federal government. In 1934, only 11% of farmers had electricity compared to 90% in Europe. Private electric companies refused to serve many rural customers or price gouged them when they did. The Rural Electrification Administration was formed in 1935 to fix the problem by providing technical assistance and loans to electric cooperatives. Less than 20 years later, practically all farms had power due largely to electric co-ops.
The REA was such a success that the same strategy was used in the 40s to make telephone service available in all rural areas. The Rural Telephone Administration matched the success of the REA. To this day, 1.2 million rural residents are members of a telephone co-op.
The US government's success in boosting rural economies through cooperative development is a largely forgotten story that couldn't be more relevant today. For instance, in creating jobs.

The democratic ownership and management of cooperatives creates stable enterprises and jobs. Yet, none of the $20 billion in loan programs available to rural cooperatives are available to urban ones. This is despite the fact that 80 percent of Americans now live in cities, with some of the highest poverty rates in the country.

Last year, when cooperative groups were visiting Congressional offices on the Hill in support of USDA programs, Congressman Chaka Fattah, who represents an urban district in Philadelphia, asked why co-ops in urban America didn’t have similar support. A year later, a bill developed by Fattah and cooperative groups—the National Cooperative Development Act—aims to bring technical assistance, revolving loans, and startup capital to co-ops in cities across America, recognizing that co-ops are a vital and long-term economic development model.

HR 3677 would set up an organization based out of the Housing and Urban Development Administration and administered by a separate non-profit to implement the kinds of support needed specifically by co-ops. The bill would also set up a revolving loan fund for loans for machinery, buildings, and the other startup costs. Currently with 13 cosponsors, the bill will be reintroduced in 2013 in the new session by Congressman Fattah, with more bipartisan support, according to his office.


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