The FairPrice and Sunkist appeal of cooperatives

Global brand names as varied as American fruit producers Sunkist, Danish butter manufacturer Lurpak, Dutch financial institution Rabobank and Spanish football club FC Barcelona share a similar trait: they are not companies, but cooperatives.

What is the difference between the two?

The profit motive, with cooperatives putting social mission over money.

Cooperatives, owned by members, are not driven to make big profits for shareholders but to create the best value for its members and customers. Ownership is shared and decisions are made democratically.

In Singapore, some of the best-known cooperatives come under the labour movement National Trades Union Congress (NTUC). Think FairPrice for groceries, NTUC Income for insurance, and NTUC First Campus for pre-schools.


In Singapore, some of the best-known cooperatives come under the labour movement. Think FairPrice (above) for groceries, NTUC Income for insurance, and NTUC First Campus for pre-schools. Cooperatives, owned by members, are not driven to make big profits for shareholders but to create the best value for its members and customers. ST PHOTO: ALPHONSUS CHERN

The creation of cooperatives began more than 90 years ago when Singapore was still under British rule.

Their functions, both here and abroad, have evolved through the years to keep pace with changes in society and the needs of individuals, and the smart money would be on cooperatives' continued survival and success.

Look at Sunkist, the oldest citrus fruit cooperative in the United States. It is owned by fruit growers in California and Arizona.

The marketing cooperative gives the growers greater clout to compete overseas and, in turn, grow the fruit supply business into a billion-dollar-a-year organisation.

But as Sunkist states on its website, "you can't buy stock because there isn't any" as it is a cooperative, a not-for-profit enterprise owned by each individual grower so that together, they can do many things that a grower alone cannot afford to do - develop a worldwide market and access a global transportation system - to name a few.

Football club FC Barcelona, home to famous players such as Lionel Messi and Neymar, is another example of how a cooperative - owned and run by 175,000 members who are mainly fans - has produced super results.

The club, which recently won a treble of the Spanish league and cup titles and the European Champions League, scores points by giving priority to youth development and fan welfare above financial gains.

This is best exemplified by its cheap tickets.

The average cost of an adult season ticket is just £75 (S$160), and the club pays a charity, Unicef, €1.5 million (S$2.2 million) a year to sponsor its own shirts.

By comparison, top English clubs, such as Manchester United, receive £20 million a year in shirt sponsorship, while Arsenal charges at least £900 for a season ticket.

In Singapore, cooperatives have remained relevant in improving the lives of consumers by offering affordable goods and services, morphing from its early 1900s roots as credit enterprises.

With the lack of finance institutions for the common man at the turn of the 20th century, credit cooperatives were first to be set up. It started with the Singapore Government Staff Credit Cooperative, registered in October 1925 and still existing today.

All civil servants can be members, qualifying for loans at affordable rates to prevent permanent indebtedness.

Credit cooperatives - which have gone through several financial crises unscathed as compared with larger financial institutions - offer the lowest unsecured loan interest rates of about 6 per cent to 8 per cent a year.

In fact, former president S R Nathan had revealed that he took loans from a credit cooperative three times.

The first was to get married, the second was to buy a home and the third was to return a special monthly allowance which he received from NTUC.

"Cooperatives will remain relevant because they are set up to address a particular social need," he said in an interview with the Singapore National Cooperative Federation (SNCF), set up in 1980 to develop and promote cooperatives in Singapore and help those with lower income.

Indeed, since the early credit cooperative years, a new breed of social enterprises has sprung up.

The turning point was in 1969, when then Deputy Prime Minister Goh Keng Swee challenged the NTUC labour movement to set up cooperatives for workers that could compete with private enterprises.

The NTUC responded swiftly.

A year later, in 1970, it set up its first cooperative, NTUC Income, which made insurance within the reach of lower-wage workers. Next came FairPrice, which moderated the cost of essential goods.

Cooperatives are member-owned. Cooperatives return dividends to their members each year when there are profits, or surpluses, in cooperative language. Workers who own these cooperatives benefit.

Outside the labour movement, other cooperatives have been formed, such as the Silver Horizon Travel Cooperative, formed by retirees who are travel enthusiasts to promote active living for senior citizens through customised travel programmes.

While cooperatives are not profit-driven, some highly successful ones do make good surpluses. FairPrice achieved a group revenue of $3.2 billion and a net surplus of $144.1 million last year.

But as Mr Chandra Das, chairman of the Central Cooperative Fund put it, making profit is not a "dirty word".

"If you make money, you can do a lot of things. When private companies make money, it goes to shareholders," he said.

"But in cooperatives, we find ways and means to return the surpluses in the form of rebates and high dividends to the members who own the cooperatives."

Certainly, cooperatives which do well and do good can stand the test of time, and build a better world.

  • The writer is the chief executive officer of the Singapore National Cooperative Federation.

The story of how cooperatives have helped address social needs will be told on a Journey Wall that will travel to over 20 schools and three National Library branches.

A version of this article appeared in the print edition of The Straits Times on July 20, 2015, with the headline 'The FairPrice and Sunkist appeal of cooperatives'. Print Edition | Subscribe