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News Article

Cooperative Societies Key to Mexico’s Economic Drive

By Alessa Flores | Mon, 09/14/2020 - 12:48

Last week, Carolina García Aguilar, Secretary of the Commission of Social Economy and Promotion of Cooperativism of the Chamber of Deputies proposed to adopt a cooperative model similar to developed countries to support Mexico’s economic reactivation. "Cooperativism will be the initiative that will protect our national economy, our national security and Mexican workers' protection and economic security," García explained in a note from El Economista.

According to CONCAMEX and the General Law of the Cooperative Society, a cooperative society is a form of social organization integrated by physical persons united by common interests and principles of solidarity, self-effort and mutual assistance with the aim of satisfying individual and collective needs through the accomplishment of production, distribution and consumption activities. The law describes three types of cooperative societies: consumers of goods and/or services, producers of goods and/or services and savings and loans. 

Cooperative ventures are not a new concept in Mexico. They were formalized in 1927 with the issuance of the First General Law of Cooperative Societies, although progress in the matter was clearer over the past decade with the approval of the Cooperative Savings and Loan Societies Activities Act in 2009.

According to Real Estate Market, one of the oldest social cooperatives with strong participation in the infrastructure sector is Cooperativa La Cruz Azul. besides Dedicated to the production of Portland cement, it has a unique model of productivity, sustainability and social responsibility. In 2011, the cement company inaugurated Mexico's first combustion chamber and the fifth in its type called Combustor Hot Disc with an investment of US$14 million for environmentally friendly waste disposal. Another recognized cooperative venture is Sociedad Cooperativa Trabajadores de Pascual, a firm that has been in Mexico's soft drink industry for over half a century. As of today, the company has 4,559 employees, two manufacturing plants, nine brands and 30 branches. One Sociedad Cooperativa Trabajadores de Pascual’s main actions in Guadalajara is the annual recycling campaign for the processing and reincorporation of various materials into the value chain.

Globally, the International Cooperative Alliance estimates that there are approximately 3 million cooperative societies generating US$2.035 billion per year, plus more than 10 percent of the world's employment. In Mexico alone, it is estimated that more than 600 authorized and unauthorized cooperatives operate in the country, according to CONCAMEX figures.

Today, New Zealand's Minister of Economic Development, Simon Bridges, explained in the Cooperative Business New Zealand reunion that cooperatives in New Zealand are highly recognized for their benefits to society, as these contribute with more than 20 percent of the country's GDP. The benefit is reflected in the population. This is because of the difference between a company and a cooperative, which lies in the organization's ownership. While shareholders are the owners of a company, all workers are owners of a cooperative society, Bridges explained. These ventures stand out for having a "business model based on values and ethical principles through self-help and empowerment, reinvesting in their communities and caring for people's well-being with a long-term vision of sustainable economic growth, social development and environmental responsibility," the International Cooperative Alliance explains.

In particular, infrastructure cooperatives are linked to the well-being and development of individuals and their communities. Housing and construction cooperatives are known for creating jobs and providing affordable housing, as well as creating and enabling a dignified environment for people through the introduction of services such as roads, water, education and more, according to the International Labor Organization. Deputy García Aguilar explained that Mexico's drive to create more cooperatives could be key to economic reactivation and mitigating the impacts of the COVID-19 crisis.

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Alessa Flores Alessa Flores Senior Journalist and Industry Analyst