Farmers who manage to refine their raw materials before they sell them, will often get a better price. Flower is more worth than grain, cooking oil more than the plants it is pressed from, yoghurt, cheese and milk that is pasteurized and homogenized is worth more than untreated milk.
A single farmer may stand for this refinement. But often several farmers see advantages in joining together into a cooperative in which costs may be shared and the refining process be made more efficient and professional.
Many farmers have problems selling their products outside the local market. The cost of transporting and selling goods at far-off markets are too great to be profitable for a individual farmer. Bulk purchasers rarely take the trouble to pick up the small quantities that poor farmers can put up for sale. But in this area as well it may pay off to cooperate.
By cooperating, the farmers gain a stronger position when selling their wares. When several farmers cooperate, they have larger quantities to sell and are of greater interest to bulk purchasers. So, they may get a better price. Larger quantities also reduce the cost of transport and sale.
Cooperatives are found in many forms. In some cases they consist only of a few farmers in a village who cooperate about selling their goods in the closest town. In other cases they may be unions of thousands of coffee farmers, who refine the coffee and sell it on the international market. Regardless of size, some of the benefits are the same. Participating in a cooperative is often the best opportunity for poor farmers to get better prices for their products and greater profits from refining raw materials.