Secondary Cooperatives: Federations, Apex Bodies & Cooperative Unions

What Is a Secondary Cooperative?

A secondary cooperative (also called a second-tier cooperative, cooperative union, or federated cooperative) is a cooperative whose members are other cooperatives rather than individuals. While a primary cooperative is owned by individual farmers, consumers, workers, or other persons, a secondary cooperative is owned by primary cooperatives that have federated together for shared services or collective action. The International Cooperative Alliance itself functions as a tertiary body at the global level — a federation of national federations.

The distinction maps onto a structural hierarchy:

Primary cooperative: Individual members → own → cooperative
Secondary cooperative: Primary cooperatives → own → secondary cooperative
Tertiary cooperative (or apex body): Secondary cooperatives → own → national apex

This multi-tiered structure exists because the advantages of cooperative organization — pooling scale, collective bargaining, shared services — apply not just to individuals, but to cooperatives themselves. A single-county grain cooperative has limited market power. When 200 county grain cooperatives form a secondary cooperative to handle national grain marketing, their combined volume gives them genuine leverage with large grain buyers.

The secondary cooperative model is most developed in agriculture, credit unions, and insurance, but the logic applies across cooperative sectors.

Why Secondary Cooperatives Form

Scale and Market Power

The most common reason primary cooperatives form secondary cooperatives is to achieve the scale needed to operate in larger markets. A small consumer food cooperative cannot negotiate the purchasing terms that a national wholesale cooperative can achieve when buying from major food manufacturers. A local grain elevator cooperative cannot operate an export terminal on its own, but 500 grain elevator cooperatives collectively can.

Shared Infrastructure

Some cooperative functions benefit from scale in infrastructure. Grain export terminals, dairy processing plants, large warehouses, and information technology systems all have substantial fixed costs that a single primary cooperative may not be able to justify. Secondary cooperatives allow these costs to be spread across many member cooperatives.

Specialized Services

Secondary cooperatives often provide services that require specialized expertise:

Legal and compliance services: A small credit union cannot maintain a full legal department. A state credit union league can.
Political advocacy: Individual cooperatives have limited ability to influence legislation. A national apex organization with professional government affairs staff can.
Audit and examination: In the credit union sector, cooperative examination services are often organized through secondary or apex bodies.
Shared marketing: Umbrella brands and joint marketing campaigns are most efficiently managed at the secondary or apex level.

CHS Inc. — The Largest US Secondary Cooperative

CHS Inc., headquartered in Inver Grove Heights, Minnesota, is the largest cooperative enterprise in the United States by revenue ($44.6 billion in 2022). It operates as a secondary cooperative: its members are primarily other cooperatives — approximately 600 local grain elevator cooperatives, farm supply cooperatives, and agricultural service cooperatives — rather than individual farmers.

CHS provides its member cooperatives with:

Grain marketing and origination: CHS is one of the largest grain exporters in the US, operating elevators, terminals, and export facilities. Member cooperatives deliver grain to CHS facilities, which markets it nationally and internationally.

Energy products: CHS owns a petroleum refinery in Laurel, Montana (co-owned with Par Pacific), distributes propane through a national network, and provides petroleum products to farmers and cooperatives. CHS's Cenex brand is among the largest rural energy brands in the United States.

Crop inputs and agronomics: Through Winfield United (acquired from Land O'Lakes's former division), CHS provides seeds, fertilizers, and crop protection products to member cooperatives.

Financial services: CHS provides grain price risk management tools and financing to member cooperatives.

The complexity of CHS's structure illustrates an important feature of secondary cooperatives: they often look more like large diversified corporations than small community enterprises. CHS has thousands of employees, publicly traded preferred shares, and operations in dozens of countries. But its governance remains cooperative: member cooperatives elect CHS's board and govern the enterprise democratically. For a broader overview of the US agricultural cooperative landscape, see the top agricultural cooperatives in the United States.

Land O'Lakes — A Federated Dairy Cooperative

Land O'Lakes, discussed in the agricultural cooperative examples article, is structured as a federated cooperative. Its approximately 1,700 members are primarily local dairy and agricultural cooperatives, with some direct farmer members.

This federated structure means that individual dairy farmers typically interact with their local cooperative, which is a member of Land O'Lakes. The local cooperative handles milk pickup and first-stage processing in some cases; Land O'Lakes handles national and international marketing, brand management, and the non-dairy business segments (animal nutrition, agronomy).

This two-tier structure provides local service delivery at the primary level while achieving national scale at the secondary level — a structure that has proven durable across decades of agricultural consolidation.

Credit Union Secondary Organizations

The US credit union sector has a well-developed secondary structure that illustrates how cooperative secondary bodies function in financial services.

State Credit Union Leagues

Each US state (and several regions) has a credit union league — a secondary cooperative owned by credit unions in that state. These leagues provide:

Government affairs and advocacy: Lobbying state legislatures on issues affecting credit unions
Compliance assistance: Helping member credit unions navigate complex federal and state regulations
Education and training: Training programs for credit union board directors, managers, and staff
Shared services: Group purchasing, insurance programs, and technology services

Major state leagues include:

Michigan Credit Union League: One of the largest, serving Michigan's 200+ credit unions
California and Nevada Credit Union Leagues: Serving the western United States
Credit Union Association of New York

CUNA (Credit Union National Association)

CUNA (now merged with NAFCU to form America's Credit Unions) was the apex secondary cooperative for US credit unions — a tertiary body whose members were the state leagues (which are themselves secondary cooperatives). America's Credit Unions now serves as the primary national advocacy and service organization for approximately 5,000 US credit unions with $2.2 trillion in assets.

CO-OP Financial Services

CO-OP Financial Services is a secondary cooperative owned by more than 2,800 credit unions. It provides the shared branching and ATM network infrastructure that allows credit union members to access their accounts at any CO-OP network location nationwide. CO-OP operates one of the largest ATM networks in the United States.

This shared network illustrates the infrastructure logic of secondary cooperatives perfectly: no single credit union could build a national ATM network, but thousands of credit unions collectively can.

WesCorp (Western Corporate Federal Credit Union)

Corporate credit unions are themselves secondary cooperatives — credit unions whose members are other credit unions. They provide wholesale financial services (liquidity, investments, payment processing) to member credit unions. The corporate credit union structure suffered significant failures during the 2008 financial crisis, leading to a major restructuring of the sector. The WesCorp failure, which cost the National Credit Union Administration several billion dollars, led to fundamental changes in corporate credit union regulation.

Rabobank — A Secondary Cooperative Bank

Rabobank is the Netherlands' largest bank by total assets and one of the world's largest financial institutions. It is organized as a two-tier cooperative structure.

Primary level: Approximately 100 local Rabobank cooperative banks operate across the Netherlands, each serving a local community. These local banks are member-owned: individuals and businesses in a community become members of their local Rabobank cooperative.

Secondary level: The local Rabobank cooperatives collectively own Coöperatieve Rabobank U.A., the central organization that provides shared services, capital, risk management, and the international banking operations that no local bank could maintain independently.

This structure gives Rabobank an interesting dual character: locally responsive and member-governed at the primary level, globally capable and professionally managed at the secondary level. Rabobank is the world's leading agricultural lender, with financing operations in food and agriculture across dozens of countries.

The Rabobank model is regularly cited in debates about cooperative banking as evidence that cooperative ownership and global financial sophistication can coexist — though the 2013 LIBOR manipulation settlement (in which Rabobank paid approximately $1 billion in fines) demonstrated that cooperative ownership does not automatically prevent the misconduct that affects large financial institutions generally.

The ICA as Tertiary Cooperative Structure

The International Cooperative Alliance functions as a tertiary body at the global level: an organization whose members are national cooperative apex bodies, which are themselves secondary cooperatives or federations.

For example:

Individual farmers → primary agricultural cooperative → national agricultural cooperative federation → ICA

The ICA does not have individual person members; its members are organizations. This three-tier structure — individual, primary, secondary/apex, international — is the full hierarchy of cooperative organization.

Governance Challenges in Secondary Cooperatives

Secondary cooperatives face distinct governance challenges that primary cooperatives do not:

Diffuse accountability. When a primary cooperative's members are other cooperatives rather than individuals, accountability chains become longer. Individual farmers are affected by CHS's decisions, but they influence those decisions through their local cooperative, which influences CHS through elections and governance participation. Each step adds distance between individual stakeholders and top-level decisions.

Conflicting member interests. Member cooperatives in a secondary cooperative often have different sizes, geographic locations, and interests. A small regional grain elevator cooperative has different needs from a large multi-state agricultural cooperative. Governance structures must manage these differences without systematically favoring larger or more powerful members.

Management vs. member control. Large secondary cooperatives like CHS, Land O'Lakes, and Rabobank employ thousands of professional managers and operate sophisticated enterprises. The practical governance authority of member cooperatives — particularly small member cooperatives — over these enterprises is limited by information asymmetry and managerial expertise.

These challenges are real but not unique to cooperatives. They parallel the principal-agent problems in any large organization. Secondary cooperatives have generally managed them reasonably well: CHS, Land O'Lakes, and Rabobank have each operated continuously for over a century.

Secondary Cooperatives in Agriculture Globally

The secondary cooperative model in agriculture is not uniquely American. Several important global examples:

Coop (Switzerland): One of Switzerland's two largest retailers (alongside Migros), Coop is organized as a federation of regional consumer cooperatives, making it a secondary cooperative at the national level.

COGECA (European Farmers' and Agri-Cooperatives): The European apex organization for agricultural cooperatives, representing national agricultural cooperative federations from EU member states. COGECA advocates for agricultural cooperative interests in Brussels and coordinates policy positions across European farming cooperatives.

Copa-Cogeca: The joint committee of the Committee of Professional Agricultural Organisations (Copa) and Cogeca, representing both farmer unions and cooperative federations in EU policy processes.

OCAB (Organization of African Cooperative Apex Bodies): The African apex structure for cooperative federations, working in partnership with the ICA's Africa regional office.