Market Update: How To Build An Economy That Works For Local Communities – Full Analysis

A growing number of Hawaiʻi residents are asking a similar question: how can our economy work for the many instead of the few?

Those working in cooperative development across the Pae ʻĀina (archipelago ) believe the answer lies in expanding and modernizing the cooperative business model, allowing communities to own and govern the value chains that shape our local economies. This legislative session presents a historic opportunity to do just that.

Cooperatives are businesses owned and democratically governed by their members, the people who use their services or work within them. From worker-owned enterprises to agricultural and community-based co-ops, they operate for local benefit rather than distant shareholders. Through shared ownership and the principle of “one member, one vote,” cooperatives strengthen local control over jobs, resources, and investment.

Across the United States, more than 65,000 cooperatives serve over 120 million members, generating over $650 billion annually and supporting millions of jobs. Organic Valley is a farmer-owned cooperative of over 1,600 organic farmers that generates more than $1 billion in revenue by pooling resources to process, market, and distribute products nationwide.

Despite producing around 30% of America’s organic milk, 84% of its farmers have fewer than 100 cows, showing how cooperative ownership can scale markets without consolidating wealth or land.

Worker-owned cooperatives also demonstrate higher survival rates and stronger job stability than conventional small businesses. Research from Harvard Business School found that employee-owned firms are 20% more likely to remain in business than traditional companies. Because they are owned and governed by their members, cooperatives prioritize long-term sustainability, community benefit, and fair labor conditions over short-term profit.

In Hawaiʻi, cooperatives already play a vital role in financial access, food systems, and renewable energy. As of 2023, we are home to 47 federally insured credit unions serving nearly 870,000 members with more than $15 billion in assets. The Kauaʻi Island Utility Cooperative achieved the highest renewable energy generation in Hawaiʻi in 2023 at nearly 58%, while maintaining the lowest residential electricity rates.

Agricultural cooperatives such as the Molokaʻi Livestock Cooperative, Hāmākua Ag Cooperative, and Kamuela Vacuum Cooling Cooperative support small farmers and strengthen food security. The Hawaiʻi ʻUlu Cooperative now includes over 200 farmer-members across four islands, partnering with the Department of Education to incorporate locally grown ‘ulu, kalo and ʻulu flour into breakfast and lunch menus serving over 100,000 students at all 258 public schools across Hawaiʻi.

New cooperatives continue forming across housing, water, energy, and agriculture, keeping wealth circulating locally.

Hawaiʻi holds an older model of collective stewardship in the ahupuaʻa system. For generations, Kanaka ʻŌiwi society integrated land, water, labor, food production, and governance within interconnected regions, prioritizing balance and collective well-being over individual profit. 

Modern cooperatives reflect many of these same principles of shared ownership and democratic decision-making. Because cooperative members are both the owners and the users of the business, decision-making aligns directly with community well-being.

This structure resolves a fundamental contradiction in conventional business models, where companies seek wealthier customers while suppressing wages and benefits for employees. By concentrating ownership among workers and community members, cooperatives strengthen local purchasing power and create a positive feedback loop that supports stable markets and healthier local economies.

Research consistently shows that cooperative enterprises make more value-driven decisions, demonstrating higher levels of environmental sustainability, stronger community investment, and greater social impact than privately owned firms.

Despite this momentum, Hawaiʻi’s cooperative laws have not kept pace with how these enterprises operate today nor with how residents want to wield the cooperative model to address modern challenges. Because of the state’s restrictive and outdated cooperative statutes, worker-owned and multi-stakeholder cooperatives in Hawaiʻi often face legal uncertainty or are forced to incorporate in other states. These barriers increase startup costs and prevent many community-led enterprises from forming.

This session, three bills aim to remove these obstacles and strengthen Hawaiʻi’s cooperative economy.

Senate Bill 2922 and House Bill 2404 amends HRS 421C, previously the consumer cooperative statute, to establish a General Cooperative Associations Act, creating a unified and flexible legal framework that makes it easier for communities and workers to form a variety of cooperative businesses. This amendment replaces outdated sector-specific laws with an incorporation structure that supports worker-owned, producer, consumer, and multi-stakeholder cooperatives through democratic governance and shared ownership.

Senate Bill 2716 establishes a Cooperative Development Program within the state Department of Business, Economic Development and Tourism to provide cost-share grants and technical assistance to cooperatives, prioritizing worker ownership, rural and agricultural communities, job creation, and Native Hawaiian communities.

Together, these bills create a modern legal foundation and practical pathway for cooperative growth. They emerged from the first Hawaiʻi-wide Co-op Hui Gathering held in May 2025 in Hilo, attended by over 65 cooperatives, emerging cooperatives and engaged community members.

Cooperatives are not a silver bullet, but they offer a proven alternative to extractive economic models that send profits away rather than reinvesting locally. They create quality jobs, strengthen community control, and build resilient local economies. Rather than depending on the goodwill of private companies, cooperative structures are designed to serve the needs and priorities of their member-owners.

Through modernized cooperative laws and investments in cooperative development, Hawaiʻi can build an economy rooted in both proven social enterprise models and its own traditions of collective stewardship, kuleana, and aloha ʻāina.