Presentation Coops at HCCA
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The document discusses the internationalization of cooperatives in agriculture, highlighting their various roles in market efficiency, risk management, and innovation. It outlines changes in cooperative structures, including the emergence of hybrid models and shifts towards product-based organizations. Additionally, it examines the impact of the EU's Common Agricultural Policy (CAP) on cooperative operations and potential future trends in cooperative formation and governance.
Presentation Coops at HCCA
- 1. Defi pour les cooperatives Internationalisation of Coops under a changing CAP Presentation at HCCA, Paris, October 2018 Krijn J. Poppe
- 3. Cooperatives add value in different ways: Realise efficiency of scale (if owners don’t want to merge): joint machines, cheese factory Create a market / realise access to the market that is at a distance Increase market efficiency by competition with traders with a high mark-up Reduce transaction costs for the food industry by standardising contracts, organising farmers and their quality control. Manage risk for farmers (pooling) Organise innovation e.g. in niche products
- 4. --Marketing and processing---Input supply Production d , - Clustering F/H. Regional niche coop.C. Bargaining coops D. Specialzd Processing coops E. Large Agribiz coops. Scale/branding/capitalintense Selling (or buying) Clustering of 500 European Cooperatives, clustered on characteristics (excluding region and policies of the region relevant for those coops) A. Secondary coops B. Supply coops G. Emerging coops Production proces
- 5. Structures of cooperatives are changing Cooperatives go international Cooperatives obtain hybrid organisational structures Cooperatives give more room for managerial entrepreneurship Cooperatives (have) become more product-based and less region-based (in member-representation) In order to attract additional equity capital, cooperatives change their ownership structures Federated cooperatives are likely to disappear or become farmer-owned instead of user-owned
- 6. Overview of the situation in EU (circa 2010) Transnationals 1 (members in all supplying countries) Transnationals 2 (members in some but not all supplying countries) Inter- nationals Cereals 4 7 7 F & V 12 3 15 Dairy 6 3 8 Sugar 2 0 3 Other sectors 8 1 12 Total 32 14 45
- 7. Internationalisation is closely related to growth In several countries the domestic merger process within a sector has, more or less, been completed => ‘national champions’ European food processing companies are still small compared to the retailers as well as to American food processing companies (Wijnands et al, 2007) More international consolidation can be expected Internationalisation seems to be the goal, not a transnational cooperative movement
- 8. How to create a transnational cooperative: 1. a national cooperative invites members from another country (e.g. Avebe) 2. through acquisitions in foreign countries (Campina) 3. via establishment of a new cooperative (examples?) 4. by merging two (or more) national cooperatives (e.g. Arla Foods) It is not easy; Danish Crown Annual report 2011: ● “Much of the year has been spent discussing Danish Crown's ownership structure - and considering the options should foreign capital one day be needed to ensure future growth. And thereby want a say in the decisions made. This discussion is ongoing.”
- 9. Transnationals: in conclusion The 46 transnational cooperatives can be found in a limited number of sectors (mainly dairy and fruit & vegetables) in northwest Europe. They often also own companies that source from non- members in other countries, like the other 45 international cooperatives. Most cooperatives prefer to internationalize by acquiring foreign IOFs, not by merging with other cooperatives. ● To prevent dilution of ownership (income, control) ● There are no legal barriers in merging across borders The SCE (European Cooperative Society) can be used to merge cross-border but is not used.
- 10. Will the new CAP influence cooperatives ? The EU proposals for the future CAP – relevant aspects: Subsidiarity with national strategic plans More attention to climate and environmental issues ● 40% CAP payments on climate ● 30% EAFRD on AECM Obligation to have an eco-scheme in Pilar 1 Option to shift up to 30% from Pilar 1 to Pilar 2 ● (or 15% of Pilar 2 to Pilar 1) Budget cuts more on Pilar 2 than 1
- 11. Effects for farmers: differentiation ? Differences in basic payment between regions already exist and will not disappear Income effects of farmers will differ between regions as national (and regional) governments will be more farm- lobby oriented or more environment-lobby oriented Within (some) regions farmers with an environmental friendly farm system will benefit (higher payments, options for new farm systems) and others will face a drop in income
- 12. Will the new CAP influence cooperatives ? Increased heterogeneity between members ? Climate- / environmental schemes of food processors might satisfy the criteria of an eco-scheme ● Governments might want to leverage their investment by promoting such systems ● If farmers get a higher price for their more sustainable products, a lower payment by the government is needed – more leverage Collectives in AECM are now accepted ● There might be chances for new cooperatives / producer organisations / commons ● “3rd wave of cooperatives” as part of the transition
- 13. Thanks for your attention Merci pour votre attention krijn.poppe@wur.nl www.wur.nl Thanks to: EU / Support for Farmers’ Cooperatives Perttu Pyykkönen (PTT) 2013 presentation