IV. Discussion of the Country Papers

  This document has been made available in electronic format
          by the Committee for the Promotion and
            Advancement of Cooperatives (COPAC)

                     REPORT OF THE MEETING


In the discussion of the three country studies, it was pointed
out that differences in the quality of management, the
legislative, fiscal and monetary environments existing in a
specific country, relations with government, and the degree of
government intervention might be powerful enough factors in
themselves in affecting the direction of the relationships
determining and associated with capital formation in
agricultural cooperatives. 
The question was therefore asked: from whose point of view
should the "quality of capital" be defined?  From the members'
point of view, from the cooperative manager's perspective or
from government's or some outsider's vantage point? A low
quality capital structure could mean apathy in a
government-dominated scenario, or the intelligent use by
members of leverage in a free-market environment.  In spite of
some evidence confirming the hypotheses in the India case
study, life turned out to be more complicated than the
hypotheses suggested. 
The meeting also took into consideration the case of high
inflation and its effect on member capital.  If a cooperative
can obtain a low-interest loan in an inflationary environment,
it may pay back less than it borrowed, and extract rent from
the financial market.  As in the case of the Guatemalan
leverage, the winning strategy in an inflationary environment
may not correlate with a high proportion of member-owned
Different types of agricultural cooperatives have different
capital structures and strategies.  Financial cooperatives
were a different case from marketing and processing
cooperatives, or again from input supply cooperatives. 
In spite of these new perspectives, which greatly enriched and
broadened the debate, it was agreed that the concept of the
quality of a cooperative's capital was still valid as a
general proposition, especially for long-term stability,
independence, and lower financial costs. The degree of a
member's financial stake was an essential element in the
dynamic of the situation. 
With regard to future research in this field, it was agreed
that it would be profitable to focus on the question of "what
works?" when it comes to analysing or promoting successful
cooperative capitalization.