V. Paper II -- French Econ., Legal and Finan. Characteristics of Coops

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

                     REPORT OF THE MEETING


Paper II: "Economic, Legal and Financial Characteristics of
Cooperatives", by Mr. Gerard Deshayes 
Mr. Gerard Deshayes made a wide-ranging intellectual tour
d'horizon of agricultural cooperatives in France, introducing
some rigorous tools of analysis which opened up yet another
approach to the question of capital in cooperatives. 
Beginning with an examination of the cooperative enterprise in
contrast to the non-cooperative enterprise in society and in
the market, the speaker then contrasted economic profit with
accounting profit. 
Special attention was paid to the cooperative as a legal
entity, and to the obligation incumbent on all members to
honour debts towards third parties.  The role of capital in
providing guarantees to third parties was brought out, and an
analysis was made of residual claims. 
A graph was introduced showing an index of constituted
financial reserves on the horizontal axis, and an index of
prices paid to members in marketing cooperatives on the other
axis. These represented two options for the same money: either
the cooperative increased prices to members and reduced
capitalization, or vice versa.  It was thus possible to trace
lines of the same efficiency in terms of gross profitability,
and to locate specific cooperatives (or the same cooperative
in different years)  in specific sectors of the graph. 
Empirical use of this graph over time with French marketing
cooperatives indicated a trend:  if a cooperative did well, it
would be most likely to do better, if it did badly, it would
be likely to do worse.