Future Options for Co-operatives

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    This document has been made available in electronic format
         by the International Co-operative Alliance ICA 
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                         July, 1994

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          Future Options for Co-operatives
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3.1  The major trends of change
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Sympathizers and opponents frequently ask: "How is it possible
that co-operatives in Slovakia had such good results in the
period of `normalisation' (i.e. after the Prague Spring)? Had
they not been exposed to assistance from, and intervention by,
the totalitarian regime?"

The answer is that the co-operatives were able to build a
solid foundation in extremely unfavourable conditions. Neither
the State, nor the State economic sector, was able to satisfy
demand for goods and products, food and accommodation. This
was an opportunity which the co-operatives seized. As the
regime did not want to widen the gap between demand and supply
it had to enlist the help of co-operatives.

Many co-operatives were readily able to utilise this
situation, and thus replace comparable branches of the State
sector. Co-operatives were successful not thanks to the
planned economy, but in spite of it. They even achieved some
level of success in securing foreign trading deals, the
consequence of which was that co-operatives were able to gain
foreign currency and import food, consumer goods, and
investment from the West.

These, together with many other factors, enabled co-operatives
to develop a strong economic base. What co-operatives need now
is a consistent transition to the market economy, and improved
marketing. In comparison with joint-stock companies, the
co-operatives differ in that, in addition to their
entrepreneurial function, they fulfil a socio-economic and
social role in accordance with their 150-year tradition. This
is very attractive under the current situation.

It is presumed that co-operatives will make few demands on the
State: only that it should provide the appropriate conditions
in which they can run their business and social activities,
and similar subsidies to those which are usual in Western
countries. In their 150-year history, co-operatives have
repeatedly survived periods of crisis. Only a few were unable
to survive, but those which remained showed a very strong will
to continue.

The struggle to reach a favourable position in the market
economy will be won by those who understand that assistance
primarily comes not from Government, but from the people. This
applies to small and medium-sized enterprises, and to
privatised State companies which have become joint-stock
companies, but it is equally valid for co-operatives.
Co-operatives can survive only if they come back to the tried
and trusted principles of co-operative self-aid and mutual
aid. The future is not to be found in separating the existing
co-operatives into smaller business units, nor in individual
co-operatives "and co-operative unions" acting in isolation,
both of which have been witnessed since 1989. The future must
be looked for in the voluntary, deliberate and economically
advantageous merging of co-operatives. Within a market economy
only the strongest businesses are able to thrive. This does
not mean that priority should be given to the establishment of
big co-operatives, but it should be possible for co-operatives
to enter into mergers or collaboration so as to take advantage
of joint resources, ideas, and especially joint capital. 

Despite the present, exceptionally complicated, situation it
will be up to the co-operatives themselves to retain and
eventually strengthen their position in society and to become
competitive within the national market.

Slovakia is currently, as are the other post-Communist States
of Central and Eastern Europe, in a period of transition. Our
credit system is not yet adequate and the situation is such
that it is only with great difficulty that many businesses,
including co-operatives, are able to obtain bank loans at
acceptable interest rates.

Agricultural co-operatives
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The continued existence of agricultural co-operatives will
depend on State agricultural policy, as it does in countries
with a market economy. For the time being, it is difficult to
speak about agricultural policy in Slovakia. Three basic
questions have yet to be answered:

1.   How the privatization of land will influence the
     quantitative and qualitative growth, or decrease, in
     agricultural production.

2.   How the positive and negative stimuli will be manifested
     in agriculture in general, and in co-operatives in
     particular.

3.   What effect Slovak agriculture will have on the
     possibility of joining the European Union.

It is possible to say that agricultural co-operatives have a
role to play in the future, although such co-operatives cannot
be built on the principles of the old agricultural
co-operatives. They will be established as businesses and will
be smaller than the current co-operatives. It is not possible
to exclude the possibility that some of them will be
established in place of bankrupt co-operatives: on the same
land, but with new members. They will frequently be
"co-operatives of small co-operatives", involving mergers
between specialised production units. They will also have to
have new, healthier member relations, consistently applied
co-operative democracy and a strong work ethic. Each member
will have to feel personally responsible for the prosperity of
the co-operative. 

It is with some justification that it is thought the new
co-operatives will be actively involved in the processing
industry and benefit from its profits. They will provide
services to co-operatives as prime producers. It is also
believed that co-operatives will fulfil a wider function:
providing services to residents, and influencing the country's
cultural and social life, including agro-tourism and also
rural tourism. Agricultural co-operatives will have a
particular interest in environmental improvement, safeguarding
social conditions and producing agricultural products which
have no health risks.

Furthermore, it is presumed that agricultural co-operatives
will preserve their apex organisation, in order to represent
them in dealings with the State, to assist with the sale of
agricultural products, to organise the education and training
of members and to provide varied advisory services. Upon
request, the union will fulfil those tasks to which the
members are entitled by virtue of their membership fees.

It is taken for granted in all co-operative branches that
co-operatives will co-operate with other commercial companies
when this is mutually advantageous, eventually creating joint
ventures with them.

Consumer co-operatives 
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Consumer co-operatives now have to fight to win and retain
customers. They have to take steps to motivate their members
to attain good commercial results. Some steps have been taken
in this direction, but much more will need to be done in order
to develop the internal market. The question also remains as
to how the reduction in citizens' purchasing power may be
halted, since this is one of the main reasons for the decrease
in co-operative revenues.

Housing co-operatives
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The future of housing co-operatives will depend on the State's
housing policy. Unfortunately there are no indications as to
what this will be. The State should get rid of direct
subsidies, but it should also provide advantageous long-term
loans to finance co-operative housing construction and take
steps to eliminate the chronic failures which have plagued the
housing sector for decades.

Production co-operatives 
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Production co-operatives are faced with the problem of
developing a skilled management able to rapidly perceive
changing trends and adapt production to these. The motivation
of members is of the utmost importance. Members must consider
it their duty to support their co-operative.

Credit, financial and saving co-operatives
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An important task will be the development of further
co-operative sectors, especially credit, financial and saving
co-operatives. Prior to 1948 these were the pillars on which
the Slovak co-operative movement was founded. Preparations for
their reinstatement are under way.

3.2  Need for international assistance
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In our opinion, mutual international assistance between
co-operative organisations, members of the International
Co-operative Alliance, is very important and very necessary.
For the Slovak co-operative movement, such help had a positive
influence in the development and approval of co-operative
laws, especially in 1991 during the discussion stage of the
Co-operative Transformation Law.

Over the past three years some concrete forms of assistance
and collaboration between Slovak co-operative organisations
and co-operative organisations in economically developed
European countries have been developed. The level of
collaboration varies according to individual co-operative
unions and countries. For example, there are successful
developments between Slovak consumer co-operatives and
Swedish, Danish, Finnish and other European co-operative
organisations; between production co-operatives and the ICOSI
organisation from France and other countries; between Slovak 
housing co-operatives and Dutch housing co-operative
organisations; between Slovak agricultural co-operatives and
others from Denmark and elsewhere.

Even though international assistance has had many positive
results, there is still a need for much more. Below, we would
like to mention some possibilities (not in order of
importance) which might be usefully applied in the Slovak
conditions.

1.   To publicise co-operative development worldwide, to
     inform the public about the international experiences of
     the co-operative movements in Europe, throughout the
     world and in Slovakia, and to distribute information
     material to politicians, members of parliament,
     ministries, universities, etc. 

2.   To invite representatives of the international
     co-operative movement to the most important co-operative
     assemblies and meetings.

3.   To assist Slovakia to overcome our problems by exploring
     the possibilities for collaboration within the
     International Co-operative Alliance's European region. To
     utilise such collaboration to improve the co-operative
     image and to develop better economic conditions for the
     co-operatives within the Slovak Republic.

4.   To send representatives of the International Co-operative
     Movement to meet politicians, members of parliament,
     members of the government and senior officers in the
     ministries. Also to maximise the publicity given to such
     visits.

5.   To provide foreign assistance for the education and
     training of managers and co-operative members.

6.   To develop the co-operative system, which will enable
     Slovakia to benefit fully from the possibilities for
     assistance from international financial sources. In this
     connection we would request co-operative movements within
     more developed countries to lobby their Governments to
     provide more visible assistance to our co-operative
     movement through their co-operative organisations.

7.   To help us to apply for assistance from international
     financial sources such as the PHARE programme of the
     European Union, the European Bank for Reconstruction and
     Development, the World Bank, etc. to fund the development
     of our co-operative system.

8.   That the International Co-operative Alliance and its
     members should prepare the conditions for wider
     development of international co-operative collaboration.
     To organise international events as conferences,
     seminars, training etc. to this end.

9.   That the International Co-operative Alliance and its
     members should provide assistance for the development of
     new types of co-operatives such as credit and saving
     co-operatives, pharmaceutical co-operatives etc.

10.  To develop collaboration between universities to provide
     courses dealing with co-operative systems. It would be
     possible, under the umbrella of the International
     Co-operative Alliance, to organise conferences with
     contributions from all those universities which have
     co-operative studies in their curriculum.

11.  To provide support for the preparation and organisation
     of sales exhibitions and co-operative markets worldwide.

12.  To donate to our co-operative movement copies of any
     professional literature regarding co-operatives from
     1950-51 to the present date.