The Idea and Basics of Co-operation - Global Perspectives & Danish Tradition

The Idea and Basics of Co-operation - Global Perspectives and Danish Tradition

by Claes Bjorn

The basic ideas of the co-operative system as we know it today were shaped
in the first half of the 19th century. They were inspired by the social
problems created by the early industrialisation and the emergence of the
modern working class. One of the first to formulate the thoughts behind the
co-operative movement was a Briton, Robert Owen (1771-1858) but his
attempts to put them into practical use came to nothing. In 1844, a group
of workers established the world's first consumers' retail society in the
North England town of Rochdale near Manchester. In doing this, the
initiators laid down a number of basic principles which since then have
been considered the guidelines for co-operatives.

>From Rochdale, consumers' retail societies spread to other parts of Great
Britain and from there to the Continent. In France, a number of
theoreticians had already put forward thoughts similar to those of Robert
Owen and in the late 1840s societies based on co-operative ideas, were
formed in Germany to provide facilities for people of the lower middle

Co-operation as a Social Lever

In the 19th century, the co-operative idea made its greatest impact in the
form of consumers' retail societies. In assessing the position of the
system both then and later, it is important to see it as an instrument for
the improvement of the lot of the socially underprivileged. That opinion is
valid also in other countries today. By 1895, the co-operative system had
become so widely used - mainly in retail societies - that it was possible
to form the International Co-operative Alliance (ICA).

Ever since, ICA has functioned as a form of superstructure over the
co-operative movement in individual countries. However, in each country,
the special national traditions and the political system in use have
influenced the way in which the idea has been put into practice.

The Global Perspective

In this century, the co-operative system has been adopted worldwide. It is
particularly strong in two spheres - those of consumers' retail
co-operatives and of co-operative enterprises linked with agriculture.

The co-operative movement is of significant importance in many countries.
In the United States, for instance, the agricultural sector in particular
includes a large number of co-operative undertakings.

In the socialist countries, primary farm production is often organised in
co-operatives. However, these are strongly dependent on government
supervision and their relationship with the individual members differs
greatly from that known in Denmark and other non-socialist countries.

The widespread liberation of developing countries from colonial rule has
accelerated the growth of the co-operative movement. Many of these
countries have adapted an economic policy based on the co-operative system.
Here, too, public control is often strongly in evidence. The experiences
gained in developing countries vary greatly but a part of the Danish
government assistance to developing countries has taken the form of help in
the establishment and operation of co-operative enterprises.

Danish Conditions

Co-operation in Denmark, of course, has been based partly on international
developments as previously described. However, the special conditions in
19th century Denmark were of decisive influence. While Danish co-operative
retail societies were inspired by and modelled on the English pioneer
undertakings, the agricultural movement, to all practical purposes was
built up independent of the development of co-operation in other countries.
Danish agricultural co-operation in our century has, in fact, become a
model for other countries in their efforts to build up co-operation in
their farming industries.

Agricultural Reforms and Political Liberation

The foundation of modern Denmark was laid with the introduction of
agricultural reforms in the last half of the 18th century. They were to
influence decisively the shaping of the Danish economy and culture until
the 1950s when industrialisation ad urbanisation accelerated sharply.

With the reforms, the structure of agriculture was rationalised, making
considerable economic and social advances for the farmer possible right
throughout the 19th century. In the wake of the reforms, the farmer gained
political freedom. From 1841, the farming population had a say in local
government and when the first Danish Constitution was introduced in 1849,
they gained influence in national politics.

>From the 1840s onwards and parallel with these developments, the farmers
formed their own organisations to deal with political, technical, economic
and cultural matters of common interest. Throughout that century, the
farmers endeavoured to rid themselves of their traditional dependence on
large landowners, bureaucrats and the prosperous part of the urban
middle-class. In the 1880s, this process of liberation culminated in a
political battle between the conservative government and the Liberal party
which was based on the middle-class farmers.

Grundtvig and the Folk High School

Along with political and social liberation of the rural population, the
rapid spread from the 1860s of the Grundtvigian movement contributed to the
creation of cultural independence. The religious and educational ideas of
N. F. S. Grundtvig which, among other things, found expression in the folk
high schools, gave the foundation for a new parish-based culture replacing
the old village-bound traditional culture, still with the medium size
farmers at the forefront.

The importance of Grundtvig and the folk high school to the co-operative
movement in Denmark is often debated. They were an important part of the
19th century process of liberation. Folk high schools contributed to the
foundation on which the co-operative movement was built but they did not on
their own constitute that foundation.

Co-operation in Agriculture

>From 1914 to the Fifties -  Consolidation and Continued Growth

Even though Denmark was not directly engaged, World War One strongly
affected the development of the nation. The supply situation grew very
difficult and in the years from 1914 to 1918, for the first time ever, the
Government exercised control over prices and supplies. This affected the
co-operative enterprises in agriculture, and towards the end of the war,
dairy production was drastically reduced. Trade in grain was subject to
Government control and the co-operative farm supply societies administrated
the distribution of raw materials to the farming industry and of bread
grain to the consumers on behalf of the Government.

The conditions in 1919, brought on by the War, led to the establishment of
a joint representation for the industry, that of Landbrugsradet, the
Agricultural Council of Denmark.  The co-operative sector greatly
contributed to the preparations. As a step in this direction in 1917 the
Co-operative Committee extended its organisational foundation through the
formation of the Federation of Danish Co-operative Societies. The Committee
then formally became a joint representative body for its members but this
meant no significant change in its activities. Ever since, the Committee
and the Federation - in 1986 renamed the Federation of Danish Co-operatives
- were among the key organisations of the Agricultural Council.

Reunification and Post-war Conditions

In 1920 North Slesvig was reunified with Denmark and its agriculture - the
dominant industry of the area - was adapted to the Danish structure. The
first local co-operative dairy had been established there in 1884 and ever
since, the dairy industry developed along the Danish pattern, partly
inspired by the national conflicts between Danes and Germans. The
co-operative system had little foothold in other sectors of agriculture
prior to 1920. Subsequently, co-operative bacon factories were established
in most major towns and JAF was organised everywhere with the exception of
the island of Als which, in respect of farm supplies, chose to join the FAF
of Funen. In fact, until after World War Two, agricultural co-operation in
South Jutland and its percentage share in total turnover lagged behind the
rest of the country.

After the inflated economy of the war years, a reaction set in and caused a
considerable set-back for the Danish economy, including that of
agriculture. The dairy industry had built up significant milk export units
which had to be liquidated. This had catastrophic effects for the
Andelsbanken which had been closely involved in this activity. Attempts to
secure sufficient support from agricultural co-operative societies failed
and in 1925, the bank closed down. As a result, Anders Nielsen lost his
dominant position in the industry and the closure of the bank was widely
considered a major defeat for the co-operative idea.

The Crisis of the Thirties

The international crisis in the wake of the 1929 Wall Street crash hit
Danish agriculture in the early `thirties. Prices tumbled, the United
Kingdom, Denmark's dominant market, restricted its imports and a number of
Governmental emergency measures had to be taken to aid the industry.

During the `thirties, a number of political movements emerged, inspired by
the crisis, and two of them, the L. S. and the J. A. K. gained support from
many farmers. They vehemently attacked "the system" and they attempted to
use co-operatives, such as dairies and bacon factories, as tools in actions
against the Government. However, the results were very modest though many
annual general meetings of bacon factories in particular were very stormy
during the crisis years.

One constructive result of the activities of L. S. was the establishment of
Danske Landbrugeres Kreatursalgsforening (DLK), Danish Farmers' Livestock
Sales Organisation which was organised on a co-operative basis with the
purpose of undertaking the sales of the members' cattle and improving the
current extremely low prices.

Another innovation was the establishment, from 1932 onwards, of a number of
co-operative poultry dressing stations aimed at making broiler production
economically viable side by side with the established egg production.

As far as the main sectors were concerned, the co-operative dairies and
bacon factories continued to grow in numbers and producer support. At this
early point, a debate began concerning the long-term structure of such
agricultural co-operative spheres as the dairy industry.

>From World War Two to the Fifties

The effects on the Danish economy of World War Two and the German
occupation of Denmark from 1940-45 were not as considerable as those of the
1914-18 period. In general terms, the production apparatus remained intact.

The Marshall Aid and the international upswing of the early `fifties gave
new impetus to production and sales. Mechanisation of the industry gathered
great speed. At the initiative of the agricultural co-operative sector and
not least that of Frederik Nielsen, Managing Director of FDB, Dansk
Landbrugs Andels-Maskinindkob (DLAM), the Danish Farmers' Co-operative
Machinery Purchasing Association was formed in 1947.

In 1950, the Governmental export boards which had controlled distribution
of farm products were disbanded but they were replaced by committees formed
by each industrial production sector in order to secure the widest possible
co-ordination. It was clear to everyone that in the field of marketing in
particular, there was an express need of greater co-ordination to meet the
new conditions for Danish agricultural exports.

The further extension of agricultural co-operation as such did not differ
greatly from the period immediately prior to 1914. Co-operative dairies and
bacon factories had become totally dominant in their industries.
Co-operative farm supply organisations handled 45-50% of the total Danish
turnover. The Danish Co-operative Egg Export Association, together with egg
sections run by pig slaughter-houses, accounted for one-third of all egg
exports. Almost every Danish farmer had now become a member of at least one
co-operative society and more often of several.