This document has been made available in electronic format by the International Co-operative Alliance (ICA) 
LATVIA (1993)

August 1993

Source : Co-operatives in Eastern and Central Europe - Estonia, Latvia & Lithuania by Mats Ahnlund, Studies and Reports 22nd in the serie, 77pp, ICA, Geneva, 1993

3.1  Main characteristics of the present co-operative structure

3.1.1 Models of co-operatives and their significance in quantitative terms:

If you look at the structure of consumer co-operatives in the Latvian Republic, the basic units are the 28 local co-operative societies.

Many of the former local societies have merged into 16 district societies.  There are also ten regional co-operative  consumer unions affiliated to the national union, the Latvian Union of Consumer societies.  (See Chart  2 on following page).

By the end of 1992 there were around 3,000 retail sale units in the system, and over 1,500 public catering enterprises. Directly under the Latvian Union of Consumer Societies are five wholesale organizations, many industrial enterprises, delivery unions, fur-farms, building and transport associations, urban markets, co-operative educational establishments, and advertising agencies.

There are a wide range of small, unprofitable retail outlets, each with only one or two shop assistants.  These constitute 40% of the shops belonging to the Latvian Union of Consumer Societies.

To facilitate food production and the delivery of raw materials, mobile shops are widely used, and many stores operate on the basis of advance orders.

For agricultural producers, the consumer societies very often function as buyers and distributors of their produce, a system which is under revision as the privatization of farms progresses.

Since the postwar period, such developments have also meant that co-operatives have been responsible for the delivery of bread to most of the population.  In 1991 the co-operative bakeries produced more than 136 thousand tons of bread and cakes (half the amount produced in the whole country), i.e. 103 kilos of bread per head of population.

In addition to a national economic role, Latvian consumer co-operatives also play a social role in the countryside.  The co-operatives carry out multi-functional activities in production, wholesaling and retail sales.  They organize the supply of commodities to the rural areas where almost 50% of the Latvian population lives.  There is no other organization so widespread, even in the most remote villages, as the consumer co-operative movement.

The movement currently holds around 35% of the total retail market and it employs around 40 thousand people. Agricultural production and the delivery of raw materials is organized by the district co-operative organizations' production and delivery unions, together with the firm 'Sagade' and the Riga co-operative's commercial enterprise. Part of the agricultural production is purchased by the salesmen themselves and by the public catering enterprises (about 1/7th of total sales).

But this structure, inherited from the Soviet period, with a little shop in every cluster of houses throughout the whole countryside, is now at risk.

In the structure of district co-operative organizations there are the following financially independent enterprises: trade unions, department stores or co-operative business ventures, public catering enterprises, bakeries, transport businesses, and production and delivery unions.

3.1.2 Brief historical background:

As in the other Baltic countries, Latvian co-operatives existed before the period of Soviet rule, the first ones having been established in the 19th century.

At the end of last century many new consumers' co-operatives were started and, as in the rest of the Baltics, grew rapidly. A typical development is described in the section on Estonia (2.1.2).

Latvia became an independent state in 1920, but soon had a fascist Government which, in many ways, expressed sympathy with Hitler and his ideology.

In 1940, the Soviet Union occupied Latvia and made alterations to the whole of Latvian society, including the co-ops.  The co-operative business side was allowed to continue, but any remnants of the democratic organization established following fascist rule were now totally abolished.

The standard co-operative rules and statutes being used in the Soviet Union were introduced, meaning that all decisions now came from the top down.  This changed when Latvia was occupied by German troops in 1941 and the old rules were reintroduced.

When the Soviets came back in 1944 the centralizing statutes of 1941 were reintroduced by the newly-installed co-operative leadership.  Thus the co-operative movement was gradually incorporated, not just into the planned economy, but also into the Soviet machinery of power.  This was the case for both consumer and housing co-operatives.

Other types of co-operative were nationalized completely, e.g. banks and insurance operations, as in the rest of the Soviet Union.  Agricultural co-ops were collectivized: land was confiscated by the State and those who worked within the `co-operative' sector of agriculture were employed by and made `owners' of the great State kolchoses.

Consumer and housing co-operatives retained a nominal independence, but became a part of the planned economy and were included in the various five year plans.  The co-operatives were given important assignments by the State, such as responsibility for all food distribution to restaurants in the countryside, where they were allowed to flourish.

These political decisions led to the situation in which consumer co-operatives were responsible for over 50% of retail trade, with a virtual monopoly in the countryside.

Until recently, the kolchos agricultural co-operatives were responsible for between 75 and 95% of agricultural production.

Membership figures and market shares show that consumer co-operatives reached the levels expected by the Party and the State during the 1960s.  Since then, their share of the economy has not increased, with the exception of housing co-operatives, which show an accelerating curve right up to the end of the 1980s.

The fact that co-operation did not grow was due to ideological reasons.  According to Lenin, who was a source of inspiration in these countries, co-operation is simply a passing phase towards the more complete transformation to a Communist society.

However, inclusion of the co-operative companies into the `plan' also meant that the State planning authorities, whose job it was to carry out the plans, decided everything of importance concerning co-operative operations.  Prices of goods sold or delivered, products, range of goods, quantities, wages, new establishments; in principle, everything was either decided by or had to be agreed with the State.

The co-operatives, in exchange, were allowed to take part in the planning process which 'the people's organizations' carried out before each new five-year plan.  Since those who were allowed to lead the co-operative societies and unions were sympathetic to the Party cause, such involvement was more symbolic than effective.

In 1988, as a result of the new Soviet co-operative law, new statutes were accepted by the Latvian consumer co-operatives, as was the case in Estonia and Lithuania.  The Union once again became an organization directed by consumer co-operatives and lost its connections with the central planning authorities.

Two fishermen's associations are also members of the Latvian Union of Consumer Societies.  The fishermen co-own boats and nets and deliver most of their Baltic sea catch to the consumer co-operative shops or factories.

Another sector is that of local housing co-operatives.  They were also a part of the planned economy, directly under the Ministry of Housing, and were not even allowed to have a central union.  They are now formally independent, and can easily create their own future.

The policy concerning agricultural co-operatives is, since Latvian independence, that not only the agricultural production units (the kolchoses) but also the State farms (the sovchoses) should be split up.  But this is progressing more slowly than in the neighbouring Estonia and Lithuania.

3.1.3 Membership relations in the existing co-operatives:

In theory, since 1988, consumer co-operatives in Latvia, as in all other former USSR countries, have radically transformed their organization.  But in practice the changes in Latvia have been both smaller and slower than, for example, in Estonia.

At the beginning of 1993 there had been no election of board members and Union President for almost four years and the existing leadership kept a tight grip on consumer co-operative development.  One reason for this could be that, since independence, the Government has been strongly influenced by people from the old system.  And such individuals have been reluctant to make many changes to consumer co-operative movement.

It could be argued that the Latvian Union of Consumer Societies has maintained a very good relationship with the Government, and the rest of the movement is rather pleased with that and has not felt the need for change.  However, the long period during which consumer co-operatives were a part of the system has influenced the members' view of the co-ops. Very few members participate in the democratic activities, e.g. annual meetings, etc.

As the consumer co-operatives still have a virtual monopoly in retailing in the countryside it is, of course, difficult today to judge the future value of the fact that the members mainly use their own shops for the daily commodity shopping.  It is impossible to tell to which extent this depends on the fact that there are very few other shops in rural areas.

Up until the beginning of 1993, the Latvian Union of Consumer Societies has retained the structure it had under Centrosoyus at local, regional and national levels.  There are also special unions for specialized operations.

When it comes to the members' formal influence the model is very similar to a Soviet one.  The President chairs the elected board and also heads the staff in the position of General Manager.  Perhaps the present view on the members' role is best expressed in the strategy approved by the Latvian Union for its development and role: 'to organize amateur performances with the help of society members, classes and courses as well as various sports, tourism and health facilities.'  The members' role as owners is not mentioned.

The other aspect of membership, the economic benefits of the members, is not developed at all.  The only exception to this is that the Latvian Union of Consumer Societies has fought with the law-makers to be given the right to increase the member's share, and to pay a dividend on that share.  However, such payments do not even cover the rate of inflation, so in practice the members' shares are decreasing in value.

The strategy for the future states that:

"the consumer societies will render even wider assistance to their members, offering goods at reduced price and providing goods on credit"

From a co-operative standpoint this sounds promising: there will be a direct economic benefit in remaining a faithful member.

The housing co-operatives of Lithuania do not have a functioning co-operative membership.  They were nominally independent of the State, but did not even have their own union, as they were ruled directly by the Ministry of Housing. Today, the struggle has started to change the attitudes of local housing co-operative members from tenants to owners of their own houses.

As in Estonia and Lithuania, the co-operative law of 1988 gave birth to a lot of `new co-operatives'.  These were, in most cases, co-operative only because the founders and owners were not allowed to use any form of capital association, such as joint-stock companies.

Member relations in the newly-started agricultural co-operatives are very good.  These smaller companies, sometimes called co-operative, sometimes not, have a very strong and interested base: the family farmers.

3.1.4 Secondary organizations, federations and co-operative companies:

Industrial production is the work of district co-operative organizations (bakeries, production and delivery unions, meat processing and soft drinks plants) and by 11 factories immediately under the Latvian Union of Consumer Societies. Six of them are situated in the territory of district co-operative organizations.  Their main products are fruit and vegetable preserves, sausages and smoked meat, confectionary, soft drinks and several kinds of consumer goods. Co-operatives supply them with the necessary raw materials.

During recent decades, a wide network of food processing enterprises has developed in the country.  The enterprises owned by the co-operative movement produce half of Latvia's preserved fruit and vegetable output.

Timber merchants and saw mills prepare pre-cut wood, door and window blocks.  Reinforced concrete blocks, earthenware, ready-made clothes and a great variety of other consumer goods are also manufactured for commercial purposes.

The consumer co-operative movement trains its own specialists in two trade schools and the Riga co-operative technical secondary school.

The transportation structure consists of four main depots, under the supervision of the Latvian Union of Consumer Societies, and 16 regional depots.

Building and repair work is ensured by three regional building and maintenance companies, supervised by the Latvian Union of Consumer Societies, and the builders' groups belonging to the district co-operative organizations.

Secondary-level co-operative organizations currently exist mainly within the consumer co-operative movement.  The small number of housing co-operatives, with a rather unsure future, is still a part of the State housing system.  Their history is very much the same as that of the Estonian housing co-ops, but so far the Government in Latvia has not shown the same interest in developing local housing co-operatives, which are reliant on the State's staff, maintenance, accountancy etc. into truly independent co-operatives.

3.1.5 Evaluation of the existing co-operative system:

The Latvian consumer co-operatives have had less problematic relations with their State, with regard to obtaining a new co-operative law and recognition as an essential part of society, than most other East and Central European co-operatives.

On the other hand, the State still seems to look upon the co-operative movement as the little brother.  One example of this is that the money that the co-operatives and their secondary organizations and enterprises have been keeping in the State bank has been virtually stolen from them.

In the beginning of the reform process the Latvian consumer co-operative movement was a rather wealthy and solid organization.  But the State bank gave only 5% interest on the co-op savings, in an economy with an inflation rate of more than 100%.  The result was that within two years  the co-op assets, which they were obliged to keep in the State bank, lost more than 75% of their value.  The immediate consequence has been that Latvian co-operatives experience huge cash-flow problems and, in many cases, are now able to buy from suppliers only if they pay on delivery.

Opportunities for obtaining credit have disappeared as quickly as the value of their liquidity.  Thus, there is no money for investment to help with the lack of modern infrastructure evident in almost every area: transport, storage, shops, energy efficient heating and cooling etc.

Other problems are more general and similar to those in the other Baltic countries:  member participation is very low. Participation in the democratic process is almost nil.  And there was little evidence of any ambition to change that during my visit (autumn 1992).  One reason for this could, of course, be the lack of democratic tradition.  Presidents at local and secondary level are still elected as both chairman and CEO.  This gives them an almost dictatorial power, if the rest of the board is not used to questioning decisions.

Both management and board members are in urgent need of expertise.  There is a general lack of knowledge about how to operate in a market economy.  But within the present leadership of the consumer co-operative movement there is little evidence of the willingness to adopt Western views. Their way of working is very similar to that of previous years, to a much larger extent than that, for example, of Estonia,

As yet, housing co-operatives have achieved neither a formal separation nor a divorce from the State and the local authorities.

The new type of co-operatives are of two kinds: the first consists of the co-operatives that were established following the introduction of the co-operative law of 1988.

An enormous number started immediately, as 'co-operatives' were the only kind of private ownership permitted.  They have somewhat contaminated the word co-operative, so it now means the equivalent of 'blood-sucker' within Latvia.

The agricultural co-operatives are currently growing.  As the old structure of collective farms disappears, somewhat slower in Latvia than in Estonia and Lithuania, the farmers have to establish new companies.  It is very likely that the agricultural co-operative sector will grow quickly, even if the private farmers don't want to call their organizations co-ops.

3.2  The co-operative reform process

3.2.1 The need for, and main field of, co-operative reform:

This subject has already been discussed as part of the evaluation.  The big changes have not started yet.  Neither the democratic activities nor the business operation are in accordance with those necessary for a modern Western democracy or for the demands of a free market economy.

At the time of writing, the leadership of the local consumer co-operatives had not changed much, and the management of the Latvian Union of Consumer Societies was unchanged from that in power before independence.  The biggest change so far is that the co-operatives are truly independent of the State and political parties.

Within the co-operatives, the area in greatest need of reform, so as to achieve a real change and gain the acceptance of customers and the public in general, is probably the activation of the members.  The fact that most members do not care about their co-operatives is already creating problems for the co-operative movement.  The State bank's treatment of the movement's savings would probably not have been possible with an active co-operative membership pressurizing politicians and the media when their organization was unfairly treated.  But no such reaction was in evidence when the State bank mishandled the consumer co-operative movement's money.

The lack of active, influential, well-educated members also means that unsuccessful, or even dishonest, co-operative leaders are not dismissed.

Furthermore, in Latvia the co-operative principle regarding the distribution of profits is not followed.  Profit is distributed to the members on the basis of their shareholding, and this situation does not seem likely to change.  The only development which might make members more faithful is the Latvian Union of Consumer Societies' newly-adopted strategy for the future, in which members are to be offered goods at reduced price and, as another member benefit, receive credit for the purchase of capital items.

In the new and old housing co-operatives everything has yet to be done.  Even though they formally exist, only in a few cases have they started any co-operative activity either on the maintenance and financial side, or on the democratic side.

3.2.2 Government co-operative policies:

All the major changes in the Latvian Union of Consumer Societies result from the Government's having changed the external conditions.  So, Government decisions are naturally of great interest in understanding the developments within Latvian co-operatives.

Since Latvian consumer co-operatives also had to adopt the Soviet model, most of the consumer co-operative shops are situated in the countryside.

In July 1992 the Government decided to introduce privatization.  The Government thought that the time was now ripe, since the time limit for claiming the restitution of property lost after the Second World War expired on the 20th July 1992.

The property remaining after restitution is divided into three categories.  The Government has plans to privatize the first two.  The first consists of large companies which are only for sale for Western currency.  This probably means that such organizations will pass into foreign hands.

The second category of companies will be sold for Latvian roubles: a transition currency.  The third category is those businesses of which the Latvian Government intends to retain control.  These are schools, universities, certain pharmacies, forestry companies etc.

The companies to be sold for Latvian roubles consist of many small ventures such as restaurants and shops, which will be sold by sealed tender.  The Government had wished to have support from abroad, so that a better valuation of the companies to be sold, could be established.  The companies that are to be sold range from small spring-manufacturing companies to large steel works.

In principle, it is easy for foreign interests to invest in Latvia, but the really large investments will no doubt be delayed since the legislation necessary to create security for such investments has yet to be put in place.  It is possible that foreign investors will be allowed to operate without having to pay tax for a number of years and will thereafter be taxed a percentage of the normal company tax, gradually increasing to the full amount.  One restriction on foreign investors is that they will not be allowed to buy land.

At present, the consumer societies are still in the process of ensuring that they are the legal owners of their units and that the land belongs to them.  They are also analysing their effectiveness to determine whether they should be sold to private owners, leased, retained as co-operative property or only managed by the co-ops.

Many thousands of rural co-operative shops have already been given back to the old owners: but these have often been the smaller ones.  It seems as though Latvian consumer co-operatives have managed to keep most of the newer shops that were developed in modern housing areas in the countryside.  In Lithuania, for example, all such shops have been auctioned off to private owners.

Even if there are differences between the Baltic countries' treatment of co-operatives, reprivatization has had one very unjust consequence for Latvian co-operatives.  To my knowledge, no co-operative has been allowed to reclaim its urban shops confiscated by the State during the 1940s.  These are often large properties, which now seem to be lost forever - a real problem, as most of the growth in retailing is likely to take place within the cities.

3.2.3 Co-operative legislation:

Before 1988, Latvian co-operatives were a part of the State system.  The State and the Communist party approved co-operative leaders before they were formally elected by the members.  The leading role of the Party was even acknowledged in the co-operatives' rules.

As one result of Perestroika, the new Soviet co-operative law of 1988 gave co-operatives in Latvia and the rest of the Soviet Union a formal independence.

Since 1991 there has been a new co-operative law.  This has precisely determined the legislative status of the consumer societies and their activities.

On August 6, 1991 the Supreme Soviet of the Latvian republic adopted the legislation 'Regarding Co-operative Societies', and on November 13, 1991 the Council of Ministers approved the sample statutes of the Union of Consumer Societies.

The law was quickly drafted and also accepted with a speed unknown in most other Eastern and Central European countries. (Many are still waiting for a real co-operative law).  It doesn't cover all aspects of a modern co-operative movement and will probably be revised soon.

But the economic basis for member-shareholders' legislative status has not yet been discussed.  At present, share capital is a relatively minor part of the co-operatives' turnover (when the co-operative societies were formed the proportion was more significant).  Now, each member's shareholding is small: about 15 roubles.  The shareholder's liability for his society is limited to this amount.

This is not unusual in Western consumer co-operatives, but in the present situation the Latvian Union wants shareholding to be more than symbolic, encouraging the members to take an interest in and accept responsibility for their co-operative society.  The Latvian Union of Consumer Societies has worked out a scheme to implement the following:

-    a minimum share value to be fixed in the statutes of consumer unions, with no maximum value;

-    the fixed value of each share is considerably enhanced in the new statutes of co-operative societies (in some consumer societies it amounts to 100, 200 or even 500 roubles);

-    free circulating money in societies will be turned off on mutually profitable conditions to the economic turnover as object or other installments;

-    the consumer societies' statutes should lay down various advantages for the member-shareholders, usually ensured by the customer board of administration;

-    within the Latvian Consumer Co-operative Movement the creation of an increasingly sound financial base to encourage the member-shareholders to take an active part in the administration and supervision of their co-operatives.

It now hopes to get the legal right to bring about these changes.

3.2.4 Changes within the co-operative movement and their impact on its structure:

As has already been said, the changes in the Latvian consumer co-operatives have not as yet been very great.  This is the result of a much more accepting political atmosphere and the wishes of the present leadership.

The retail trade is very undeveloped in Latvia, as in many other ECE countries.  There are only 203 square metres' trading area per 1,000 inhabitants, which is considerably less than in the majority of other European countries. Consequently, there is a real need for new shops, and the Union is now working actively to find land on which to develop.

In other instances consumer societies are now selling off some of their business ventures to private individuals.  In many cases this is a development that probably ought to be examined by independent auditors.  Of course, auditing or investigations will come in due time and officials who have made immoral, or even illegal, profits from such deals will be judged very harshly in the future.  But the shops and other units which have been sold will probably be lost forever.

The Latvian consumer societies have spent a lot of time in trying to clear up the question of property.  A team of experts has been set up within The Latvian Union of Consumer Societies (LUCS).  It has made several proposals intended to bring about an improvement in property relations with regard to both co-operatives and individual owners, and the LUCS is now working to accomplish the recommendations expressed in its report.

Another aim is to strengthen the co-operative presence in the seven larger cities.  To this end, it becomes necessary to utilize the market squares within towns more effectively and to lease municipal premises for commercial purposes.

The Ministry of Retail and Wholesale Trade's monopoly in the cities and within the local co-operative societies has been done away with, and this fact has given the (technically well-equipped) wholesale trade organizations the opportunity to start trading in earnest.  Within the consumer co-operative system a stock exchange has been set up on which stocks and other securities are traded.  Leading consumer co-operative businessmen have also started to act as brokers at the various stock exchanges in Riga.  This is a new development, with few parallels in the world.

The Latvian Union of Consumer Societies has determined some goals for its development and role.  These are as follows:

-    to consolidate and further develop retail trade and public catering in rural districts;

-    to increase their scope of activities, and to increase the turnover of goods in order to ensure that inhabitants are better supplied with commodities;

-    to purchase from the population, shareholders, farms and farmers, agricultural production and raw materials, home-produced items and handmade goods, berries, other wild fruit and mushrooms for further processing and sale in the co-operatives' network of retail trade and industry;

-    to increase the quantities of food products and consumer goods by the purchase of agricultural produce and raw materials as well as through wholesale trade;

-    to render economic and social assistance to the rural population.

3.3  Future options for co-operatives

3.3.1 The major trends of change:

The consumer co-operatives of Latvia have a good chance of surviving in the present situation, because they are still big and have a lot of assets in the form of real estate and industries.  But it has to be handled strategically, before industries become loss-making and real estate is sold to make up the deficit.

As already mentioned, the co-operative societies' main sphere of operation is within the countryside, where the sprawling villages and low density of population are characteristic of the rural areas of Latvia.  Another drawback is the comparatively low availability of private and public transport and the current lack of fuel.

During the early nineties the quantity and variety of production has gradually decreased, together with the ability to purchase goods.  This is due to the country's constant lack of raw materials, fuel and various kinds of goods, and to the slackening of traditional economic communications with the republics of the former USSR.

Under such circumstances, maintaining stable economic and financial situations within consumer co-operatives has become more and more complicated,  and the consequence of this is a deteriorating level of customer services.

When predicting the future, one can conclude that the real free market with its private competition is not yet a reality in Latvia.  There are few attempts to start or take over private shops in those areas where the co-operatives have their main business.

In towns one can see some development of private shops, but in the countryside they are still tiny, with a very limited range of goods.  (The total stock of one such shop was 1 tin of shaving-foam, bubble-gum, three tins of Sprite, some disposable nappies, toys, tights, films, some electrical goods and a few other things, all guarded over by a very fierce shop owner with the eyes of a hawk).

According to the most recent statistics available, there are about 560,000 members in the co-operative societies, i.e. 56% of the adult population (i.e. over the age of 16) in the villages.  In other words, every family has a member in the local co-op.

If the Latvian consumer co-operative movement can manage to keep the confidence of the majority of its members in the future, it will have a solid financial base to operate from!

When competition grows, especially in a few years' time when the currency is convertible and foreign retail chains are interested in investing in the country, the co-operatives will find it difficult to compete: unless they manage to improve the capital and expertise available to them.

The fact that the Communists took all the consumer co-operatives' property in the bigger villages and towns is, of course, a problem.  If developments in Latvia follow the trends experienced by other industrialized countries, it will be in the towns that the big buying power grows.

Sheer numbers of shops and staff, and relatively heavy overheads at the various levels, could ruin the co-operatives. Few of the unprofitable shops have been closed so far.  This is due to both to local opposition and to a rationalization process which is still not very developed.

Here also, member relations could be much better because, when the State and the Communist Party took care of all the important decisions, being an active member of a local co-operative was not very fruitful.

The fact that almost one half of the population of Latvia is non Latvian is a challenge, but could also present an opportunity for co-operatives if used in a constructive way.

However, the present leadership is now turning to its neighbours.

3.3.2 The need for international assistance:

As in the other countries, the need for assistance is huge, starting with the need for a new and improved retail and wholesale infrastructure.  Huge investments in retailing, wholesaling, warehouse storage, transport and production are necessary in order to make them both competitive and environment-friendly.  Housing co-operatives need investments in energy saving, heating and sewage systems etc.  However, co-operative housing is not particularly suitable for financing through international aid.

So, if some of the money which the international institutions, like the European Bank for Development and Reconstruction of Eastern and Central Europe (EBRD), are currently investing in the Latvian infrastructure were also available to the co-operatives, much would be won.  Today, it seems as though all such money is spent in the public and traditionally private sector.  This frequently means that the co-operatives' competitors get a disproportionate amount of support.

Thus, international co-operative assistance to co-operatives in Latvia and elsewhere in Eastern and Central Europe must attempt to influence the Western Governments and international institutions like EBRD, the World Bank and the European Community to give a fair share of the aid paid in those countries to the co-operatives.

Secondly, there is the obvious need for expertise, now and in the future. Almost every sector there is in great need of knowledge.  Almost every aspect of the democratic co-operative business process has to be covered.

In the housing co-operatives the needs are similar, but also more basic.  They also require information regarding modern maintenance processes, maintaining the members' involvement, the establishment of savings schemes, environmental protection etc.  However, unlike the consumer co-operatives, they lack the organization to handle such tasks.

Even though the transformation of the agricultural sector is slower in Latvia than in the two other countries, here, too, farmers are well provided for with training programmes funded by the EC PHARE programme, the World Bank and several Western Governments.

The third need for international assistance is in establishing recognition for the co-operative movement.  As in the other Baltic countries, the legacy of the Communist system is casting dark shadows on the consumer and housing co-operatives.  However, in the course of the reform process, the Latvian authorities have been more understanding of co-operatives than the Governments of many other countries.

Western co-operatives could also help to reestablish democratic activity and member participation in the different levels of the co-operative movement, so that the membership can make demands for change and improvements at their own AGMs, instead of looking to private shops to satisfy their needs.

Management training, the development of internal auditing, member education and economic benefits are all areas that could improve member participation and the image of the co-operatives.  This could be done with the help of Western co-operatives.

But it has to be said here too, that most of the work involved in winning back lost confidence must be done by the Latvian co-operatives themselves.  Only by continuing with the far-reaching changes that have already started can the existing co-operatives survive as organizations owned and run by their members.