Future Options for Co-operatives (1993)

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

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                 Future options for co-operatives
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3.1  The major trends of change
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  From the second half of 1989 onwards, Polish co-operatives
have been subject to a dramatic process of change which is far
from being concluded.
 
>From the economic point of view, they are still adjusting
their structures and organization to the new environmental
conditions created by the introduction of the free market
economy. They are reducing or eliminating non-profitable
economic activities, in many instances paying no, or
inadequate, attention to the fulfilment of their
members'needs.  They are trying to augment their financial
means by raising members' share capital and avoiding bank
loans, theinterest on which has never fallen below 50% during
the last two and a half years.  They are also reluctantly
reducing the number of persons employed.  Some of them are
trying to find economic support by affiliation to Economic
Chambers or by embarking upon joint ventures with other
co-operatives or private enterprises.
 
>From the social point of view, many co-operatives, especially
those operating in rural areas, but also some workers'
co-operatives, are confronted with a visible conflict of
interests between farmers and co-operative employees, both
groups being co-operative members. In many cases the employees
are the winners in this conflict, with detrimental effects on
the realization of their co-operatives' main purpose to
promote the interests of the farmers or craft workers for whom
they were established.

>From the organizational point of view, the period of chaos
resulting from the liquidation of all co-operative unions
seems to be approaching an end. New co-operative auditing
unions have been established in all co-operative branches,with
the exception of housing, horticultural and agricultural
circles' co-operatives. The new co-operative unions are in the
initial phase of development work, and will probably deal with
auditing, consulting and training only, thus differing very
much from the structures of 1989.

The process of members' empowerment and of changing members'
attitude to their co-operatives should be one of the most
important fields to be taken care of.
 
Opinion seems to be justified that, in the foreseeable future,
all models of co-operatives currently existing in Poland,
possibly with the exception of agricultural circles'
co-operatives, will continue to operate. However, their number
and size, the nature and structure of their activities, as
well as their affiliation to upper-level co-operative
organizations will be changing over a relatively long period
of time until the achievement of a certain  stability. Then,
the co-operative movement, however important, will certainly
play a much smaller economic role that the one it held before
the big political change of 1989. Its social importance will
depend mainly on co-operators themselves.
 
Taking the most acute needs of the society as the basis for a
forecast of the future of co-operatives in Poland, credit and
savings co-operatives in rural areas, and dairy and
horticultural co-operatives seem to have good prospects. The
same can be said about housing co-operatives, as the supply of
housing is extremely short in Poland and the average income is
relatively low and unlikely to improve quickly.  Unemployment,
amounting to over 2.4 million in May 1992, would justify the
promotion of workers' co-operatives as one means of coping
with this phenomenon.  There is, however, lack of adequate
Government policy regarding this.

In 1992, the first rural telecommunication co-operative was
granted the needed Governmental licence and started to
operate.  This is a promising field for co-operative activity. 
Insurance co-operatives, however, do not show similar
potential, the first of these have begun to change their legal
form to that of joint-stock companies.

The question of enabling primary co-operatives to change their
legal form to limited companies will be solved by
theregulations of the new Co-operative Law.  However, the
joint-stock company form has been chosen for the
newly-established banks of particular co-operative
branches:the Bank of Peasant Self-Aid Co-operatives, and the
Bank of Consumer Co-operatives, "Spolem".  The former central
bank for savings and credit co-operatives, Bank of Food
Economy, has also become a joint-stock company.

3.2  Need for international assistance
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The ICA has observed with great interest the historic,economic
and political developments occurring in Poland.  InNovember
1989 it offered its support for restructuring andurged its
member organizations to do the same.

The total value of technical assistance projects for the
co-operative sector is impossible to assess, as financial
resources are routed through different channels and not
centralized.

Such assistance is oriented toward the following major areas:
support for policy dialogue with public authorities, the
restructuring of agricultural and consumer sectors, and the
development of the financial sector. Most of the programmes
include an educational aspect.  

The number of independent agencies makes the assessment of
efforts difficult. We have identified several parties playing
a role in the development of the co-operative sector. There
are large international bodies, non-governmental
organizations, national apex bodies and, finally, individual
societies. A list of projects is mentioned in Annex 2. When
possible, the amount of credit has been indicated.

On the governmental side, several bodies are involved at the
national level: e.g. the Ministries of Finance, Agriculture,
Education, Foreign Economic Regulations, and Agricultural
Marketing.

The lack of institutional partners within the co-operative
sector hinders the work of development agencies considerably. 
Following the introduction of the law of 20th January 1990,
one of the most centralized movements in Eastern and Central
Europe has splintered into thousands of independent units.

Therefore, it occurs that different projects overlap,
thematically or geographically. For example, there are
virtually no projects for the management of workers'
co-operatives, but numerous ones for those of agricultural
societies; for some reason the Eastern and Southern areas are
much in favour, whereas projects in the West and North of
Poland are scarce.

While the original priorities and choice of themes continue to
be valid, the absence of a national strategy for the
co-operative sector makes the evaluation of impact or
performance of single projects uneasy.

On the other hand, it is possible to cite specific cases of
project success in terms of strengthening an institution or
introducing an innovative area of work. Foreign assistance has
resulted in a spectacular rise in financial co-operatives and
proves that the approach is viable.

Finally, when the potential exists for greater national
execution and implementation of the co-operative development
projects, progress is not significant. This is due, in part,
to the fact that the disbursement of credits granted is very
slow. Because there is no alternative to the Government's
transition programme, the co-operative sector should reaffirm
its commitment to economic democracy. Technical assistance
should be deployed to strengthen the  organizational structure
of the co-operative movement and its local societies. The
principal target would be to develop an institution to help
articulate and support the co-operative movement strategy
within the framework of the transition programme. For the time
being, there is no institution acceptable to all parts of the
co-operative movement.  

A National Co-operative Council is to be established as a
result of the revision of co-operative law. The Council, when
established, should initiate work on new a co-operative law in
which the co-operatives will be fully recognized as a part of
the private sector. Another objective will be the creation of
a high-level inter-agency body responsible for the
co-ordination and dissemination of information on foreign
technical assistance programmes. Local co-operatives currently
lack information  about opportunities to participate in
development projects.

New foundations created for specific purposes, such as the
Foundation for Rural Co-operatives (to develop rural
co-operatives) and the Capital Foundation (to assist
co-operatives financially) are not able to cover their
existing needs for both technical and economic assistance. In
addition to the introduction of new technology and new methods
of management, what is badly needed is training for the
members of co-operative elected bodies and for co-operative
managers, and consultancy services on organizational, legal,
marketing, financial and accountancy problems.