Agricultural Co-ops in North America & Europe (UN/ECE 1995)

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   This document has been made available in electronic format
           by the International Co-operative Alliance.
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              INTERNATIONAL CO-OPERATIVE ALLIANCE
                    15 Route des Morillons
                  1218 Grand Saconnex, Geneva
                        Switzerland

          Submission to the Committee on Agriculture
           of the UN Economic Commission for Europe
                      November, 1995

Agenda Item 5: Institutions and policies relating to agricultural
          markets and their impact on regional trade 


          ++++++++++++++++++++++++++++++++++++++++++

            The Agricultural Co-operative Movement

          ++++++++++++++++++++++++++++++++++++++++++


                          TABLE OF CONTENTS

        Introduction
        Dimension of the Agricultural Co-operative Movement
        Significance of Activity of Agricultural 
          Co-operatives: Market Share
        Exports within the ECE Region
        Innovations within the Co-operative Movement
          Environmentally Sustainable Agriculture
          New Partnerships
          Transitional Economies: Government Regulations and
            Effects
        Conclusion


Introduction
------------
The International Co-operative Alliance is a non-governmental
organization in consultative status, category I, with ECOSOC,
which unites, serves and represents co-operatives worldwide. ICA
is presenting this report on the current situation of
agricultural co-operatives in the ECE region in order to
highlight the important role and contribution of co-operatives
in national economies.  It will also provide some insight on how
agricultural co-operatives are responding to the challenges of
changing conditions so as to continue to serve the needs of their
members and the communities in which they operate.

Co-operatives are a force that is too often misunderstood. Co-
operatives are first and foremost business enterprises, however
they are more than just that.  A co-operative is an autonomous
association of persons united voluntarily to meet their common
economic, social and cultural needs and aspirations through a
jointly-owned and democratically controlled enterprise.  Co-
operatives are based on the values of self-help, self
responsibility, democracy, equality, equity, and solidarity.  In
the tradition of their founders, co-operative members believe in
the ethical values of honesty, openness, social responsibility,
and caring for other. 

The agricultural co-operatives described in this report include
co-operatives involved in agricultural production, processing and
marketing, and farm supply.  Information on the following
countries has been collected:  Austria, Belgium. Bulgaria,
Canada, Cyprus, Czech Republic, Denmark, Estonia, Finland,
France, Germany, Greece, Hungary, Iceland, Israel, Italy, Latvia,
Lithuania, Netherlands, Norway, Poland, Portugal, Slovakia,
Spain, Sweden, Switzerland, United Kingdom, United States and
Yugoslavia.  The sources of information have been varied
including statistics provided directly to the ICA Secretariat by
agricultural co-operative organizations, information contained
in annual reports, specific reports on agricultural co-operatives
as well as general overviews of co-operative movements.  One
important source of statistical information has been the recently
released 1995 Profile:  Agricultural Cooperation throughout the
World, published by the Centre de gestion des coopratives, Ecole
des Hautes Etudes Commericales, Montreal, Canada.

Dimension of the Agricultural Co-operative Movement
---------------------------------------------------
Agricultural co-operatives exist in nearly all of the ECE member
states and in some of these are responsible for over 50% of the
total agricultural production. Some examples of the significance
of agricultural co-operatives are shown by the following:

     In 1993, agricultural co-operatives in the European Union,
     Austria, Finland and Sweden had 14 million members. Total
     shares of farm inputs were 55 per cent and market share
     totalled 60 per cent. In the United States fourteen co-
     operative enterprises were included in the "Fortune 500"
     list of the largest corporations. In transitional economies
     private sector supply and marketing co-operatives are being
     set up to take over from former parastatal and state
     systems.

Co-operatives are also predominant in Eastern and Central
European agriculture.  Initial growth was noted during the
transition process, however, co-operatives are now set to become
a permanent actors in national economies.

Although it is difficult to estimate the total number of
agricultural co-operatives in the ECE region, statistics exist
for a selected number of the ECE member states.  These have been
provided for the most part by apex agricultural co-operative
organizations and are compiled in Table 1.


                           TABLE 1
            Selected countries in the ECE region 
 Number of Agricultural Co-operatives, Membership and Gross Sales

Country        No. of Co-ops      Members    Gross Sales
(Date of Info)                             in million US$
______________________________________________________________

Austria (1993)     1,115          466,207        8,312
Belgium (1990)       100           48,270        1,896
Bulgaria (1993)    1,205          329,000         n/a 
Canada (1993)        823          599,179        9,253 
Cyprus (1994)         65           30,000           67
Czech Rep (1994)   1,429            n/a            n/a
Denmark (1993)       111          109,713       10,475 
Estonia (1995)       519           17,267          n/a 
Finland (1994)    202,000         140,700        9,014 
France (1994)      16,800         720,000       74,996 
Germany (1994)      5,198       3,768,000       50,632 
Greece (1990)       7,255         934,863           65 
Hungary (1990)      1,335         316,900          n/a 
Iceland (1993)         26          28,100          415 
Italy (1992)        3,549         436,207        8,542 
Latvia (1995)       1,415           n/a            n/a 
Netherlands (1994)    271         290,147       25,461 
Norway (1994)          83           n/a          4,760 
Slovakia (1992)       969         300,000         n/a 
Spain (1990)        3,116         830,040        3,016 
Sweden (1994)          64         306,000       10,900 
Switzerland (1993)    624          70,000        2,114 
UK (1993)             498         247,542        3,842 
USA (1993)          4,244       4,023,264       82,900


Significance of Activity of Agricultural Co-operatives: 
                 Market Share
------------------------------------------------------         

In a number of countries, agricultural co-operatives hold an
important position as major producers of agricultural products
and agricultural inputs.  Market shares can be as high as 98% of
total national production.  

In Canada, the agricultural co-operative movement generated 40%
of total farm cash receipts in 1992.  In the farm supply sector,
co-operatives were responsible for 36% of the fertiliser and
chemical sales, 27% of feed sales and 19% of seed sales where 8
or 10 largest enterprises in the agricultural sector are co-
operatives

In 1994, agricultural co-operatives in the Czech Republic
operated on 47% of the total area of cultivated land and
generated 67% of the total national agricultural production.

In the same year, agricultural co-operatives in Denmark were
responsible for 96% of the butter production, 97% of hog
slaughtering, 89% of milk production, 78% of cattle slaughtering,
54% of poultry slaughtering, and 59% of egg sales.  Forty-nine
per cent of feed sales and 49% of fertilizer sales could be
attributed to the farm supply co-operatives.

One of the largest cheese producers in Estonia is a co-operative
society - 'Poltsamaa'.

In Finland in 1994, agricultural co-operatives produced 12% of
the total beef exported, 13% of pork exports, 50% of butter
exports, 29% of cheese exports, 25% of the egg exports and 28%
of exported grain production.  

Co-operatives are one of the principal enterprises in the
agricultural sector in France.  Thirty percent of total
agricultural sales were attributed to agricultural co-operatives
in 1994.  In terms of market share, in 1991 it was estimated that
40% of dairy production was controlled by co-operatives, and
28.5% of the market in seven sectors of the agro-food industry
(milk, slaughter, feed, canning, fruits and vegetables, wine
making, distillation and sugar production) was held by co-
operatives 

In the New Lnder in Germany, 38% of agricultural land was farmed
by approximately 1,500 agricultural production co-operatives in
1993; and Raiffeisen agricultural co-operatives totalled 80 to
90% of market share in the processing of animal products. 

In Iceland, co-operatives are the primary enterprises involved
in slaughtering and the domestic marketing of meat and related
products.

Co-operatives are the principal enterprises involved in the
agricultural sector in Israel.  In 1994, co-operatives controlled
over 80% of the agricultural production of Israeli farms.

In the Netherlands, the four largest dairy co-operatives
processed approximately 75% of the total dairy production in
1994.  The importance of co-operatives in the Netherlands can
further be seen by the market shares indicated in Table 2.

                            TABLE 2
                       The Netherlands
       Agricultural Co-operatives by Commodity and Market Share 
                            (1993)

                 Commodity              Market Share %

              Chemical fertilisers             47
              Pesticides                       40
              Mixed Feed                       51
              Mushroom Compost                 60
              Milk                             84
              Livestock and Meat               40 (hogs)
                                               31 (livestock) 
              Poultry Sales                    12
              Poultry Slaughtering             10
              Egg Sales                        13
              Egg Product Sales                49
              Sugar                            63
              Potatoes and Seeds               73
              Potato Production                22
              Potato Starch                    100
              Vegetables                       67
              Fruits                           85
              Mushrooms                        47
              Flowers                          97
              Flower bulbs                     50
              Plants                           72
              Wool                             60

         Source: 1995 Profile: Agricultural Cooperation 
                 throughout the World, p 57.


In Slovakia, 925 co-operative farms own 69% of land; this in
contrast to the 7% of the total land area owned by 5,500 family
farms and the remaining owned by the state and public sector. 

Agricultural co-operatives in Sweden are also principal actors
in the agricultural sector.  Co-operatives hold 95% of the dairy
market, 80% of livestock slaughtering, 70% of the seed market,
and 80% of the mixed feed market.

The 1993 estimates of market shares of agricultural co-operatives
in Turkey are found in Table 3.

                        TABLE 3

                        Turkey
        Agricultural Co-operatives: Market Share

       Commodity                         Market Share %
       ---------                         -------------
       Cotton                                  48.6
       Egg                                      1.0
       Fig                                     27.7
       Lemon                                    2.4
       Milk                                     2.9
       Nut                                     36.7
       Olive Oil                                1.7
       Orange                                   2.0
       Raisin                                  18.3
       Rose flower                             23.5
       Sunflower                               31.5
       Vegetables                               1.0
                       Source: Taris 


Of the total number of 5,300 registered co-operatives in ex-
Yugoslavia, farming co-operatives account for 1,600, of which
1,530 are in Serbia and 70 in Montenegro. The largest part of all
production capacities is owned by co-operatives, some products
such as milk, grapes, wine, and wool are almost exclusively made
by co-operatives. They own as much as 72% of arable land and 85%
of livestock.

Exports within the ECE Region
-----------------------------
Many agricultural co-operatives are providing their products to
outside markets.  Some export mainly within the European Union,
while others export to wide number of countries throughout the
world.

The agricultural co-operatives in Denmark export 66% of their
total production to 150 countries worldwide, of which the eight
largest markets buy 75%.  

The Finnish co-operative movement reports exports of agricultural
products in 1993 destined as follows:

                    EFTA                15.3%
                    European Union      20.5%
                    Eastern Europe      41.9%
                    USA                 10.4%
                    Other               11.9

In 1993, the Raiffeisen co-operatives of Germany and their
federal organization had agricultural exports totalling US $2.9
million.  Eighty-three per cent of the exports were destined to
the European Union. In 1994, half of the total cereal production
exported (i.e. 116,000 tons) was produced by the Raiffeisen co-
operatives. 

Innovations within the Co-operative Movement
--------------------------------------------
Co-operatives like other enterprises in the agricultural sector
are examining ways to retain their competitivity.  Some have
experienced the need to consolidate local small-scale co-
operatives into large groups to better compete with larger
agricultural enterprises and achieve economies of scale; some
have begun creating new legal structures such co-operatives
holding companies; other have sought to form alliances with other
co-operatives for trading purposes and still others have
evaluated their markets and introduced new farming and processing
techniques such as organic farming which better respond to
demand.

      Environmentally Sustainable Agriculture
----------------------------------------------
Due to the unique blending of economic and social orientation,
co-operative enterprises, possibly more than other types of
enterprises within the market, are able to contribute to a
variety of other issues such as environmental rationality and
societal sustainabilty.  This is because member-owners are able
to control business policies and practices and are empowered to
ensure that the operations of their co-operatives are
environmentally sustainable. In this way they are able to
safeguard their own long-term interests and those of their
families and communities where the enterprises operate. Their
growing awareness of environmental issues during the last decade
is being rapidly translated into practical changes in enterprise
operation. 

In Western European countries such as Denmark, Finland, Italy,
Netherlands, Sweden,  Switzerland, and the United Kingdom, as
well as in Canada, agricultural co-operatives have instituted
programmes for environmentally friendly agricultural production. 
Some have turned to organic farming, while other have
rationalized chemical inputs.  

In the United States, agricultural co-operatives are also
instituting programmes and plans for green production.  The GREEN
Plan/gris System offered to farmers by the Growmark Co-operatives
is just one example of how co-operatives are responding to the
challenge of ensuring the profitability of farmers and responding
the environmental requirements of the market.  The GREEN Plan
applies technological innovations to farming so as to reduce
chemical inputs, thus contributing to sustainable agricultural
development.  

In addition, newly formed agricultural co-operatives specialized
in organic farming have multiplied in recent years in the United
States.  Their products are marketed through private enterprises
as well as through consumer co-operatives.  

      New Partnerships
-----------------------
One of the difficulties facing agricultural co-operatives is the
need for capital.  In many of the ECE countries, co-operatives
have experienced a reduction in their membership, a direct
consequence of the decline in numbers of the agricultural
population. This trend has had direct implications on the capital
stock of the co-operative and has led to the investigation of new
forms of financing such as issuing equity shares, co-operative
investment certificates, and bonds. Co-operatives have also
looked to new partnerships with non-co-operative associates to
bring capital into the business without affecting the co-
operative character of the enterprise. Increasingly, agricultural
co-operative groups of a certain size are structuring themselves
around holding companies which simply coordinate their
shareholdings in various subsidiaries. Co-operatives in France,
Italy and Spain have opted for such innovative schemes so as to
remain competitive in the changing environment.  

In Belarus the consumer co-operative movement has set up
agricultural processing  and marketing co-operatives.  The
consumer co-operatives purchase meat, potatoes, fruits and
vegetable, mushroom and berries from private farmers.  Once
processed, these items are sold in consumer co-operative shops. 
This is one example of the linkages that can be created between
co-operatives in different sectors of activity and which can
prove to be competitive.

In view of the rapidly changing conditions and growing
competition, agricultural co-operatives in the Czech Republic are
looking for new linkages and are initiating new structures.  A
concrete example is the establishment and expanding marketing
operations of dairy co-operatives.  Links are being sought to
newly created financial and credit co-operatives, which whenever
possible, participate in making capital investments in the food
and processing industries and in agricultural services.

The agricultural co-operative movement in Denmark has also begun
looking to the future and seeking innovative models and ideas
which will respond to the new economic environment while
continuing to serve in an optimal manner the needs of their
members - the changes in agricultural trade with the birth of the
World Trade Organization, the implications of the agricultural
policies in the European Union, as well as the changing national
environment (legislation, taxation, changing agricultural
policies reflecting heightened awareness of the environment,
etc).  Models have focused on the question of capital formation,
increasing member participation, member rights and obligations.
Ideas have been introduced to expand membership by opening
membership to employees, or producers in other countries, or to
issuing shares.  Proposals have also been made to consolidate co-
operatives by sector, i.e. one agricultural co-operative to
regroup the existing co-operatives; forming a holding co-
operative to amalgamate co-operatives from a variety of sectors;
increasing collaboration between co-operatives from difference
sectors on integrated production or distribution; forming joint
ventures or strategic alliances with co-operatives outside
national borders; or forming strategic alliance with retailers
on production of "private label" good and distribution of co-
operative labels.

In Lithuania farmers' co-operatives are examining ways of forming
joint stock companies.

      Transitional Economies: Government Regulations and Effects
-----------------------------------------------------------------
In East and Central Europe the entire agricultural sector has
been adversely affected by liberalization policies. Rural
production, service and marketing co-operatives were particularly
disadvantaged by governmental measures. However, five years after
the introduction of economic reforms, two basic problems most
frequently evoked in the beginning of the transformation process
have been resolved; the revision of co-operative legislation has
been completed and land reforms have been implemented; initial
decisions restricting co-operative development have either been
eased or revoked, and the negative attitude of governmental
agencies towards co-operative movement has changed. Some examples
of the circumstances in which agricultural co-operatives exist
are :

In Estonia many agricultural co-operatives were formed in the
process of privatization of collective farms. The government had
given some priority in privatizing the food processing industry
to regional co-operatives as seen be Article 32 of the
Privatization Law. This article establishes that co-operatives
which supply raw materials to a processing plant are have the
right to the first bid in the privatization of the enterprise.

In Latvia, private farmers benefit from tax exemptions over a
number of years, however, co-operatives are subject to 25% income
tax.  Due to this taxation scheme, few farmers actually
incorporate their farmers' organization as co-operatives. The
majority of co-operatives were formed  after the privatization
of collective farms.

In Slovakia, dialogue between the government and the Slovak Union
of Agricultural Co-operatives resulted in the 1994 stabilisation
policy which has favourably effected agricultural co-operatives,
thus allowing a resurgence of agricultural co-operatives.


Conclusion
----------
This report has shown the dimension and significance of the
agricultural co-operative movement in the ECE region. It has
highlighted ways in which co-operatives have responded to
changing economic and legal and environmental conditions.  We
reiterate the words of the UN Secretary-General when he concluded
that 

     "organizations of farmers, including agricultural
     co-operators, are key institutions in the revitalization of
     agriculture and the development of rural areas... Their
     role, in terms both of faithfully representing farmers'
     views, and of providing practical services to their
     members, appears often to have been given less attention by
     Governments and international agencies than it deserves,
     and consequently their potential has not been fully
     utilized. Seeking farmers' views through consultations with
     farmers' representative organizations, and encouraging and
     supporting the latter in their efforts to provide services
     to their members, are prerequisites for sustainable rural
     development. The current absence of consultation of
     farmers, including co-operators, by researchers, is a
     serious constraint upon accumulation of relevant knowledge
     and successful diffusion of innovation".

We hope that the ECE will make efforts to establish links with
agricultural co-operatives so as to exchange information and
experience in the future. ICA commits itself to assist the ECE
Committee on Agriculture in forging these ties.  


Notes:
------

1/  The ICA regroups over 200 member organizations representing
over 750 million individual members in all sectors of the
economy.
2/  ICA/UN Department for Policy Coordination and Sustainable
Development.  Farmers' Organizations and Rural Co-operatives:
Note prepared for the Participants of the World Summit for Social
Development.  March, 1995.
3/  Jensen, H. "Co-operation in the Year 2010: Models for Future
Collaboration between Co-operatives and between Co-operatives and
Private Companies". 1995, 
p. 3.
4/  Hernandez Perlines, F.  "Son Competitivas las Cooperativas
Agrarias?" in Revista de Debate sobre Economia Social y
Cooperativa. No. 18, Julio, 1995. pp 11-40.
5/  Picard, Jacques.  "New Forms of Finance for Agricultural Co-
operatives" in ICA Review of International Co-operation, Vol. 86,
No. 4, 1993. pp 61-70.
6/  Information provided to ICA from the Belorussian Republican
Union of Consumer Co-operatives (Belcoopsoyuz), Minsk, Belarus.
7/  Czech-Moravian Association of Agricultural Co-operatives.
Agriculture and Agricultural Co-operatives in the Czech Republic.
1995. p. 21.
8/  Jensen, H. "Co-operation in the Year 2010: Models for Future
Collaboration between Co-operatives and between Co-operatives and
Private Companies". 1995, pp. 11-12.
9/  UN Secretary-General Report. Status and Role of Co-operatives
in the Light of New Economic and Social Trends. Document
A/47/216-E/1992/43.