Cooperatives: a Tool for Family Farms
European Commission – FAO:
Kick off 2014 Year of the Family Farm
Brussels, November ...
Cooperatives add value in different ways:

 Realise efficiency of scale (if owners don’t want to
merge): joint machines, ...
Main findings on European Cooperatives

 Cooperatives create markets or give farmers a better
access to them and improve ...
Some succesful examples

 The Santo Wine Cooperative, Santorini, Greece
● Successful, vertically integrated 2nd tier (fed...
Role in the food chain

 In

supply chains cooperatives play a role in maximizing
their members’ share of the value added...
The importance of trust and governance

 Farmers have many options in organising their
cooperative’s internal governance ...
Thank you for
your attention

krijn.poppe@wur.nl

www.wageningenur.nllei
Results availabe from DG Agri and WUR
Krijn Poppe on Family farms and Cooperatives
Krijn Poppe on Family farms and Cooperatives
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Krijn Poppe on Family farms and Cooperatives

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Slides used in a presentation at the opening of the 2014 Year of the Family Farm at a European Commission - FAO event in Brussels, November 2013

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Krijn Poppe on Family farms and Cooperatives

  1. 1. Cooperatives: a Tool for Family Farms European Commission – FAO: Kick off 2014 Year of the Family Farm Brussels, November 2013 Krijn J. Poppe
  2. 2. Cooperatives add value in different ways:  Realise efficiency of scale (if owners don’t want to merge): joint machines, cheese factory  Create a market a distance / realise access to the market that is at  Increase market efficiency by competition with traders with a high mark-up  Reduce transaction costs for the food industry by standardising contracts, organising farmers and their quality control.  Manage risk for farmers (pooling)  Organise innovation e.g. in niche products
  3. 3. Main findings on European Cooperatives  Cooperatives create markets or give farmers a better access to them and improve efficiency.  Structures of cooperatives are changing: room for management, internationalisation, new structures  Cooperatives have three key characteristics: userowned, user-controlled and user-benefitting.  Various hybrid business entities, look-alike of IOFs, often majority owned by farmers’ organisations.  Cooperatives do not always represent the optimal organisational form; the choice is not an ideological but a practical one.
  4. 4. Some succesful examples  The Santo Wine Cooperative, Santorini, Greece ● Successful, vertically integrated 2nd tier (federated) cooperative ● High quality food products ● From economies of scale (2nd tier) to collaboration with IOF on the brand name of Santo  OVISO, sheep cooperative in Extremadura ● Fast growing market share, based on brands ● 2nd tier cooperative that sells the lambs and sheep ● But also has intensive professional services (veterinary etc.) to members ● Strong internal quality management
  5. 5. Role in the food chain  In supply chains cooperatives play a role in maximizing their members’ share of the value added.  Countervailing power is limited: even the largest transnational cooperatives lack market power  In the new food economy organising production to private standards and consumer niches is important  Cooperative yard stick theory: a large market share for cooperatives in a region can increase the price level and reduce volatility (dairy) ● In countries where cooperateve market share is 2050%, the milk price is 4,5 to 6 euro per kg higher compared to < 20% (2008-2010 data). ● Market share > 50%: 2,5 – 4,5 euro/100 kg. ● IoF pay even 10% more (for their specialities)
  6. 6. The importance of trust and governance  Farmers have many options in organising their cooperative’s internal governance optimally.  In many cooperatives there is room for further professionalization (checks and balances, professionals)  Cooperation works as people identify with groups and that influences their behaviour (Elinor Ostrom)  Cooperative behaviour is very context specific !  Communication, cohesion and “culture” (lack of social and human capital) are important  Reputation builds trusts that creates collaboration, directly or via reciprocity  Outside support can strengthen or corrupt collaboration
  7. 7. Thank you for your attention krijn.poppe@wur.nl www.wageningenur.nllei
  8. 8. Results availabe from DG Agri and WUR

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