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

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. 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. 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.

6. 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

7. 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)

8. 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

9. Thank you for
your attention
krijn.poppe@wur.nl
www.wageningenur.nllei

10. Results availabe from DG Agri and WUR