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Support for Farmers' Cooperatives Case Study Report the Role of Post-Socialist Production Cooperatives in Bulgaria

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Support for Farmers' Cooperatives Case Study Report the Role of Post-Socialist Production Cooperatives in Bulgaria Support for Farmers' Cooperatives Case Study Report The role of post- socialist production cooperatives in Bulgaria Ivan Boevsky Markus Hanisch Julian Sagebiel The 2011-2012 project „Support for Farmers‘ Cooperatives (SFC)“ has been commissioned and funded by the European Commission, DG Agriculture and Rural Development. Contract Number: 30-CE-0395921/00-42. The SFC project is managed by Wageningen UR’s Agricultural Economics Research Institute LEI and Wageningen University. Project managers: Krijn J. Poppe and Jos Bijman. Other members of the consortium are: • Pellervo Economic Research PTT, Finland: Perttu Pyykkönen • University of Helsinki, Finland: Petri Ollila • Agricultural Economics Research Institute, Greece: Constantine Iliopoulos • Justus Liebig University Giessen, Germany: Rainer Kühl • Humboldt University Berlin, Germany: Konrad Hagedorn, Markus Hanisch and Renate Judis • HIVA Katholieke Universiteit Leuven, Belgium: Caroline Gijselinckx • Rotterdam School of Management, Erasmus University, The Netherlands: George Hendrikse and Tony Hak How to cite this report: Boevsky, I., M. Hanisch, and J. Sagebiel (2012). Support for Farmers’ Cooperatives; Case Study Report: The role of post-socialist production cooperatives in Bulgaria. Wageningen: WageningenUR. Disclaimer: This study, financed by the European Commission, was carried out by a consortium under the management of LEI Wageningen UR. The conclusions and recommendations presented in this report are the sole responsibility of the research consortium and do not necessarily reflect the opinion of the Commission or anticipate its future policies. Support for Farmers' Cooperatives Case Study Report The role of post-socialist production cooperatives in Bulgaria Ivan Boevsky University of Sofia, Bulgaria Markus Hanisch Humboldt Universität zu Berlin, Germany Julian Sagebiel Humboldt Universität zu Berlin, Germany November 2012 Corresponding author: Markus Hanisch Humboldt Universität zu Berlin Department for Agricultural Economics Division of Cooperative Sciences Luisenstr. 53 10117 Berlin, Germany E-mail: [email protected] II Preface and acknowledgements In order to foster the competitiveness of the food supply chain, the European Commission is committed to promote and facilitate the restructuring and consolidation of the agricultural sector by encouraging the creation of voluntary agricultural producer organisations. To support the policy making process DG Agriculture and Rural Development has launched a large study, “Support for Farmers’ Cooperatives (SFC)”, in order to provide insights on successful cooperatives and producer organisations as well as on effective support measures for these organisations. These insights can be used by farmers themselves, in setting up and strengthening their collective organisation, by the European Commission, and by national and regional authorities in their effort to encourage and support the creation of agricultural producer organisations in the EU. Within the framework of the SFC project, this case study report on the role of post-socialist production cooperatives in Bulgaria is a collaboration between researchers of the Bulgarian Institute for Agricultural Economics in Sofia and researchers at the Humboldt-Universität zu Berlin. Concepts and questionnaires have been developed together. Data collection for this report has been done in the spring of 2012. In addition to this report, the SFC project has delivered 32 other case study reports, 27 country reports, 8 sector reports, 6 EU synthesis and comparative analysis reporst, a report on cluster analysis, a report on the development of agricultural cooperatives in other OECD countries, and a final report. The authors would like to thank the directors and managers of the APCs under study and a list of experts who enriched this report with their comments. III Table of Contents 1. Introduction ................................................................................................................................................................ 1 1.1. Analytical framework.................................................................................................................................... 3 1.2. Method of data collection ............................................................................................................................ 3 1.3. Structure of the report .................................................................................................................................. 3 1.4. Brief review of the literature on farm structures .............................................................................. 4 1.4.1. The explanation of Bulgarian farm structures .......................................................................... 4 1.4.2. Micro farms .............................................................................................................................................. 5 1.4.3. Large farms .............................................................................................................................................. 5 1.4.4. Service provision ................................................................................................................................... 8 1.4.5. APCs and their treatment in the “size versus efficiency debate” in agricultural economics .................................................................................................................................................................... 9 2. Description of Case APC 1, Municipality Silistra, North-East Bulgaria ........................................... 12 2.1. Facts & Figures of the APC ....................................................................................................................... 13 2.2. Relevant Support measure affecting structure and strategy ..................................................... 15 2.3. Strategy of the cooperative with regard to the study topic........................................................ 15 2.3.1. Other than agricultural services .................................................................................................. 15 2.3.2 Employment ......................................................................................................................................... 16 2.3.3. Credit ....................................................................................................................................................... 17 2.3.4. Agricultural services and market access .................................................................................. 17 2.3.5. Main Hypotheses/summary .......................................................................................................... 18 3. Description of APC 2, Municipality Yakimovo, North-West Bulgaria .............................................. 19 3.1. Facts & figures of the APC ........................................................................................................................ 19 3.2. Relevant support measure affecting structure and strategy ..................................................... 20 3.3. Strategy of the cooperative with regard to the study topic........................................................ 20 3.3.1. Other than agricultural services .................................................................................................. 20 3.3.2. Employment ......................................................................................................................................... 21 3.3.3. Credit ....................................................................................................................................................... 21 3.3.4. Agricultural services and market access .................................................................................. 21 3.3.5. Main Hypotheses/summary .......................................................................................................... 22 4. Analysis by comparison ...................................................................................................................................... 23 5. Discussion ................................................................................................................................................................. 25 References .......................................................................................................................................................................... 26 Appendices ........................................................................................................................................................................ 29 IV List of Abbreviations APC Agricultural Producer Cooperative EU European Union ESU European Size Unit GDP Gross Domestic Product GVA Gross Value Added NMS New Member States SFC Support for Farmers’ Cooperatives SAPARD Special Accession Programme for Agriculture and Rural Development TKZS Communist Agricultural Productive Cooperative V 1. Introduction Bulgaria entered the European Union (EU) on 1st January 2007. Since the year 2000 growth has accompanied national development with a stagnating period in 2010 and recovery on its way since 2011 (six per cent annual growth from 2004 to 2008, 2011, two per cent). Currently, seven per cent of the country’s labour force is employed in agriculture contributing about five per cent to national gross domestic product (GDP) (Central Intelligence
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