PUB(14)9112:4 DEVELOPMENT OF AGRICULTURAL COOPERATIVES IN THE EU 2014 DEVELOPMENT OF AGRICULTURAL COOPERATIVES IN THE EU 2014 Printed in Brussels, 5th February 2015 picture copyrights : © Copa-Cogeca Further information on agricultural Cooperatives in Europe can be downloaded from the Cogeca web site: http://www.copa-cogeca.eu/ Cogeca © European agri-cooperatives (Cogeca), 2014 Copy, print permitted when mentioning the source: Cogeca. Printed in Brussels on 5th February 2015 PREFACE European agriculture is facing a multitude of challenges. Despite the re- cent reform which started to be implemented in 2014, numerous uncer- tainties still exist. Market conditions are evolving and pressure is in- creasing for more effective responses and higher level of efficiency at international level. Nevertheless, opportunities are also significant for our cooperatives and farmer members. Let me also remind you that when I was appointed President of Cogeca, we approved a working programme that included certain policy objec- tives aiming to promote the entrepreneurial orientation of European agri-cooperatives. This report constitutes thus a useful instrument of information, to facilitate our lobbying to the European Institutions, as well as our contacts with other stakeholders and international organisa- tions. The information contained in this report, highlights the role of agri-cooperatives and of national cooperative organisations. Information on the current profile of agri-cooperatives referring to their economic performance and the evolution of their structures, is of fundamental importance in policy de- cision making at EU level. Recognition of their contribution in economic growth, employment and in sustainable development, is of key importance for policy making. For the same reason it is also essen- tial to present the specificities of cooperatives and the wide variety of different type of cooperative or- ganisations across the EU Member States. Hence, the importance of this publication, which presents updated general agricultural statistics, coop- erative data, and trends for agri-cooperatives across all MSs of the EU. The information contained in this report, has been provided by the Cogeca member organisations, or retrieved from formal sources. The findings of this report highlight the economic significance of EU agri-cooperatives, while at the same time reflecting a wide spectrum of different levels of their development across the EU MSs. Hence the pressing need for farmers, particularly in these market segments where the market share of agri- cooperatives is still very low, to organise themselves into cooperatives, in order to increase their eco- nomic viability and receive a fair share of the value added. This report also shows that the best economic performance in farming, is found in the most market ori- ented MSs and sectors. Higher economic performance is achieved by cooperatives that pursue entrepre- neurial business strategies and value adding activities through processing and marketing. These findings demonstrate that the viability of farming depends on the level of organisation in cooper- atives. In the future, faced with increasingly competitive markets and a greater diversification of cus- tomers’ needs and preferences, cooperatives will become an indispensable instrument in the hands of farmers, to attain higher economic performance. This study is therefore an essential tool for better understanding EU cooperatives, but also to demon- strate to EU institutions the relevance of views and arguments of Cogeca, given that cooperatives are constitute a fundamental part of European agriculture. Finally, I would like to thank the national organisations, as well as all those who have contributed in this extensive and detailed report and in particular the Secretariat which has undertaken this laborious work. Brussels, 4th December 2014 Christian Pèes President of Cogeca 5 EXECUTIVE SUMMARY Cogeca has, in recent years, presented periodic reports on the de- velopment of EU agri-cooperatives. This publication follows the path set in previous editions, with an extended scope in the current edition, since it is now covering all EU MSs as well as providing additional analysis. More comparative cooperative figures, as well as covering legal, governance and fi- nance aspects is also provided. This report has been prepared by the Secretariat, largely compiled on the basis of the contributions received from Cogeca member organisations, in response to a questionnaire (whereas in other cases, the main source of information has been the study: “Support for Farmers’ Cooperatives” (Nov. 2012) which has been financed by the European Commission and carried out by LEI Wageningen UR. In that questionnaire, Cogeca member organisations were requested to provide general information on their identity, contact details and indicate their current elected and executive leaders. In addition to that, information was requested on current market developments with an impact to agri -food cooperatives, and their policy objectives and priorities. National organisations were requested to provide general data on the development of their member cooperatives as to identify and rank the leading cooperatives as well as their leading cooperatives per sector. The final part of the questionnaire addressed legal aspect and in particular the main legal provisions as well as taxation, governance and auditing aspects. The responses provided, were organised in different chapters of this report. It should be underlined that this approach has led to a considerable wealth of additional information (as compared to previous editions), since the collected information now, for the first time, covers agri-cooperative developments across all EU 28 MSs. The first chapter presents a short profile of Cogeca. This information throws light in the establishing phase of Cogeca and the birth of its collaboration with Copa to form a common Secretariat. The cur- rent structure and organisation through the Secretariat follows suit, as well as a description of decision making instruments and methods of lobbying towards the European Institutions and stakeholders. The second chapter summarises the main statistical indicators of agricultural production across the EU MSs, as well as the general cooperative figures in each MS, followed by a list of the TOP 100 agri- cooperatives ranked on the basis of their turnover in the last reporting period (2013). The overall conclusion derived from these figures is that, EU cooperatives maintain a strong market presence in the European food supply chain. In particular, the total turnover of all cooperatives is cur- rently in the range of some €347 billion, while the total number of cooperatives has decreased to some 22000 (instead of the 38000 figure reported in the previous period). It should be nevertheless noted, that this is due to excluding the 11500 CUMAs, as well as the heavy reduction to the number of Greek cooperatives (by some 6000), as a result of new legal provisions, through a re-registration procedure). Furthermore, a significant growth trend is demonstrated by the leading cooperatives, since both the total turnover of the TOP 100 cooperatives has grown by 4% from 2011 to 2012, followed by another 14% growth in the next year. At the same time the growth observed by the TOP 25 agri-cooperatives has demonstrated an equally impressive trend (given the length of the periods), as it has increased by 5% in the period 2003-2008, followed by a 12% growth in the period 2008 to 2013. When looking at the table of TOP 10 cooperatives in the main 8 sub-sectors, with their turnover re- ported in the last three years, a significant growth trend may also be observed, with limited exceptions. 6 Chapter three presents the legal framework, including, finance, taxation and governance aspects relat- ed to agri-cooperatives. A wide variety of different provisions are stipulated through the legislative framework foreseen for agri -cooperatives. These variations are related to the general rigidity of the legal system across the MSs. In other words, some MSs have extensive and thorough laws specifically governing cooperatives, while some have specific legislation for agri-cooperatives even, whereas in other MSs, the legal framework leaves more flexibility to the legal entities to act, provided that they comply with the usually general commercial or enterprise law provisions. Governance in agri-cooperatives is inseparable from control rights, which in turn is directly related to the finance of cooperatives at least for the equity capital of members. It should be underlined that alt- hough notable differences exist in the legal system across MSs, governance (as well as financial as- pects), are mostly linked to market conditions. The difference is between traditional structures and operations in commodity markets and more elaborated management structures, when business con- cerns lead to the adoption of more elaborated methods of business management and strategies. To put it more simply, one tier governance systems where elected farmers are assuming executive roles in everyday management are adequate to handle commodities and less complicated decision making. On the other hand, when market conditions demand more complicated decisions, because of more market oriented business strategies and higher level of capital intensity, then management require- ments call for professional managers. Such circumstances give rise to the need of having a professional management board,