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agricooperatives

agricooperatives

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Published by Nina Bilge
agricooperatives in the 21st Century
agricooperatives in the 21st Century

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Published by: Nina Bilge on Feb 27, 2008
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United StatesDepartment ofAgriculture
Rural Business– CooperativeServiceCooperativeInformationReport 60
AgriculturalCooperativesin the 21st Century
 
Preface
This report identifies challenges and opportunities facing farmer cooperatives in theyears ahead and offers strategies to increase their chances for success. The externalforces besetting cooperatives are examined as are their internal strengths and weak-nesses. Priority issues are identified that cooperative members, leaders and advisersneed to address. No easy solutions are provided, because there are none. Hopefully,this report will serve as a catalyst for further thought and discussion on how farmercooperatives can enhance income and quality of life for their members.
1987 Study
In 1987, a USDA report, "Positioning Farmer Cooperatives for the Future," was pre-pared in response to a directive from the Senate Agricultural AppropriationsSubcommittee. It reflected the views of cooperative leaders from across the countrywho gathered in a series of focus panels to discuss the future of farmer-owned cooper-atives. While many different issues and strategies were discussed, panelists conclud-ed that cooperatives must continually adapt to the changing marketplace and needs offarmers and that nothing inherent in the cooperative form of business prevents thattype of evolution. The report affirmed the need and and capability of cooperatives tochange for the future.
2002 Methodology
This report examines the challenges producer-owned cooperatives face at the dawn ofthe 21st century. Several participants in the 1987 study revisited that report and com-mented on a range of topics regarding the continued relevance of its findings and newissues that have arisen since then. Then, prominent members of the cooperative com-munity across the country participated in six focus panels (Appendix B). A discussionoutline covering a range of conditions confronting agriculture in general and cooperativesin particular was sent to each participant before each focus group met (Appendix C).The focus group panelists engaged in brainstorming sessions and free-form discus-sion, framed by the set of "contemporary" cooperative principles formulated in the1987 study.
1
Commentary from each panel is reflected in this report. However, no com-ment is directly attributable to any panel member.
Goal
This report identifies challenges facing agricultural producers and their cooperatives asthey enter the 21st century and suggests a foundation for developing options andstrategies to meet those challenges.
2
1
The three principles: member-owned, member-controlled, and member-benefits succinctly define theunique aspects of the cooperative form of business and provide a framework for evaluating cooperativeactions and practices.
2
This report refers to various structures used by members to form cooperatives. Scholars have classifiedthese structures and given them somewhat arbitrary labels. A summary of the meaning of various teamsused to describe cooperative strutures in this report is attached as Appendix A.
i
November 2002
 
Contents
Preface. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . iIntroduction. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . vCooperative Principles and Assessment of Options. . . . . . . . . . . . . . . . . . . . . . . . . 1Cooperative principles. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1Inter-related principles. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1Principles guide analysis. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2When changes are considered. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2Issues and Forces Shaping the External Environment of Cooperatives. . . . . . . . . . 3Changing farm demographics. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3Technological innovation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3Changing competitive environment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4Role of the consumer. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4Industrialization: Farm to retail via the supply chain. . . . . . . . . . . . . . . . . . . . . . 5Structural change in food processing and marketing. . . . . . . . . . . . . . . . . . . . . 6Globalization. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7The policy environment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8The price-income anomaly. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8Environmental regulation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8Issues and Forces Shaping the Internal Environment of Cooperatives. . . . . . . . . . 9Limited ability to accumulate equity. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9Diverging member characteristics and needs. . . . . . . . . . . . . . . . . . . . . . . . . . 10Board effectiveness. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10Management lack of cooperative focus. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11Growing emphasis on value-added activity. . . . . . . . . . . . . . . . . . . . . . . . . . . . 11Pressures on the federated model. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
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