Professional Documents
Culture Documents
as transforming agents in
rural development
The case of Galicia
María Fandiño, Carlos J. Álvarez, Raquel
Ramos and Manuel F. Marey
Abstract: Changes in the agricultural sector over the last 50 years have meant that
many of the organizations created to favour agricultural production are no longer of
value and need to be modified. In Galicia, Spain, the agricultural cooperative
movement is not fully developed, and at the same time is being forced to adapt to
new development policies within the European Union. This study reviews the
current situation regarding the agricultural cooperative movement in Galicia, and
assesses its potential as a transforming agent in rural development. The authors
report on a census of existing cooperatives and a questionnaire survey of their
characteristics.
The authors are with the Department of Agricultural and Forestry Engineering, University of
Santiago de Compostela, Escuela Politécnica Superior, Campus Universitario s/n, 27002 Lugo, Spain.
Tel: +34 982 25 36 39. Fax: +34 982 28 59 26. E-mail: proyca@lugo.usc.es.
In many countries of the European Union, the political and economic conditions. There have been
socioeconomic development of rural areas remains a key numerous studies of specific aspects of agricultural
problem. Pathways to achieve this development include cooperative function, including for example information
both traditional approaches and new programmes within systems (Kollar et al, 1999) or land acquisition (Duke et al,
the framework of the Common Agricultural Policy 2004).
(Maseda et al, 2004). The present study was aimed at France, Germany, the Netherlands and Denmark
assessing the potential of agricultural cooperatives as a provide clear examples of adaptation to changes in
transforming element in rural development, in view of the economic policies and market conditions. Concentration
positive effects of this type of organization both in terms of agricultural cooperatives through mergers has
of production (ie the possibility of organizing and strengthened the cooperative system in these countries,
adequately dimensioning production) and participation and has given it a major presence in most agricultural and
(ie social integration of decision making, and fisheries sectors. Indeed, most agricultural purchases and
diversification of products and services). We focus on the sales in these countries are made though cooperatives
province of Lugo in the north-west Spanish region of (Munuera, 1997). In these countries, agricultural
Galicia, where agriculture is the primary economic cooperatives are a central component of rural
activity. There can be little doubt that agricultural development.
cooperatives favour rural development; our principal In southern Europe, however, the situation is very
interest here is to assess the extent to which cooperative different. In Greece, Italy, Portugal and Spain, most
systems may complement other developmental strategies. agricultural cooperatives are small in scale in terms of
In Europe, agricultural cooperatives are currently both membership and turnover (Gómez, 2003).
facing profound structural changes due to evolving In Spain, agricultural cooperatives have a long
tradition, but their economic development has been Materials and methods
delayed with respect to other countries with more
We first drew up a census of cooperatives, on the basis of
advanced agricultural sectors. Spanish agricultural
the lists maintained by the Galician regional government,
cooperatives are generally small to medium-sized
supplemented and validated (a) with data supplied by the
enterprises made up of small to medium-sized farms
Caixa Rural de Galicia, the only cooperative savings bank
(Juliá, 2002). The origin of these associative structures can
in Galicia, and (b) with various lists of dairy marketing
be seen as a response to continued reductions in the
cooperatives.
income of agricultural businesses and rural workers
Second, we drew up a questionnaire. We opted to
with respect to urban workers, reflecting both market
administer this questionnaire to a single representative of
changes and declining governmental support (Gómez,
each cooperative. This permitted validation of the census,
2003).
and reasonable confidence in response representativeness.
Within Spain, new developments in the EU Common
The questionnaire was administered to the manager of
Agricultural Policy give increasing emphasis to concepts
each cooperative, on the grounds that this person was
such as multifunctionality and rural development, and
likely to know most about the cooperative’s function and
encourage cooperatives to become increasingly and
outlook. The questionnaire was divided into four blocks,
proactively involved in these areas, within which
as follows:
cooperative organizations evidently offer great
advantages (Juliá, 2002). • Block 1: Basic characteristics of the cooperative, includ-
Galicia is a region in north-west Spain, at the periphery ing respondent’s name and position, and past and
of the European Union, with an area of about 29,400 km2 present characteristics of the cooperative (structural
and a population of about 2.7 million. About 75% of this characteristics, financial status, activities).
population lives in rural communities, and about 25% of • Block 2: Services offered by the cooperative to its
the active population works in the primary sector. In members, paying particular attention to ways in which
recent years, there has been a dramatic decline in the cooperative is able to adapt to its members’
agricultural employment and in the number of farms changing requirements.
(Crecente et al, 2002). Rural communities have suffered • Block 3: Financing of the cooperative, including current
very significant emigration (López, 1979; Beiras, 1975), financial status and credit, and the respondent’s
particularly of young people abandoning the agricultural opinions about the current and future situation of
sector (Hernández, 1996). In addition, agricultural cooperative credit organizations.
development has historically been hindered in Galicia by • Block 4: Outlook for agricultural cooperatives in Galicia
inheritance traditions favouring the fragmentation of land in general, and for the respondent’s cooperative in
ownership, and this problem is compounded by the hilly particular. In this block we also asked respondents how
topography (González et al, 2004). Thus farms are often they thought that the functioning of their cooperative
both small and discontinuous, making cooperative might be improved.
association practically essential for market access and
profitability.
Government census data indicate that agricultural Results and discussion
cooperatives currently have a total membership of about
Our initial census indicated a total of 107 agricultural
45,000 people in Galicia, accounting for about 25% of the
cooperatives in Lugo Province, 76 of which were active
total number of agricultural businesses, with a turnover
and could be contacted; in other words, about 40% of the
of about €1,200 million per annum, and generating more
cooperatives included in the official lists are no longer
than 4,100 direct jobs (Xunta de Galicia, 2003). Most of
active. A total of 67 cooperatives agreed to take part in the
Galicia’s agricultural cooperatives are in the livestock
study.
sector, and over 50% are in dairy farming; although it is
Table 1 summarizes the educational level of the
notable that only 13% of milk produced in Galicia is
respondents. About 34% had university-level education:
processed and marketed by cooperatives, versus 87% by
this relatively low proportion is unfavourable for
private companies. Most cooperatives in Galicia are
effective management of cooperatives. As expected, most
smallholder cooperatives (Fernández, 1988) with
of these university-educated managers work in larger
relatively few members, a small volume of business, and
cooperatives.
little connection or cooperation with other cooperatives;
in line with this, cooperatives tend to focus on their own
specific problems rather than on those of the industry as a
whole.
As noted, the present study reviews the current
Table 1. Educational level of the 67 respondents, all managers of
situation regarding agricultural cooperatives in Lugo
agricultural cooperatives.
province (Galicia), aiming to analyse the principal
problems faced by these enterprises, and to identify Educational level %
strategies for improvement of the cooperative system
No schooling 3.0
and for the transformation of rural development Primary school 38.8
through cooperative organization. The study was Secondary school 23.9
based on a questionnaire administered to all University 34.3
agricultural cooperatives in the study area (Lugo
Total 100.0
province).
90
3
00
–7
–8
–0
19 –
40 51
–9
–2
61
71
01
re 19 19
81
91
fo
19
19
20
19
Activity %
Figure 1. Proportion of cooperatives founded in each of the
periods shown. Purchasing, sale of products 64.2
Purchasing, sale of products, feed production 14.9
Milk production 4.5
Farm-machinery use 11.9
The first question asked the respondent in which year Services (second degree) 1.5
the cooperative was founded. The cooperative movement Share-owned beef cattle 1.5
began in the late nineteenth century in Galicia (Díaz de Others 1.5
Rábago, 1899; Fernández, 1988), as in Spain generally Total 100.0
(Montolio, 1992). As shown in Figure 1, though, only
1.5% of the cooperatives included in the present study
were founded before 1940. Again as shown in this figure,
the cooperative movement in Galicia underwent a purchase cost but significantly reduces the farmer ’s hours
dramatic expansion from the 1980s onwards, and some of work (see Bukenya et al, 2003).
73% of the total of 67 cooperatives were founded in the To assess our findings as regards volume of business,
1980s and 1990s. This highlights the delay in the we will consider the cooperatives in three groups, namely
growth of the cooperative movement in Galicia with dairy farming, beef production, and other activities.
respect to other European countries; indeed, the historical The dairy sector has traditionally been strongly
pattern seen in Galicia is more typical of developing cooperative in many parts of the world (Ferrier and
countries. Porter, 1991). About half of the dairy cooperatives in this
The 67 cooperatives included in this study are all in the study do not market their members’ milk: ie members
livestock sector (Table 2), and are mainly concerned with negotiate individual contracts with milk marketing and
the marketing of the milk or beef produced by their processing companies, and the cooperatives only buy
members. In some cases, this principal activity is supple- inputs and feed. Of the cooperatives that do market
mented by bulk purchasing of agricultural inputs, or by members’ milk, 68% each sell less than 10 million litres of
other services to members (Table 3). milk per annum; the remaining 32% sell larger volumes. It
Responses to this section of the questionnaire also is important to bear in mind that the volume of milk sold
indicated that the cooperative movement in Galicia shows is likely to be an important factor determining the profit-
limited vertical development, with only one second- ability of the cooperative, and thus its future survival,
degree cooperative (ie a cooperative with other merger, absorption or disappearance (see Lerman and
cooperatives as its members). This is largely attributable Parliament, 1991; Hind, 1994). Individual negotiation of
to the recent establishment of most Galician cooperatives, contracts with private companies is a relatively new
to structural problems within the sector, and to develop- development, largely attributable to wide variations in
mental considerations (Hermann, 2002). production volume among the individual members of
Typically, members want their cooperative to produce each cooperative (see Hind, 1997). It is worth noting that
and supply feed, and about 15% of the cooperatives milk marketing companies probably aim to play down the
considered in the present study offer this service, supply- importance of cooperatives, since it is likely to be to their
ing both to members and to non-members, and thus advantage to negotiate contracts directly; at the same
favouring synergy and coordinated development (see time, large-volume producers can probably obtain better
Filippi and Torre, 2003). terms by direct negotiation than through a cooperative.
One specific type of cooperative that shows Our results indicate that the volume of milk sold is the
particularly favourable prospects in Galicia (Xunta de principal determinant of cooperatives’ turnovers. As
Galicia, 2003) is the farm-machinery use cooperative. shown in Table 4, about 55% of the cooperatives have a
Many of the cooperatives considered in the present study turnover in excess of €1.2 million per annum.
were created with the sole purpose of purchasing and In many areas of the world, the operational and
using a self-propelled feed mixer, which has a very high commercial strategies of cooperatives have changed
Table 4. Annual turnover of the 67 cooperatives. Table 5. Other activities of the 44 dairy-sector cooperatives.
considerably in recent years (see Chase, 2003). Our results Table 6. Territorial scale of the 67 cooperatives.
indicate that these changes have been positive in Galicia:
73% of the dairy cooperatives considered in the present Scale No %
study reported net profits, although 45% of these profit- Local 7 10.4
able cooperatives showed profitability that was Municipal 13 19.4
classifiable as low. District 23 34.3
Following the creation of a cooperative, its members Provincial 15 22.4
typically begin to demand a wider range of services, and Regional 8 11.9
the cooperative usually begins to diversify its activities National 1 1.5
International 0 0.0
(see Chase, 2003). In line with this, Galician cooperatives
certainly show increasing diversification of services to
members, often involving specialization: thus for
example, some cooperatives have specialized in supplying
inputs required by single-family farms (see Allanson and cooperatives of widely differing size. About 51% of the
Hubbard, 1999). Our findings on the activities of the cooperatives included in this study can be classified as
different dairy cooperatives are summarized in Table 5. small, with fewer than 45 members, and it seems very
Only 9 (13%) of the 67 cooperatives included in this likely that most of these cooperatives will be absorbed by
study were in the beef production sector. The remaining larger cooperatives or disappear. About 45% of the
14 cooperatives (21% of the total) were of other types, cooperatives can be classified as intermediate in size, with
including cooperatives dedicated to services, purchase 45–300 members, indicating either successful recruitment
and sale to members of inputs including fertilizer, and of members or a merger of smaller cooperatives. These
farm-machinery use cooperatives. cooperatives are typically competitive in the short and
The 67 cooperatives had a total of 5,686 members, on medium term, but subject to market tensions and member
average 90 members per cooperative. This reflects the demand for increasingly complex and expensive services.
growth of the cooperative movement in Galicia over Finally, the remaining 5% of cooperatives have more than
recent decades. As noted above, this development is 300 members, generally reflecting the fusion of two or
partially attributable to the dramatic increase in the more medium-sized cooperatives, or the absorption of
number of cooperatives in Galicia during the 1980s and several small cooperatives by a larger cooperative. These
1990s, within a context of adaptation to the more large cooperatives are typically highly competitive, and
competitive agricultural markets entered on joining the most of their members have entered them from smaller
European Union (see Jenkins, 2000). The cooperatives cooperatives because of the better services offered. The
formed in Galicia at this time were generally at the level members who ‘desert’ small cooperatives for larger
of an existing small geographical administrative unit, cooperatives tend to be the more dynamic larger
such as the municipality or district (see Filippi and Torre, producers, so that smaller cooperatives tend to suffer
2003 and Table 6). This remains apparent in the small size continued erosion of their most valuable membership.
of most existing cooperatives. This problem has perhaps not been fully assimilated by
It is worth noting that the growth of the cooperative many cooperative managers: 41% of managers considered
movement in Galicia over recent decades has been private companies to be their main competitors, versus
associated with a decline in the number of farms only 10% who considered their main competitors to be
(Crecente et al, 2002). This decline has most severely other cooperatives. Surprisingly, 19% of respondents did
affected small farms, precisely those that are least likely to not consider their cooperative to be subject to any sort of
enter into cooperative organizations. In fact, most of the external competition.
inactive cooperatives detected in this study are small Only 50% of the cooperatives had approximately equal
associations of small farms, which have probably become numbers of male and female members; in the remainder,
inactive because many or all of the farms have been most members were male (Table 7). There is, however, a
abandoned. clear tendency for women to become increasingly
At present, however, the cooperative system appears to involved in cooperatives, reflecting the ongoing broad
be dynamic and growing, and includes functional sociological trend towards equal opportunities for women
cooperative movements in other regions, and at other Reunión de estudios regionales, Universidad de Cantabria,
times. Certainly, cooperatives show strong potential as Santander.
González, J.J., and Gómez-Benito, J.M., eds (2002), ‘Una nota
transforming agents in rural development; and in each
sobre la evolución del mercado agrario en España’,
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cumulative experience gathered to date in other regions UNED, Madrid, pp 451–457.
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tion of land distributions with joint regard to plot size and
shape’, Agricultural Systems, Vol 82, No 1, pp 31–43.
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