From Global to Local

GLOBAL to LOCAL An industry whose time has come

David Cameron UK Prime Minister Co-ops are a great British invention

Pauline Green President ICA Co-ops Build A Better World

Jesse Norman UK Member of Parliament Co-ops: An antidote to crony capitalists

Ed Mayo Secretary General Co-ops UK Big Society or Big Business: Co-ops Can Deliver

2012

International year of Co-operatives

the conservative co-operative movement

conservative co-operative the

movement

GLOBAL TO LOCAL

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Noodles.Nurseries.

Knickers.News.

For Android, iPhone and iPad

Find ethical businesses for all your needs on Co-operate To mark the International Year of Co-operatives, Co-operatives UK is launching Co-operate, the first mobile app to make it easy to find co-operatives and mutuals wherever you are, whatever you need. It is an exciting initiative for the whole sector. We are encouraging everyone interested in an ethical economy to download the app, which will be available on Android, iPhone and iPad from 12 noon on 19 June.

Download Co-operate www.uk.coop/co-operate

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CONTENTS The co-op opportunity

Contact UK Prime Minister - Westminster

6

David Cameron

Co-ops are a great British invention

7

John Goodman

What is a co-operative?

8

Pauline Green

Co-ops build a better world

president@ica.coop

10

Jim Anderson/ George Cheney

Seven myths about co-operatives

jander77@kent.edu

12

Simon Randall OBE

New ‘rights’ for co-operatives in the UK

15

United Nations Rec

Recommendation 193 goes global

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Jesse Norman

Co-ops: An antidote to crony capitalism

16

Iain Hasdell

Ownership: A fundamental issue

18

Ed Mayo

Big society or big business: Co-ops can deliver

20

Mark Lancaster MP Fairtrade, co-ops and food safety

21

Damian Hinds MP

Credit Union and Microfinance

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David Erdal

Co-ops make everyone a capitalist

john.goodman@uk.coop

gcheney@kent.edu srandall@wslaw.co.uk

jesse.norman.mp@parliament.uk iain.hasdell@employeeownership.co.uk ed.mayo@uk.coop officeofmarklancaster@parliament.uk damian.hinds.mp@parliament.uk david@erdal.org.uk

Co-ops worldwide

Contact

24

Spain

Mondragon: A successful international co-operative formula

26

Canada

Private businesses converting to co-ops is gaining government support

27

Germany

Co-operatives: significant players in Germany’s booming economy

wieg@dgrv.de

28

Ethiopia

The Meki Batu Fruit and Vegetable Grower Farmer Co-operative Union

www.selfhelpafrica.org

29

Sri Lanka

The importance of infrastructure

29

Ecuador

Ecuador and the ‘Solidarity Economy’

paola.ycaza@gmail.com

30

China

Co-ops competing with Walmart

business@acfsmc.coop

31

Korea

Co-operation in Childcare

32

Kenya

Meru Herbs Rural Sacco Ltd.

33

Rwanda

Mayange Pigs Farmers Co-operative

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New Zealand

New Zealand Co-ops: Purely commercial

jmarcos@mondragoncorporation.com david@canadianworker.coop

ilana.bodini@euricse.eu

james@morrisonconsulting.co.nz

Co-ops: The future?

Contact

37

Fairtrade

Three simple ideas for the Co-operative Movement

38

Europe

Could closer integration be achieved via co-operative structures?

40

UN/MDG

Aid is not enough

41

Technology

There are big opportunities in co-operative collaboration

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Sport

Co-operatives in sport: They work in Brazil

Design: gtcreate limited

Researcher: Lizzy Millar German Intern: Jennifer Reineke

Chairman: Simon Randall OBE

Images courtesy of: pbjerre@gmail.com ERICSE Park Slope food co-op. NY

T: 020 7340 6015 E: info@conservativecoops.com

Advertising: GovToday T: 0161 238 8850 E: info@govtoday.couk

The views expressed in this publication are not necessarily those of the Conservative party. The acceptance of advertising does not indicate editorial endorsement. While every effort is taken to ensure accuracy of statistics and comments, CCM cannot accept responsibility for loss, damage or inconvenience caused through error or omission.

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ashley@hybridcom.co.uk tracey.crouch.mp@parliament.uk

CCM Founder: Jesse Norman MP

Global to Local puplished by Conservative Co-operative Society

phillip.blond@respublica.org.uk linda@co-op.ac.uk

Editor: Loanna Morrison

Editorial Office: 55 Tufton Street Westminster SW1P 3QL

barbara.crowther@fairtrade.org.uk

Facebook/conservative-coop-movement Twitter/ccmcoops

ISBN 978-0-9550709-9-0/ £5 All contents copyright 2012 ©

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1 BILLION MEMBE

CANADA

1 IN 3 PEOPLE

UK

9.8

MILLION

USA

1 IN 4 PEOPLE

35% 25%

BRAZIL

5.672 MILLION

ARGENTINA

9.1

MILLION

4

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the conservative co-operative movement

1

MBERS WORLDWIDE NORWAY

35% CHINA

180

MILLION

KENYA

1 IN 5 PEOPLE

INDIA

236 MILLION

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AUSTRALIA

2,000 CO-OPS

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Co-ops are a great British invention UK Prime Minister David Cameron

Rochdale Pioneers

In this International Year of Co-operatives, it gives me great pleasure to introduce this global survey from the Conservative Co-operative Movement.

C

o-ops are a great British invention, one that has spread out across the world over more than two centuries. They flourish in financial services, in football, in social work and healthcare, in housing and retail. There are an estimated 1.4 million co-operatives across the globe, with nearly a billion members.

Some three billion people rely on co-ops for their livelihood.

These are extraordinary facts and figures.

In the UK there are some 5,450 independent co-operative businesses. Together they have a combined turnover of more than ÂŁ33 billion. They employ 236,000 people and are owned by 12.8 million people, more than one in five of the UK population. It is especially telling that British co-ops have outperformed the UK economy as a whole over the past four years, growing by 21% since the start of the credit crunch in 2008.

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And the Rochdale Principles mean that all these member-owned businesses abide by business practices that treat staff and customers fairly.

I sometimes worry that, in the UK at least, co-ops are a hidden secret. Too many people do not know about co-ops, and mis-understand their distinctive ethos. The same goes for many professional advisers who could be assisting entrepreneurs to turn businesses into co-ops, and many banks that could be helping local community groups to set up co-operatives.

That is why we, the coalition, have decided to introduce a new Co-operatives Bill. At present, co-ops are governed by a mosaic of 17 different pieces of legislation that were laid down over nearly 50 years. Little wonder many people are unclear about the co-operative business model. The new Bill will level the playing field and will, I hope, encourage more people to set up local co-operatives, or join their existing ones.

So I congratulate the Conservative Co-operative Movement on this publication, which follows their excellent Co-ops In The Big Society last year. Co-ops are not the province of any political party: they are our common inheritance. ď Ž

the conservative co-operative movement

What is a co-operative?

Mutuals are organisations majority owned and controlled by their members on a fair and equitable basis. Co-operatives are part of this family of businesses alongside building societies, mutual insurers, and employee owned businesses. What distinguishes co-operatives is their adherence to the International Co-operative Alliance’s internationally agreed values & principles.

Mixed ownership: Community co-operative – members are a specific community of interest and the co-operative’s benefit is to that wider community.

Supporter co-operative – a community co-operative specifically in the sports sector (e.g. football supporters trusts).

Multi-stakeholder co-operative – co-operatives with any mix of the above range of owners but less than 75% in one class.

In the UK co-operatives and mutuals are not legally defined; therefore an organisation that conforms to the ICA values and principles is a co operative no matter what its legal form.

Mutuals are businesses that are member-owned but do not adhere to all the co-operative principles, so, for example, an employee mutual is employee-owned but may not adhere to all co-operative principles and a building society is a consumer-owned mutual registered under the building society act. 

Types of co-operative

John Goodman - Co-operatives UK

Consumer-owned: Consumer co-operative – the co-operative’s members are its customers (e.g. the consumer retail societies such as the Co-operative Group).

Ten reasons why co-ops work:

Housing co-operative – the co-operative’s members are its tenants or co-owners.

1

Co-operatives make people’s lives, communities, and economies more just, equitable, and democratic.

Credit Union – a saving and loan co-operative registered under the credit union act. Members are the savers and the credit union can only trade with its members.

2

Co-ops can fit different needs for different communities and types of businesses.

3

A co-operative is equally owned and controlled by the same group of people.

4

Each member has one vote.

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It’s for this reason that co-ops keep money - and jobs - in their communities.

6

Co-operatives offer a solution to many of today’s economic, environmental and social problems.

Agricultural co-operative – the members are farming businesses.

7

Co-ops are empowering means for self-help and solidarity.

Artisan co-operative – the members are self-employed and collectively share services (e.g. actors, craftspeople).

8

Members of co-operatives share the good as well as the bad times.

Secondary co-operative – a consortium co-operative where all the members are co-operatives.

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Co-operatives are more resilient in a downturn.

Worker-owned: Worker co-operative – the members work for the co-operative and have direct ownership and control.

Employee trust co-operative – the members work for the co-operative but ownership is through trusts, employee share ownership plans or other arrangements.

Enterprise-owned: Consortium co-operative – the members are businesses who share services (e.g. buying, marketing, machinery).

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Co-operatives are an international movement: there are an estimated one billion members worldwide.

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THEME:

ting the local impact of Start the year by promo scale.

JANUARY TO MARCH

2012 Take part

Co-ops Build A Better World International years come and go, but when the resolution for a co-operative year was put to the UN General Assembly, it was signed by 90 governments, easily double the number that usually support such initiatives.

In designating 2012 as the International Year of Co-operatives, the United Nations has given the global co-operative movment a huge gift.

The impact of today’s global co-operative economy may not be recognised by the public, or even key decision-makers, brought up in recent decades on a diet of global brands and wall-to-wall uniform marketing campaigns, but when it comes to the impact of co-operatives on domestic economies, the stability of rural communities and financial credibility, co-operatives cannot be ignored.

The key aim for the International Co-operative Alliance (ICA) this year is to drive recognition of our business model

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higher up the agenda of key global political and economic institutions. And we have a great story to tell.

Today’s co-operative movement is owned by nearly a billion people across the globe – nearly one in three of the world’s population; together they employ 100 million people, reach into every village, town and city, indeed into every corner of the world.

The Global 300, the largest 300 co-operatives in the world, are together worth US$1.6 trillion, equivalent to the ninth largest economy in the world. They operate in some of the globe’s most competitive industries: banking, insurance, agriculture, retail, health, utilities and others. The 300 list includes co-operatives from 25 countries, including all the G20 nations, except perhaps Saudi Arabia, and yet at the moment the voice of the co-operative model is totally absent from the G20 business advisory group. This has to change.

During the global financial meltdown of the past four years, co-operative financial institutions have fared much better than their competitors, around the world, as funds have been withdrawn from the

Dame Pauline Green President International Co-operative Alliance, Chair of the UN Advisory Panel on the International Year of Co-operatives high street and moved into co-operative facilities. We have seen our deposits rise, sometimes substantially, our asset base grow, and our lending rate remain steady, and even increase, while that of the leading corporate financial institutions has collapsed. These claims are now well documented and recognised by the UN, the International Labour Organisation, the Food and Agriculture Organisation and Nobel Prize economists.

The international year has given the global movement the opportunity to demonstrate the significance of its impact on the world economy, and the serious need to ensure that, after the crisis in the financial markets and the consequent recession, the co-operative model is given equal recognition to its corporate competitors, and equal promotion with other styles of business.

Part of our problem as a co-operative model is that we do not have a single recognised global brand. This makes us difficult to see and hear in today’s world.

However, the world is changing, and I am convinced that we do not want or need a global brand.

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“Our business model is sustained because it is different, and that is its attraction. It is a huge and growing network of local, autonomous, sovereign businesses, which bridges the local economy and the global market.”

While our investor-led competitors are legally bound to maximise profits and hence need to worry about stock market and investor pressures, our priority is to serve our members. So we can concentrate on giving them a good deal rather than obsessing about maximising profits for shareholders who are often remote and disconnected. We keep profits in our businesses, give a return to members and invest in the local community.

Co-operatives are embedded in the business world; united by a set of principles and values that are globally recognised. We are not business as usual.

The UN is first to recognise that for nearly two centuries co-operatives have been helping to reduce conflict; building community cohesion, skills and expertise; developing local leadership potential; and supporting women into positions of economic activity and leadership. In effect co-operatives have taken millions out of poverty with dignity by helping them to build their own co-operative businesses.

IYC2012 – Global Events • Ghana: Football Tournament 1 July 2012 • Canada, Quebec: Campus Coopératives 2 July – 14 July 2012 8 October – 11 October 2012 • United Kingdom, Manchester: Mainstreaming Co-operation: An Alternative for the 21st Century?

3 Jul 2012 – 5 Jul 2012 • Ireland, Trim: Summit International Year of Co-operatives (IYC) 11 September 2012 – 12 September 2012 • Ireland: World of Rural Co-operation 11 Sep 2012 – 12 Sep 2012

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For example, electric co-ops serve 42 million US citizens and cover 75% of the United States landmass. Using their expertise, and as a direct result of their social agenda, they have been working in Bangladeshi villages, supported by US and UK development aid, to help local villagers to build sustainable electric co-ops. They have brought electricity to villages for the first time with all the implications that has for a better life. Those co-op businesses are now in the hands of the local people themselves. That is the way in which we contribute to the fight against poverty, and it shows the power of intelligent private and public investment.

In the United Kingdom, the groundbreaking work of the Co-operative Group has established and put into the mainstream its Fairtrade products – a market into which our high street competitors have all chased us – to the good of producers in the developing world.

During its 117-year existence, the International Co-operative Alliance has always brought together member co-operatives from across the political, cultural and religious divides.

Many, especially the young, are being cruelly hit by the global recession and are becoming cynical of the political and dominant economic models.The co-operative is not only an effective model of governance but also a compelling one.

The International Year of Co-operatives will launch a blueprint for a decade of co-operative growth.

Together, we really will, in the words of the UN slogan for this year, help to build a better world. 

These and many other initiatives give credibility to the words of Ban Ki Moon, the UN General Secretary, when in launching the international year at the General Assembly he said: “Co-operatives are a reminder to the international community that it is possible to pursue both economic viability and social responsibility.”

• Austria: XVII International Conference on Cooperative Studies (ICCS): “Cooperatives in the focus of a new economic policy” 18 Sep 2012 – 20 Sep 2012 • Cyprus, Nicosia: Cyprus International Year of Cooperatives Conference 28 September 2012 – 29 September 2012 Invitation only • Canada: Imagine 2012: International conference on co-operative economics 6 Oct 2012 – 8 Oct 2012

• India: National conclave on a sustainable cooperative movement in India: The road ahead 14 Nov 2012 • India: National Conference of ‘Rural Cooperative Credit Institutions’ 17 Dec 2012 – 18 Dec 2012 • India: ‘IYC-2012 Best Performance Awards’ 17 Dec 2012 – 18 Dec 2012 • Further information @ http://civimail.ica.coop/events

• Canada: 2012 International Summit of Cooperatives 8 Oct 2012 – 11 Oct 2012

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Seven myths about co-operatives Jim Anderson of the Ohio Employee Ownership Centre and George Cheney of the University of Texas “The co-operative is a flexible and well-tested model that should be part of the tool kit of policy makers and business leaders. Worker co-ops can be designed to take advantage of market niches, deliver government services, fit community needs and build stable, prosperous and fair enterprises.”

Myth #1: Worker co-operatives are a form of socialism.

Fact: Co-ops are grassroots economic development initiatives and are non-socialist because the workers themselves hold the means of production not “society” in general. They are capitalist enterprises whose equity or value is not publicly traded on the stock market or subject to the whims of distant owners. Employees are local residents and local consumers who build on local pride and keep earnings local. This creates a multiplier effect in the local economy.

Myth #2: Worker co-operatives are not-for-profit.

Fact: Most worker co-ops are private for-profit firms. They need viable products or services and must be profitable to survive.

Financial solvency is essential, but so is the thoughtful commitment to customers, stakeholders, and community.

Myth #3: Worker co-operatives do not have managers and other experts.

Fact: Worker co-ops enlist various kinds of expertise while also encouraging worker-owners to develop their skills to advance in the company. They employ an array of professionals just like other businesses but also give their owner workers the opportunity to develop these skills.

Myth #4: Worker co-operatives suppress creativity and innovation.

Fact: Worker co-operatives are all about entrepreneurship and innovation while meeting community economic and social needs.

Worker co-operatives use a mix of individual and group incentives to encourage the development of new ideas and their applications. The array of incentives actually makes worker co-operatives more resilient than many traditional firms whether the economy is turning down or booming.

Myth #5: Worker co-operatives cannot grow large enough to have an impact on community economic development.

Fact: The co-operative economy focuses on small and medium-size business development, but many of these businesses grow through acquisitions, mergers and strategic alliances. Ultimately, through collaboration as well as competition, worker co-operatives become stable parts of the urban as well as the rural economy.

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Myth #6: Worker co-operatives are short-term enterprises.

Fact: Stakeholders in businesses, whether traditional or co-operatively owned, are committed to long-term success. Some worker co-operatives are large, well-established enterprises and there are sound examples of this in the United States and Canada as well as in many other countries around the world.

Myth #7: Worker co-operatives are feasible only for a few kinds of business.

Fact: There are thriving worker co-operatives across the world producing electricity and food, beverages, clothing and household appliances. They work in agriculture, law, journalism, transportation, high-tech and alternative energy development. The co-operative model is not one-size-fits-all, but rather one that can be adapted to specific business sectors and community needs. 

Co-ops USA •

29,000 co-ops operate in every sector of economy, every congressional district; Americans hold more than 350m co-op memberships

•

Co-ops generate 2m jobs and contribute annual sales of $652bn, having assets of $3trn

•

Two million farmers are members of 3,000 farmer-owned co-ops. They provide more than 250,000 jobs and annual wages above $8bn

•

More than 7,500 credit unions provide financial services to 91m consumers

•

More than 900 rural co-ops deliver electricity to more than 42m people in 47 states: 42% of the nation’s electricity distribution lines, covering 75% of land mass

•

Approximately 233m people are served by insurance companies owned by or closely affiliated with co-ops

•

Food co-ops have innovated in unit pricing, consumer protection, organic and bulk foods and nutritional labelling

•

More than 50,000 use co-op day-care centres

•

About 1.2m rural Americans in 31 states are served by the 260 telephone co-ops

•

More than 1.2m families live in homes owned and operated by co-op associations

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New ‘Rights’ for Co-operatives in the UK? Simon Randall CBE, Chairman, CCM

In Britain, co-operatives, mutuals and community-owned bodies play a significant and growing part within our towns and cities.

“Perhaps more importantly, there is little inclination in the Commission to support co-operatives in spite of some fine words commending the emergence of an organised local civil society.”

Localism Act 2011

The UK Government’s plans for the localism agenda through the Right to Challenge could fall prey to EC bureaucracy.

The Coalition government elected in 2010 have launched some important initiatives to encourage growth in these sectors. In the UK in 2011 the Localism Act received its royal assent and subsequently various sections have come into effect. The essence of this legislation is to devolve power from Whitehall to Town Hall and move it down to local communities, charities or employee-owned entities.

The key provisions to drive public sector co-operatives, as promised in the Coalition Government’s programme, are enshrined in the Right to Challenge provisions of the 2011 Act. Under the legislation, any group of two or more local authority employees can submit an expression of interest to their local authority to provide or assist in providing a service on its behalf.

Few services will be exempt from such an approach and it is anticipated that many thousands of employees will be keen to become their own boss; introducing innovative ways to improve the standard of service, whilst reducing costs and sharing any financial surpluses within their co-operative. Detailed regulations will outline the procedure, including the vexed question of the requirement to carry out a procurement exercise in respect of the relevant service.

The government has also been seeking amendments for three year exemptions in the new draft EC Procurement Directive. This would allow local authorities to involve their employees in direct negotiations with co-operatives and mutuals, so they can get experience of running independent public services prior to full and open competition.

The present draft Directive appears to assist small and medium enterprises, such as co-operatives, but the rules are still complex and positively discourage all but the well-resourced organisation.

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If all local authorities, despite the procurement hurdles, including those describing themselves as co-operative councils, were to fully embrace the aims and objectives of the Localism Act, local government within England could change beyond recognition. This would be of enormous benefit to residents and tax payers alike and set an example throughout the world for the localism ethos.

Co-operatives Bill Whilst proposed consolidation of current legislation would considerably assist co-operatives with their administration, hopefully the Government will be more innovative and incorporate improvements to legislation, updating (and perhaps overhauling) co-operative and mutual law, which is still based on fifty-year-old acts of parliament.

The key area requiring improvement relates to the desirability of bringing co-operative entities closer to companies act entities, with insolvency reforms and arrangements to encourage introduction of capital.

Co-operatives are creating our entrepreneurs of the future; the Government should consider appropriate tax breaks such as much reduced corporation tax for start up co-operatives and partial relief from business rates.

All of these important legislative changes will enable new co-operatives, mutuals and community-owned bodies undertaking public services to consolidate their position as mainstream corporate vehicles and help foster the spirit » of entrepreneurship, that drives so many employee-owned entities.

the conservative co-operative movement

•

Ethiopia and Uganda – co-operatives have been prioritised as important instruments in poverty reduction and growth in relation to rural development and employment strategies.

•

Russia held a parliamentary hearing in December 2002 where a long list of concrete recommendations calling for a comprehensive co-operative development programme was adopted.

•

Turkey – the National Union of Consumers’ Co-operatives used the UN recommendations to defend their existing right of workplace based consumer co-operatives that a draft labour law had threatened to abolish.

United Nations Recommendation 193 Goes Global

•

In 2002, the International Labour Organisation (ILO) adopted an international policy to provide a legal framework for co-operatives for the 21st century (no 193).

Ethiopia has formulated a new co-operative development policy based on Recommendation 193.

•

As the ILO is a specialised agency of the United Nations (UN), its recommendations are not international treaties but are designed to support governments in providing a conducive policy and legal environment.

Croatia, Bosnia Herzegovina and the Ukraine have adopted new co-operative laws that incorporate elements of the guidance.

•

Colombia has incorporated Recommendation 193 into its national development plan, and has enacted a new co-operative law based on the recommendation.

Since the adoption of ‘Recommendation 193’, a number of countries have been reforming their own co-operative laws and policies and some have independently began to simplify and amplify legislation that will assist the sector to successfully develop:

•

Bolivia and Kenya - these co-operatives have used the proposals to protect their autonomy, which was threatened by new co-operative laws.

•

Hungary has drafted a new co-operative law based on the guidance.

•

European Parliament – In March 2012, guidelines were placed on the statute for a European Co-operative Society to further strengthen the involvement of employees.

•

Malaysia has finalised a new national co-operative development policy on the basis of the proposals.

•

UK – Prime Minister David Cameron announced plans for a Co-operatives Bill to simplify 17 separate pieces of legislation that govern co-operatives across the UK. Credit unions will soon be allowed to recruit under-16s as members.

•

India has adopted a new national co-operative development policy and a new multi-state co-operative law that is strongly influenced by the guidance. 

•

US – the National Cooperative Development Act has been introduced in Congress to stimulate further development of the co-operative sector by providing it with seed capital, training and resources.

•

Canada – the province of Québec adopted a co-operative development policy statement which will contribute to Canada’s medium-term strategy ‘en route to full employment’.

•

Guinea-Bissau passed a new law under the National Policy on Co-operative Development based on the UN advice.

•

China – the All China Federation of Supply and Marketing Co-operatives has agreed that the basic co-operative principles and values outlined in Recommendation 193 should form the conceptual basis for China’s future reform of co-operative legislation.

•

South Africa revised its co-operative law and moved responsibility for the sector into the Department of Trade and Industry.

How does ‘Right to Request’ work?

‘Right to request’ was an initiative began by the Labour Government which enabled public health service workers to take control of the services they provide.

See the comprehensive report from the All Parliamentary group on Employee Ownership which was done in 2011 at: www.employeownership.co.uk

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Park Slope Food Co-op, Brooklyn NY

Co-ops: An antidote to crony capitalism

Jesse Norman UK MP, Founder, Conservative Co-op Movement Appearances notwithstanding, politics is about ideas. But even so, it is a very rare and beautiful thing when a phrase gets picked up and enters the political lexicon. So I discovered early this year with the phrase “crony capitalism”, after the publication of my paper The Case For Real Capitalism. Co-ops, I said, could be the antidote.

So what is crony capitalism? In my view it has two key features: •

Business activity that loses any relation to, and often clashes with, the wider public interest;

•

Business merit that is separated from business reward.

These features in turn feed off and into a culture in which values of decency, modesty and respect are disregarded, and short-termism and quick returns come to dominate long-established norms of fair dealing and just reward.

By contrast, real capitalism is a system where real people take real risk, invest real time in real work and reap real rewards for their efforts – a day’s work for a day’s pay. Markets are used, but not venerated. Competition is welcomed, but made subject to proper regulation and supervision. People are rewarded and respected for their aspiration, energy and innovation, not for being in the right place at the right time.

Crony capitalism is what happens when the constraints of law and markets and culture cease to be effective, or disappear; when entire industries lose their governing rationale; and when executives, freed from real accountability, are able to reward themselves at the expense of shareholders. Entrepreneurship and value creation are replaced by rent-seeking, and certain groups become enormously wealthy without taking risk. These factors in turn lead to long-term economic underperformance and sometimes to social unrest.

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Seen in these terms, the financial capitalism that has grown up in the UK and the United States over the past 20 years is best understood as a further species of crony capitalism. It has much in common with the US financial capitalism of the 1920s, which culminated in the Wall Street crash of 1929. Then, as now, financial institutions were able to exploit informational and risk advantages to make enormous profits during a time of massive asset inflation and lax supervision. Then, as now, Wall Street, the financial sector, became separated from Main Street, the needs of business, and the public good.

Co-ops, of course, are no panacea – like mutuals more generally, they work best in activities that rely on human capital and human touch, like retail and social care. But they are a million miles away from the features of crony capitalism I have outlined. Thanks to the Rochdale Principles, they consciously exist to add social value, and a moral dimension, to their work. Their natural transparency and governance structures run completely counter to the self-enrichment found in crony capitalism. Finally, their generally local ethos and membership give them a grounding in the values and traditions of specific communities. Little wonder that so many countries have embraced the co-op traditions and practices, and used them to shape their social values.

Well before the 2010 general election, the Conservative Party chose to embrace a radical programme of change to address the UK’s economic and social recession. This included rebalancing power away from the State and further towards the individual through constitutional reform and deregulation. It included devolving more power from Whitehall to local government and a relocalisation of public services. And it includes breathing new life into old institutional forms – such as co-ops.

So co-ops are an integral part of this Conservative-led British government. With luck, the new Co-operatives Bill will make them an integral part of a long-term cross-party movement to restore responsible capitalism. 

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Ownership: A fundamental issue Iain Hasdell, Chief Executive of the Employee Ownership Association

Several domestic economic issues compounded the effects of the recent worldwide financial crash on the UK.

It also provides a very effective way to help rebalance the economy by spinning out large parts of the public sector into the private sector whilst protecting the public service ethos of the workforce simultaneously unlocking higher productivity and competitiveness.

Businesses where employees have a significant ownership stake have happier staff and more satisfied customers, and demonstrate higher levels of innovation and prove more resilient in recessions.

They are also more likely to be healthier, suffering less stress than businesses owned by external shareholders.

But what is the real key to growth for employee owned businesses?

The fundamental issue is the nature of the business ownership.

Business ownership had become incredibly concentrated in a small number of individuals and institutions; the PLC model over-dominated, productivity deficits were apparent in key industries, and the public sector had grown to nearly 40% of the total economy.

The dominant business model in the UK economy is driven by shareholder and investor value. This can often be seen almost exclusively in terms of financial returns in the short or medium term, especially when external investors are involved.

The crash has therefore, convinced many the world over of the need to diversify economies, improve productivity and extend the ownership of wealth.

In addition, much of the traditional corporate sector is constantly encouraged to plan or look for opportunities for a quick turnover.

Creating businesses whose employees have significant ownership and involvement, can and should play a very significant role in this structural reform of the UK economy.

Employee ownership offers a brilliant mechanism for quickly spreading business ownership in the private sector. This includes business succession when selling to the employees, rather than selling to competitors. This can protect the company’s unique selling point and anchor business sustainability, the associated jobs, skills and wealth to the local community.

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When the employees are the owners, profit is important, but the emphasis is on job satisfaction and the ability to exceed customer expectations. This leads to a more customer centric organisation that enables long term planning. As Mike Thompson, Chairman of employee owned nursery group Child Base would concur, his 1,400 employees focus on the long-term development of value rather than short-term demands for dividend.

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Productivity and competitiveness are a central part of the DNA of employee owned businesses. Even a cursory glance at the performance and growth of companies like Gripple or of Clansman Dynamics, a global leader in robotic handling equipment, gives ample testimony.

Evidence shows also that employee ownership works especially well in smaller knowledge-based companies, on which the UK economy increasingly relies. And this success is equally apparent in those organizations that have spun out from the public sector. One of the most significant of these, Central Surrey Health, has achieved major growth in productivity and much better clinical outcomes since becoming an independent employee led business in 2006.

And yet, employee owned businesses account for only around 2% of the corporate landscape in the UK. Why then are so few businesses adopting the Employee Ownership structure?

Is it the disincentives in the taxation system? In the US, a more modern approach to taxation has created a dynamic and growing employee ownership sector, which has memberships tripled.

But the reasons run much deeper than the taxation system.The two biggest obstacles remain lack of awareness, and the difficulty in obtaining appropriate advice, support and finance.

Simply not enough business owners or entrepreneurs know that the model exists or, even if they do, are sufficiently appraised.

They may know of John Lewis Partnership, or Arup, but be completely unaware of the diverse range of sectors that use an array of such employee ownership models.

What is an employee buyout (EBO)?

Employee Buyouts are the sale of a company to its own management and staff.

Private companies have many sale options: • Employee Buyout • Members of the owner’s family • The company’s employees, including management • An MBO (Management Buy Out) • External buyers • Gradual purchase over time - owner might retain a stake or management role

Should they consider an EBO? • Tax advantages: The Share Incentive Plan (SIP) • Recognition of employees’ role in having helped to build the business

• Excellent record of sustainability • Less likely to result in closure of premises in local economies • Puts control in the hands of people who know it best and are committed to making it succeed • Means continuity for customers and suppliers

In buyouts, start-ups or acquisitions, when employee ownership transactions should be considered, lawyers and accountants often avoid this ownership option. They are either unaware of its existence, or are highly nervous about its structure due to a lack of knowledge and experience.

How is an employee buy-out enacted?

Consequently access to the finance remains a considerable challenge for the growth of the employee ownership sector. So we must continue to promote knowledge and understanding of employee ownership and its economic and social benefits by making available, the hard, convincing performance data.

Adding some new fiscal incentives will also facilitate growth.

• The trust is financed by contributions from the company or from a loan which is repaid from company contributions

The great news in the UK and Europe is that employee ownership is gaining more and more interest and support amongst businesses, in Government and across the political spectrum.

This undoubtedly points to a bright new dawn for the co-operative industry. 

• Cash is required to buy all or most of their shares • Shares bought by an employees’ trust

• If the trust is financed by the company over time, it may take some time before the trust has received sufficient funds to finance the purchase of all or even a majority of the issued shares in the company • If the trust is financed by a loan, this may enable it to acquire a majority shareholding • The trust may retain some or all of the shares it has acquired on a long term basis, or it may distribute shares to employees over time • The intention may be for the company to remain wholly or partly owned by employees and/or the trust indefinitely More info at: www.employeeownership.co.uk

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Co-operatives UK Big Society or Big Business: Co-ops can deliver Ed Mayo

Secretary General of Co-ops UK

The enduring value of co-operative models of enterprise is that they allow people to take responsibility for themselves and for others.

You can’t run everything as a business, but where you can, the member-owned model of co-operative enterprise allows people to meet their needs, to share the gains and to grow through self help and mutual aid.

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From Argentina to Zambia, the 1.4 million co-operatives across the globe will be celebrating The International Year of Co-operatives 2012 and showing how they build a better world. Co-ordinated by the International Co-operative Alliance, the aim is to boost understanding of co-operatives everywhere for the whole of 2012.

There are over 1.4 million co-operatives in countries across the globe. They range from micro enterprises to businesses with tens of millions of members. Together they have a turnover of $1.1 trillion.

Here in the UK, the number of co-operatives is increasing at a rate of 9% per annum. This represents around 450 new co-operatives a year – more than one new co-operative a day. In part this reflects a new interest in co-operative models.

Co-operative businesses, in the public eye, are widely perceived to be local (81%), share their profits (79%), fair (75%) and customer owned (73%).

The UK co-operative economy has grown by 21 per cent to £33 billion since the start of the credit crunch in 2008. As a result, there are now 12.8 million members of co-operatives in the UK – that’s one in five of the UK population.

For some on the political centre and right, co-operatives fall squarely into the box marked ‘Big Society’. They stress the value of having a membership and encouraging public participation and, often, the success of the co-operative model in saving village shops and pubs from closure. For others, co-operatives are an important part of the economic and business agenda. » They stress, instead, the size and reach of

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modern co-operatives, citing examples such as highly profitable farmer co-operatives or retail co-operatives, consumer or employee-owned, on the high street. Both are relevant, and they come together when you look at some of the opportunities for co-operative enterprise, where the UK could learn from overseas.

The UK has tended to shift uneasily from state monopolies to private sector cabals in all the utility markets, and perhaps banking. Other nations have gone the co-operative route. Utility co-operatives, for example, have long been successful in Scandinavian countries with Denmark and Sweden pioneering electricity co-ops over a century ago and Finland taking a lead to develop phone co-ops. In the USA, over 900 mainly rural energy co-ops own 40% of national power lines and provide light and power to 42 million people in 47 states.

Denmark was among the first to pioneer a new, decentralised utility model, harnessing renewable energy and co-operative models of enterprise. People like to do things for themselves and in Denmark, the debate on planning and wind turbines has been an entirely different one to the acrid scrap we have here in UK, because what was being put in was human-scale and it was owned by the local community. Whatever the aesthetics, people appreciate things better if they have a stake in them.

The UK is on the way. There is an emerging field of community energy co-operatives, raising money from local people for local renewable energy. In the retail market, 2011 saw the market entry of Co-operative Energy as a national energy retail supplier, to challenge the Big 6 energy companies.

Co-operatives UK, in work developed by the transport analyst Christian Wolmar, has argued for the railways at a more local level, to be opened up through ‘micro franchises’ into train co-operatives. These would be grass-roots enterprises. The thrust of regulation is still in favour of large, capital-intensive business models, resulting in a clutch of dominant firms such as telecoms, energy and banking.

What we need is a business and economic policy that embraces the diversity of business form. We don’t want simply to restart the same economy that has proved wanting.

Accounting rules, regulation, taxation all tend to be designed within the straightjacket of the PLC model. Small business, family firms, co-operative enterprises are part of what can make a more cohesive market. 

United Kingdom • Co-op economy has grown by 21% to £33bn • 5bn turnover, £644m a week • Owned by 12.8m people, more than one in five citizen • Co-ops sustain 236,000 jobs • 446 farming co-ops with turnover above £4.4bn • 67 fishing co-ops, turnover £39m • 541 worker co-ops, turnover £156m • More than 5,450 independent co-op businesses • 97% survival rate of community shops • Largest independent travel agency is a co-op • Co-op Group is largest farmer and fourth largest food retailer • 53 building societies, £395bn assets England • 4,352 co-operatives turnover £27.5bn Scotland • 473 co-operatives turnover £3.4bn Wales • 386 co-operatives turnover £1.3bn Northern Ireland • 239 co-operatives turnover £0.9bn

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19

Fair trade, co-ops and food safety Mark Lancaster UK MP

It is thought that by 2050 the global population will top nine billion, two billion more people than today. With this in mind, food security has become a key concern the world over. It is our duty to guarantee that food is affordable and accessible to all. Food security is not a simple problem to resolve when a large proportion of our foodstuffs come from Third World countries, including some fragile states. We need to ask how we are going to provide food for an ever-growing world population.

This year we have seen an international focus on Somalia, a classic example of a conflict-hit area that used to produce food. But civil war and the growth of terrorist organisations such as Al-Shabaab have undermined the stability needed for growing food and developing production. In March, President Obama and David Cameron highlighted their joint efforts to turn Somalia around and to get it producing food again. They have pledged that the United States and Britain will be investing in agriculture. This will have the effect of not only giving people something to work and strive for, but will hopefully improve the environment. While this may seem ambitious, I am certain that Somalia, through the hard work of individuals and co-operatives, can again become a large producer of food.

Around 80% of the 20 poorest countries have been affected by conflict over the past 15 years. This often exacerbates deprivation and highlights problems with infrastructure. As a large proportion of UK food comes from these countries, the Department for International Development (DfID) wants to ensure that education, investment and funding are secured, across the Third World, especially in agriculture. Two ways of doing this are through co-ops and fair trade: by helping farmers to build co-operative businesses with their neighbours, the assistance they need can be made available to increase crops and share best practices.

DfID has set up a “co-operative to co-operative� scheme to ensure that farming methods are shared to achieve the best possible outcome. In Africa, they have encouraged smallholder farmers not only to grow crops for sale, but also to keep a kitchen garden to feed themselves and their families.

In Bangladesh, DfID has been working with dairy farmers to ensure that they have a market for their goods and the appropriate storage and transport, and supporting them to keep checking the health of livestock.

2012 is the UN International Year of Co-operatives. The main objectives are to increase awareness, promote growth and establish appropriate policies. This will bring much needed attention to the fantastic things being achieved through co-operatives, but we should be even more ambitious. It would be good to see the UN and other international bodies focusing on food security and ensuring that Third World countries, especially those in or resolving conflict, grow and prosper. ď Ž

Local bananas - Global distribution Fairtrade and co-ops AgroFair is a Fair Trade company representing fruit farmers in Latin America, Africa and the Caribbean. It was founded in 1996 by Dutch development organisation Solidaridad to protect the rights of banana workers in Latin America. Since that time, the organisation has grown into a global enterprise.

It was in 2000 that AgroFair first supplied Fairtrade bananas to Co-op supermarkets in the UK and to mark its 10th birthday, a British comedian and a television presenter were joined by a group of pineapple growers from Costa Rica to celebrate at Borough Market, a fruit and vegetable wholesale market in London.

In 2006 the Fairtrade organisation sold 80,000 tonnes of bananas, pineapples, mangoes and citrus fruit in supermarkets across Europe alone. This represented an annual turnover of 62 million euros and a growth rate of 40%.

In the same year AgroFair recorded a net profit of 944,000 euros and so was able to sign up another 2,500 farmers.

The producers are the main shareholders of the company, so they are represented on the board and also receive a share of profits.

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Credit Union and Microfinance: An old banking system for the new millennium

By Damian Hinds UK MP Credit unions started in Britain in the 1960s. They were set up by Caribbean immigrants in London searching for the services and benefits of the credit unions they had known in their home countries. The earliest credit union was formed by, and for, members of the Ferne Park Baptist Church in Hornsey, while Wimbledon Credit Union was set up to serve people living in the local Jesuit parish. Migrants from Ireland brought the model to Scotland a little later.

However those abroad have a longer history. In the 19th century credit unions began, spreading from Germany to Canada and the United States, then eventually to more than 100 countries. They were accessed by everyone from subsistence farmers in Afghanistan to serving officers in the US armed forces, who are members of the largest credit union in the world with nearly four million members and more than 200 branches.

They benefit the most needy. A potato farmer in Sri Lanka would have struggled to get a loan to diversify her business if she had not been able to borrow from the credit union and the Kenyan carer would not have had access without the branch in the orphanage where she works.

Modern credit unions continue to reach remote and inaccessible groups. In Afghanistan, US credit unions are partners of Islamic investment and finance co-operatives – or IIFCs, as credit unions are known there – to help victims of the conflict begin their recovery process. They have been supporting these organisations to create prosthetic hands for distribution in Afghanistan.

Volunteers from IIFCs have received training in India to fit the hands and are training further volunteers in their own country.

The prosthetic hands will be distributed through the IIFC networks, which are increasing with the support of the World Council of Credit Unions.

With funding from the US Agency for International Development (USAID), the World Council of Credit Unions has helped IIFCs to increase membership in high-risk provinces such as Helmand, Kandahar and Uruzgan. Shura (community council leaders) work closely with IIFC membership development, travelling into previously unserviced areas to assist groups of small farmers and business owners. A female membership development officer from Nangarhar province has taken the task of reaching women’s groups in these areas.

In the US, even though some credit unions serve millions of people, a quarter of them employ three or fewer full-time staff.

Yet they provide a full range of services by pooling resources, in some cases sharing branches to give members more face-to-face outlets.

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Credit Unions: 53,000

Members: 188,000,000

Assets: £867,520,000

Credit unions now serve nearly a million people in Britain. However, while offering more sophisticated services, they are still seen as the debutantes at the building society ball. But building societies specialise in lending on mortgage to homebuyers. Their lending is always asset based and they generally do not get involved in micro business lending, however that business is constituted, whether it is a company, partnership, co-operative or anything else. This puts the credit union in a category of its own. Mortgage lending is not one of its specialisations and assets are not always its only guarantee.

The British Government recognises the potential for credit unions to bring affordable and accessible financial services to millions of people on low to moderate incomes. Last year the Department for Work and Pensions commissioned studies on how best to spend a potential £73 million modernisation and expansion fund for credit unions, and some legal barriers have recently been removed.

The eventual goal is that British credit union members will be able to benefit from opening and managing online accounts, 24/7 access to contact centres, ‘jam jar’ bill payment accounts and face-to-face transactions at the post office. This should help reduce the exploitation of vulnerable people on low incomes by loan sharks.

In addition, investment can now be made on a central banking platform to allow credit unions in Britain to pool international knowledge and best practices, benefit from economies of scale, provide a wider range of services and increase access for people across the world. 

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Co-ops make everyone a capitalist

By David Erdal - Non-Executive Director at Baxi Partnership In general, people who own companies have many more rights than the people who work in them. While owners have the right to be given all significant information about the enterprise, employees have no right to any information.

Owners have the right to make all the important decisions – in particular to decide who runs the place. By contrast the employees have no say in choosing the boss, or in any other key decision. Similarly, owners have the right to dispose of all the profits made by the business, along with all the capital built up over the years, while the employees, whose work has helped to create this wealth, have no right to a share in it.

However, there is one set of businesses – which are much more extensive than most people realise – where the employees have the right to share in all the information, all the key decision-making and all the profits. That is because the owners and the employees are the same people. Such businesses are characteristically more productive than other businesses, and it is not hard to see why.

Owner-employees are genuine partners in the business. This affects how they feel, how they are treated and how they behave.

People like to feel that: the business is theirs, they are in charge of their own destiny and are working for themselves and not for some fat cat who reaps all the benefits. That feeling of ownership is a very powerful motivator. It is a large part of what made the industrial revolution happen in the first place. It drives commitment, which, in turn, drives efficiency, effectiveness and innovation. In a sense, it makes everyone a capitalist. Usually capitalism is good at creating capital, but bad at creating capitalists. Employee ownership redresses the balance.

Being treated as a partner, being acknowledged as a fellow-player, an autonomous contributor, as someone who counts – changes everything. It makes the experience of working life dramatically different from the normal situation, where the employee however

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decently treated, is ultimately a hired instrument to be manipulated by the manager to serve someone else’s interests.

Their own perceptions and feelings as well as their colleagues encourage a spirit of partnership; to think about the enterprise, to put forward their ideas, to improve the way things are done, to be active in solving problems and to take initiatives.

If they see a fellow-employee shirking, for example, their reaction will be rather different because the money wasted is theirs not the boss’s. Peer supervision is highly effective and empirical studies prove that.

It is unsurprising to find that the retailer rated top in the UK – the John Lewis Partnership, which includes Waitrose – has been employee-owned since 1929. Less well known is that the American retailer in the same position, Publix, has also been employee-owned for decades. In Spain, the second or third largest retailer, Eroski, is also employee-owned. The same goes for Europe’s premier coach manufacturer, and the leading provider of laser printer drums in the US. Its employees have owned Arup, one of the foremost engineering consultancies in the world, for forty years. In the case of Zeiss, the enormously successful global optical business headquartered in Germany, the employee ownership has lasted for 120 years so far. The list goes on – successful, innovative, productive businesses across the world that serve their customers to the very highest standards.

If there is a single element that characterises an employee-owner, it is long-term commitment. Employee-owned businesses typically invest for sustainability. Compare the behaviour of these co-operatives to the irresponsible gambling in the Anglo-American financial sector that nearly brought the global economy to a catastrophic halt. The power in the hands of the financial institutions meant that the costs of this reckless greed have been passed on to the general population.

When the employees own the business those trends are reversed.

The wealth is spread more evenly. There are only two things you can do with profit – either invest it in the business or distribute it to the owners. When profits are distributed to the owner-employees, the local economy also benefits.

The economic multiplier of employee-owned businesses is huge. 

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Mondragon: A successful international co-operative formula

By Arantza Laskurain,

General Secretary of Mondragon Corporation Mondragon is the result of the co-operative movement formed in 1956 in the town of the same name, when five young workers created the present corporation’s first production unit. The great co-operative boom in the Basque Country, the northern Spanish community from which Mondragon emerged, took place in the 1960s, and in the 1970s a period of expansion began, with an increase in the number of co-operatives and the consolidation of those that already existed. Research also flourished at this time with the creation of a research centre.

Mondragon as we know it today began to take shape in the 1980s, to respond to the globalisation of the economy and the creation of the European Economic Community. Up until this time the co-operatives had been grouped by geographical proximity, but now they started to be structured by sectors. And today, that first co-operative founded by five young entrepreneurs has become the leading business group in the Basque Country.

Mondragon is now the tenth largest association in Spain and has great international projection, manufacturing and marketing its products in five continents. It is large in both size and turnover, but it is also a world benchmark in the co-operative sector. Being Mondragon means applying a business model based on solidarity principles that is managed according to democratic methods – a formula that has worked for 56 years.

The figures speak for themselves: 258 companies and co-operatives, 93 production subsidiaries and nine corporate offices, more than 80,000 workers, a presence in more than 70 countries, a turnover of â‚Ź14,000 million.

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Roots in the community - what really sets Mondragon apart from other business groups is its organisation based on the co-operative model, a formula that preserves the essence of its origins. Despite its large size and the expansion of its business model, Mondragon has always remained the same, people with an innate commitment to their local environment, democratic participation and inter-company co-operation.

It is a group with roots in its local area, preserving its traditions but continuing to grow and create wealth wherever it settles. The Mondragon co-operative model encourages people’s participation and integration in their companies’ management, profits and ownership. As a result, one of its characteristics is that a sizeable proportion of its workers are co-operative members, i.e, shareholders in their companies.

This means that they consider their companies’ projects as their own, which increases their commitment and, consequently, their efficiency and profit. Against the present economic backdrop, the Mondragon model has shown itself to be able to cope with difficult times. In 2010, a profit of €178 million was made, tripling the previous year’s figures, while the number of workers was reduced by only 1.4%.

Mondragon is structured into three major areas: finance, industry and distribution. These three mainstays are complemented by the knowledge area, which gears its work to technology innovation, training and research.

The finance area consists of Caja Laboral, a banking institution with branches throughout Spain, the insurance company Seguros Lagun Aro and its own mutual society for administering contributions to schemes such as pension or healthcare funds.

The industry area is made up of almost a hundred companies specialising in the manufacture of consumer goods, capital goods and industrial components, construction and business services.

There are many outstanding success stories among these co-operatives. Fagor, for example, is the top household appliance manufacturer in its sector in Spain and France, and the fifth largest in Europe. Orona specialises in lift design and manufacture and is a pioneer in Europe, devising and building a space for specialist innovation in the lifts and mobility sector. Some €160 million has been invested, and the creation of 1,000 highly qualified jobs is planned.

The distribution area comprises six co-operatives, headed by the Eroski Group, a retailer of general consumer services and products (food, textiles, footwear, household appliances, travel, leisure and sport, perfumeries, opticians, petrol stations and mobile telephony) and has 2,440 sales outlets across Spain. Eroski has reacted to reduced household consumption by launching more of its own brands and boosting its online sales.

An innovative attitude Achieving this kind of results requires commitment from everyone and constant modernisation. This innovative attitude is another of the group’s trademarks. It is channelled through its 14 technology centres, which together with its own university, Mondragon Unibertsitatea, make up the knowledge area. Another clear example of this innovative approach is the co-operatives’ involvement in numerous research and technology projects.

The group has invested €144 million euros in R&D; almost 1,300 of its 80,000 workers are exclusively dedicated to research; it has 716 own-invention patents and participates in more than 75 national and international projects through its co-operatives and technology centres.

All this is reflected in its sales. In 2010, 21.4% of its sales in the industrial area were of new products and services that did not exist five years ago.

This constant growth enables Mondragon to include international expansion of its companies in its plans. The group has new plants in Germany, Brazil, the US and India. In all, 93 plants and almost 15,000 people work in factories and offices located abroad, and these figures are set to grow.

Outside Spain Mondragon has a presence in Brazil, France, Morocco, Slovakia, Taiwan, the US, Italy, Romania, India, Portugal, the Czech Republic, the United Kingdom, China, Germany, Poland, Turkey and Thailand. 

Other successes include Orbea, which specialises in the manufacture and design of bicycles and works in 29 countries in four continents, or the industrial solutions supplier Danobatgroup, whose international sales now represent 85% of its total turnover and whose top-ranking customer is China.

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From Canada to Europe - private businesses converting to co-ops is gaining government support

By David Wilson, Canadian Worker Co-operative Federation An estimated 500,000 small business owners in Canada are planning to retire over the next five years, with another 750,000 expected to go by 2020. In less than ten years this will affect 50% of all small businesses in Canada. However, the retirement wave of baby-boomer business owners presents a tremendous opportunity to extend workplaces owned by workers.

At a time when turning back gains made by workers and outsourcing jobs overseas is the trend, it is critical that workers are proactive in taking advantage of any option to purchase their workplaces and convert them into worker co-operatives as this will create continuing employment for themselves as members.

Countries in Europe who have been outsourcing jobs to Asia and whose small business owners are also set to retire are beginning to acknowledge that worker co-operative conversions could be part of the solution to maintaining employment beyond retirement. In France, for example, worker co-operatives do not pay the professional tax, which is 1.5% to 2.5% of revenues.

Income on worker shares is also exempt from income taxes.

Italy leads the sector with more than 800,000 people working in the co-operatives, about half of whom are in worker or social service co-ops (mostly in the healthcare).

The Italian government provides a subsidy up to three times the amount of workers’ investment to assist the conversion of an existing business into a worker co-operative.

The Mondragón Co-operative in Spain is the most prominent example of a worker co-operative conversion. It was a bankrupt paraffin oven factory that was converted into a worker co-operative in 1956. Sales at Mondragon are now close to €33 billion, employing 92,000 workers. To encourage the growth of worker co-operatives, the Spanish government taxes co-operative profits at just 10%, compared with the corporate tax rate of 28%.

Worker co-operatives receive tax breaks in these European countries because the enterprises are seen as a public good.

There are successful examples of worker co-operative conversions in Canada, especially in Quebec.

A great worker co-operative conversion example is CETAM. The privatisation of ambulances in Quebec did not improve service.

With its 23 private companies calls were not being managed efficiently. Many wanted to sell. In response, La Coopérative des Techniciens Ambulanciers de la Montérégie (CETAM) created in 1983 now has more than 700 worker-members and 30% of Quebec’s ambulance services, in 70 municipalities, with revenues above $50 million. Response times and service levels have improved dramatically. Wages also increased substantially.

When the CETAM concept was proposed, many private ambulance workers had modest incomes and little in the way of savings, and were apprehensive about the conversion. Each worker invested $1,000, plus a 3% to 5% deducted from pay cheques that is reimbursed when the member leaves the co-op.

Additional financing came from the Quebec government, the Confédération des Syndicats Nationaux solidarity financing network, and unions.

CETAM is unusually a unionised worker co-operative. Unions and worker co-operatives have a shared history. Though it is democratically controlled by its worker-members, conflicts do arise at times between management and frontline workers. Shop stewards at CETAM present workers’ complaints. The Western Labour-Worker Coop Council in Canada has recently created guides for union-led conversions to worker co-ops. 

Profits in Italian co-ops are exempt from tax as long as they are reinvested in the business. By law, worker co-operatives have to place 3% of their profits into co-op development and investment funds. One of which is currently worth more than US$340 million.

This fund is used just for conversions.

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Co-operatives: Significant players in Germany’s booming economy

By Dr Eckhard Ott - CEO- DGRV As in most European countries, co-operatives play a significant role in Germany market economy. Modern industrial companies and service providers, countless small and medium-sized traders and crafts companies, as well as a strong agricultural sector, power the German economy. Traditionally, it is the medium-sized enterprises (SME), which guarantee competitiveness, economic stability and added regional value. But now the progress of internationalisation and an increasing market concentration is putting SMEs under greater pressure. Co-operations merging into alliances or network groups are a response to this. In this context, the co-operative is a model provides a vitalising factor for the economy in many types of businesses.

The absolute number of co-operatives in Germany has declined in the last few years due to mergers resulting from the transformation and evolution of the economic structures; the market share has however clearly increased. The co-operative network – with over 21 million members in more than 7,500 co-operatives – is one of the largest economic organisations in Germany. The local people’s banks and Raiffeisen banks (“Volksbanken” and “Raiffeisenbanken”) are the basis of the co-operatives financial network (“Genossenschaftliche FinanzGruppe”) and are supported by two central banks, and other enterprises of the co-operative financial network, the so-called “Verbundunternehmen” as well as by regional and national federations. At present, 1,138 independent co-operatives banks are acting on a local level.

These credit co-operatives have more than 13,000 branch offices throughout Germany. They are organised locally, rooted in their region and consider themselves as partners of small, medium enterprises.

In Germany, there are approx. 2,600 enterprises running on co-operative basis in the agriculture and food industry – operating from local to international. These enterprises are providing the farmers with production equipment while also buying their agricultural products, which are then processed according to demand and commercialised. For example, 70% of the milk produced by farmers will be collected by co-operatives and two thirds processed as milk products by co-operative creameries.

Service co-operatives make up 1,600 very differently oriented small-scale businesses including: commodity, buying and marketing as well as co-operations of retailers, craftsmen and freelancers. The buying and marketing co-operatives serve the affiliated enterprises by offering services that can be efficiently provided through co-operative efforts; either through common purchase and marketing activities or partnering with common brands to gain the ability to compete with big businesses.

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However, consumer co-operatives play a limited role in Germany, having largely been squeezed out of the market through an extremely concentrated retail trade. Nevertheless, they are re-emerging in villages and districts that are yet undiscovered by the retail chains. More than half of those that have sprung up in the last five years are untypical for the co-operative sector such as schools, institutions for handicapped persons, cultural centres, newspapers, ecological products and fair trade shops.

The housing co-operatives (representing 2.2 millions flats approx. 10% of the housing stock) are providing affordable and secure housing to more than 5 million people; the concept of co-operative housing is based on joint ownership and long-term sustainability. Consequently, the co-operatives are developing connected services to this real estate market; assisted housing for the elderly and handicapped occupants, neighbourhood meetings, shopping assistance, member festivities or special housing offers for young members and families.

At the moment, a revival of the co-operative idea is happening mainly in the field of renewable energy, power generation and energy supply. Supporting people to engage in energy transition projects, the so called “Energiewende” means direct benefits for all its members. The value added remains in the region and that is important to obtain acceptance for renewable energy projects.

Today, co-operatives are also proliferating in the services industry; data processing, new media industries and health sectors. In health care, medics and health networks have organised themselves as co-operatives, buying and marketing jointly to achieve advantages or, working with suppliers to create new health care units.

In the process of globalisation, networks like co-operatives are better positioned than the large centrally controlled corporate companies. In this process of structural change, flexibility, quick decision-making, fast reactions and minimum bureaucratic is vital.

Globalisation could thus lead to an intensification of the range of services on offer and a huge growth in members networking in co-operatives. 

DGRV Members: 7554 co-operatives 1,138 co-operative banks 2,604 Raiffeisen commodity, service and agricultural co-operatives 1,622 Small-scale industry commodity and service co-operatives 219 Consumer and service co-operatives

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Vegetable Production: Ethiopia

Ethiopia The Meki Batu Fruit and Vegetable Grower Farmer Cooperative Union

By Jenny Rafanomezana, Head of Research, Innovation and Learning, Self Help Africa The management-speak acronym TEAM stands for Together Everyone Achieves More. Nowhere is this more apparent than in Africa, where smallholder farmers struggle to earn a viable living from the land.

In joining teams, they become a vast alliance in the fight against hunger and poverty.

Self Help Africa’s first projects were in Ethiopia, where it began work to provide long-term and sustainable solutions to food production after the devastating famine of 1984. The organisation now works in eight countries across the continent, supporting communities to grow more food and sell their surpluses, but the lessons learned in Ethiopia over the past 28 years are fundamental to its work.

The organisation’s mission – “to empower rural Africa to achieve economic independence” – was forged on the back of this experience in Ethiopia. In a continent where up to 75% of people rely on small-scale agriculture for their survival, Self Help Africa believes that it is only by tackling the challenges faced by rural farming communities that real and sustained economic progress can be made. Many of these challenges have one solution - joining farmers together in teams.

A key part of the organisation’s role is in supporting Africa’s smallholder farmers to organise, and then to facilitate links to international, regional and local market opportunities that can enable them to increase their income and move out of poverty.

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In Ethiopia, Self Help Africa has a co-operative development programme that has supported a range of co-ops and unions, to address the fundamental problems of increasing agricultural production and productivity against water scarcity, rainfall dependence and market instability for smallholder farmers.

One of the organisations it has supported is the Meki Batu Fruit and Vegetable Grower Farmer Co-operative Union, established in 2002 in Oromia as the first irrigation farmer co-op union in the country. The union’s objective is to sell members’ produce to local and foreign markets; supply agricultural inputs and credit; deliver market information; and provide training and support to member farmers.

From an initial 12 founding co-ops with 527 members, there are now 135 co-operatives in the union with almost 7,000 farmers across five districts. The union has about 2,562ha of land growing various horticultural products, producing more than 50,000 tonnes of vegetable and fruits that are supplied to local market outlets as well as exported to Djibouti and the Netherlands. The union also carries out hybrid maize seed production, which meets 68% of regional seed demand and is proving competitive and lucrative. The union’s capital has increased from 592,086 birr in 2003 to 35,023,966 in 2011 (from around GBP21,000 to GBP1.26m in today’s values). This represents a sixtyfold increase in eight years.

The union now operates completely independently with no further direct support from Self Help Africa.

Despite all that Meki Batu has achieved, co-ops are not a panacea for African farmers. Indeed, co-operatives had a bad name in Ethiopia in the past. Much has been learnt from the history of the co-op movement, and as we celebrate the International Year of Cooperatives, we are building on the lessons. Our experience in Ethiopia and elsewhere suggests that co-operatives are stronger and more resilient when linked to viable commercial opportunities and have strong relationships with other market actors.

Supportive governments, such as the current Ethiopian administration, can help by providing an appropriate legal framework, capacity building and services. This is critical in enabling the scaling-up of co-ops and the sustainability of the impact that they have on their members’ lives and the national economy. 

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Picture by Peter Bjerre

Sri Lanka: The importance of infrastructure Lizzy Millar

The co-operative movement was introduced to Sri Lanka in 1911 during British colonial rule to promote thrift among the rural poor.

According to statistics from the Department of Co-operative Development, 5,346,000 Sri Lankans have mobilised themselves into 11,762 primary co-operative societies by 1998. These figures include multi-purpose co-operative societies with a membership of around 3.5 million. In addition, there are nearly 8,000 credit co-operative societies with a membership of a similar size.

According to the UN, more than 380,000 war-displaced people have returned to Sri Lanka’s former conflict zone, making the re-establishment of local livelihoods through co-operatives a key component to recovery efforts.

High on the list is poultry farming.

“The reason is because there is a ready-made market in the villages. You really don’t have to worry too much about transport,” Kanagasabapathi Udayakumar, the general manager of the Vavuniya North Multi-purpose Cooperative Society (MPC), noted.

A kilogramme of chicken sells for around US$3 and the MPC itself made a profit of around US $730 when it recently sold a flock of 200 birds.

Udayakumar sees another advantage in popularising parboiling and milling within the region. “We won’t fall prey to the price mafia,” he said.

During the last paddy harvest, outside buyers drove down prices because of the lack of processing facilities in the region. “Farmers could not keep the harvest so they were buying at prices sometimes 40 percent below market rates.”

Ecuador and the ‘Solidarity Economy’ Paola Ycaza Co-operatives have a key role in supporting and improving the prospects of poor people in Ecuador. In 2008 the government introduced a new constitution to promote the concept of the “solidarity economy”, which was approved by referendum. This was the country’s twentieth constitution since 1830 and the disintegration of the short-lived Gran Colombia, of which Ecuador was a part. The sheer number of constitutions typifies the political and economic turmoil in post-colonial Latin America.

About 60% of rural people in Ecuador live below the poverty line.

Co-operatives, especially in savings and credit, represent an increasingly significant sector in this growing network of solidarity.

The movement has helped to reduce state paternalism, often said to be one of the main weaknesses of Latin American countries, while giving vulnerable groups a greater stake in the economy.

Credit and savings co-operatives are second only to the banks in the financial sector and, according to the Rural Finance Learning Centre, there are more than 550 selling points, responsible for 10% of transactions in Ecuador.

Some 430 co-operatives, two thirds of them micro-enterprises and 45% rural micro-enterprises, serve 1.8m people. Two prime examples are La Dolorosa Savings and Credit Co-operative and CADO, the agricultural co-operative.

La Dolorosa was created in 1964, when regular credit was only available to a small section of people able to provide collateral against their loans. The sucre was then the unit of currency.

Nowadays the official currency is the US dollar.

These types of co-operatives are increasingly playing a major role in Ecuador’s economy, especially in rural areas, in promoting social and economic development. Meanwhile, credit and savings co-operatives operating in marginal and rural areas are developing strategies to offer more favourable terms to their stakeholders without neglecting their core business.

Udayakumar said that once the roads connecting remote villages such as Nedunkerni became more easily accessible, the importance of cottage industries would increase even more, at least in the short term.

The CADO agricultural co-operative was founded in 2003 to provide solid training and modern technology for owners of small sugar cane plantations. Traditionally, sugar cane was cultivated in the foothills of the Ecuadorean provinces of Bolivar and Cotopaxi where families grew the crop to make spirits and perfumes, and each would earn only US$40 in the local market for their yield from a week’s harvesting.

“Now, because of transport difficulties, it is very hard to take fresh produce like vegetables to the south. Once the road is better everyone will want to grow vegetables, which fetch higher prices than paddy,” he said. 

Despite Ecuador’s economic crisis in the late 1990s and the current global recession co-operative credit unions and banks are the only financial institutions to hold firm and look set to enjoy continuing prosperity. 

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CHINA: Co-ops competing with Walmart Mr. Li Chunsheng, Vice President, ACFSMC The Chinese co-operative movement started in the 1930s when a consumer co-operative was set up in Ruijin, and others followed in the Yan’an area. During the Second World War, co-operatives made an incredible contribution to reduce economic stagnation and improve people’s lives while guaranteeing commodity supply.

With the founding of the People’s Republic of China in 1949, co-operatives received unprecedented support from national leaders and government, and developed even more rapidly.

That year, the Central Co-operative Administrative Bureau was established, and in 1954 the first national congress of Chinese co-operators was convened, creating the All China Federation of Supply and Marketing Co-operatives (ACFSMC) as the national body of the movement’s supply and marketing.

Through the years of great change, the federation created strong bonds with farmers and their families. Their system consists of 31 federations in provinces, 343 at prefecture level, 2,369 in counties and 21,602 primary co-operatives.

In the 1990s, the co-operatives faced increasing competition from globalisation. International retail giants such as Wal-Mart and Carrefour were seizing market share in large and small cities, while private supermarkets emerged in towns and villages, attracting consumers with lower costs and more flexible marketing strategies. It became tough for primary co-operatives to survive and develop if they remained local.

Since 2006 the federation has pushed forward a program known as the New Countryside Modern Circulation Service Network Project To tackle these new challenges. The aim is to integrate traditional business outlets and co-operatives into a national network chain with a centralised distribution and uniform business branding. Now all co-operatives, including outlets and stores, use the same “CHINA COOP” logo and standardised management.

The establishment of a national network of co-operatives brought at least three benefits: it cut the business costs of commodity purchase and transportation; elevated business efficiency by standardising management and operation; and perhaps most significantly, it improved the brand management of co-operatives, one of the most important assets for any enterprise in a market economy.

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Through the creation of a national network, the supply and marketing co-operative system regained the vitality it had lost because of severe competition, making rapid progress in the past few years. Annual sales revenue has bounce back from the 2003 historical low of 392 billion Yuan (US$61.3 billion) and reached 2,025.5 billion Yuan (US$316 billion) in 2011 with a profit of more than 20 billion Yuan (US$3.1 billion). By the end of 2011, the system had 760,000 business service outlets, covering two thirds of villages nationwide, and more than two million working employees.

We need to progress from a local-to-national model. With a proactive approach, globalisation could be an opportunity rather than a barrier. To make use of its benefits, we are upgrading Chinese co-operatives from national to global.

The federation is now ready for globalisation, and is embracing all the possible opportunities for co-operation worldwide. We welcome you to contact us. 

Distribution and innovation From Chad Swanson-China Daily Traditionally, lack of an advanced distribution and management system hindered development of organic farming in the western region of Xinjiang, with many farmers trying to sell their produce on the street. “Buyers can just play one farmer off another,” Professor Gao said.

So the national government encouraged farmers to form co-operatives or management organisations as their traditional lack of managerial expertise had hindered progress and development.

The central authorities then worked on regulatory infrastructure to facilitate development of safe food while local government encouraged foreign investment in agriculture by exempting enterprises from its taxes.

The agriculture ministry also created certifications for organic, green and pollution-free food, helping to boost consumer confidence while allowing farmers to make bigger gains. 

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Co-ops in the Far East China • The 8,124 co-ops are responsible for 4.96% of GDP in 2009. They employ more than 137,888 people: 46% men and 54% women • 22.27% of health sector jobs provided by co-ops, 14.7% in transport, 7.7 % in agriculture and 6.44% in finance • Co-ops provide 91% of microcredit • Saludcoop (health co-op) is second largest employer India • More than 239m people belong to co-ops meeting needs of 67% of rural households Indonesia • About 80m individuals are co-op members Japan • Agricultural co-ops have US$90bn output with 91% of farmers in co-ops • In 2007 consumer co-ops had turnover of US$34.048bn with 5.9% of food market share Philippines • 30,000 plus co-ops provide 65,215 jobs Singapore • 50% of its population are co-op members

Co-operation in Childcare - South Korea Lizzy Millar, CCM

The Cooperative Childcare Movement in South Korea is living proof of how parents can work together to provide cost-effective and quality care for their children.

Since the opening of the first co-operative centre in South Korea in 1994, 37 childcare centres and 16 afterschool centres have been set up as of May 2001. Many of these were set up by students who fought against military dictatorship during the 1980s - the generation that brought democracy to South Korea.

Typically, a co-op centre is established around 30 families who each deposit US$2,500 to rent and renovate a building, often with a large garden. They also pay monthly fees to fund the running of the centre and for extra staff and equipment. Quite often the ethos of these co-operative childcare centres is to cultivate a greater sense of community, cooperation and care for natural environment. The centres also aim to enlist parents to take shared responsibility for the rearing of all children. In some cases, parents who own and manage after-school centres are also able to influence how their local schools are run. 

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• Consumer co-ops take 55% of supermarket purchases. NTUC Fairprice - biggest retailer with US$1.65bn turnover Mongolia • Co-ops produce 19% of rural revenues South Korea • National Agricultural Co-op Federation • Second largest agricultural co-op globally with more than two million (90%) of farmers. In 2005 they had revenues of US$ 24.7bn Vietnam • Co-ops contribute 8.6% of GDP • Fishery co-ops have a 71% market share Iran • More than 130,000 co-op societies have 23m members • Co-ops contribute 6% of GDP generation 1.5m jobs New Zealand • Co-ops generate 22% of GDP; 95% of domestic and export dairy markets, 70% of meat, 50% of farm supplies, 70% of fertiliser market, 75% of wholesale pharmaceuticals, 62% of groceries and 40% of the adult population are co-op members Kuwait • Union of Customer Co-op Societies, whose members are 6.5% of population, handled nearly 70% of national retail trade in 2007

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Kenya

Meru Herbs Rural Sacco Ltd.

By Carla Ranicki Though the soil of Tharaka-Nithi County, in eastern-central Kenya, is quite fertile, inadequate and unpredictable rainfall makes farming a risky business. But an irrigation project started in 1987 brings a regular water supply to 2,000 families (approximately 20,000 people) and has developed into a flourishing fair-trade business and now a co-operative providing loans to almost 500 members.

The Ng’uuru Gakirwe Water Project (NGWP) was started by the Diocese of Meru with funding from the Italian government to bring water from the Kithino River near Mount Kenya to 134 farmers. The role of project coordinator was given to Andrew Botta, an Italian native who had been living in Nairobi since 1955.

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Traditionally the local Tharaka ethnic group, a sub-tribe of the Meru people, were subsistence farmers, growing maize and millet. The original idea was to help the farmers in this drought-prone area grow more food for their families, but in 1991 Andrew encouraged some farmers to grow carcadé (Hibiscus sabdariffa), whose dried flowers can be used to make a tart, bright-red herbal tea. This led to establishment of Meru Herbs, a commercial venture producing and marketing herbal teas.

Meru Herbs now buys organically grown herbs and fruit from farms within the NGWP produces a range of products distributed through fair-trade channels around East Africa, to Europe (especially Italy) and even to Japan. The most popular herbal teas are carcadé, lemongrass and chamomile, and over the past two decades the Meru Herbs range has expanded to include jams (using mango, papaya, guava, pineapple, passion fruit, carcadé and lemon), tomato sauces, chili powder and tropical fruit in syrup.

The project employs 46 local people to maintain the irrigation system and process and package Meru Herbs products, while 20 to 100 local women are employed on a seasonal basis to prepare the fruits and herbs, dry the herbal teas and make the jams and sauces.

Organic farming courses are also held for the farmers. All net profits are reinvested back into the two production facilities. 

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Rwanda

Mayange Pigs Farmers Co-operative: A women’s co-operative

by Ratha Tep Southeastern Rwanda’s Mayange is one of the poorest regions in one of the poorest countries in the world. It’s an area that bears the scars of the country’s 1994 genocide, and once densely forested, now faces the aftermath of soil erosion and drought exacerbated by decades of logging for charcoal production. Most of Mayange’s 25,000 residents struggle to subsist on farming-eroded plots of land.

In 2009, an initial group of 60 women-mostly widows up to age 65 who had lost their husbands during the genocide banded together in search of a more lucrative alternative to farming, which had earned each less than $1 a day. They also sought a form of income that wasn’t as dependent on rainfall, which had decreased and become more erratic over the decades.

The group partnered with the Millenium Villages Project/Rwanda (MVP), and the Los Angeles-based Pilot Light Foundation, to form a pig-rearing co-operative, whose model called on the women to equally share the duties of breeding and raising piglets. With a $7,000 grant from the Pilot Light Foundation, MPFC built a pigsty and purchased the initial seven piglets – six female and one male.

By 2011, those initial seven piglets had produced 74 piglets, all of which have been sold to local farmers and other new co-operatives, producing an alternative, less weather-dependent revenue stream than subsistence farming. MPFC’s goals for the future include increasing its number of pigs, building more pigsties, and establishing a slaughterhouse, with the ultimate objective of selling pork – which fetches a higher price than live piglets – to supermarkets as far away as Kigali, Rwanda’s capital city. 

The “soundtrack” of the International Year of Co-operatives Stories.coop is its global digital campaign to spread the benefits of co-operation through the tradition of story-telling. We like to think of it as the “soundtrack” of the International Year of Co-operatives: a multitude of voices joining together to represent the complexity and reach of a formidable model of economic and social development.

Stories.coop was developed by Euricse, an organisation founded in 2008 by Co-operatives Europe, the Federazione Trentina della Cooperazione (Trentino Federation of Co-operatives), the Fondazione Cassa di Risparmio di Trento e Rovereto (Trento and Rovereto Bank Foundation), and the Province of Trento and the University of Trento. While Euricse is rooted in the Italian region of Trentino its approach favours openness and collaboration with other research centres, both domestically and with developing countries.

Co-ops in Africa Kenya •

One Kenyan in five is co-op member

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20m people directly or indirectly make their livelihood from co-ops

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Co-ops: 45% of Kenya’s GDP, 31% of its savings and deposits

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70% of coffee market, 76% dairy, 90% pyrethrum, and 95% cotton

Benin •

FECECAM (Fédération des caisses d’épargne et de crédit agricole mutual) provides insurance to 516,076 members, 90% in rural areas

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It provided $16m in rural loans in 2002

Ghana •

Divine Fairtrade chocolate company 45% owned by farmers’ cocoa co-op Kuapa Kakoo

Côte d’Ivoire •

Co-ops invested US$26m in setting up schools, building roads and establishing maternal clinics

Ethiopia •

900,000 people in agriculture supplement their income through co-ops

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The co-op movement in service, agriculture and industry sectors, supported by CoopAfrica, is rapidly expanding

Malaysia •

27% of population are co-op members

Mauritius •

Nearly 50% of sugar-cane planters are in co-ops, co-op share in sugar production is 10%. Co-ops account for more than 60% of food crop sector, including 75% of vegetables. Co-ops have about 30% of bus transport

www.stories.coop

the conservative co-operative movement

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New Zealand co-ops: Purely commercial Dr James Morrison, Co-operative Consultant

The co-operative movement in New Zealand did not emerge through any class struggle or values transplanted with British immigrants during the 19th Century. It was just a rational response to the unique challenges of geographic isolation and the absence of readily available capital. New Zealand co-operatives thus exhibit all the characteristics of entrepreneurship and fierce competitiveness expected of any successful enterprise. The only difference from investor-owned businesses is that rewards of success flow back to the members who transact with the co-operative, rather than some independent group of financiers and shareholders.

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While New Zealand’s productive sector is heavily geared towards the export of primary sector goods, its co-operatives are dominant in several key sectors such as primary production and food retailing.

These have performed well in a highly deregulated and competitive environment and constitute an important part of the country’s economic engine.

The grocery sector, for example, is dominated by two companies: Progressive Enterprises, owned by Australian retailer Woolworths, and Foodstuffs, which comprises three regional New Zealand retailer-owned co-operatives operating as a federation. Surprisingly, Foodstuffs has outperformed Progressive: Foodstuffs has 57% market share, and has opened significantly more stores than Progressive in the past decade. However, Foodstuffs is no socialist collective achieving its goals in harmony with workers’ and suppliers’ interests.

The secretary of the National Distribution Union claims that Foodstuffs is one of the most anti-union companies in New Zealand and is more like a libertarian think-tank that happens to run supermarkets.

Unsurprisingly, New Zealand’s agricultural and horticultural industries are another sector dominated by co-operatives. This is » for very practical reasons. With a small domestic population of only

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4.4 million people, most of the nation’s produce must be exported.

This has always been true, and is why New Zealand pioneered frozen meat shipments to Britain in 1882. Currently the dairy and kiwifruit industries export more than 90% of production, while 80 % of beef and 70 % of apples are exported. This has the direct result of exposing those sectors to volatile commodity and foreign currency markets. Significant export price volatility, compounded by the natural vagaries of the weather, means there is considerable procurement price risk for investor-owned processing companies; co-operatives simply pass this risk through to growers at the end of the season in the final return paid for their produce. This is beneficial to the survival of the co-operative and has other advantages in production signals to growers, as well as minimising financing costs in times of crisis.

A further practical consideration that favours co-operatives is the interdependence of growers and processors. Co-operative ownership minimises the risk of a hold-up of farmers and growers by the processor.

Co-operative ownership is also a practical means of financing the processing operation. Anecdotally, banks are highly reluctant to lend on kiwifruit pack houses as the payback period is so long. It is hence far preferable for dairy farmers and kiwifruit growers in particular to raise capital under a co-operative structure.

Unsurprisingly, these two sectors are dominated by co-operatives.

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So what role has government played in assisting the New Zealand co-operative movement? The answer is very little, other than to provide a legislative framework via the Co-operative Companies Act 1996. This legislation simply allows for shares to be issued with a nominal value, use “co-operative” in company name, provide appropriate disclosure and reporting rules and other necessary variations from the broader legislation set out in the Companies Act 1993. Conversely, the New Zealand cooperative movement is proactive in representing its members’ interests to government and recently successfully co-ordinated the New Zealand lobby for special recognition of co-operative companies New Zealand’s notion of co-operatives very neatly fits Jesse Norman’s description in “The Big Society” of institutions which inspire loyalty, act as repositories of human knowledge, and also promote entrepreneurship and competition. However, New Zealand co-operatives differ from similar British institutions insofar as they have no particular political affiliation. They are no different to any other commercial enterprise in this respect. They are simply an expression of their members’ rights to control the firm that they deal with, and to share in the profits of that firm. 

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Creating a buzz Fancy paying a bill of £1.8 billion every year? That’s the cost the UK would have to stomach hand-pollinating our crops if our bee populations died-out, according to recent research for Friends of the Earth. A big figure for such little insects.

Bees, like the rest of nature, hold great value to us as a wonderful part of wildlife but putting a price on their hard work does bring an interesting perspective.

Head of Nature at Friends of the Earth, Paul de Zylva said: “It’s difficult to overestimate the value of bees and our reliance on them. They pollinate so much of what we eat, including a lot of our most-loved fruit and vegetables – they are very much the farmer’s friend.”

To change this, environment charity Friends of the Earth launched The Bee Cause, the campaign to save British bees.

“We knew when we launched the campaign we’d need to work with lots of different organisations to make change happen,” said Paul.

“There’s already plenty of positive work happening, but we firmly believe a co-ordinated approach is the only way we’ll all reach our joint goal – to reverse the decline in all types of bees.”

It’s with this goal in mind that Friends of the Earth is calling on David Cameron to commit to a National Bee Action Plan.

They believe a plan needs to include better support and advice to farmers to boost bee communities on their land, a reduction in pesticide use, improved protection for local wildlife sites and measures to protect the health of wild bees.

More than 50,000 online actions have already been taken in support of The Bee Cause. For more information on the campaign and for tips on making your garden bee-friendly, visit www.foe.co.uk/bees.

Photograph: Katherine Watson

Photograph: Amelia Collins

Photograph: Amelia Collins

Sadly hand-pollination in the absence of insects has already become a reality in other parts of the world. Intensive farming and habitat loss has wiped out native bee populations in Hanyuan County, China, forcing the region to hand-pollinate their pear trees.

When bees are such an asset to us, it’s becoming an increasing concern that numbers of many bee species have declined dramatically over recent years. Problems facing honey bees have received attention but our solitary and bumble bees are in trouble too. The reasons for the decline is often debated but research shows that disease, pesticides and the way we farm and plan our towns and cities have all contributed to their decline.

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Three simple ideas for the Co-operative Movement Barbara Crowther, Communication Expert from the Fairtrade Foundation Ask people if they’ve heard of Fairtrade, and nine out of ten are likely to say yes.

A whopping 77% of UK adults now recognise the Fairtrade brand – it is taking root in South Africa, South Korea, Japan and Eastern Europe.

What has contributed to this success? And, for the cooperative movement, what can be applied to the campaign to build co-operative brand?

The first lesson is one that we learnt from each other: the power of co-operation itself.

The initial success of Fairtrade was driven by a coalition of like-minded organisations – Oxfam, Christian Aid, CAFOD, Traidcraft, WDM and the WI who drove early campaigning to supermarkets. From then on, the churches, the women’s groups, the local campaign groups and more recently local businesses and town councils have amplified our marketing strategy with a constant drum beat of local activity. Our 535 Fairtrade community campaigns have brought together these diverse groups with that common cause.

Never underestimate the value of word of mouth – friends, family and a wider network of social connections are possibly our most important advertising tool.

As this realisation dawns, International Year of the Co-operative IYC2012 will be instrumental in increasing the tempo of the co-operative conversation and brand awareness across the world.

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The second learning tool comes from mainstream brand management; agree and build a powerful brand identity, not just a logo, but a clear positioning and a strategy for getting it the message out. By 2002, there were at least half a dozen different Fairtrade logos around the globe and a difficult but important decision was taken to adopt one symbol to represent the global standard and certification system. The phrase “Guarantees a better deal for Third World producers” performed a critical role in driving a single thought associated with the label. Later, it was removed due to its 1980s “Third World” terminology, but only at the point when more than 50% of the UK public were able to spontaneously associate the symbol alone, with the concept of a better deal for producers in the Southern hemisphere.

What would be a similar single thought for the Co-operative movement?

The third idea is about finding a co-ordinated moment of focus.

This year, IYC2012 itself provides that vehicle – but being established in the public’s and business annual calendar can drive year-on-year awareness building. The co-operatives movement, like the Fairtrade movement, has unprecedented strength in numbers and a real opportunity to amplify that by simultaneously speaking with one voice. Since 1996 Fairtrade Fortnight has provided a peak moment each year – set up originally, to generate community events; it has now become a fixture. When Ed Mayo, General Secretary of Co-operatives UK, took up his post, we sat down together to apply the lessons from Fairtrade Fortnight, to launch also an annual Co-operatives Fortnight. This includes International Co-operators’ Day. An annual theme that creates excitement, a core idea or iconic news hook; lots of flexibility for localised adaptation and mobilisation are suggestions to make it both exciting and inclusive.

Using social media can add a fun factor and reach out to the unconverted. In 2012, our youtube video attracted more than a quarter of a million views of our films at the time of writing.

However, as with all good communications and marketing, giving consideration to a range of stakeholders – shoppers, members, campaigners, brands, retailers, education networks, social media – can be the catalyst that produces totally new creative communication approaches, extending the potential to reach beyond your wildest imaginings. 

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The EU: Could closer integration be achieved via co-operative structures?

Adrian Pabst, University of Kent and Phillip Blond, ResPublica

The continuous crisis of the eurozone, with its potential threat to the very existence of the EU, offers an opportunity to propose an alternative and better European vision. Whatever the merit of the integration and enlargement process, the Union is currently characterised by excessive centralisation of power and a growing concentration of wealth.

Neither a maximal Franco-German federal superstate nor a minimal Anglo-Saxon free-trade area captures the hopes of the European peoples or the true potential of Europe. In reality, Europe is more like an association of nations and peoples that has the potential to evolve in the direction of an innovative and co-operative polity.

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Historically, the EU was captured gradually by a purely economic vision of trade and legal harmonisation. The original hopes of its founders lay, however, in shared political practices and common cultural bonds. The economic has assumed priority over the cultural because elites felt that this was the easier way to achieve the hardware of the Union and the cultural software would follow. The cost of this failure to align the cultural with the economic and embed them in society is now evident.

In Europe, this is exemplified by the single bureaucratically regulated market whose operation tends to trump social solidarity, mutuality and the bottom-up needs of small and medium-sized enterprises. The European Commission has been far too obsessed with top-down harmonisation of production and trade and not sufficiently concerned with the conditions and needs of genuine free and fair competition. Countries protect their own champions and sectors within this model using differential legal systems and regulations – with the effect that only the big players can trade across Europe and small enterprises are effectively proscribed. What is needed is a new theory of bottom-up market entry that does not penalise the small or shut out the differently constituted.

The priority of state control and the reduction of the common good to consumer welfare characterises both Franco-German statist and Anglo-Saxon free-market liberalism. Both models favour big business and big government to the detriment of small and medium-sized enterprise and local economies. As a result, they have reinforced socioeconomic polarisation and the growing disconnection of Europe’s technocratic elites from its citizenry.

Transforming Europe into a co-operative polity has become even more urgent in the face of the “fiscal pact” that locks the eurozone periphery into the economic straitjacket of an undemocratic capitalism, while at the same time undermining the social market economy model that is enshrined in the Lisbon treaty.

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Meanwhile, the two-speed Union sidelines non-euro members such as the UK while strengthening centralisation under a purely German economic aegis, which will ensure permanent proletarianisation for the southern nations and provoke further social unrest in countries whose governments are effectively denied any autonomy in meeting the needs of their people.

Consequently, Britain and its continental European allies need to take a lead. Politically, the whole system of governance must be re-embedded in the civic bonds and social relations binding people within and across Europe’s nations. Instead of being part-executive, part-legislator, the Commission should be reconfigured as a pan-European civil service that supports the work of the European Council and the Council of Ministers. National governments and their representatives should form the sole executive, accountable both to national parliaments and the European Parliament.

In turn, the European Parliament needs to be beefed up to create an upper chamber that represents cities, regions, professions and communities. For example, the European Economic and Social Committee, which currently has little more than consultative functions, could be incorporated into a European upper chamber.

Pan-European co-operative movements should also be represented. In this way, Europe could promote more social dialogue and workers’ co-decision as part of a constitutional rebalancing of countries and transnational markets. The Italian and Portuguese constitutions already officially recognise the social dimension of co-operatives. It is time that the European treaties and institutions do too.

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Ultimately, an upper chamber would do much to reconnect Europe to its citizens. Just as the lower house represents the people, so the upper house reflects society. This, coupled with decentralisation according to the principle of subsidiarity, can combine proper political representation with more civic participation. Paradoxically, a more devolved system needs to be guaranteed at the centre.

Therefore, an upper chamber of the European Parliament would uphold the primacy of civil society against the usurping of the state and the capture of the market by vested interest.

Economically, national governments and community institutions should promote a greater diversity of businesses and productive activities for the sake of sustained economic growth and the common good. Here co-operatives can play a central role. By responding to the needs of key stakeholders (workers, producers, consumers and members of the community), co-operatives tend to have higher levels of innovation, productivity, job satisfaction, stable employment and sustained profitability.

There is much that Europe could do to foster the co-operative movement. First, it could facilitate the creation of co-ops in the public sector to deliver key services such as health, education and welfare, as the work of ResPublica has shown. Second, the Union could pass legislation that makes it easier to set up co-operatives within and across EU member states by simplifying the legal procedure and mainstreaming the business model, thereby making more finance available and offering co-operatives a greater share in public contracts and procurement.

With more than 150 million members and an annual turnover well in excess of £100 billion, co-operative businesses are the backbone of Europe’s economy. It is time that the European polity reflects their role and promotes their flourishing, and uses this principle to refashion and rethink its fundamental governance and representational structure. 

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Aid is not enough Co-operatives and the UN Millennium Development Goals (MDGs) Linda Shaw & Stirling Smith, Co-operative College, Manchester, England The Millennium Development Goals are ambitious targets that have been set by the United Nations for global poverty reduction by 2015. These include reducing the number of people in poverty by half; reducing the toll of diseases such as malaria, TB and HIV/Aids; increasing school enrolments, especially of girls; and reducing maternal deaths.

The coalition, to its great credit, has maintained spending on overseas aid, despite the constraints on public spending, but aid is not enough. Successful private enterprise is the best long-term way to raise people out of poverty.

And co-operatives are a type of private enterprise – collective entrepreneurship - that has a proven track record in poverty reduction.

Co-operatives were established in Britain in the 1840s as a practical means for working people to meet their everyday needs for good-quality foodstuffs at reasonable prices, as a route to building a better society. Their vision was not simply about retailing, but about how, through self-help, they could improve their working and living conditions, and their communities.

It is precisely this model of practical self-help that poor people in developing countries want and need.

How co-operatives help to reduce poverty The benefits gained through co-operative membership are found throughout the developing world. Co-operatives provide a range of goods and services not provided by the State – including health, energy and education. For millions of people in the developing world, especially in rural areas, co-operatives operate in the key areas of agriculture and financial services – savings, loans and increasingly insurance.

Agriculture Agriculture, including farming, forestry, fisheries and livestock, is the main source of employment and income in rural areas, where the majority of the world’s poor live. According to the UN, the importance of agricultural co-ops in improving the lives of millions of smallholder farmers cannot be overestimated. Co-operatives enable farmers to avoid selling directly at the farm gate to unscrupulous traders and to gain better market prices. They can negotiate better prices for fertilisers, seeds and equipment as well as enjoy better access to extension services. The co-operative can do things farmers cannot do on their own, such as marketing, and provide credit.

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Financial services A World Bank study on financial co-operatives pointed out that they can reach larger numbers of the poor than many microfinance institutions focused on the underprivileged. Indeed, recent revelations about the shortcomings of the “credit first” approach to microfinance have served to re-emphasise the sustainability of the financial co-operative model with its stress on savings before credit – savings and credit co-ops as they are known in Africa.

Legacies, misconceptions and mixed histories Co-operatives have long and complex histories. The story of Kuapa Kokoo, the cocoa farmers’ co-operative in Ghana that supplies much of the Fairtrade chocolate we enjoy in the UK, illustrates this.

Post independence, Kwame Nkrumah’s regime forced all cocoa farmers to join co-operatives that were forced to sell their output to a state marketing board. All the benefits of their hard work went to the government. When co-operative leaders stood up for their members, the movement was sidelined. This parody of co-operative enterprise was swept aside in the 1980s era of reform. Farmers expected improvements, only to find middlemen had replaced the parasitical State. So in the 1990s, they turned back to the co-operative model. Now their fate is in their own hands, and their delicious chocolate is in ours.

A common misconception in development is that the co-operative model may be fine for the rural poor but should be seen as a stepping stone to the adoption of mainstream commercial enterprise models. This is very far from the truth. There are some examples of large-scale co-operative enterprises in the developing world. The Kenya Co-operative Insurance Corporation offers life insurance without requiring a test for HIV. In India, the Farmers Fertiliser Co-operative runs several large plants and made more than $200 million profit for distribution to its members.

The profile of co-operatives in international development agencies, including the British Department for International Development, is low; they have sometimes been seen as failing organisations. This perception is in large part because, until recently, governments and development agencies promoted “co-operatives” that were not member-owned and controlled but which were subject to government interference. Many co-operatives were weakened by this legacy of political interference and related corruption.

This is changing. Just as David Cameron has promised a new comprehensive law for co-operatives in the UK, some countries are starting to modernise laws dating back to the colonial period so that co-operatives can operate as genuine autonomous enterprises.

Co-operatives are not set up to reduce poverty like development projects but rather to help their members. Poverty reduction does result from their work but their aim is to build viable enterprises.

This is surely is the more sustainable approach. 

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There are big opportunities in co-operative collaboration through technology Ashley Goodall – Associate at The Big Society Network Today’s technology networks are the inspiration for a new explosion of co-operative style businesses which is creating a singular opportunity for the co-operative movement to reach out, adopt, champion and engage with businesses across the world.

Traditional co-ops are grounded in location and geography, but the growth of the new breed of co-ops are more likely to be associative, technology based and crowd sourced in nature and driven by the explosion in social media tools and the ubiquity of mobile telephony. They are also more likely to be driven by an entrepreneur, a group with entrepreneurial business mindsets and younger participants.

Once we start to look at what is actually going on it’s clear that a plethora of initiatives are evolving that are all but co-operative in name: On the one hand collaborative consumption groups engaged with car, bike, time and land sharing all use elements of co-operative sourcing, on the other, associative groups with business or social objectives are emerging on line and validating off line to form new hybrid businesses.

NESTA’s Rachel Botsman recently published an informative booklet on the subject demonstrating how the growth in social enterprises, both on and off line is effectively co-operatives in nature. The Unlimited company for example estimate that there are around 70,000 social enterprises in the UK, and, with the opening up of public procurement and open public services bill in April, are delivering many more opportunities for Social enterprises to win work and deliver public services.

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All around us social media has become the aggregating force for reinvention – whether as groups on Facebook, Linked-in or Twitter, or using apps and algorithmic software to engage their audiences. This is not just for the future but also the present driver of change.

When we examine social media statistics- conservatively, 100m on Twitter, a billion on Facebook, 750m online gamers, 5.9bn mobile phone users, it’s clear that something dramatic is happening. Not only are people communicating via social media, but shopping, interacting, connecting campaigning and forming businesses on line. These associations are invariably social in nature, crowd sourced and scalable. The opportunity to engage people not just around the country, but across the world, means these new breed of co-operatives can easily become global.

At the Big Society network we have been incubating a range of social businesses we call Nexters. Some are social businesses, some charities, others social enterprises, but at their heart these entrepreneurs are finding new ways operating, to engage and strengthen communities using network technologies to scale and embrace anyone anywhere. I believe the Nexters are indicative of the opportunity for the co-operative movement to reinvent and extend itself.

Collaborative consumption sites too, are making great headway: streetcar and Citycarclub, Zopa for lending, Boris bikes in London and who has not used Gumtree, Freecycle or Ebay?

These are all technology communities.

This should be the new frontier for the co-operative sector, and also for the reinvention of British businesses. Going with the grain of how modern businesses and groups are organised should help to redefine the word co-operative in people’s minds and confirm their support for social enterprises, social network technology companies, groups and associations who exist in the online world. Ultimately technology will enable us all to take advantage of and position ourselves for the modern entrepreneurial version of co-operatives whose development is being blocked by continuing political dogma. 

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Co-operatives in sport: They work in Brazil Tracey Crouch, UK MP

Highly successful sport co-operatives can be found all over the world and I have found myself supporting them. In the United States, the Green Bay Packers in Wisconsin, my favourite NFL team, have developed into one of the best, with a current valuation of around $1 billion. But their success is as much based on what happens off the field as on. The Packers have a co-operative ethos and have 112,000 shareholders who between them own about five million shares. These cannot be resold, except back to the team for a fraction of the original price. No dividends are paid and the stock cannot appreciate in value. No stockholder can own more than 200,000 shares, ensuring that no individual can assume control of the club. It is a model that is envied, although not replicated, and it should be noted that the Packers remain the only NFL team never to have been sold.

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In north eastern Spain, FC Barcelona, founded in 1899 by a group of Swiss, English and Catalan footballers, has developed into one of the most successful examples of a co-operative-run sports club. The club is owned and run by its 175,000 members, who each pay an annual membership subscription of about €180. A president is elected every six years, usually through an audacious manifesto, promising to sign the world’s best players and bring them to Catalonia.

While the club’s current fame may relate to it having Lionel Messi, the three-times Ballon d’Or winner, on its books, it remains just one of a handful of Spanish football (soccer) clubs who have managed to maintain their co-operative status beyond the 1990s.

While FC Barcelona and the Green Bay Packers are different in so many ways, they share a common financial model that not only promotes stability but allows success on the field. In the UK, sport co-operatives are far fewer, and are mostly found in the lower leagues of English football. In a survey by Co-operatives UK, 56% of respondents said that they saw the benefits of co-operatives in sport and believed that their club would be in much safer hands if it were owned by its supporters. Unfortunately, hostile takeovers of English football clubs are becoming increasingly common, particularly in the Premier League.

Financial mismanagement has brought the demise of some of Britain’s greatest football clubs, with administrations more and more frequent. We have recently seen the Glasgow-based Rangers FC, winners of 54 league titles, more than any other team in the world, go into administration.

Players have agreed wage cuts of up to 75% while others have left the club voluntarily in an effort to avoid major redundancies.

In the UK, we are determined to promote co-operatives in sport. There is a real benefit of fan-based ownership that could lead to fewer takeovers by foreign billionaires, who disregard the need for financial transparency, often at the detriment to club and fans. In the coming months, UK CCM members will be holding a much needed inquiry into co-operatives in sport, and I am pleased to say that the Conservative Party fully supports reform of football governance rule to allow greater co-operative ownership of sports clubs.

While I am not advocating that every football club should follow this route, it is certainly a proven formula for success. My own team, Tottenham Hotspur, are privately owned, well run, well managed and are currently flying high in the Premier League. Other clubs are not so fortunate. 

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