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Developing Successful   Coopera3ve  Enterprise   The  New  Zealand  Way   Ramsey  Margolis   Execu3ve  Director,  New  Zealand  Coopera3ves  Associa3on   DEKOPIN  Fes3val  IYC  2012  •  Lombok,  Indonesia  •  23  May  2012  

Important New  Zealand  dates  

!   1840 –  Treaty  of  Waitangi  –  a  Bri3sh  colony   !   1907  –  became  self-­‐governing   !   1947  –  formal  independence  

Some figures   !   Popula3on  of  New  Zealand  =  4,400,000   !   Most  recent  GDP  figure  =  $161bn  (US$126bn)   !   6,000,000  dairy  cows  +  31,000,000  sheep     !   Less  than  200  coopera3ves  with  more  than  500,000  memberships   !   Co-­‐ops  employ  43,000  people,  their  members  employ  200,000  more   !   19  of  the  200  largest  businesses  are  coopera3ves   !   2010–11  turnover  of  coopera3ves  and  mutuals  =  $43bn  (US$31bn)  

New Zealand s  largest  co-­‐op  

!   Fonterra Coopera3ve  Group   !   New  Zealand s  largest  business   !   owned  by  10,500  dairy  farmers   !   25%  of  New  Zealand s  exports  

Agricultural coopera3ves   !   Half  of  New  Zealand s  coopera3ves  are  in  the  agricultural  sector:   !   Meat  =  Silver  Fern  Farms  +  Alliance  Group   !   Dairy  =  Fonterra  +  Tatua  +  Westland  +  LIC  +  Dairy  Goat  Co-­‐op   !   Farm  supply  =  CRT  +  Farmlands  +  Ashburton  Trading  Society   !   Fer3liser  =  Ballance  Agri-­‐Nutrients  +  Ravensdown   !   Fruit  &  vegetable  =  MG  Marke3ng   !   Packhouses  =  Satara  +  Eastpack  +  Nelson  Apple  +  Future  Fruit     !   Insurance  =  FMG  +  Unimed  +  Southern  Cross   !   Seasonal  labour  =  Seasonal  Solu3ons  

Keeping the  wealth  onshore  

!   Coopera3ves ensure  that  the  wealth  produced   in  New  Zealand  remains  in  New  Zealand     !   Coopera3ves  are  locally  owned  businesses   !   Each  co-­‐op  has  a  single  focus,  there  are  no   mul3purpose  coopera3ves   !   Members  of  most  New  Zealand  coopera3ves   are  small  businesses  


!   Why do  people  join  coopera3ves?  What  are  they  looking  for?   !   Lower  commodity  prices   !   Lower  service  costs   !   Higher  returns  on  produce  

How people  operate  their  co-­‐ops  

!   Share in  the  ownership  of  the  business   !   Manage  the  business  themselves  in  a   very  direct,  democra3c  fashion   !   Elect  their  board  of  directors   !   Have  a  transparent  set  of  financial  accounts   !   Reinvest  in  the  community  and/or  pay  patronage  to  people  in  the  community  

The things  that  maker    

!   Coopera3ves !   Deliver  a  service     !   Are  democra3cally  run     !   Inclusive  of  all  members   !   Keep  the  profits  in  the  community  

Otago Dairy  Farmers  Coopera3ve  

!   1871 –  New  Zealand’s  first  farmer-­‐ owned  coopera3ve   !   Seven  farmers  got  together   !   Milk  collected  daily,  processed  into   buker  and  cheese  

Beker than  mul3na3onals  

!   Ravensdown Fer3liser  Coopera3ve  –  NZ$930m     !   New  Zealand,  Queensland  and  Western  Australia   !   Capricorn  Society  –  over  AU$1bn   !   New  Zealand,  Australia  and  South  Africa   !   Interflora  Pacific  Group   !   members  in  15  different  Asia  Pacific  countries  

Necessary ques3ons  

!   What is  the  problem  that  we re  facing?   !   How  do  we  come  together  to  solve  that   problem?   !   What  is  the  business  model  that  will  work   for  us  as  a  community  to  do  this?   !   Could  it  be  a  coopera3ve?  

In a  capitalist  world,  what  makes   for  a  successful  coopera3ve?  

Working together  

!   Markets fail   !   Individuals  and  small  businesses  get  together  and  pool  resources   !   IMPORTANT:  the  co-­‐op  has  to  operate  effec3vely  and  efficiently   !   purchasing  co-­‐ops  reduce  dependency  on  powerful  suppliers   !   marke3ng  co-­‐ops  reduce  dependency  on  powerful  buyers   !   Greater  returns  for  the  member s  primary  business  

Governments... !   Coopera3ves  need  good  legisla3on   !   does  not  discriminate  against  coopera3ves   !   accommodates  the  special  needs  of  a  coopera3ve  enterprise   !   proper  taxa3on  policy   !   government  to  make  available  exper3se  and  resources   !   Co-­‐ops  are  privately-­‐owned  business  that  are  independent  of   government  

Ensuring sustainability   !   A  co-­‐op  has  to  be  a  genuine  business,  efficient  and  profitable   !   Owned  and  governed  by  its  members  –  who  transact  with  it   !   First  and  foremost  businesses,  the  social  objec3ves  are  equally   important   !   Providing  access  to  services   !   Strengthening  cohesion  in  the  community   !   Reducing  poverty  

Governments can  help  

!   Outside help  and  a  cri3cal  perspec3ve   to  ensure   !   Good  governance   !   Transparent  elec3on  processes   !   Transparent  financial  accounts   !   Management  is  nurtured  

Crea3ng a  value  chain  

!   Members of  the  coopera3ve  are  producers   !   Ver3cal  integra3on  to  create  a  value  chain   !   Also  minimises  risk,  making  credit  available  to  small  farmers  

DEKOPIN ...  NZdotCoop  

!   What exactly  is  the  role  of  a  coopera3ve  apex  body?  It  should   !   Offer  training  and  educa3on  for  coopera3ves   !   Work  on  behalf  of  coopera3ves  as  an  advocate   !   encourage  coopera3on  among  coopera3ves,  e.g.  branding   !   assist  small  coopera3ves  that  wish  to  merge   !   help  new  coopera3ves  to  start  

Essen3al business  principles  

!   Propor3onality !   Service  at  cost   !   Self-­‐financing  

Propor3onality !   In  New  Zealand,  coopera3ves  allocate   !   revenues   !   costs  of  transac3on   !   member  rights  and  du3es   !   capitalisa3on   !   liabili3es   !   vo3ng  rights   •  according  to  how  much  business  the  member   does  with  the  coopera3ve  

Service at  cost  

!   Except when  dealing  with  members,  New  Zealand  coopera3ves   akempt  to  minimise  costs  and  maximise  revenue   !   Dealing  with  members  though,  a  coopera3ve  either   !   sells  to  members  for  as  likle  as  possible,  with  a  small  margin,  or   !   buys  from  members  for  as  high  a  price  as  possible   !   Coopera3ves  are  profit  conscious  not  profit  maximising  

Self financing  

!   To survive  as  a  coopera3ve,  the  business  needs  to  be  self  financing   !   Equity  has  to  come  from  transac3ng  members   !   New  Zealand  law  allows  for  up  to  40%  outside  investors  —  DON T  DO  IT!   !   Retained  earnings  in  a  general  reserve  or  in  member  accounts  

Coopera3ve principles  

!   Keep to  your  coopera3ve  principles  and   the  co-­‐op  will  thrive   !   Forget  your  principles  and  the  co-­‐op  will   disappear  eventually   !   Members  need  to  work  hard  to  keep  the   coopera3ve  as  a  coopera3ve  

Interna3onal Year  of  Coopera3ves  

!   Opportunity for  governments  to  strengthen   an  enabling  environment   !   NZdotCoop  asked  member  businesses  for     sponsorship   !   Launch  at  Parliament  a  tremendous  success   !   Research  project  looking  at  the  contribu3on  of  coopera3ves  to  the  economy   !   Briefing  pack,  media  kit,  fact  sheets,  research  results  and  more  

Educa3on campaign  

!   Young people  don t  appreciate  what  a  coopera3ve  can  do  for  them   !   Newspapers  +  the  radio  +  the  internet   !  +  +  +   !   New  Zealand  Law  Society  +  New  Zealand  Ins3tute  of  Chartered  Accountants  

Interna3onal Conference   !   Two  panel  sessions:  banking  and   agriculture   !   Professional  development  sec3on   !   Coopera3ve  research  sessions   !   Register  through  a  website  at   !   Par3cipants  from  Australia,   Belgium,  Canada,  Egypt,  India,   The  Netherlands,  New  Zealand,   the  USA  ...  and  more  …  people   from  Indonesia?  

Coopera3ves contribute  

!   Coopera3ves make  a  HUGE  contribu3on  to  the  New  Zealand  economy   !   They  do  so  because  they  are   !   Responsive   !   Responsible   !   Innova3ve  and  proac3ve  


!   Coopera3ves are  responsive  to  members  and  the   market   !   There  are  no  government  subsidies,  nor  any  protec3on   !   Ac3vely  listening  to  what  members  want   !   Offering  effec3ve  leadership   !   Ahead  of  the  market  with  quality  products  


!   Coopera3ves are  responsible  to  local   interests   !   People  are  beker  served  in  a  global   economy  by  a  local  coopera3ve  than  by   global  capitalism  

Innova3ve and  proac3ve  

!   Coopera3ves need  to  be  innova3ng  constantly   !   Fonterra,  the  Dairy  Goat  Coopera3ve,  Silver  Fern   Farms  –  all  have  significant  research  budgets   !   The  Coopera3ve  Bank  was  the  first  in  New  Zealand  to  offer  telephone   banking  and  cellphone  text  banking  

Final thought  

!   Your farm  is  your  business   !   Your  coopera3ve  is  your  other  business  

Thank you  

NZdotCoop presentation at DEKOPIN (Indonesian Cooperative Council)  

Executive Director of NZdotCoop Ramsey Margolis gave this presentation on 23 May at Mataram on the Indonesian island of Lombok to the Indone...