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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)