Cooperation experiences and challenges in Germany!
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1 Cooperation experiences and challenges in Germany! Guido Seedler Conference: International experiences and success stories of cooperatives Tartu, 17th November 2017
2 Agenda 1. Challenges for the agricultural business in the future 2. Cooperatives and the German Raiffeisen Federation 3. Benefits for the farmers 2
3 Challenges for the farm-supply-market Agriculture / Agricultural trading: Farmers / traders are part of an international value-added chain. have to operate in a free market environment, price volatilities will increase further decline in number of companies as well as in number of market partners Company size and diversity will increase to compensate volatilities 3
4 Challenges for the farm-supply-market Farm size in Germany from to less than ha 350, , , , , ,000 50,000 0 DRV 2017 Source: Situationsbericht (DBV), p. 74 4
5 Challenges for the farm-supply-market Politics: Minor influence on global markets, agricultural policy can only follow and monitor Political influence is not based on market power but on significance on the internet Images and emotions are in main focus 5
6 Challenges for the farm-supply-market Society: Lives mainly in urban areas with little contact to modern agriculture Growing social demands: leisure orientation safety orientation Increase in poor nutrition Open-minded towards media and digital life 6
7 Challenges for the farm-supply-market Media: are in a state of radical changes great economical pressure leads to bad quality in reporting sensational news and scandals are easier to sell than facts and figures 7
8 Challenges for the agricultural business urbanisation critical consumer progressing structural changes Consumer protection policy liberal agricultural market Agribusiness growing media interest 8
9 Challenges for the farm-supply-market To be prepared for future challenges in a globalised and competitive agricultural market it is essential for cooperatives to secure their market position! In Germany agricultural cooperatives look back on a long and successful history. 9
10 The Founding Fathers Friedrich Wilhelm Raiffeisen & Hermann Schulze-Delitzsch 10
11 Success through cooperation Self-help Selfgovernment Selfresponsibility 11
12 Cooperatives as business model / legal structure Cooperatives as self-help organisations Members act as investors and service recipients Members assume responsibility and get involved Members determine the strategy of the company Business company and partnership No capital company Priority: advancement of members Members retain economical independence Target: improvement of competitiveness and market access 12
13 The Raiffeisen Federation (DRV) National federation and head of 2,200 rural commodity and service cooperatives, annual turnover approx. 61 billion EUR Cross-divisional association Production, collection, processing and marketing of the entire range of vegetable and animal products Trading with agricultural products Mission Advancement of the cooperative system Representation of members economical and political interests Consulting and assistance (e.g. model statutes, implementation of legal regulations) Platform for the exchange of experiences Lobbywork: e.g. European agricultural policy, free trade agreements, commodity market / export focus / quality assurance 13
14 German Raiffeisen Federation (Deutscher Raiffeisenverband e.v. DRV) 6 regional associations 5 central supply and marketing cooperatives Raiffeisen-Cooperatives 109 Credit cooperatives with supply and marketing Commodity and service cooperatives 282 Supply and marketing 216 Dairies 85 Livestock and meat 85 Fruit, vegetable, gardening 165 Wine-growers 509 Other Raiffeisen-Cooperatives 730 farm cooperatives (primary production) 14
15 Development of Raiffeisen-Cooperatives: Total Number and Turnover (in billion EUR) 25,000 80,000 20,000 67,5* 66,4* 61,7* 60,1* 70,000 60,000 15,000 10,000 5, ,753 13,764 3,5 17,5 39,0 5,199 Amount Turnover 2,385 2,316 2, ,000 40,000 30,000 20,000 10,000 0 * including sales proceeds of subsidiaries and holdings of the cooperatives Source: DRV; as per
16 Market significance of Raiffeisen-Cooperatives 66 % of German milk processing 50 % of German grain trade 45 % of German fruit and vegetable marketing 33 % of German livestock trade 30 % of German wine harvest 16
17 Farm cooperatives: A story of success At the time of the German reunification there were about agricultural cooperatives (Landwirtschaftliche Produktionsgenossenschaften - LPG) located on the territory of the former GDR. These cooperatives were founded between 1952 and 1961 by compulsory merger of agricultural businesses. After the reunification they were legally bound to either change the legal structure into a Western German one or to close the company were converted into corporate entities, of them into agricultural cooperatives with primary production (Agrargenossenschaften). Due to mergers and further conversions there are about 900 cooperatives today. 17
18 Legal forms in former East and West Germany Farms in former East Germany family farms Partnerships Corporate bodies 6 Million ha farmland farms family farms partnerships corporate bodies Limited society 900 cooperatives 100 corporations average farm size: 250 ha DRV 2017 Source: Situationsbericht (DBV), p
19 Benefits for members of farm cooperatives Three legal relationships between farmer and cooperative: Ownership: The farmer is joint owner of the cooperative and can exert influence in business decisions. Employment relationship: The farmer is employee of the cooperative with salary entitlement, holiday entitlement and paid sick leave. Lessor and tenant relationship: The farmer is free to lease the farmland to the cooperative or to a third party and will receive the rental payment. The farmer can join or leave the cooperative by free decision at any time! 19
20 Benefits for members of Raiffeisen cooperatives Membership in cooperatives strengthens one s own market position. larger quantities ensure better prices in purchase and sale sales opportunities in new markets (export) new marketing systems (e.g. grain: rewarding storage, pre-contract) protects effectively against risks. professional storage and quality management risk management to reduce price volatility (commodity futures exchanges) allows a greater say in the company, because there is not only a customer relationship but an owner relationship, too. cash back means political representation by cooperative organisations. regional, national, throughout Europe 20
21 Raiffeisen cooperatives To be a member of a cooperative strengthens your position in the market! 21
22 RA Guido Seedler Warenwirtschaft Deutscher Raiffeisenverband e.v. Pariser Platz Berlin Telefon Telefax seedler@drv.raiffeisen.de 22
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