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Re: Enabling rural cooperatives and producer organizations to thrive as sustainable business enterprises

Janos Juhasz Hungary

Just a short note on Peter Steele’s latest contribution. Peter raises the question why nobody shifts the debate to larger-scale cooperatives or better to say cooperative companies. The issue of “thinking big” is, no doubt, valid and important. In addition to Fonterra New Zealand a long list of successful large cooperative structures could be given by each of us mainly in the US and Western Europe and in practically any sector of the economy. There is only one thing Peter seems to forget about: All those large-scale cooperatives started small and it took them many years of struggle and development to become large and strong. Cooperatives’ institution building is typically bottom-up. Normally local cooperatives are organized to meet local economic needs. Nevertheless, the importance and need for various forms of inter-cooperative associations, the establishment of secondary and tertiary cooperatives or even international cooperative organizations have always been high on the cooperative agenda precisely for reasons of enhanced business efficiency and competitiveness. In other words, cooperators do think big, but they see large-scale cooperatives as a means and not as a goal in itself. The question, therefore, is whether cooperatives can skip some phases of development and come into being as large-scale organizations from the very outset. Large-scale organizations can, of course, be established in both the public and the private sectors and you may even call them cooperatives, as it was the case in the CEE countries under the centrally planned system. But this is a top-down exercise by definition. What would then ensure that the organizations created that way are owned and controlled by their members which are basic requirements for a cooperative? Who would manage them if not the few privileged having power and management skills in, say, “a poorly managed continent”? To what extent and in what ways would they develop the technical, entrepreneurial and management skills of the small-scale, sometimes illiterate, producers?

All the above, of course, is not to say that cooperatives are a panacea for and exclusive means of agricultural and rural development. Other organizations, private or public, may also prove efficient and successful, but I think that is a theme for another discussion.

Janos Juhasz
Budapest, Hungary