The term co-operation is widely used in modern forestry parlance but a variety of meanings are attached to it. For instance, United States legislation making forest fire prevention a-combined responsibility of the Federal and State authorities and private owners, speaks of this as co-operation between those bodies and individuals. On the other hand, there are many groups of individuals or public bodies that do not call themselves co-operatives but associations, syndicates, etc., although they present, in fact, all the features of co-operation as it is understood in this section.
A forest co-operative, then, can be defined as a grouping of persons wishing to collaborate to their mutual advantage in order to cope with tasks or undertake operations which a single forest owner would find difficult or impossible to attack with his own resources. It may be added that a further object of the forest co-operative is to furnish direct services to its members in the form of financial aid or practical assistance.
The present law relating to associations of forest owners in Japan lays down that:
"the object of these associations, and of the federations of the same, is to promote, through the co-operative organization of such owners, the efficiency of forest management and increased forest output, as well as an improvement in the economic and social conditions of the forest owners..."
An act of 1 March 1934 adopted in China and relating to co-operatives in general, defined a co-operative as:
"an organization set up on a legal basis for the mutual advantage of its members, with the purpose of undertaking business which will benefit all parties and raise their standard of living."
CO-OPERATIVES AND "SOCIÉTÉS FORESTIÈRES"
The members of a co-operative as a rule invest in the co-operative a certain capital, in the form of shares or subscriptions, to run the organization. Thus far, the co-operative is somewhat similar to a joint-stock company of the type discussed in an earlier section.
There is, however, in another respect a considerable difference between them. In the case of the co-operative, the investment of capital and the highest possible rate of interest thereon are not the essential elements that make the co-operative valuable for its members. The shares in a joint-stock company can usually be freely sold and any individual can, as a rule, possess as large a number as he is able to obtain. On the contrary, the ownership of shares in a forest co-operative is bound up with the ownership of forest land or of a forest enterprise; the number of shares possessed by each member is usually determined by the size of his forest property, and his holding in the co-operative cannot be sold as a normal share can be; and its transference to another person is subject to strict regulations. The distribution of the co-operative's profits is also governed by different rules from those of the joint-stock company; it is based not so much on the member's holding as upon his activities in the running of the co-operative's business and his contribution to its profits. Finally, a forest co-operative is open to all those who possess the qualification required by its articles (e.g., that of being a forest owner), and who wish to profit by the advantages which that co-operative offers. A member may receive one share or several, the number of such shares, generally speaking, not being limited. The joint-stock company, on the contrary, has a fixed number of shares, and a new shareholder can acquire one only by buying from another shareholder who agrees to sell.
It must be admitted that, under some legal systems, some of the features which we have just mentioned as being characteristic of the co-operative are also found in certain kinds of joint-stock companies. Swiss law distinguishes between them chiefly by not allowing co-operative associations to carry over a profit. If the year's trading shows a surplus, this must be shared among members in the following year. It will be seen, however, that other legal systems permit or require the building up of reserves. The Swiss distinction cannot therefore be regarded as generally applicable.
There is, however, a more fundamental difference: in co-operatives it is the parties who are merged, not the capital (whether this capital be in money or in material property). Moreover, the benefits of a joint-stock company are bound up with its capital, whereas those of a co-operative lie in an exchange of goods and services.
CO-OPERATIVES AND FORESTRY ASSOCIATIONS
As has been seen, the distinction between forest co-operatives and associations of the type dealt with in the preceding section is perhaps less clear-cut. This is because such associations sometimes give their members certain services identical with those rendered by co-operatives.
The difference emerges fairly clearly, however, if it is realized that helping each member to achieve more profitable management of his property or enterprise and furnishing him with efficient services is the essential purpose of a co-operative. Co-operatives, therefore, enter directly into the personal business of each of their members. The contract which binds the members of a forest co-operative includes rules laid down by national legislation relating generally to the organization of co-operatives, or rules established by the partners themselves. In any case, that contract is really a mandate which each member gives to the co-operative to undertake in his name the management of a given part of his personal business. Moreover, the co-operator himself usually has clearly defined obligations to the co-operative.
It is clear that forest co-operatives may, within the limits of the definitions given earlier, take very varied forms.
Wherever the internal sectors of a country show profound differences - physical, economic, social or historical - it is a distinct advantage if the law sanctions the widest possible variety and flexibility in the forms which co-operatives may take: for so they can better be adapted to regional differences.
SYSTEMS OF CLASSIFICATION
The provinces of the present German Federal Republic have never (save from 1933 to 1945) been subject to a uniform and highly centralized authority, and the number of units constituting the territory has continually varied: as a result, the forms of forest co-operatives are highly varied. If, therefore, it is desired to reduce to some order all the possible varieties of co-operative which might be envisaged by modern legislation, the German authorities might well be followed in the matter.
M. Endres2 divides co-operatives into two main categories:
2 M. Endres, Handbuch der Forstpolitik, 2. neubearbeitete Auflage - Berlin, Julius Springer Verlag, 1922.
1. Ownership co-operatives
These, in the strictest interpretation, are the same as those examined in Chapter II. It is, however, easy to imagine less rigid forms in which, for instance, while the forests are managed as a unified whole, the separate constituent areas remain individual and, under certain circumstances, may be withdrawn from the co-operative. One might also visualize that the owner of each separate area might be permitted to dispose of all the timber standing at the time the co-operative is formed, seeing that the ownership co-operative is usually the form adopted for reforestation purposes in which the landowners contribute bare land to the joint organization, the greater part of the capital required for the reforestation operations being often supplied from public funds.
2. Economic co-operatives
In such co-operatives, which form the chief subject of this chapter, each proprietor retains full ownership over his land and its cover. The collectivity confines itself to the development, or to phases of the development, of those elements.
Endres makes a distinction between restricted and full co-operatives. In the restricted co-operative, the responsibility for treating his own woodlands is left with each owner, and in this case the co-operative may be referred to, according to its purpose, as a co-operative for protection, supervision, administration, extraction, or management, the latter being the form which is most strictly binding on the parties. In the full co-operative, on the other hand, the whole of the woodlands grouped in the co-operative are managed according to a common working plan. Each co-operator receives from the co-operative's revenue a return in proportion to the capital value of his land and its forest; the woods, however, remain his property, and he takes personal care of the operations carried out upon his property.
This last form of co-operative is, therefore, very similar to the ownership co-operative.
Another German authority, R. Mascher3 has worked out a much more complex classification for co-operatives, more from the legal standpoint.
3 Rudolf Mascher, Die Zusammenschlüsse im kleinen Waldbesitz Nordwestdeutschlands, ihre rechtliche und forstrechtliche Gestaltung. Bremen-Horn, Walter Dorn Verlag, 1954.
1. Associations formed under private contract
(a) Associations not having juristic status. Loose in form, usually without contractual obligations, they can nevertheless - in certain conditions and subject to the inclusion of certain clauses in their articles - stake legal claims in civil courts in restricted cases.
(b) Associations having juristic status. Among these there is a further distinction between profit-making associations which have this legal status under the terms of their constitution, and nonprofit-making associations which acquire the status by being registered. Both can sue in a civil action. Such non-profit-making associations are the Niedersachsen Forstverbände whose sole aim is to help their members manage their forests efficiently.
(c) Partnership associations. These owe their legal basis in Germany to an act of 1869 dealing with profit-making companies. These registered associations have a juristic status and are distinguished by their being commercial in character and by their activities not being necessarily confined only to fulfilling the needs of their members. They may be of limited or of unlimited liability.
The only forestry association of the third type in Germany is, as far as is known, the Waldmarkschaft Uelzen (Hanover). It is, however, a large one; in 1951, its members included 1,776 landowners holding 32,706 hectares distributed over 190 parishes. Originally a tree planting association, this co-operative gives varied services to its members:
(a) the direction of silvicultural operations under the supervision of officials assigned to eleven forestry districts,
(b) carrying out fellings and silvicultural treatment,
(c) organization of measures against fire and diseases,
(d) collective marketing of timber from the forests,
(e) buying and selling machinery, tools and equipment.
Despite the setback due to the war, the results achieved by this body are notable; from 1936 to 1951, the Waldmarkschaft afforested, with very little State help (less than 5 percent of outlay) about 10,000 hectares of land, and timber output has greatly increased.
2. Associations formed under public law
These are associations of which the constitution, membership and legal status are governed by public law, while the administration is directly controlled by the State. They are of three kinds:
(a) Ownership co-operatives. The origins of these groups go back in history to the early Allmenden similar to corporation forests in other European countries or else derived from associations which have evolved gradually as a result of a variety of circumstances. The largest of these German ownership co-operatives, for instance, the Murgschifferschaft, with an area of 5,011 hectares, began in the fourteenth century as an association of heads of forest extraction and floating enterprises who bought forests or, acquiring long-term rights on forest lands became, through various processes, owners of those lands. Although the State now holds 55 percent of the shares in the association and undertakes its practical administration, the cooperative is managed by a board of five directors, and its highest authority is the general assembly of its members.
(b) Full economic co-operatives. Ownership rights of members over their lands and forests remain intact, whereas management is in the hands of the collectivity, revenues being shared among the members of the association. This form of co-operative, in north Germany at least, is based upon a law dating from 1875.
(c) Restricted economic comparatives. Members not only retain the ownership of land and forest but may also dispose as they wish of the revenues from their individual forests. These co-operatives also owe their constitution to the terms of the 1875 law, in addition to a 1943 regulation on forestry associations.
These two systems of classification of co-operatives, although framed to suit conditions in what is today the Federal German Republic, would appear to cover fairly adequately all forms of forest co-operatives likely to be encountered: naturally, some forms tend to be predominant in certain countries, and others may not occur at all, depending on national legislation and historical evolution.
This is historically noticeable in Germany. In Bavaria, for instance, where there were 75 co-operatives in 1954, aggregating 30,000 members and 125,000 hectares of forest, almost all associations were of the looser kind. In Baden, on the contrary, all the 55 forest co-operatives aggregating a total of 9,413 hectares were ownership co-operatives. In north-west Germany the most varied forms existed side by side.
A survey of these German co-operatives elucidates an interesting fact: the individual co-operative - and the ownership-co-operative in particular - often covers a very small area, sometimes less than 100 hectares, which would elsewhere be regarded as small for a forest unit. Another fact, already mentioned but which must be emphasized, is that, apart from the former Allmenden, the formation of co-operatives seems to have been, and still seems to be, quite easy when the aim is the afforestation of bare lands. The group of Forstverbände of the northern part of Lower Saxony, which together make one of the largest German associations, is a case in point. Constituted for the purpose of reforesting the Lüneburg heathlands, they aggregated, in 1953, 8,500 owners and 151,000 hectares, the average area in each association being 3,800 hectares. Here, however, the bodies are only economic and not ownership co-operatives.
AN EXCEPTIONAL EXAMPLE
However detailed a system of classification is adopted, it is difficult to make allowances for all the varieties of co-operative which may be in existence. One example that does not fit neatly is enlarged upon here because it suggests a form of co-operative that might profitably be used in tropical countries with some necessary modifications.
The Kangra District in the Punjab (India) covers an area of about 650,000 hectares, half of it forested. The extremely rugged locale is dominated by the Dhoula-Dar mountain chain which rises to 4,500 meters. The district is relatively densely populated with about 385 inhabitants to the square kilometer, living in very small villages scattered throughout the forests. They are chiefly engaged in agriculture but the area of cultivated land available does not suffice for their sustenance, so that stock-raising has increased out of all proportion to the available grazing-land. Over-stocking, aggravated by nomad practices, has caused serious damage to the soil and to the forests which, however, include valuable stands of conifers.
Before the advent of the British a feudal system prevailed, the inhabitants of the villages enjoying all the products of the forest land without, however, owning the land or its vegetative cover. After British rule started, measures were introduced to protect the forests and to promote the spread of tea-plantations in the district. The forests - leaving aside a very small area of private forests - were divided into four categories. The smallest sector, the Ban Muafi forests, made up much less than 1 percent of the total area. It included forest lands belonging to village communities, and the Government, which managed them, could not, however, forbid grazing in the forests without the consent of the owners. Next came the "reserved" forests (2.5 percent of the total) on which lands and cover belonged to the State. The greater part of these consisted of "protected" forests (73 percent) and "unclassified" forests (24 percent) on which the land belonged to the inhabitants and the trees to the Government; the chief difference between the two kinds of forest being that in the former the Government could prohibit grazing, whereas in the latter it could not do so without the consent of the local people. In all forests, most of the villagers had timber-usage rights.
Abuse by overcutting and overgrazing ended in terrible catastrophes which forced the Government, in 1939, to seek the co-operation of the villagers in establishing effective control of cutting and grazing practices in these forests. It was decided to authorize and encourage the setting up of co-operatives within the territory (mauza) of each village. These co-operatives were to be entrusted with the management of any Governmental forests on their territory on condition that the inhabitants agreed to subject all forests on that territory to a regular management plan.
The scheme now covers reserved, protected, unclassified and Ban-Muafi forests together, and private forests on the territory can also be covered if the owners so desire. The forests are all administered for the benefit of the community, both for people enjoying usage-rights and those who do not. The management plans, including the defining of prohibited areas, are laid down by forestry officers of the Kangra Forest Societies Division, a branch of the State Forest Service specially created for the purpose and for giving technical assistance to the villagers.
A society can only be set up with the assent of three-quarters of those enjoying usage rights. It is officially registered, and is responsible for forest protection and for improvement or other operations to be carried out. It appoints its own forest wardens. The Government gives financial aid to those societies unable to meet all charges out of forest revenue. It retains ownership rights over the soil and the trees or over both according to the particular case, and also reserves the right to extract resin from the trees, since tapping formerly caused severe damage. But all forest revenues, whether from the sale of timber or of resin, or from grazing rents, are passed back to the society concerned.
After some hesitancy on the part of the local inhabitants, the number of societies grew rapidly: 70 were set up between 1941 and 1945, aggregating 33,000 hectares. During this period it had not been possible to supply more than 40 societies with management plans, but over these 40 mauzas about 6,000 hectares had been successfully closed to grazing, as against 700 under the old system.
Remarkable results have been achieved. Natural regeneration has made great progress. On forest grazing lands, the cover of forage plants has improved considerably. Several tree nurseries have been set up by the Government. Apart from the fairly large revenues paid over to the societies (84,000 rupees for the financial year 1944-45), there have been wider possibilities for employment in the forests in course of rehabilitation, the assurance of protection for the villages and cultivated lands, and the improvement of grazing, meaning better feeding for animals and better nutrition for the people.
The peculiar nature of co-operatives makes it incumbent that certain legal restrictions be placed upon them to protect individual members. On the other hand, co-operatives are such a valuable instrument in the economic development of small private forests, that legislation should also be such as to encourage their formation.
COMPULSORY AND VOLUNTARY CO-OPERATION
There may be a strong temptation to make the formation of co-operatives compulsory. In this connection, the history of the development of forest co-operatives in Japan is instructive.
In that country, the emphasis in the formation of forestry associations has always been laid on common action for the efficient management of forests belonging to members of the association, on protection against fire and against destructive cutting, on replanting, and on improvement cuttings. Certain associations with this for purpose, and usually composed of neighboring forest owners in part of a parish, were in existence long before the first legislation on forest co-operatives was passed in 1907. Side by side with these, and often of much earlier origin, there were, in some regions, associations of loggers and timber industries. This movement saw its greatest development between 1880 and 1905. Then the associations were simply authorized by the Ministry of Agriculture on the advice of the governor of a prefecture, who was responsible for seeing that the associations' internal statutes and regulations were fair. There was already a distinct tendency to make the associations compulsory, at least under certain circumstances.
The 1907 Act relating to forestry associations was, however, liberal in character and intended to encourage the establishment of as wide a number of associations as possible: it provided for their constitution in the most varied branches of forestry, from the common management of all forests belonging to association members to the execution of special works, the sale of products or the extraction or processing of timber. This legislation fostered a rapid increase in the number of associations and, from 1927 onwards, about 150 new bodies were formed each year.
Alarmed at the increased rate of felling and fearing that the already depleted forests could not deal with the large demand for timber, the Government established strict control over felling operations between the years 1930-35. This control was further strengthened in 1936 when cotton imports from India were suspended and the manufacture of artificial fibers in Japan was considerably extended, requiring an increased output of woodpulp of about 400,000 tons.
Forest legislation was therefore revised in 1939, with the aim of stimulating timber production while still insisting on sound silvicultural methods. Given the country's forest-ownership pattern, this could only be achieved by concentrating control in the hands of a central government forest service. It was absolutely necessary, however, to obtain the co-operation of local governments, towns, villages and, lastly, forestry associations. It was a short step from this to make the forestry association legally the final link in a bureaucratic chain. The association was no longer to be solely for the benefit of its members; it became an organ of control, and hence the formation of associations had to be compulsory. The 1939 law, in fact, provided for three possibilities:
1. voluntary association;
2. a formal association within a given territory, adherence becoming compulsory once two-thirds of the interested parties, holding at least two-thirds of the forest area concerned, decide to set up an association;
3. compulsory association by order of the local governor.
In practice, results were poor. Much of the lack of success was probably due to the excessive control made necessary by the then state of war. But if the policy adopted by a Government involves a too strict control by government departments over private forests, and if the co-operative's main function is to serve as an instrument of that control, then it loses attraction for the forest owner.
The organs of control created by the Japanese Government before the last war have since been dissolved; and the forest co-operatives reorganized on a liberal basis in accordance with the new forest legislation of 1951. This has not meant, however, that the State no longer exercises strict control over cutting in private forests: quite the reverse. What it does mean is that the formation of co-operatives is no longer compulsory, and can no longer be made accessory to that control.
The principle of voluntary constitution is in general observed in other countries where forest co-operatives have been developed; although there are certain kinds of co-operative created for special purposes which are obligatory or semi-compulsory. For instance, associations for floating timber down rivers are compulsory in northern European countries, arising from the fact that some semi-official institutions are involved in this kind of operation. In the same countries, associations for the building or maintenance of forest roads can be made compulsory.
In other countries, particular associations formed for carrying out special projects like road-building and drainage can be made compulsory for all owners within a given area, if a certain proportion of owners request that such a step be taken.
REGULATIONS COVERING CO-OPERATIVES
Legislation relating to co-operatives, as has already been said, includes safeguards for the interests of the co-operators.
One important question is: What are the members' financial liabilities if the association should sustain losses? In Germany, for instance, the original laws provided only for the creation of unlimited liability associations, but an amendment in 1889 provided for the constitution of limited liability associations. In the former case, individual liability of members extended to the sum total of their properties; afterwards, their liability was restricted to a multiple of their total share-holding in the association. The Austrian law of 1873 recognized from the start the principle that liability could be either limited or unlimited. In 1918, the law as it related to insolvent associations and members' liabilities was revised in order to protect members against creditors, and the associations were authorized, in the case of insolvency, to arrive at an amicable settlement with their creditors out of court. In 1920, legal sanction was even given to associations without liability but not in the fields of agriculture or forestry.
Generally speaking, the liabilities of the members of forest co-operatives are limited. In northern European countries they are even limited only to the number of shares in the co-operative held by members, although there are certain exceptions.
Naming the association
The Austrian law requires that the purpose of co-operatives and associations must be set out in their articles, and must clearly emerge from their titles. In this way, intending members shall not be misled, and any tax exemptions applicable to such associations can be easily determined.
The law also lays down generally the qualifications for membership of an association. Regarding co-operatives, and forest co-operatives in particular, the rule is that membership is open to all, subject to any restrictions specified in the articles (themselves subject to legal approval). The latest Swedish legislation particularly emphasizes the principle of unfettered membership and points out that an economic co-operative cannot refuse a request for membership unless for some special reason connected with the kinds of activities or aims pursued by the company, or other reasons of a similar kind.
Current Japanese legislation goes more thoroughly into this matter. It must be pointed out, however, that it distinguishes two kinds of forest owners' associations. The first is the true co-operative in the sense adopted in this essay and which Japanese law refers to as a facilities association. Its object is:
"to help each member to devise a scheme for administering or managing his forest and to give it correct treatment; the association may accept from a member a mandate whereby the association itself undertakes the management, or both the management and treatment, of that forest, and all activities accessory thereto."
The second type, called a production association, is formed for the specific purpose of managing a forest (over which the association therefore exerts genuine property rights or at least usufruct rights) and of conducting operations accessory to this purpose. Membership of the "facilities association" is open, subject to restrictive clauses in the articles, to:
2. all other persons whose business is connected with the forest and who are held capable of using the facilities offered by the association concerned."
This second category of members would probably apply to small forest operators, charcoal manufacturers, nurserymen, owners of small sawmills, etc. The law, however, excludes this second class of persons from voting rights in the general assembly of an association and from being elected as officers. Membership of the production associations is open to:
"1. any individual living in the area covered by the association;
2. any individual making an investment in kind in the shape of a forest situated in the association's area or of any right he holds in such a forest."
It will be seen that this second form of association bears a closer resemblance to the associations examined in Chapter II than to the true co-operatives, for the object is the administration of a forested area contributed by its members or which the association itself has been enabled to buy and develop, owing to the investments of persons who, though residing in the locality, are not necessarily forest owners. The law, however, places limitations upon the formation of this second kind of association, for it requires that at least one-third of the persons living in the association's area, and engaged in the pursuits with which the association has to do, must agree to joining it before the association can be formed. Moreover at least two-thirds of the members of the association must be engaged full time in the pursuits with which the association is concerned. These two provisions are obviously designed, first, to guarantee that the association shall have an adequate forest area to administer and will not clash with other forest owners or associations of forest owners; and secondly, to ensure that the association will not be dominated by purely speculative interests.
It is conceivable that the articles of an association might exclude from membership owners whose interests were too much at variance with those of the average member. There is no doubt, for instance, that the big forest owner cannot have the same motives for taking part in a co-operative as the small owner - even though his interests may not be directly opposed to theirs. In Austria, it has been found that the pressure exercised by the big owners has often had a deadening effect. In the United Kingdom, on the contrary, it is considered desirable for the big owners to join and take an active part.
Again, there are some professional persons who might seem undesirable as members of a co-operative - a logging contractor, for instance, is perhaps out of place in an association whose activities cover just this field. Japanese law, in fact, forbids membership to such persons, and even to legal representatives of another corporate body engaged in the same field. In the United Kingdom, on the contrary, such persons are usually regarded as useful assets; it is held that the prime object of an association is not to enter into competition with commercial and industrial undertakings, but to lower costs by efficient methods of production, a matter which is of interest to all members.
Resources, outlay and profits
The resources of a forestry association come initially mainly from the-fees paid in by members, these fees being fixed, as a rule, by the articles of the association. Sometimes, however, the law carries stipulations in this respect, as it does far more commonly in regard to the distribution of the profits made by the association once it is functioning.
On this point, attention is drawn to the system now in use in Finland. In pursuance of the Forestry Association Act of 27 November 1950 and the order relating to forestry associations of 13 July 1951, every forest owner is obliged to subscribe a certain sum to the local forestry association. He then automatically becomes a member and can use the services available to members. The amount of the contribution is fixed each year by the association itself, but it must lie between 2 and 6 percent of the value of the parish rates and taxes. The only persons exempt from contribution are the owners of forests with a yearly output below 20 cubic meters, but these too may voluntarily become members by paying the appropriate contribution. The State itself must pay the contribution if it holds forest land in the association's territory, but the State contribution is only a quarter of the normal fee, and the same applies to owners who undertake to manage their own forests themselves. If they wish to become active members of the association, however, they must pay the full contribution.
The parish authority collects the contributions and keeps the accounts, and after deducting 2 percent for its own expenses, pays over the balance to the association. Where there is no local association, contributions are still levied on all the owners concerned but they are paid to the District Forestry Board.
The Finnish system is, therefore, to a certain degree tantamount to a compulsion to join, or at least contribute to the cost of running an association or co-operative. Although the measure seems to be applied to forest co-operatives only in Finland, the same principle obtains elsewhere. In France, for instance, it is applied in the case of Chambers of Agriculture, which are partly run through contributions proportionate to the land tax and payable even by owners who do not use - at any rate directly - the Chamber's services.
National legislation usually includes provisions relating to the profits made by co-operative associations. Profits are not, as a rule, distributed in proportion to shares held but to the business done by each member through the agency of the co-operative. There are, however, many cases where co-operatives do business related to their normal activities with persons other than their own members. Even apart from this, the commission, however small, received by the association on each business deal, may result in an appreciable profit after deducting the expenses. Such profit must then be distributed among members according to their shareholding; but the law often requires that the financial position of associations should be strengthened by transferring part of the profits to a reserve fund. In Finland, at least 10 percent of annual profits; in Sweden, at least 5 percent, must be so set aside. In Japan, at least 5 percent must be reserved from one year to the next to pay chiefly for purely silvicultural operations.
The law usually requires the public authorities to keep some check upon the financial affairs of co-operatives, as well as to see that their activities are conducted generally in keeping with the law and their own articles. In Japan, administrative authorities are empowered to demand from associations details of their membership, officers, employees, turnover, and any other matters pertinent to the proper conduct of business.
In Austria, inspection of the associations every two years has been compulsory by law since 1903. The law names three authorities which may carry out the inspection: the inspecting institutes (or unions), the federal authorities, and the Land (or province). In 1934, permission to form an association was made conditional upon the association's membership in an inspecting union recognized by the State, and in 1936 any existing associations not belonging to one of those unions were required to make a request for membership.
Special regulations are usually applied to credit, mutual assurance associations, etc., their financial activities being more complex.
In this connection, Japanese law again differs in having a provision which approximates some kinds of forest associations to joint-stock companies. It is obvious that the annual profits of production associations must be distributed according to the number of shares held by each member. The dividend on each share, however, is limited to 10 percent, and any surplus over and above this is distributed in accordance with the activities of each member. Moreover, even facilities associations can invite their members to invest in the association by buying shares which cannot be transferred without the association's approval, and then only to other members of the association. These associations are known as share associations. The financial liability of any member is limited to his share-holding, and if he should be expelled from the association, he can claim full compensation. When a facilities association is also a share association, the articles of foundation can lay down how the profit shall be distributed, but the annual dividend must not exceed 5 percent of the total investment of each member.
Matters of the constitution and management of co-operatives are also covered, at least in outline, by legislation.
The minimum number of persons entitled to form a forest co-operative is usually fixed. In Sweden, for example, it is five, but may be only three if those persons themselves represent societies. The number in Japan is ten in the case of facilities associations, and five in that of "production associations." Japanese law even goes into detail regarding the procedure to be adopted for meetings of founder members, for the drafting of the association's articles, and for the holding of the first general meeting to approve the draft.
The law rules what the articles must include; the precise objects of the association, its style and title. its office-address, the geographical area it is intended to cover, its duration (if that is limited), the conditions governing the admission and expulsion of members, and the procedure whereby the organization may be dissolved.
The number of shares created, their value, and, where necessary, the maximum holding permitted to a single member, must be stated; how the association's accounts are to be kept and audited, how profits shall be calculated and reserves determined, the conditions governing the distribution of profits and losses, and the nature and extent of the liabilities of the members.
Finally the articles must state how and by whom the association shall be managed. As a rule, a general meeting of members takes overall decisions and decides policy. The articles must state the conditions under which general meetings shall be called, who may vote and how decisions are to be taken. Direct management must, however, be in the hands of a board of directors, and the articles must specify how these directors shall be appointed and their precise duties.
These various points are not, of course, usually left entirely to the association's discretion; in other words, while the association may draw up its own articles, it must frame them within certain limits.
For example, the law sometimes specifies members' voting rights in an association's general assembly. It may also lay down the matters which must be decided by the general assembly, defining the powers of the assembly and of the board of directors; it may specify the minimum of votes needed to carry a motion, as well as the quorum necessary to make a decision valid; it may reserve to a general assembly the election of directors, and limit the term of their appointment; it may also cover the appointment of auditors, and the fees and duties of both directors and auditors.
Finally, the law may define the authorities competent to approve an association's articles. Under Austrian law, the articles and any changes thereto must be entered in a register of associations kept by the Chamber of Commerce. Japanese law sets out in detail the procedure for submitting the articles for official approval and for notifying the interested parties that approval has been given.
The small forest-owner who joins a co-operative is most attracted by the short-term financial benefits he may derive by selling his timber under more favorable conditions, by being able to buy the material and equipment he needs at lower prices, or to borrow money for forest operations at cheaper rates. Hence forest cooperatives will be the more attractive to forest owners the greater the material gain they lead them to expect.
There is one simple way of enabling co-operatives to increase their money yields: that of exempting them from some of the burden of taxation falling upon individuals or corporate bodies. It would, indeed, be unfair for a member of a co-operative to suffer double taxation: once as the owner, say, of timber sold through the agency of a co-operative, and again as a member of that co-operative. On the other hand, it is quite regular for a co-operative to be taxed on the profits it makes which are distributed to its members in proportion to the shares held.
The schedule of taxation applied to forest co-operatives can tend, therefore, to encourage their increase and efficacy.
In the early days of the formation of forestry associations in Austria, there was a general tax on the profits of all enterprises which were obliged to make public their balance sheets - such as joint-stock companies, credit institutions and savings-banks. Certain associations, however, were exempt from this tax, namely mutual credit and deposit associations if operations did not exceed a certain figure and were confined to their own members whose liability was unlimited; agricultural supply co-operatives for purchasing seed, fertilizers, machinery and equipment, on condition that the net profits were not distributed; and lastly, farmers' selling co-operatives for marketing produce. These exemptions naturally also applied to forestry associations.
There were also associations which were granted tax-reductions on turnover, or even complete exemption, but this was a privilege usually restricted to certain small associations.
The privileges granted today are that associations pooling their members' products or goods for sale purposes, are exempt from tax on condition that the associations' dealings are confined to the products or goods belonging to their members. They pay full taxes on income obtained from dealings with non-members. This concession is highly important to those forestry associations which buy only members' timber and resell it for use in the round or as sawlogs. Credit associations are less favored; they pay one-third of the normal tax on turnover, subject to their operations being confined to dealings with their own members.
Sawmills are considered in Austria as industrial undertakings and are accordingly subject to industrial taxes. If, however, a forest owner possesses a sawmill and transforms his timber into sawn wood, he is exempt from this industrial tax on condition that he does not enter also into the manufacture of processed goods. Such exemption also applies to sawmills owned by forestry associations dealing mainly with timber from members' lands.
The tax privileges granted to co-operative societies in northern European countries, however, appear more substantial. In Norway, no taxes are levied on profits made by forest co-operatives from their normal marketing activities. The only taxable profits are those realized from the sale of timber belonging to nonmembers, and from the primary conversion of the timber. But special prices are charged for roundwood delivered to co-operative conversion plants so that the profits on this kind of operation are practically nil. It is rare for there to be dealings with non-members. Finally, these associations pay no tax on capital or income save on any reserve fund established. The tax here is calculated on a hypothetical income assessed at five percent of the capital constituting the fund. But since the tax is progressive and the reserve funds are retained by the individual associations themselves (and not by the federations of which we shall speak later), taxation does not in the end amount to much.
In Sweden, industrial and commercial companies pay taxes amounting to 32 percent of their profits. There is no tax on invested capital, although each member of a company must declare his investment in the company to the taxation authorities. This is a high rate of taxation but, in practice, so-called open companies, i.e., those in which membership is unlimited (as is the case with forest co-operatives), do not pay tax on that portion of their profits which, in accordance with co-operative principles, is distributed to members, even if this distribution is made only after the balance of the accounts has been declared.
This system has led Swedish co-operatives to make fairly substantial capital investments, the members being required to provide contributions for this purpose and the contributions in turn often being obtained by deductions from the annual sums due to co-operators as their share of the profits. Swedish law, however, does compel co-operatives to transfer 6 percent of their profits to the reserve fund. The Norwegian system of taxation, on the other hand, encourages co-operatives to build up considerable reserve funds rather than make capital investments.
LOANS AND SUBSIDIES
Privileges in the matter of taxation are, however, not the only kind of financial aid which the State can grant to assist the formation and working of co-operatives. Small forest owners, whom the co-operatives aim to help, rarely have sufficient means available either for working capital or for operations. This may be remedied in two ways:
1. by granting subsidies to co-operatives for operations or works that are of public value;
2. by facilitating loans on advantageous terms, easy repayment being especially important in forestry where long-term investments are involved.
It is, of course, possible to combine subsidies and loans.
In northern European countries, forest co-operatives only rarely receive subsidies and then for special purposes. The system of compulsory contributions previously described normally replaces subsidies.
Subsidies are commonly granted in France and Italy, but usually in combination with loans, and only in virtue of the kind of works undertaken. Subsidies are reserved for works which are of greater advantage to the national interest than to the private interests of the owners who co-operate in carrying them out; while loans are made in the contrary case.
In the case of loan or credit co-operatives, governments usually act as guarantors. The Svenska Jordbrukskreditkassan or Swedish Federation of Rural Loan Societies, can call upon a basic fund of 25 million kronor in treasury bonds. Central loan societies receive treasury bonds to cover 20 percent of their commitments, with a minimum of 100,000 kronor and a maximum of one million for each society. In Norway, the farmers' short-term credit society (Centralkassen for Bøndenes Driftskredit) receives privileged terms from the State Bank and is thus able to grant loans in its turn to forest owners and their associations.
In both Finland and in Sweden, co-operatives engaged mainly in providing credit facilities for members can be specially authorized to undertake banking transactions themselves under certain conditions. This is regarded as being of particular importance in that they make loan societies less dependent upon borrowing from ordinary banks.
In the United States, the forest co-operative movement, as understood in this chapter, is little developed. A reason frequently advanced for this fact is the lack of credit facilities for furnishing working capital. The 1948 reappraisal of forest conditions in the United States devoted a whole section to forest co-operatives. Enquiries had shown that most of the co-operatives then existing had received some financial aid at the outset, besides technical help from officers of State or Federal forest services. This aid had generally been given as a result of special legislation and in the form of loans, mostly small, from the Resettlement Administration or the Farm Security Administration. The reappraisal considered that the credit facilities granted to farmers' co-operatives in general did not entirely meet the needs of forest co-operatives.
After the last war, Japanese co-operatives of all kinds were generally in a precarious financial position. In 1961, an Act provided for State development loans every year for five years to any co-operative that would guarantee to put its financial affairs in order, in conformity with certain principles. The act in effect committed the Government to paying the interest on associations' debts during the rehabilitation period; and the magnitude of the scheme may be judged by the fact that the total budgetary estimate was U.S. $61 million, of which 20 percent was for forestry associations alone. The Act has now effected a slight improvement in the situation of forest co-operatives; apart from a few shining exceptions, most associations had debts averaging eight times their capital, while now the figure is six times their capital.
Independently of this legislation, a credit bank for agriculture, forestry and fisheries was created in 1963. This is a State organization, the capital being entirely met out of budget resources, and its profits return to the State. Loans granted by the bank depend upon the kind of works to be undertaken; for regeneration operations the interest varies from 4.5 to 6 percent, and repayment extends over 15 to 20 years, the first instalment being payable only at the end of two to five years. The bank also grants loans to forest-owners prohibited by current regulations from cutting their stands because the latter have not yet reached the normal rotation age. The interest on such loans is 4 percent and repayment is extended over 25 years. Any forest-owner is legally entitled to such loans but, in practice, more than 90 percent of them are granted to forestry associations and federations of associations, which, in turn, share them among their members.
Forest co-operatives may be formed with the object of assisting their members in any operation relating to forest management, from the drawing-up of management plans or working plans to the marketing of primary forest products.
On the other hand, they may restrict their activities to certain clearly defined objectives, such as selling standing or felled timber, or building forest roads. Even when the articles of an association provide for engaging in all forestry pursuits, in practice, some will predominate.
MARKETING FOREST PRODUCTS
One of the most common activities of forest co-operatives is the marketing of primary forest products, and many people regard this as their most useful function. There is, indeed, no doubt that receiving good money for his timber stimulates an owner to improve his output.
Other people, while agreeing with this, still think that where marketing of products is the co-operative's sole activity, it is likely to do more harm than good, for it encourages the small owner to sell his timber before it is mature - timber which, with a little patience, could yield more useful commodities and a much better return. These conflicting views show how closely the whole subject of forest co-operatives is bound up with local conditions. The creation of co-operatives simply for marketing might indeed be harmful in a country where the management of private forests is not subject to any control by the government forest authorities. Where such control does exist, the co-operative will facilitate the exercise of it, and, to the extent the owner benefits from the co-operative, the more likely is he to accept that such control is necessary and important.
At all events, in those parts of Europe where forest co-operatives are most highly developed, their growth has been fostered by the need to organize small owners to counterbalance associations of buyers of forest products. In northern countries, there were a few sporadic attempts to set up marketing co-operatives in the eighteenth and nineteenth centuries. Again, at the beginning of the twentieth century, difficulties were encountered in setting up efficient selling organizations, and societies mainly restricted themselves to giving technical advice, although the internal regulations of the early Norwegian societies stipulated that they should keep members informed of market trends, help them in buying and selling forest products, and guard against any over-production which might harm members' financial interests. In Finland, associations did not become active in the commercial field until the foundation of the Central Owners' Society (Metsänouristajai Metsäkeskers) in 1921. Similar activities began in Sweden in 1927 and in Norway in 1929.
The general slump of 1930 brought a sharp fall in timber prices and gave fresh impetus to marketing co-operatives; in the years 1930-1940, they were to be encountered in every part of Norway and Sweden. During and after the second world war, they played an important part in maintaining fuelwood supplies, and enhanced by this circumstance, their prestige grew still more in the subsequent years of expanding demand and rising timber prices.
SILVICULTURE AND MANAGEMENT
Often trading is not the major activity of forest co-operatives. In Japan, for instance, the most progressive co-operatives are those which furnish the necessary facilities for improving forest management and productivity. The most common facility so provided is the building and upkeep of forest roads, which again shows how the activities of co-operatives are influenced by local features, because Japan is a mountainous country and accessibility of forests is a particularly acute problem. Road-building is greatly encouraged by the fact that State subsidies furnish 50 percent of the outlay and local authorities 10 percent, the rest of the cost being shared by the forest owners in proportion to the benefit they derive.
Next to road-building, the activity most commonly pursued by Japanese co-operatives is the raising or purchase of tree seedlings. They distribute about 50 percent of all the three-year-old plants of forest species raised in the country. Here again, the State helps by collecting seed from the national forests, running nurseries, and distributing one-year-old seedlings to local authorities. Transplanting is done under strict supervision by private nurserymen or by the forestry associations. This procedure is obviously of public interest, since it enables the forest authorities to keep a strict control over the provenance of at least a part of the material from which the country's future forests will grow. It has been proposed that such control shall be exercised throughout the country.
Trading in forest products is a minor activity in the Japanese co-operative movement. The volume of sawtimber passing through the hands of the associations in 1952 was only 1.3 percent of the total volume produced. The co-operatives' dealings in charcoal are equally insignificant compared with the total output, although such trade should be profitable. Farmers' co-operatives, which absorb considerable quantities of charcoal, offer some competition in this field. In fuel-wood, too, the forest co-operatives' dealings are on a very minor scale.
Although social and economic conditions are very different in the United Kingdom, there also the forest co-operatives seem to place emphasis less on marketing than on silvicultural operations. Private woodlands in Britain have in very many cases been exhausted by excessive cutting in two world wars, and now the owners' chief concern is mainly the afforestation of denuded land or the reforestation and rehabilitation of existing woodlands. These operations, moreover, are subsidized to some extent by the State. The co-operatives to carry out such work, formed under the Industrial and Provident Societies Act are usually assisted by the State forest service, known as the Forestry Commission; they buy equipment, seed, young plants, etc., obtain the services of skilled workers and put all these facilities at the disposal of members, together with technical advice and guidance. Where the co-operative, as contractor responsible for the work entrusted to it, has not sufficient manpower or means of its own, it can call upon sub-contractors. The co-operative's employees are often engaged in cutting and preparing minor products like stakes or even fuelwood because, while it is comparatively easy for an owner to sell valuable trees on the stump, such minor products find few buyers unless they are prepared for sale beforehand. Harvesting of such products is often ancillary to good silviculture, and local labor, scarce in the woodland areas of the United Kingdom, is often unobtainable for this kind of work.
MANPOWER AND WORKERS' CO-OPERATIVES
In the case just cited, one of the advantages presented by the forest co-operative lies in its providing labor for the members. In workers' co-operatives, however, the members are employed by their society on the same basis as any other regular wage-earners, while helping owners to sell their timber. It has already been seen that some Japanese co-operatives are empowered to accept members who are not themselves forest-owners; they may be small forest operators, charcoal-burners or forest workers employed in the forests incorporated in the co-operative. But an interesting case has been reported in American Forests4 where the labor is supplied by the members of the co-operative, themselves owners of small woodlots. It concerns a small co-operative, the Au Sable Forest Products Association, started by a ranger in the State of Michigan in 1940.
Organized under the regulations of the Michigan Corporation and Securities Commission, this association started off with a very small loan of $3,000 from the Farm Society Administration which enabled it to begin operations. Its purpose was to exploit the timber - chiefly pulping timber - distributed on small woodlots, split up into parcels too small for the timber to be sold from them separately. The manpower was supplied by members of the association working singly or in family groups; but the cut was pooled and sold en bloc by the association. The return from sales was only $ 3,200 in the first year, and from that the actual workers had to be paid. But the association's revenue, with ups and downs from seasonal variations and market fluctuations, has steadily grown; in 1952 it was $ 247,900, and in 1964 about $ 300,000. The association now has a permanent manager and secretary-treasurer; the forest operations have contributed a considerable element of stability to the community because well-paid, part-time or full-time work has been ensured for the members of the association. Finally, the association has made possible the development of an area of forest land which would otherwise have been of scant profit either to its owners or to the community.
4 A.H. Carhart: Woodlot owners may find the answer to their own problems in the co-operative approach of Michigan residents, American Forests, April 1955.
Other associations owe their existence not to the grouping of members' forests but of their skills. Attempts have been made in many countries to form forest workers' co-operatives of this kind. They are difficult to get started, for they need a fairly large initial capital, not only for the purchase of tools and equipment, but more especially for the organization of actual felling operations. The seller of a crop of standing timber naturally demands, even under the most favorable conditions, if not an actual advance down, at least a guarantee for his money, which the co-operative cannot easily supply. Recourse to a loan will equally require a guarantee, and will place a burden from the start on the co-operatives' funds. In areas where forests are State-owned, conditions may be favorable, so long as the national forest services are not tied by too stringent regulations on the granting of rights to fell or sell timber.
It is in a country where such conditions are fairly well fulfilled - India - that interesting attempts have been made in recent years to set up organizations of this kind, especially in the States of Bombay and Madras. The co-operative movement is fairly well developed in India, especially in the two states mentioned, where co-operatives are reported to extend over 93 or 65 percent respectively of the villages. Attempts have been made to organize forest workers into co-operatives, especially the indigenous tribes often used as a source of labor by felling contractors. The State of Bombay's first five-year plan included, as one of the features of its social policy, the organization of forest co-operatives among native tribes. The forest service was deputed to assist the tribes to group themselves, and was required to detach specialists for the job. The experiment succeeded; from a single forest co-operative in 1947-48, the number had grown to 58 by 1953, and the value of the products they dealt with amounted to 1,794,000 rupees (about U.S. $358,000).
The government brings all its weight to bear on the encouragement of these co-operatives. In the State of Bombay, the Adivari (native) co-operatives are placed under the auspices of departments which are nothing less than social services, supervising the co-operatives' activities and acting as intermediaries between them and the various ministries which have to be dealt with. Membership of such co-operatives must be at least ten persons and must not exceed one hundred. Members' subscriptions may be either one anna for every rupee of their wages (16 annas = 1 rupee) or a quarter of the share of profits due to them according to the articles of the association. The subscriptions are converted into shares of which no member may hold more than 25. Moreover, the co-operatives' working capital is supplied by a Central Loan Agency, a pare-governmental organization, whose loans are partly backed (up to 40 percent) by the State. Finally, felling contracts are granted at prices at which the co-operative can expect to make a profit of at least 10 percent. The co-operatives are also exempt from payment of sureties and advances before being awarded a felling contract and they are helped to market the felled timber as profitably as possible. If there is a profit upon this, the State takes 50 percent but it also bears 50 percent of any losses.
The Bombay Government's experiment may be compared with a scheme promoted by the forest-owning communes of the Haut-Rhin Department in France.5 Here shifts in population and changes in economic and social conditions had led to the progressive lowering of living standards among the farm workers partly employed in forest work; and to remedy this situation the communes set up intercommunal syndicates for forest management. The object was to organize:
5 L. Badré, Population, forêts et travail en montagne, Revue forestière française, No. 7, June 1955.
"teams of skilled woodcutters, highly trained and equipped, mechanized and motorized so that they can operate over a wide radius and thus be able to ensure that felling operations in all the forests belonging to the syndicate's member communes are carried out in the best possible conditions."
In Norway, teams of forest workers, organized in the villages, are ready to lend their services to any small forest owners in the community. This scheme is becoming increasingly popular; and a similar movement is reported from Finland.
These organizations are not, strictly speaking, workers' co-operatives. But here too, the dividing line between true co-operatives and other forms of association is far from rigid. It may, for instance, be recalled that there have long existed in many Italian Alpine villages teams of forest workers, led by one of their own number, who hire out their services to sawmills or felling contractors both locally and in neighboring countries. These groups may have no capital; sometimes even their traveling expenses are paid in advance by the enterprises that employ them. While their organization can hardly be called a co-operative, it is a form of co-operation inasmuch as it enables its members to protect their interests more effectively, to find work more easily and to achieve a higher standard of living than if each individual was left to his own devices.
Similar groups of workers are reported to exist in the Saskatchewan Province of Canada; a so-called co-operative of Indians obtained from the Saskatchewan Timber Board in 1951 a felling contract at McDonald Bay, 30 miles from their home town. In Quebec Province there were, during the winter of 1948-49, 43 groups of this kind, totaling 3,000 members and belonging to five regional unions which, at the end of 1949, set up a federation of workers' co-operatives.
Besides these groups, Quebec has co-operative syndicates of forest workers which are co-operatives in the true sense, for they themselves purchase felling-rights and cut, transform and sell timber without employing middlemen. Again during the winter of 1948-49 there were 24 syndicates of this kind, totalling 1,200 members, with a business turnover of Can. $847,000.
Information about co-operatives in Soviet Russia goes back to 1938. At that time, the All-Russian union of forest workers' co-operatives and co-operatives of workers in the timber industries comprised 4,500 cooperatives grouped in regional units. They were associations of skilled workers, engaged either in forestry proper or in manufacturing articles of wood, especially furniture. About three-quarters were within the Russian Soviet Federated Socialist Republic, and about 90 percent were centered in the countryside where very many of their 400,000 members combined farming with felling work in the forest or some type of craft. Moreover a large number of these co-operatives belonged to the mixed kolkhoz farming and artisan type.
The forest co-operatives proper were either independent and sold the timber they felled to the craft-co-operatives, or they were themselves combined with the craftsmen's co-operatives and felled for their own use, so constituting simply manpower groups.
The exclusive output of all co-operatives at that time was valued at about 1,200 million roubles; felling accounted for 15 percent of this total; timber manufactures 73 percent, and the extraction of resin, distillation products, wood alcohol, etc., 12 percent.
A fairly large number of craftsmen at that time worked in their own homes, but 66 percent of production came from communal workshops. The All-Russian Union was then making great efforts, not only to provide the co-operatives with experts to give technical advice, improve the quality and rate of production and find fresh uses for wood, but also to combat illiteracy and promote the professional training of co-operative members.
The forest co-operatives - regarded from this broad angle - played an important part in the Soviet economy. It is true that they cut only 4 percent of the volume of timber extracted from the forests of the Soviet Union, but they accounted for more than 50 percent of the total furniture production, 75 percent of resin output, and 70 percent of that of wood distillates.
TECHNICAL ASSISTANCE ACTIVITIES
In a survey of the most usual activities of forest co-operatives, one must of course mention technical assistance rendered to members - in general towards attaining as high a level of sustained-yield as possible. This usually involves drawing-up both long- and short-term management plans. Co-operatives which aim at making technical advice available to their members must naturally engage at least one forestry expert on a permanent or temporary basis.
As has already been said, national legislation sometimes imposes a degree of State control over the operations carried out in their forests by private owners. Although in Austria there is, strictly speaking, no such intervention, all owners of over 900 hectares of plains forest or 1,500 hectares of mountain forest are required to engage a qualified forester. Forests of less area, but exceeding 100 hectares, are sometimes managed by a technically qualified person under the direction of a forest officer. But, in the case of forests less than 100 hectares in area, help in regard to management and silvicultural problems is usually given by the provincial Chamber of Agriculture, the organizations having a legal status and being financed by the contributions of all the landed proprietors. Some of these chambers have a special forest service. Hence they really amount to management co-operatives; and their importance may be judged from the fact that 1,400,000 hectares of forest land in Austria - or 44 percent of the total forested area - consists of woodlands under 100 hectares in extent, mostly owned by farmers.
Where the law provides for a measure of State control over private forests, it is normal for forest co-operatives to include the provision of technical aid among their activities; membership in a forest co-operative is the surest way for an owner to know that his forest will be managed in his own best interests and according to the prescriptions of the law.
In Japan, these prescriptions are most strict, because here it is the State itself which prescribes the management of all forests, whatever their system of ownership. The law obviously makes the task more difficult by restoring complete freedom in the constitution and membership of forest associations, and the forest authorities' difficulties are the greater inasmuch as the facilities associations formed under the new law are much more numerous than the production associations that manage their members' forests as a single unit. In fact, the latter type of association has been organized only where, as a result of peculiar historical circumstances, certain forests formerly belonging to part of a parish and supposedly shared among the local inhabitants, had remained under collective management. To deal with this situation, the Government has had to create many fresh posts for State forestry officials and technical officers.
In regions where damage from fires is serious, the forest co-operative can again render service either in organizing efficient fire-prevention or in minimizing the financial losses of the owner whose forest has suffered.
The efforts of a co-operative can be directed, for instance, towards having firebreaks or trenches cleared or the planting of non-inflammable species around the forest perimeter. These means of protection are usually only really effective if there is an uninterrupted network covering large areas according to a well-conceived and executed plan. There is little hope that a co-operatives' efforts will be on a sufficiently extensive scale unless the State forest authorities co-ordinate the work and give some financial help and technical advice. But it is equally true that forest co-operatives afford the only means, in a heavily-wooded region where there is a large proportion of small private woodlands, of getting such work done quickly, and then kept up properly; or of buying equipment and engaging staff. Since fire-fighting equipment usually benefits not merely the forest owners but also local villages, State help in purchasing is usually provided to the threatened communities rather than to co-operatives.
Finally, there is another activity in connection with forest fires which can usefully be undertaken by forest co-operatives: that is fire insurance.
Insurance against forest fires might well be left to ordinary insurance companies, as commonly happens in some countries and is beginning to happen in others, but it has features which do not, in general, commend it to insurance companies.
The fires which destroyed the maritime pine forests of the French Landes in 1948-49 resulted in enormous losses to the insurance companies, which afterwards fought shy of further fire insurance. The Regional Syndicate of Forest Owners in Southwest France then stepped in to organize a Mutual Fire Insurance Association for Southwestern Foresters.
This association insures only young plantations up to 25 years of age, i.e., during the period when a forest fire would mean an almost total loss; and a policy covers a lump-sum payment of 8,000 francs per hectare to defray the cost of reforestation plus 3,000 francs for each year of a stand's age, with an automatic percentage reduction if the stand is incomplete.
The association would undoubtedly seem to be running risks unjustified by its resources, the more so as the owners likely to take up insurance are those who have many young plantations, i.e., those who suffered most from the fires of 1948-49, and they cannot afford to pay high premiums, so that these have been fixed at 3 per 1,000, a figure manifestly too low. There are, however, two circumstances which make it possible to run the association. First that it has been able to reinsure profitably with the Central Bank for Agricultural Friendly Societies. Secondly, its resources have been swelled by a generous contribution from the Gascony Landes Provident Fund. What this amounts to is that part of the insurance premiums of the sufferers from the fire is paid by those who were fortunate enough to have their property spared.
This is undoubtedly a good example of professional solidarity but it can hardly be expected to become general. There are clearly difficulties to be faced by co-operatives wishing to undertake such responsibilities. Nevertheless, there are co-operatives of this kind in all the northern Europe countries, although in Sweden they have a purely local importance. But forest fires in these countries are neither so common nor of such magnitude as in North America or Japan.
In Japan, fire causes enormous damage every year, an estimate of the average volume of timber rendered useless annually being 830,000 cubic meters; an average volume of 2 million cubic meters is salvaged in a damaged state.
In order to meet such a situation - especially serious in a land of small private forests - the government authorities have not only taken direct measures for preventing and combating forest fires but have also instituted a scheme of State insurance against fire. An act establishing a special fund for insurance against forest fires was passed in 1937 and amended in 1952. The earlier act limited insurance to stands under 20 years of age of Cryptomeria japonica and Chamaecyparis obtusa, but the 1952 legislation extended the insurance to cover all man-made forests. The 20-year limit was originally set simply because ordinary insurance companies issued policies for older forests and the Government did not wish to enter into competition with them. These companies, however, suffered severe losses during the last war as the result of which most of them then abandoned this type of insurance, and the others discouraged new applications for insurance. The latest forest legislation provides the possibility that State fire insurance should be open to at least some owners of older age-class forests.
The insurable value is worked out on the basis of species-and age of growing stock. Owners can insure for a higher sum if desired. The premium rate varies according to the part of the country, which for this purpose is divided into four regions. The policy can be taken out for from one to twenty years. In the case of a long-term insurance, the premium increases progressively from year to year. If a fire occurs, the damage is assessed by the government department concerned. Appeals against its assessment can be made first to a special committee, and afterwards to a civil court.
Forest co-operatives do not at first sight appear to have any particular part to play in this system. But while the legislation outlined is administered by the Ministry of Agriculture, it is the staff of the local governor which has the responsibility of dealing with the insured parties or with the owners wishing to insure, of conducting the enquiries on which the amount of the insurance and the premium will be based, of collecting premiums and of settling claims for damages if a fire occurs. In practice, the forestry associations are entrusted with a considerable part of this work and collect premiums and pay them into the treasury. It is, therefore, owing to their help that this insurance movement has developed so satisfactorily. It must be added that some dozen private companies are still prepared to issue policies against forest fires, but their business in this field is not very lively.
OTHER ACTIVITIES OF FOREST CO-OPERATIVES
There are many other ways in which forest co-operatives usefully serve their members: for instance, by building collective timber yards and storage depots.
Little mention has, however, been made of the co-operatives which grant loans on favorable terms to their members, so enabling them, for instance, themselves to carry out necessary works on their forests, or to avoid the necessity of cutting immature trees to meet urgent or unforeseen expenses. But this is rarely done by specifically forest co-operatives, for an association needs considerable capital to do so. Mention has been made of several French loan funds but these were agricultural funds. In Sweden and in Finland it is chiefly the mixed associations for agriculture and forestry which advance such loans. There is a society in Norway which deals almost exclusively in loans to forest owners but this is exceptional. On the other hand, co-operatives may play a very important part in obtaining loans or subsidies from the State or from banking institutions, and distributing them among their members.
The so-called accessory products of the forest, like cork and resin, may also give rise to the formation of co-operatives. There is, for example, a resin producers' co-operative in Lower Austria which, in 1953, had a membership of nearly 1,400 and which marketed about 3,000 tons of crude resin every year.
In France, also, there is a similar co-operative of somewhat unusual character. This Union corporative des résineux has its headquarters in Bordeaux, the trade center for the Landes forests. It is singular because the membership comprises forest owners, resin tappers, manufacturers and processors, and even distributors and dealers interested in the finished products. It is perhaps a corporation rather than a co-operative.
It includes members of the Syndicate of Southwestern Forest Owners, of the Federation of Southwestern Gum-Producers and Tappers, and of the Resin Traders Syndicate, all represented by a fixed number of delegates to the General Assembly which has 40 members, and on the Board of Governors which has 16. The Union can go to law, negotiate contracts, transfer rights or property, purchase and administer; and exerts the widest control over all its members' operations, from the collection of the crude material to the distribution of the distillation products.
The Union controls the distribution of the resin among the processing plants, acts as arbitrator prior to any legal action being taken in the case of contestations over quantities and qualities, draws up contracts and fixes charges, and stipulates when distillers shall change their methods or equipment in order to modernize manufacturing processes or improve productivity. Apart from dealing with produce from the members' forests, the Union may buy and distribute from State forests, the State receiving the same unit price as members. Finally, the Union fixes the sales prices of distillation products which are marketed exclusively by the "French Society for Distributing Resinous Products," formed under the Union's auspices; and the members of this society are forbidden to carry out any transactions in timber, rosins and turpentine other than on behalf of the member factories of the Union.
TREND TOWARDS ALL-ROUND SCOPE
The activities briefly surveyed may all be independently pursued by different co-operatives but the general trend is towards the single co-operative rendering its members all the services needed for efficient forest management and all the benefits derivable from a co-operative venture.
As an example of wide-ranging activities, quotation may be made from the articles of a Spanish forest co-operative formed in 1948 in Santa Coloma de Farnes (Catalonia). The aims of the co-operative are defined as:
"1. The co-operative will inform, direct and advise its members or associates on any regulations concerning forestry matters which are, or shall be, issued by the State, the Province, the municipal authorities, the local forest officers, and any organizations whatsoever whose jurisdiction extends to the region wherein those members' property is situated.
2. The co-operative will assist and promote the development of forestry work in all its aspects, especially as regards prices, wages, transportation and the more efficient placing of forest products on both internal and external markets.
3. The co-operative will advise its members regarding better methods of conserving and using forests, and afford assistance in forest regeneration and in the prevention of damage and disease.
4. The co-operative will protect the common interests of its members vis-à-vis all kinds of authorities, organizations, persons or societies.
5. The co-operative will study, report upon and submit to appropriate organs and entities any question directly or indirectly concerned with forestry, especially questions concerning the import and export of timber and rough, finished, or semi-finished forest products.
6. Lastly, the co-operative will exercise any functions or activities entrusted to it by the Board of Directors and the General Assembly with due regard to the relevant official regulations or instructions and to the provisions of the present articles."
An important factor in the success of a forest co-operative movement is delimitation of the actual area to be covered by each association. There are arguments in favor both of the small local co-operative and of the more extended association.
SMALL OR LARGE ORGANIZATIONS
The owner of a small woodland is likely to be more attracted towards direct and intimate co-operation with close neighbors whose needs are the same as his and whom he can meet on an equal footing, than to membership in a huge organization in which, despite his voting rights, he may well imagine that his personal problems will receive scant regard. The managers of a small co-operative can be people whom he knows and who are thoroughly acquainted with the local circumstances and needs.
On the other hand, the co-operative which covers only a small locale is usually limited in funds and, without outside help, may find it hard to remain solvent when it tries to undertake the activities which are of most value to its members, and its managers, unless they are particularly dynamic, may find it difficult to keep in touch with market trends and technical developments.
The opposing tendencies both find place today in the United Kingdom. In Wales, where the average area of private woodlands is 12 hectares, the trend seems to be towards the formation of small associations; in Scotland and England, towards large associations. But experience has shown how difficult it is for the headquarters of a big association to keep in touch with individual members and with local conditions, and the big co-operatives are adopting the policy of forming local groups covering something like 40 square miles in area.
FEDERATIONS OF FOREST CO-OPERATIVES
The best method of combining the advantages of both large and small co-operatives is to create federations of co-operatives such as exist in Japan and in those parts of Europe where co-operative forestry has made most progress.
Federations of forestry associations are usually subject to much the same legal rulings as are the associations themselves. Japanese law, however, has a special section reserved to them. These provisions allow federations to pursue somewhat similar activities to ordinary forestry associations but emphasis is laid on those activities which require either bigger capital or a wider territorial scope, such as loan ventures, extension and research.
The structure of federations may, of course, have several stages: small local associations may, for instance, be grouped into district federations, and these latter in their turn may form provincial federations, finally combined into national federations.
A clear differentiation between a federation of associations and a straight association is not always possible. The normal large association may count as members smaller forestry associations as well as individuals or corporate bodies owning woodlands. The way in which associations and federations are formed, and the way their articles are contrived, depends much upon historical accidents. In this connection, it is worth mentioning how the first Austrian forestry associations were formed, and how they grew and federated or otherwise proliferated.
The modern forestry associations of Austria go back to very modest beginnings during the last decade of the nineteenth century when the first farmers' associations were organized to help farmers market their produce. The oldest associations of this type are to be found in Lower Austria where sawmills were established to convert members' timber; one at Pöchlarn in 1899 and another at St. Veit on the Gölsen in 1902. These were not - and still are not - specialized forestry associations but rather farmers' associations branching out also into forestry.
The Union of Provincial Associations in Upper Austria seems to have launched out into timber trading in 1917. In 1918, the Farmers' Association of Zwettl in the thickly wooded northwest, did the same and opened a sawmill.
Immediately after the first world war, increasing demands for timber and consequent higher prices stimulated the formation of new associations. In 1921 the Lower Austria Forest-Owners Trading Board, a limited liability association, was instituted in Vienna, and the Nöwag Forestry Association of Lower Austria was formed there in 1922. Both are still in being. The Trading Board - which has always kept strictly to commercial transactions and has been more successful in this line than any other Austrian association - has, however, created a joint-stock company under the same name, which has taken over all the activities of the association. In the members' opinion, the new form will give greater scope for trading activities.
Up to the second world war, three more trading associations owning sawmills came into being in Lower Austria. The Carinthian Forest Society set up in Klagenfurt in 1936, has since become a Provincial Union; the Little Glödnitz Association of mountain farmers was formed, also in Carinthia, in 1940.
As reconstruction proceeded after the second world war, there was a still stronger impetus to the formation of associations. Three provincial unions were set up: the Alpine Forest Union in Styria in 1946, the Central Forestry Association in Upper Austria in the same year, and the Union of Forestry Associations of the Tyrol in 1949. Further new associations established were three trading associations in Styria, seven in Upper Austria, 18 in the Tyrol and another association of mountain farmers in Carinthia. Finally, in 1949, there was formed the Union of Forestry and Timber Trade Associations covering the whole of Austria and known as Austroholz.
The Austrian unions and federations, like the associations themselves, are governed by the 1873 legislation referred to earlier in this paper, and are classed and considered from the legal standpoint as agricultural associations. There are no distinct provisions relating to forestry associations.
At present, Austroholz comprises six provincial unions:
1. Alpenholz Union for Styria, with its head office in Graz;
2. Central Forestry Association of Upper Austria, Linz;
3. Union of Forestry Associations of the Tyrol, Innsbruck;
4. Carinthian Forestry Association, Klagenfurt;
5. Union of Forestry Associations for Lower Austria, Vienna;
6. Salzburg Raiffeisen Union, Salzburg.
All these Unions have both individuals and corporate bodies among their members. Included among the 129 members of the Alpenholz are seven associations, five collectivities, 98 private forest owners and 15 persons who do not own forests but have interests in timber extraction, manufacture or trading. The big Union of Forestry Associations of the Tyrol has 92 members, comprising 24 associations, 20 collectivities, 38 private individuals, and 10 founder-members. A further analysis of this membership shows that the Union answers to the needs of very different categories of owners. Of the 24 associations, there are 15 forest co-operatives in the strict sense; one forestry society of the type described in Chapter II; two associations engaged solely in timber trading, and six agrarian communities.6 The 20 collectivities cover 12 communal forests, 3 forests owned by monasteries, and 5 trade organizations.
6 Agrarian communities are the Austrian counterpart of the collectives of landed proprietors which owe their origin to special historical circumstances, and which are most developed in the Alps. They were referred to in Chapter III.
CENTRALIZATION AND DECENTRALIZATION
In northern Europe
The formation of federations and their relations with their constituent co-operatives largely depend upon circumstances.
In Finland, the organization of marketing co-operatives is highly centralized, probably because these associations are mainly concerned with the export of roundwood or sawn timber produced by their members. Activities began in the Finnish-speaking part of the country with the formation in 1921 of the Metsänomistajain Metsäkeskers (Central Forestry Company of Forest-Owners), which officially took the form of a joint-stock company but worked, in fact, like a co-operative. It set up branches, and although the whole organization suffered some setbacks during the depression in the 'thirties, the expansion preceding the second world war enabled it to consolidate its financial position. After the war it confined itself to its industrial undertakings and passed the buying of timber and selling of manufactured products to the Metsälüto (National Federation of Forest-Owners Co-operatives). The two organizations, although basically independent, work in close collaboration, using largely the same staff.
The Metsälüto was founded, as an independent organization, in 1941, although similar activities had previously been conducted by a section of the National Farmers' Federation. Those forest owners who wish to profit from its services, join the Metsälüto individually and not through the local co-operative. They pay a subscription of 100 Finnish marks per share and buy a certain number of shares, varying considerably in value according to the parish, the average being 370 marks per hectare. The society has an executive committee elected by a board of 19 to 25 directors, themselves appointed by 76 delegates elected from the members of the National Federation which in 1951 numbered 53,000 owners representing a total of 2.5 million hectares of forest land.
This high degree of centralization is, however, mitigated by the Metsälüto's 16 local offices, each supervised by a district committee which keeps in touch with forest owners. Moreover, the Metsälüto draws very largely upon the services of the staffs of local forestry societies.
This tendency to restrict themselves to one type of activity is, indeed, characteristic of north European forest co-operative associations, and is especially marked in Finland. Finnish marketing co-operatives may indeed advise their members on forest management but this is mainly the task of the local forestry societies.
The creation of local forestry societies in Finland began in the years just before the first world war, but the movement began to show real vigor only after the 1928 legislation regarding privately-owned forest land. In 1929, there were 86 societies with 4,200 members owning 523,000 hectares of land; by 1945, the number of societies had grown to 305, with 37,000 members covering 3,260,000 hectares. The distribution of these co-operatives and their limited means constituted serious drawbacks, however, and the situation was met in 1950 by the legislation to which reference has earlier been made. They have since regrouped themselves into 18 federations of which three cover the Swedish-speaking part of Finland. By 1952 there were 267 societies with 51,000 members covering 3.7 million hectares. Thus, while the marketing co-operatives are highly concentrated, the technical co-operatives are highly decentralized.
In the Swedish-speaking districts of Finland, there are also private forest districts which are collectives for management and administration covering several parishes, while the forestry society's domain is, as a rule, limited to a single parish. There is a similar society in Sweden itself, the Skagssällskapet, established in 1912 which is, in essence, a joint administrative organization for all kinds of forests, especially communal or other publicly-owned forests.
In contrast to the development of their Finnish counterparts, Swedish marketing co-operatives are extremely decentralized: in 1951, there were 30 of them, aggregating 115,700 members owning 6,113,000 hectares, and with a business turnover of 400 million kronor. These societies undertake the delivery of members' timber to mills and factories as well as dealings with export agencies. They can undertake felling, forest extraction and transportation and own a considerable amount of processing equipment; in the same year, they owned 18 frame-sawmills, 65 circular-sawmills, 5 wood-working mills, 7 timber impregnation plants, 23 depots for sawn wood, two factories for prefabricated houses, and 12 fuelwood depots. Their holdings have grown steadily since 1951; and they also own road-building equipment and transportable sawmills which are at the disposal of members.
The associations formed the National Federation of Swedish Forest-Owners' Societies in 1932 which was at first a non-profit organization to promote forest protection, but in 1938 was reorganized as a profit-making society.
Societies specifically designed to assist owners in forest management exist, but are much less common than in Finland. Most of them, fairly long established, are to be found in Bohusland in southwest Sweden, where their main objective was the reforestation of heathlands. There are 12 at present remaining, all small local societies which have not seemingly formed a federation.
There are three big Swedish associations with related aims in forest research, particularly research into forest work science. Set up by big private owners and industrial companies, they have each around 1,000 members and cover 10 million hectares of forest land. The State services themselves have membership in two of them.
Norwegian marketing co-operatives are now mainly engaged in supplying the industrial sawmills, few of which, unlike those in Sweden, own extensive forest properties. Originally the co-operatives, highly decentralized, were concerned mostly with forest management; in 1913 they formed into a nation-wide federation, the Norwegian Association of Forest-Owners' Societies and, in 1929, this federation and all the component societies turned to marketing. They are now remarkably flourishing and play a decisive part in fixing the prices of timber supplies delivered to industry.
The heads of parish groups of woodland owners are local representatives of the marketing co-operatives, and there are no Norwegian societies which specialize only in giving technical assistance. Some of the marketing co-operatives, however, have recently followed Swedish practice in organizing advisory services. We must add that the Norwegian Forestry Society, an association of the type described in Chapter III, engages in activities of great value to forest owners, especially to owners of farm forests. In 1942, the Society embarked upon an evaluation of farm forests and their productivity. The survey provided data on volumes and rate of growth and classified all stands according to age-classes and qualities. In turn, the data were used to formulate ten-year plans for forest management.7
Co-operatives in Japan tended to give members as wide a variety of services as financial resources, plus State subsidies, permitted. In order to facilitate compulsory timber deliveries during the last war, local federations had to be created. Some had already been formed on a voluntary basis but they now became compulsory; the National Federation of Forestry Associations was readjusted and made the hub of the whole organization.
After the war, the activities of local federations slackened off: not because they became purposeless - for the federations were still responsible for controlling the production and distribution of sawtimber, fuelwood and charcoal - but because headlong inflation and widespread black marketing made it more and more difficult to trade. Finally, the fall in prices in 1949 caused them enormous losses.
Despite this, the Government tried to turn the period to account by seeking to use the federations' strong organization as a vehicle for the very ambitious schemes already described earlier in this essay. Unfortunately these schemes went awry because their cost had been underestimated. Moreover, most of the large owners, being obliged in connection with these schemes to join the associations, tended to take a somewhat passive part. They were discontented at the enforced fellings of the war years and the pressure put upon them at that time to contribute to the financing of the Japanese Sawtimber Control Society and its local branches, para-state organizations, which had a monopoly of the timber trade, and their shares in those organizations had been bought back after the war at a mere fraction of their value.
7Arn Eskeland, Agriculture and Forestry - Competition or Coexistence in Norway? International Journal of Agrarian Affairs, Vol. II, No. 2, June 1954.
However, at the time of the negotiations on the new forest legislation and the reorganization of the forest co-operatives, the associations and their federations regained the confidence of their members. They were, in particular, very energetic in presenting the case of the forest owners and looking after their interests. At the time of reorganization, there were 46 federations grouping 4,630 associations; two years later, those figures had risen respectively to 49 and 5,296, the latter including 40 production associations. There were about 1,870,000 members, some 35 percent of the total number of forest owners, holding 10 million hectares or 65 percent of the area of privately-owned forest.
Such a splintering of associations has its disadvantages. An analysis of more than 5,000 co-operatives existing in Japan shows that 1,000 of them are dealing with less than 500 hectares of woodland, and 2,000 with less than 1,000 hectares. The average body is too small to employ permanent workers, much less professional foresters.
These small associations also lack capital as well as manpower. The total capital of the 5,000 associations analyzed amounts to about U.S.$4.7 million, of which only $2 million, or 40 percent, is actually invested. This means that the average capital of an association is less than U.S.$1,000, of which only $411 are paid up. In point of fact, 1,500 associations (or some 30 percent) have less than $280 of capital, and 2,500 less than $560.
Under these circumstances, federation - at least up to country-level - becomes a necessity. Perhaps it is worth taking one such federation and seeing how it works.
The Tachigi Protection Federation combines 73 forest-owners' associations. The total subscriptions amount to U.S.$13,527 divided into 974 shares, of which $11,366 or 84 percent is paid up.
The executive consists of a Managing Director, 13 Directors (3 of them whole-time) 5 Supervisors (2 whole-time) and 38 employees. There are five branch offices throughout the county, and the head office in the county-town comprises four departments as follows:
1. administrative department, with four branches dealing with general business, budget and accountancy, material and transportation;
2. silviculture department, with two branches covering plantations and management;
3. forest products department, with two branches for sawtimberand fuelwood respectively;
4. works department, with a branch for anti-erosion works and a branch for road works.
The federation organizes courses on very varied subjects, either administrative (e.g., accounting) or technical (e.g., surveying and mensuration) for the managers of member associations; it organizes study tours; it publishes a news bulletin.
It takes over a considerable number of activities entrusted to the county authorities but which the latter cannot carry out directly. For instance, it has prepared management plans for associations of forest owners in towns and villages. In 1953, it undertook a survey of 353 hectares of land to be afforested: investigated requests for felling permits covering 775 hectares, and carried out a check over 523 hectares to ascertain whether the work of artifical regeneration prescribed and State subsidized had indeed been carried out by the owners; and finally, checked that felling operations over 89 hectares were conducted according to official regulations. In this case, the federation acted both for the county authorities responsible for the enforcement of the regulations, and for the towns and villages which are entitled to taxes on the sale of timber. The federation investigated requests forwarded by the associations for loans to forest owners, and passed on approved loans after deducting a commission of 0.25 percent.
Although the raising of seedlings and the harvesting of seed are really the responsibility of the county authorities, in practice, they hand over part of the work to the federation, which has two nurseries of its own, 6 hectares in extent and tended by two full-time nurserymen. It, moreover, buys seeds and plants from nurserymen's associations and has even obtained the exclusive right to re-sell those products. The number of young plants it distributes is therefore quite large.
The federation buys for resale products from members' woodlands. Thus, in 1953, it sold 1,100 cubic meters of sawtimber to the Ministry of Reconstruction and 1,160 cubic meters of fuelwood and 375 tons of charcoal to various dealers (and incidentally 400,000 packets of mushroom spawn). It also bought felling rights on State or private forests not belonging to members of the federation and cut over 500 cubic meters of roundwood.
On occasion - for such activities are normally carried out rather by individual associations themselves or by the county authorities - the federation also undertakes road building, engineering works to prevent erosion and excessive run-off, and buys and delivers material for works of the same kind carried out by the county authorities, earning a small profit. Transportation is a profitable business for the federation, for it has its own trucks, and the profit from hire in 1953 was nearly $ 6,000.
Finally, the county authorities also hand over to the federation the distribution of State and locally-granted subsidies; in 1953, the federation dealt with subsidies to a value of almost $ 180,000.
For the financial year 1953, the income of the Tachigi Federation was U.S.$245,802, and its outgoings $246,294, resulting in a slight deficit of $492.
RELATIONS WITH FARMERS' CO-OPERATIVE ORGANIZATIONS
Before leaving the subject, it should again be emphasized that, in most countries, many forest co-operatives are not independent bodies but are connected with farmers' co-operative organizations.
Mention has already been made of a number of activities touching on the forest which are, in fact, exercised by farmers' associations; for example, in Austria it is the Chambers of Agriculture that have practically taken over technical assistance to farmers in the management of their woodlands: in Denmark, where the farmers' co-operative movement is highly developed, the small forest owners have only fairly recently begun to set up specialized forest organizations; even so, these associations are still connected, at the top, with the farmers' associations.
This is quite usual, however, even where the forest is a big economic factor to the small farmer: at the local level there are specialized forest co-operative associations but, at the summit, the federations of these associations are themselves branches of the nationwide farmers' associations.
Thus, in Sweden, the National Federation of Swedish Forest-Owners' Associations is a branch of the Federation of Swedish Farmers' Associations. In Norway, the Norwegian Forest-Owners' Association is, similarly, a branch of the Federation of Farmers' Co-operative Associations, while in Finland, although the big central co-operative for marketing forest products is independent, the parish forestry associations are, on the contrary, grouped into 18 district leagues, themselves belonging to the Central Union of Agricultural Producers which has set up its own internal forestry commitee.
Organized thus, the contact between the forestry and the farming co-operative organizations is efficient and cannot fail to be advantageous. It is, indeed, based on the same considerations that have led most of the developed nations of the world to place their forest services under the authority of Ministers of Agriculture, while allowing them a very broad autonomy compared with the agricultural services proper.
When the merging of farming and forestry co-operatives exists on the more local level, it may have advantages and shortcomings; these are still to be examined. It might, however, be pointed out that such-a combination provides a poor solution to the problems of the small forest owners who are not themselves farmers, or - more especially - for the situation where the land is still worked under the tenant-farming or the metayage system from which forests are usually exempt. This may be a matter of some importance where a country has a large area of private forests much split up into small holdings.