EN Official Journal of the European Union C 299/45

Opinion of the European Economic and Social Committee on ‘Cooperatives and agri-food development’ (own-initiative opinion)

2012/C 299/09

Rapporteur: Mr TRIAS PINTÓ

At its plenary session held on 19 January 2012, the European Economic and Social Committee, acting under Rule 29(2) of its Rules of Procedure, decided to draw-up an own-initiative opinion on

Cooperatives and agri-food development

(own-initiative opinion).

The Section for Agriculture, Rural Development and the Environment which was responsible for preparing the Committee's work on this subject, adopted its opinion on 26 June 2012.

At its 482nd plenary session, held on 11 and 12 July 2012 (meeting of 11 July), the European Economic and Social Committee adopted the following opinion by 144 votes to 2 with 4 abstentions.

1. Conclusions and recommendations

1.1 In the quest for a more sustainable economic model, cooperatives provide a competitive and efficient alternative, offering new responses to the imbalances in the agri-food value chain, while promoting employment, local food chains, food safety, participation and social responsibility.

1.2 The current agri-food product markets need structural reforms in line with the challenges of the Europe 2020 strategy and other EU initiatives. Conventional distribution channels do not offer adequate transparency in price formation, leading to serious imbalances in the bargaining power of its stakeholders, to the detriment of producers and consumers (the first and last links in the chain). Furthermore, unnecessary environmental costs are incurred due to distribution which is not energy-efficient, such as the cold storage of fresh foods out of season and their transportation to markets which are far from their place of production.

1.3 The market should be reshaped in a circular fashion, promoting shorter distribution channels in order to better connect supply and demand in networks, promoted from the most basic level within an innovative and technologically-advanced framework.

1.4 By means of their characteristic principles and values, cooperatives help to create fair and synergetic commercial relationships which help to rebalance the agri-food value chain, bringing together interests, optimising shared value and consolidating the sustainability of consumption and production methods.

1.5 The EESC therefore calls upon the European institutions to foster the conditions necessary to promote the cooperative model, by adopting EU policies which provide for appropriate legal, economic, fiscal, technical measures etc., with a view to ensuring that the market develops in a harmonious fashion.

2. Introduction

2.1 The cooperative model bolsters the European Union's entrepreneurial ecosystem, particularly economic democracy, helping to make the change needed to the production model.

2.2 2012, declared International Year of Cooperatives by the UN, provides an ideal framework within which to consider the role that cooperatives can play in designing a new driver for sustainable and inclusive growth, enabling a highly competitive social market economy to emerge from the current crisis (1).

2.3 There are wide variations within the EU's cooperative sector. Some cooperatives' commercial activities are exactly the same as those of their competitors, while others combine their commercial activities with "political" positions in favour of consumers, the environment, etc. as part of their information or sales strategies. A distinction should also be made between cooperatives operating at the beginning (production) and at the end (consumption) of the value chain, often with no coordination between them.

2.4 The structural reform of the markets, aimed at achieving a sustainable production and consumption model, requires the agri-food value chain (2) to be rebalanced, with agricultural associations in general – and cooperatives in particular – playing a modulating and integrating role which enables the appropriate adjustments and changes to be carried out, all through inter-sectoral interaction and dialogue.

2.5 The standpoints expressed by the EESC are based on this approach, seeking to respond to the future challenges faced by EU policies in the context of the Europe 2020 strategy, the new Common Agricultural Policy, the Sustainable Consumption and Production and Sustainable Industrial Policy Action Plan, and the Single Market Act.

2.6 It should be stressed that underpinning this initiative is the principle of smart, sustainable and inclusive growth based on knowledge, the low carbon economy (3), employability and social and territorial cohesion.

2.7 Finally, this proposal contributes to other cross-cutting aspects which are extremely important to EU policies, including those relating to food sovereignty and security, territorial balance and the preservation of local food chains (4), social entrepreneurship, the protection of consumer rights and interests, and the direct participation of organised civil society in the field of agri-food (5).

3. The EESC's comments

3.1 Analysis of the current market

3.1.1 The market should operate in such a way that it offers products of the type and quality that consumers want. Messages from consumers must therefore be communicated throughout the value chain and reach producers undistorted. Unfortunately, today's market is often of a linear nature – which prevents positive feedback – and displays a degree of complexity which distorts its mission, thus damaging its true purpose of supplying the population with products in the most satisfactory manner possible.

3.1.2 Consumers are increasingly demanding products that are safe and sustainable and that are produced in ways that are innovative, responsible and environmentally-friendly and under adequate working and animal welfare conditions. It should not be forgotten, however, that less expensive food products must also be taken into account, since price is still a determining factor in purchasing decisions. Unfortunately, the agri-food value chain is not communicating the relevant information between the various links (primary production, packaging, storage, distribution and sale).

3.1.3 As well as pushing providers and consumers further apart, distribution channels have been hindering the transparency of the operations they encompass, so that production costs are undervalued and prices paid to producers often do not reach the minimum thresholds required for their economic survival.

3.1.4 Furthermore, the low bargaining power and captive dependency of those operators who endure unfair prices in their business increase the prevailing imbalance in the agri-food chain (6), perpetuating anomalous market behaviour.

3.1.5 An analysis of the current market, which is necessary for its reform, therefore indicates the following: fragmented supply, concentrated distribution and inconsistent demand. This situation provides an ideal environment for speculation.

3.1.6 It should not be forgotten that the distribution stage has other social and environmental consequences, such as those resulting from long-distance transportation, prolonged cold storage, business relocation etc.

3.2 Towards a more cooperative market: a focus on new sustainable consumption and production methods

The cooperative identity is enhanced by the values of democracy, equality, equity, solidarity, transparency and social responsibility. The International Cooperative Alliance has established seven principles to be applied by cooperatives: "voluntary and open membership; democratic member control; member economic participation; autonomy and independence; education, training and information; cooperation among cooperatives and concern for community" (7).

A cooperative agri-food market is based on cooperatives which are involved in agri-food supply and demand, and on the reciprocal or mutually beneficial relations between them, seeking an economically and socio-environmentally fairer and more efficient value chain In short, the market takes the form of a positive sum game, from which all players benefit, producing the maximum shared value by creating long-term alliances and commitments between its main stakeholders (producers and consumers) under equitable conditions of fair competition In line with the principles outlined in this opinion, the key factors for the reorganisation of the market are as follows:

3.2.1 An inversion of the "production pyramid", taking a cross-border cooperative approach, with a critical mass that ensures the necessary scale and scope. Based on individual or family producers, it is necessary to foster the activities of associations and cooperatives on the ground (which stimulate the rural economy), creating larger structures (regional networks and competitive clusters) which bring farmers closer to the portions of distribution channels with the greatest added value. This cooperative structure will make it possible to maximise yields and meet the diversity of demand, shortening distribution channels between production and consumption hubs (8). Furthermore, cooperative integration (9) ensures greater traceability throughout the process, in terms of both quality and price formation, which in turn means optimised resources and greater efficiency.

3.2.2 Cooperative social return. Profits earned within the cooperative network in turn benefit the participating cooperatives, enhancing their capacity to increase their market power, providing greater employability, wider access to basic resources and more favourable conditions for producers and consumers, fostering synergies in the new commercial relations environment.

3.2.3 Concentration of demand (10). Cooperatives, together with the promotion of consumer networks which focus consumer demand, are intended to help those consumers to access products under better pricing and quality conditions. Direct contact with producers can be achieved by means of local markets and by optimising online trading. This approach is in line with the objectives laid out by the European Union's main organisations of farmers and agri-cooperatives: "The objective is to promote/support farmers' initiatives selling directly their products to the end-consumer (e.g. direct sales at the farm-gate, through agricultural cooperatives, at local markets, through collective platforms or businesses under the control of the producer)." (11).

3.2.4 Circular market model (12) based on shorter distribution channels. In order to counter the excessive weight of operators who add no value to the agri-food marketing chain, distribution channels must be fostered that bring production units and consumption (i.e. primary producers and end-consumers) as close as possible together (13). This helps to create "market loops" which make it possible to adjust, in terms of means and costs, the available productive resources to the needs of the population, preventing surpluses or deficits, which may furthermore cause artificial price fluctuations. All of this will enable the food supply chain to operate in a fairer, more transparent and more balanced manner, helping to eradicate those abusive and unfair practices that jeopardise legitimate competition.

3.2.5 New technologies (14). Technological innovation provides the cornerstone for the growth of a more cooperative market, in terms of both the innovative development of agri-food production techniques and the logistical structure required to optimise the efficiency of communication processes when implementing smart production, distribution and consumption networks (organisations with a high capacity for self-organisation and the ability to develop flexibly, and with the capacity to learn how to act in order to achieve their objectives). Their virality, interoperability and interconnectivity within a digitalised environment will make it possible to cut out unnecessary middlemen. New technologies must therefore be the tools in a process to increase collective efficiency, given their capacity to produce change and introduce innovation into food chains.

3.3 Achieving a more cooperative market

The global transition towards responsible, sustainable production and consumption is intended to take a multi-stakeholder approach, in which each and every stakeholder can influence and be influenced by cooperative activity ("cooperative social co-responsibility"). One strategic issue to be taken into account in promoting cooperative and inter-cooperative consumption and production models is the provision of institutional mechanisms and instruments enabling the model to be established in a manner that can compete with the conventional value chain. Certain considerations may be useful when it comes to the relevant decision making process, including the following:

3.3.1 The adoption of measures in the context of EU policies. Reform of the legal framework and an appropriate policy of incentives are needed in order to promote measures to support the establishment of cooperatives by means of development agencies, financial credit etc., as well as cooperative integration and internationalisation measures, social innovation and cohesion measures, and measures to strengthen partnerships between public institutions and SMEs, cooperatives, consumer associations or other groups.

3.3.2 Cooperative public procurement (15). The progress made over recent years in the context of green public procurement and, more recently, in the adoption of ethical criteria in administrations' public procurement procedures have had a significant impact on the social and economic progress of sustainability and cooperation actions. The capacity of public procurement to serve as an example and the high volume of purchasing it entails undoubtedly make it a crucial instrument for promoting the intended objectives. Stimulating market flows between public administrations and cooperative networks can be a decisive factor in a new model of sustainable production and consumption.

3.3.3 Quality labels (16). Quality labels are indirect tools for promoting marketed products, certifying their origin, characteristics and attributes, and in this case the added value of the social aspect of cooperative production ("cooperative label"). This brand image enhances the reputation of products and enables agricultural associations to move from being production-focused to market-focused.

3.3.4 Transparency and information for consumers (17). Transparency, particularly with regard to quality and traceability, is a balancing factor in the value chain, in tandem with campaigns to make the public more aware of the purchasing decisions they make within a cooperative market. It leads to greater symmetry of information and coordinated action between production and consumption (necessary for the efficiency of a sustainability-based model), and links supply and demand, both temporally and geographically in the integration of the respective marketing processes. Consumer groups should also be prioritised, and channels leading to the concentration of final agri-food demand should be identified.

3.3.5 Education and training in social entrepreneurship and the cooperative movement (18). Although this is clearly a proactive instrument whose effect is only seen later, it is nevertheless vital in order to consolidate the changes taking place in the market. Learning and absorbing cooperative principles at school does not just foster a favourable attitude towards the cooperative system and towards cooperation as a source of confidence at an early stage in people's lives; it can also extend to the pupils' parents, encouraging them to adopt consumption patterns which are in harmony with the actions proposed. In this regard, fostering entrepreneurship amongst young people is particularly crucial, incentivising and stimulating the creation and consolidation of cooperatives, be it at the production, marketing or consumption stage. Knowledge, exchange and dissemination of good cooperative practices will undoubtedly contribute to all of this.

3.3.6 Differential tax treatment (19). Fairer taxation must gear consumption towards the efficient use of resources (20), taking more account of the content of each product in socio-environmental terms and the added social value of the cooperative approach. On the basis of a specific fiscal framework, tax incentives and compensatory aid are amongst the most direct and potentially effective instruments. As experience in various Member States has shown, the adoption of differential tax treatment promotes financial independence and autonomy but, like some of the initiatives proposed above, requires a prior impact assessment.

3.3.7 Use of technology. Technological progress and universal access to that technology are the best way to promote achievement of the objectives. In this regard, the following initiatives should be stressed: research and innovation in agri-food production, the creation of new marketing areas and distribution channels and, finally, high-quality certification, by awarding points for nutritional value, supply guarantees and other public benefits, and subtracting points for negative social, environmental and other external factors, so that criteria such as food safety and health, ecological and social footprints are taken into account and appreciated by consumers when it comes to prices and the corresponding production and distribution costs. This certification system would have to be implemented in conjunction with other elements such as smart telephony, specific IT applications and social networks.

3.4 Competitive advantages of the cooperative market

As well as the obvious benefits of a model based on economic and social sustainability and cooperation, the cooperative market offers a series of competitive advantages with implications for some extremely important aspects of EU policies in the following areas:

3.4.1 Economic: stable and secure access to markets for farmers' products, sustainable financing, socially responsible investments, stimulation of the market, safeguarding of competition, protection of consumer rights and interests, etc.

3.4.2 Social: land planning, rural development and inclusion, cultural heritage and local and regional identity, food sovereignty and security, non-over-production and the accessibility of food, social traceability of products, the non-relocation of companies, the guarantee of decent wages and improving working conditions, social responsibility and responsible consumption, community health and healthy lifestyles, direct participation by citizens in the decisions made by the institutions representing them, etc.

3.4.3 Environmental: energy saving, conservation of ecosystems, ecological footprints, agroecology and permaculture, rational and responsible use of raw materials and natural resources, the life cycle of agri-food products, the creation of green jobs as a way of expanding the market, etc.

Brussels, 11 July 2012. The President of the European Economic and Social Committee Staffan NILSSON

(1) Commission Communication on the Single Market Act, COM (2011) 206 final.

(2) Commission Communication on the Sustainable Consumption and Production and Sustainable Industrial Policy Action Plan, COM(2008) 397 final.

(3) EESC opinion A roadmap for moving to a competitive low carbon economy in 2050 OJ C 376, 22.12.2011, pp. 110-116.

(4) United Nations, General Assembly, Report of the Special Rapporteur on the right to food, Olivier de Schutter (A/HRC/19/59 – 26 December 2011).

(5) President Nilsson's conclusions on the Food for Everyone conference.

(6) EESC opinion A better functioning food supply chain in Europe (OJ C 48, 15.2.2011, p. 145).

(7) EESC opinion Cooperatives and restructuring OJ C 191, 29.6.2012, p. 24-30.

(8) Commission Communication Integrated Product Policy, COM(2003) 302 final.

(9) The integrated cooperative or collective interest cooperative society is emerging as a business formula, producing goods and services to meet a region's collective needs through the joint mobilisation of stakeholders.

(10) Commission Communication The CAP towards 2020: Meeting the food, natural resources and territorial challenges of the future, COM(2010) 672 final.

(11) The Common Agricultural Policy after 2013. Reaction of EU farmers and agri-cooperatives to the Commission's legislative proposals (COPA-COGECA, 2012).

(12) Salcedo Aznal, Alejandro. Consumer society or consumer networks? Outline for a social analysis of today's consumer (2008).

(13) Commission Communication on the Sustainable Consumption and Production and Sustainable Industrial Policy Action Plan, COM(2008) 397 final.

(14) EESC opinion The Community agricultural model: production quality and communication with consumers as factors of competitiveness OJ C 18, 19.1.2011, p. 5.

(15) Commission Communication A renewed EU strategy 2011-2014 for Corporate Social Responsibility, COM(2011) 681 final.

(16) Commission Communication The CAP towards 2020: Meeting the food, natural resources and territorial challenges of the future, COM(2010) 672 final.

(17) Commission Communication on the Sustainable Consumption and Production and Sustainable Industrial Policy Action Plan, COM(2008) 397 final.

(18) Commission Communication Social Business Initiative: Creating a favourable climate for social enterprises, key stakeholders in the social economy and innovation, COM(2011) 682 final.

(19) EESC opinion Diverse forms of enterprise OJ C 318, 23.12.2009, pp. 22-28.

(20) COM(2011) 571 final and opinion Promotion of sustainable production and consumption in the EU OJ C 191, 29.06.2012, p. 6.