Harnessing the “Cooperative Advantage to Build a Better World” was the theme of a workshop organized by United Nations Department of Economic and Social Affairs Division for Social Policy and Development recently in Ethiopia.

The workshop was attended by three illustrious cooperative personalities from India- Dr Dinesh, Chief Executive of NCUI, Dr G N Saxena, Director Cooperative Development at Iffco, and Lalita
Krishnaswamy from SEWA.

Dr Dinesh was acting as an expert while Mrs Krishnaswamy presented her views on how to create and maintain a successful cooperative. SEWA is indeed a living example of this.

Dr Saxena who lectured three times during the two-day conference told Indian Cooperative that what cooperatives could do for local area development, corporates cannot even dream of. The cooperative model is usually small and involves the participation of local people. The local populace constitutes its market. Thus you have a system which is self-contained and self-sustaining, Saxena added.

Dr Saxena expounded at length the difference between Corporate and Cooperative and cited the factors such as outward flow of fund, invasion of local climate and selfishness in the case of corporates.

The workshop was excellent and we remained pushed into the seminar-hall without any break till evening. There was no sight-seeing and it was business and business alone, remarked Dr Dinesh, Chief Executive of NCUI. “We need to inculcate UN culture in our country where seminars and workshops often degenerate into casual exercises”, he lamented.

-By James Morrison

Cooperatives can learn something from Facebook, especially when they are hunting about for ways of accessing external investor capital. Mark Zuckerberg wrote a crucially important letter in February 2012 to potential Facebook investors where he stated his mission for Facebook:

“We don’t build services to make money; we make money to build better services”

This statement applies equally well to cooperatives. Cooperatives don’t exist to make money per se. Cooperatives exist to provide valued services for members, whether that be collective purchasing, processing of produce, or whatever. It is the quality and economy of this service that defines the cooperative.

What is interesting, especially in context of the May 2012 IPO and consequent fall in share value, is that Facebook investors didn’t pay attention to the implications of Zuckerberg’s statement. They paid a 60x multiple of earnings when Apple and Google were trading around 15x. Facebook’s profit margin was also already at 50%, leaving questions as to the future upside.

If there was any doubt that they might be in for a rocky start, Mark Zuckerberg did nothing to comfort them. In fact, he made it clear that he would not comfort them, listen to them, or be in any way distracted by the demands of investors. He did this by structuring the company to ensure he retained near-complete control of it with 57% of voting rights although he would retain only 22% ownership.

Zuckerberg is not naive. He is simply focussed on the long term, and he believes that this means putting the needs of members before those of investors:

“By focusing on our mission and building great services, we believe we will create the most value for our shareholders and partners over the long term – and this in turn will enable us to keep attracting the best people and building more great services. We don’t wake up in the morning with the primary goal of making money, but we understand that the best way to achieve our mission is to build a strong and valuable company”.

Cooperatives should take their lead from Mark Zuckerberg and issue similar statements when consorting with external investors. I imagine that less grief would have followed Satara’s partial listing if they had been this clear and uncompromising about the interests of kiwifruit growers. It is also particularly relevant to the impending public offering of investment units in Fonterra’s Shareholder Fund. It would be refreshing (and reassuring) if Theo and John were to state the following in a public letter:

“Fonterra doesn’t build dairy processing and marketing capabilities to make money; we make money to build better dairy processing and marketing capabilities, so we can provide sustainable returns to our New Zealand dairy farmer members”.

If the Facebook IPO is anything to go by, investors would simply ignore this statement and focus instead on what they wanted to hear. However, dairy farmers would derive great comfort from it and it would establish a clear moral authority in any future disputes with investors. In fact, a Zuckerberg-esque intention statement included in the prospectus would limit potential future claims by investors regarding breaches of the Securities Act and Fair Trading Act. Certainly no one could then argue they were misled by the cooperative when it acted solely in the long-term interests of dairy farmers.

-By arrangement with Newshub, ICA

Ramsey Margolis is the Executive Director of New Zealand Cooperatives Association. The letter is written to me and through me to the cooperators of India. We are sure it’s a good opportunity to learn and share the cooperative values. Excerpts

Ajay hi,

Each year, the New Zealand Cooperatives Association runs an education seminar in Wellington for directors and executives of member cooperatives and mutuals. Last year fifty people from New Zealand, Australia, Canada and Thailand were involved over the two days, it was a tremendous success.

This year’s seminar will be on Wednesday 12 and Thursday 13 September. Would you or any of your colleagues from India be interested in attending? As an educational experience it would be formidable, and as a co-op networking event, these seminars are second to none — I’ve no doubt that Indian cooperators would make useful and worthwhile contacts there.

The theme is ‘Why A Co-op?’ and we will be looking at what it takes to run a successful member-owned business. For the first time, we will have a keynote speaker: Paul Hazen from Washington DC.

Paul was until recently the CEO and President of the National Cooperative Business Association, and I don’t doubt that from his 25 years experience with that organisation will have much to offer on the success of US cooperatives. (Incidentally, there are 29,000 cooperatives in the USA, and the 100 largest had a 2010 revenue of US $194 billion.) We really are fortunate to be able to bring Paul to New Zealand and I strongly encourage you to ensure you have a presence there.

There’s a web page for this event at http://nz.coop/education-seminar-why-a-co-op/. By the end of the week, it will be possible to go to that page and register online for the seminar.

Due to space limitations we are restricted to forty people this year and I’ve every reason to believe we will get that number, so I advise you to decide sooner rather than later.

If you have any questions, don’t hesitate to get in touch.

Cooperatively yours,
Ramsey Margolis
Executive Director

Robin Murray, visiting faculty in London School of Economics has focused on the theme of modern economic crisis and cooperatives in his latest article The Cooperative Turn.

The article is subtitled “Building the right kind of autonomy,” and it provides an excellent overview of what cooperatives can offer a world that is in economic crisis.

Murray was co-founder of Twin Trading, a fair trade company, and is a senior visiting fellow at London School of Economics. His analysis covers a lot of ground, including specific examples of financial, consumer, and other cooperatives in the U.K.,Japan, andGermany. From his concluding section, this passage:

“In the 20th century, the joint stock company drove the revolution in mass production. Scale ruled and clubs were trumps. But the zeitgeist is now moving back towards human-scale and cooperation.

The 21st century has seen a return to the micro, to self-governing units networked together as part of larger, complex systems.

“Cooperatives have been experimenting with such collaborative systems for some 150 years. There is a wealth of experience of what does and doesn’t work, of the pitfalls but also the extraordinary economic and human value they generate when they get it right.

They have been able to reconnect that which has become separated: the personal and the social, the consumer and the producer, finance and industry, the enterprise and its community, and at their best, in the spirit of William Morris, the head, the heart and the hand.”

– thenews.coop

Anthony Murray

The Co-operative Group is set to become a major challenger in banking following the acquisition of 632 branches from the Lloyds Banking Group.

The Group announced that it has agreed to proceed with the purchase of the branches, along with an estimated 4.8 million customers, which will take its market share from 1% to 7% with a total of 11m customers.

Subject to approval by the FSA, the transaction is expected to be complete by November 2013; and will bring almost 1,000 branches under The Co-operative Bank brand taking up 10% of the British banking network.

This deal includes 164 Cheltenham & Gloucester branches, along with 284 Lloyds TSB branches in England and Wales and 184 across Scotland, which are a part of Verde created out of the Lloyds Banking Group due to EU competition regulations.

When a bidding war broke out with NBNK last year, the estimated price tag was £1.5 billion. But that price is now considerably less with the Group paying £350m upfront, along with an additional £400m based on performance targets before 2027.

Group Chief Executive Peter Marks said this deal would deliver the “biggest shake-up” in high street banking in a generation. He added: “It would be a great deal for customers because it would make the services of our member-owned, customer-led, ethically-driven, bank available to millions of people we’ve not been able to serve up until now.

“It would be a great deal for the taxpayer because as well as receiving a fair price up front, the deal would also mean they would share in the profits of the enlarged bank for years to come.

“So far as UK banking generally is concerned, this would be a great deal because it would help restore trust in a sector whose image has been badly tarnished over recent years.”

Peter Hunt Chief Executive of the mutuals advocacy organisation, Mutuo, said: “Today’s announcement is excellent news for the Co-operative Group, its customers and the entire mutual sector. This move will greatly increase choice on the high street for consumers that are looking to do business with a customer focused and owned bank. It will also increase corporate diversity in the financial services sector and help to challenge the banking monoculture that led to the financial crisis. Peter Marks has transformed the Co-operative Group family of businesses into major players on the UK high street.”

Chancellor George Osborne also welcome the purchase by the Group, he said: “This is another step towards creating a new banking system for Britain that gives real choice to customers and supports the economy.

“The sale of hundreds of Lloyds branches to the Co-operative creates a new challenger bank and promotes mutual.”

The new Chief Executive of the combined banking business will be Paul Pester, who is currently Chief Executive of Verde.

Co-operatives UK has launched a new website to offer women from around the Movement a place to collaborate, network and develop responses to the 2020 Co-operative Women’s Challenge.

The site will be developed further in future, based on the inputs and ideas from women across the sector.

Co-operative researcher Dr Rachael Vorberg-Rugh commented: “Women have been at the heart of the Co-operative Movement for generations.

“I hope that in 2020 we see an even greater commitment to ensure that co-operative committees and management teams reflect the diversity of UK society, and that the Movement takes a leading role in campaigning for women’s economic and social inclusion in all countries and communities.”

Ed Mayo, Secretary General of Co-operatives UK, added: “Over half the UK’s population is female and six out of every ten university graduates are women. Women are 46 per cent of the economically active workforce – yet they are still under-represented in British businesses, especially senior management.

“Our new website has been developed by our members to help support women and give a focal point for sharing information and networking and help put women at the heart of the Movement.”

The Co-operative Women’s Challenge 2020 was launched a year ago to address the under-representation of women in the Movement.

FAO and OECD have said the world is still experiencing a demographic explosion and the farm production has to be ramped up at least by 60 percent to meet the food requirements of this huge population.

The UN agencies told the media in Rome farmland is not likely to increase and the resources available are severely limited. A major portion of farmland in the world has suffered degradation because of excessive farming.

Increasing productivity in a way that does not harm environment seems the only way to meet the challenge posed by growing population and decreasing farm production, they added.

According to the UN agencies, there is the glimmering of a hope in the developing countries as they still have scope for further improving their agricultural output.

In the light of FAO’s observations it is obvious that cooperatives in India have to shoulder bigger responsibilities in the times to come.

The UN Secretary General, Ban Ki-moon marked the International Day of Co-operatives by issuing an official message to co-operators across the world:

“In this International Day of Co-operatives we celebrate how co-operatives build a better world, by advancing sustainable development, social integration and decent work.”

“Co-operatives empower their members and strengthen communities. They promote food security and enhance opportunities for small agricultural producers. They are better tuned to the local needs and better positioned to act as engines of local growth.

“The global crisis has also proved the ability of regeneration of the alternative financial institutions such as co-operative banks or gold and credit union co-operatives.”

Ban Ki-moon also said that co-operatives play a fundamental role in sustaining the local communities by offering employment opportunities for women, young people across the world.

“By pooling resources they enable access to finance, information and technology.

“In this International Year of Co-operatives, I encourage all stakeholders to continue building awareness and pursuing policies to strengthen co-operatives elsewhere. By contributing to human dignity and worldwide solidarity, co-operatives indeed build a better world.”

Dame Pauline Green, President of the ICA, described co-operatives as a “huge and inspiring movement”. She described how co-operators across the world have been celebrating the International Year of Co-operatives, from the Nepalese co-operators who took the ICA flag to the top of Mount Everest to the release of four children’s books on co-operation in Singapore.

“The critical thing for us this year is to raise the profile of our inspirational movement, and tell the stories about these wonderful co-operatives,” she said. “We hope that at the end of this year, we will pivot and transition from a really successful exciting International Year to a decade of co-operative growth.”

Chuck Gould, Director of the ICA said the year “is the time to tell the co-operative story to a wider audience. Co-operatives are a key part of the way forward for the 21st Century economy.”

The statement describes the role of co-operatives in the global economy, stating that the 300 top co-operative companies have a combined annual turnover of USD 1.6 trillion and that they provide over 100 million jobs worldwide.

In Kenya, co-operatives contribute 45 percent of GDP and in the US 30,000 co-ops employ two million people. “Co-operatives are values-based enterprises. The co-operative has the greatest degree of participatory governance of any of the major enterprise models. Because of this member engagement, co-operatives reflect the values of the community,” Mr Gould said.

He continued by saying that co-operatives cover every sector from agriculture and fisheries to banking and credit unions, “they are building a better world,” Mr Gould added.

British co-operatives have outperformed the UK economy for the fourth consecutive year. Annual figures released by Co-operatives UK, show the British movement has grown 1.5% in 2011, which is twice the rate of 0.7% in the UK economy.

The sector has coped well with the financial crisis and while the real level of GDP in the UK in 2011 is 1.7%, the turnover of the co-operative sector has grown by 19.5% over the same period.

Following the publication of the report Ed Mayo, Secretary General of Co-operatives UK, said: “This is good news for business and for our new emerging economy. At a time where our economic system is undergoing fundamental change and critical analysis as to its suitability for the future, this is evidence that broadening ownership and control, prioritising social and environmental impact alongside profit is a resilient alternative to austerity.

“Co-operative businesses are more resilient, 98% are still in operation after three years compared to 65% of all businesses, over half of them (56%) are in disadvantaged areas in the UK and 88% seek to minimize their environmental impact when 44% of businesses say they have taken no action whatsoever.”

The movement’s annual report, which covers 5,933 co-operatives, indicates that the model of sharing ownership and control with members not shareholders, while benefiting the society and addressing environmental concerns, is a successful one. The Co-operative Group, John Lewis Partnership, Midlands Co-operative Society and United Merchants are among the largest co-operatives from the 2011 financial year.

The news has been so significant that as cooperative success stories appeared on BBC Breakfast, BBC Five Live and in several national newspapers.

The media attention was in response to the report released by Co-operatives UK that showed co-operative businesses outperformed the market for the fourth year in a row.

The story was covered by papers from nationals such as the Guardian, and the Financial Times to local papers including the Manchester Evening News and the Scotsman.

When asked on BBC Five Live about why co-operatives were performing so well Mr Mayo said: “When times are tough you need to keep people in the business close to you, you need your customers to be loyal and your workforce to be motivated. This is what the co-operative model does really well.”

He added: “What we have seen in this report today is a real sense of public trust still in the co-operative business model.”

In response to a statement about whether it is big businesses that are creating new jobs, Mr Mayo added: “I think actually it is almost the opposite. Across the economy as a whole, its big business that destroys jobs and its small firms that really do create jobs.”

Courtsey: ICA Newshub

A Chinese dairy company is reported to have suddenly recalled  its milk products from the market. The move has followed the revelation that the company’s products were spiked with a chemical generally used in cleaning pipes.

However, sources say the reported contamination was not a suspicious deliberate act but attributable to leakage of the lye chemical into the production line of the milk factory.

The latest incident has blown a big hole in the already compromised image of the dairy industry in China. Already in 2008, a leading Chinese dairy company’s baby food had killed 6 infants and damaged kidneys of hundreds of thousands of babies.

Commentators say the incident is likely to dent the image of the Chinese industrial products worldwide at a time when   its economy is showing signs of  weakness.