nzdotcoop presentation at dekopin (indonesian cooperative council)
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Developing Successful Coopera3ve Enterprise The New Zealand Way
Ramsey Margolis
Execu3ve Director, New Zealand Coopera3ves Associa3on
DEKOPIN Fes3val IYC 2012 • Lombok, Indonesia • 23 May 2012
Important New Zealand dates
! 1840 – Treaty of Waitangi – a Bri3sh colony
! 1907 – became self-‐governing
! 1947 – formal independence
Some figures
! Popula3on of New Zealand = 4,400,000
! Most recent GDP figure = $161bn (US$126bn)
! 6,000,000 dairy cows + 31,000,000 sheep
! Less than 200 coopera3ves with more than 500,000 memberships
! Co-‐ops employ 43,000 people, their members employ 200,000 more
! 19 of the 200 largest businesses are coopera3ves
! 2010–11 turnover of coopera3ves and mutuals = $43bn (US$31bn)
New Zealand’s largest co-‐op
! Fonterra Coopera3ve Group
! New Zealand’s largest business
! owned by 10,500 dairy farmers
! 25% of New Zealand’s exports
Agricultural coopera3ves
! Half of New Zealand’s coopera3ves are in the agricultural sector: ! Meat = Silver Fern Farms + Alliance Group
! Dairy = Fonterra + Tatua + Westland + LIC + Dairy Goat Co-‐op
! Farm supply = CRT + Farmlands + Ashburton Trading Society
! Fer3liser = Ballance Agri-‐Nutrients + Ravensdown
! Fruit & vegetable = MG Marke3ng
! Packhouses = Satara + Eastpack + Nelson Apple + Future Fruit
! Insurance = FMG + Unimed + Southern Cross
! Seasonal labour = Seasonal Solu3ons
Keeping the wealth onshore
! Coopera3ves ensure that the wealth produced in New Zealand remains in New Zealand
! Coopera3ves are locally owned businesses
! Each co-‐op has a single focus, there are no mul3purpose coopera3ves
! Members of most New Zealand coopera3ves are small businesses
Success!
! Why do people join coopera3ves? What are they looking for?
! Lower commodity prices
! Lower service costs
! Higher returns on produce
How people operate their co-‐ops
! Share in the ownership of the business
! Manage the business themselves in a very direct, democra3c fashion
! Elect their board of directors
! Have a transparent set of financial accounts
! Reinvest in the community and/or pay patronage to people in the community
The things that maker
! Coopera3ves
! Deliver a service
! Are democra3cally run
! Inclusive of all members
! Keep the profits in the community
Otago Dairy Farmers Coopera3ve
! 1871 – New Zealand’s first farmer-‐owned coopera3ve
! Seven farmers got together
! Milk collected daily, processed into buker and cheese
Beker than mul3na3onals
! Ravensdown Fer3liser Coopera3ve – NZ$930m
! New Zealand, Queensland and Western Australia
! Capricorn Society – over AU$1bn
! New Zealand, Australia and South Africa
! Interflora Pacific Group
! members in 15 different Asia Pacific countries
Necessary ques3ons
! What is the problem that we’re facing?
! How do we come together to solve that problem?
! What is the business model that will work for us as a community to do this?
! Could it be a coopera3ve?
In a capitalist world, what makes for a successful coopera3ve?
Working together
! Markets fail
! Individuals and small businesses get together and pool resources
! IMPORTANT: the co-‐op has to operate effec3vely and efficiently
! purchasing co-‐ops reduce dependency on powerful suppliers
! marke3ng co-‐ops reduce dependency on powerful buyers
! Greater returns for the member’s primary business
Governments...
! Coopera3ves need good legisla3on
! does not discriminate against coopera3ves
! accommodates the special needs of a coopera3ve enterprise
! proper taxa3on policy
! government to make available exper3se and resources
! Co-‐ops are privately-‐owned business that are independent of government
Ensuring sustainability
! A co-‐op has to be a genuine business, efficient and profitable
! Owned and governed by its members – who transact with it
! First and foremost businesses, the social objec3ves are equally important
! Providing access to services
! Strengthening cohesion in the community
! Reducing poverty
Governments can help
! Outside help and a cri3cal perspec3ve to ensure
! Good governance
! Transparent elec3on processes
! Transparent financial accounts
! Management is nurtured
Crea3ng a value chain
! Members of the coopera3ve are producers
! Ver3cal integra3on to create a value chain
! Also minimises risk, making credit available to small farmers
DEKOPIN ... NZdotCoop
! What exactly is the role of a coopera3ve apex body? It should
! Offer training and educa3on for coopera3ves
! Work on behalf of coopera3ves as an advocate
! encourage coopera3on among coopera3ves, e.g. branding
! assist small coopera3ves that wish to merge
! help new coopera3ves to start
Essen3al business principles
! Propor3onality
! Service at cost
! Self-‐financing
Propor3onality
! In New Zealand, coopera3ves allocate
! revenues
! costs of transac3on
! member rights and du3es
! capitalisa3on
! liabili3es
! vo3ng rights
• according to how much business the member does with the coopera3ve
Service at cost
! Except when dealing with members, New Zealand coopera3ves akempt to minimise costs and maximise revenue
! Dealing with members though, a coopera3ve either
! sells to members for as likle as possible, with a small margin, or
! buys from members for as high a price as possible
! Coopera3ves are profit conscious not profit maximising
Self financing
! To survive as a coopera3ve, the business needs to be self financing
! Equity has to come from transac3ng members
! New Zealand law allows for up to 40% outside investors — DON’T DO IT!
! Retained earnings in a general reserve or in member accounts
Coopera3ve principles
! Keep to your coopera3ve principles and the co-‐op will thrive
! Forget your principles and the co-‐op will disappear eventually
! Members need to work hard to keep the coopera3ve as a coopera3ve
Interna3onal Year of Coopera3ves
! Opportunity for governments to strengthen an enabling environment
! NZdotCoop asked member businesses for sponsorship
! Launch at Parliament a tremendous success
! Research project looking at the contribu3on of coopera3ves to the economy
! Briefing pack, media kit, fact sheets, research results and more
Educa3on campaign
! Young people don’t appreciate what a coopera3ve can do for them
! Newspapers + the radio + the internet
! youtube.com/nzdotcoop + twiker.com/@nzdotcoop + linkedin.com + www.newzealand2012.coop
! New Zealand Law Society + New Zealand Ins3tute of Chartered Accountants
Interna3onal Conference
! Two panel sessions: banking and agriculture
! Professional development sec3on
! Coopera3ve research sessions
! Register through a website at www.nzascm.coop
! Par3cipants from Australia, Belgium, Canada, Egypt, India, The Netherlands, New Zealand, the USA ... and more … people from Indonesia?
Coopera3ves contribute
! Coopera3ves make a HUGE contribu3on to the New Zealand economy
! They do so because they are
! Responsive
! Responsible
! Innova3ve and proac3ve
Responsive
! Coopera3ves are responsive to members and the market
! There are no government subsidies, nor any protec3on
! Ac3vely listening to what members want
! Offering effec3ve leadership
! Ahead of the market with quality products
Responsible
! Coopera3ves are responsible to local interests
! People are beker served in a global economy by a local coopera3ve than by global capitalism
Innova3ve and proac3ve
! Coopera3ves need to be innova3ng constantly
! Fonterra, the Dairy Goat Coopera3ve, Silver Fern Farms – all have significant research budgets
! The Coopera3ve Bank was the first in New Zealand to offer telephone banking and cellphone text banking
Final thought
! Your farm is your business
! Your coopera3ve is your other business
Thank you
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