A Formula For Success
Promar International Report 2006

Executive Summary

Download the report here (400KB PDF)

Aim of research:

The respected consultancy, Promar International, looked at a range of international agri-food co-operatives in order to identify why, and how, they have been successful and to see if any conclusions could be drawn about the future of dairy co-operatives in the UK.

Methodology:

The study involved a two step analysis:

• identification of the success factors relative to the industries in which the six co-ops analysed operate, and
• identification of the success factors relative to the co-ops themselves.

The six key success factors by which the co-operatives were ranked were:

• history of co-operation
• homogeneous member group
• professional management
• aggressive adaptation to meet market needs
• level of vertical integration, and
• government involvement.

Participants:

The report is based on six case studies:

• Arla Foods – Largest dairy co-operative in Europe – Denmark/Sweden
• Fonterra – Leading multinational dairy business - New Zealand
• Sodiaal – Leading dairy co-operative - France
• Danish Crown – Europe’s biggest pork processing company - Denmark
• Limagrain – Extensive cereal breeder/seed company - France
• The Greenery – Leading seller of Dutch horticulture – The Netherlands

Key findings:

The key findings are that these co-operatives, based in Europe and New Zealand, are modern, innovative businesses, displaying the characteristics of successful quoted or private equity businesses, but importantly returning their profits to their farmer members.

The report found that a successful agri-food co-operative is one that:

• Competes in both domestic and international markets
• Meets the demands of diverse and demanding consumers
• Invests in research and development
• Makes investments downstream in food processing.

In addition, a number of other key factors impact on success including the attitude and involvement of the Government, levels of education and training provided to co-operative members, the engagement of professional managers and high levels of vertical integration within the business.

Conclusion:

Co-operatives have been successful in other parts of the world for a number of complex and inter-related reasons but of particular importance are:

• the attitude of the country’s government
• the existence of competition policy that allows mergers and acquisitions
• investment in technology, skills and expertise
• engagement of professional managers at both Board and Executive level
• involvement of members in an ongoing process of education and training in business and production standards
• high levels of vertical integration.

Download the report here (400KB PDF)