Enablers for economically viable agricultural cooperatives: a case study on Chile

Abstract

The food system in its current form is increasingly creating negative environmental and social outcomes. Agricultural cooperatives can play an important role in rethinking the system, by increasing farmers’ economic power and producing sustainably. However, many smallholder cooperatives have shown to not be able to survive without support. Therefore, this thesis aims to provide an answer to the question “what are the prerequisites for economically viable agricultural cooperatives and how can these be enabled?” As a starting point, a theoretical framework was composed that combines a widespread variety of literature that is or could be related to the prerequisites for economic viability of agricultural cooperatives. The prerequisites range from organisational characteristics to financials, supply chain integration, and market adaptation. Also, the structural components of the Technological Innovation Systems approach were added to the framework with the intention to structure the enablers accordingly. Subsequently, members and managers of eighteen agricultural cooperatives in Chile – varying in size, location, and purpose – were consulted through semi-structured interviews to collect the data. These data were afterwards analysed using two different approaches: a deductive approach to test the relevance of earlier-identified prerequisites, and an inductive approach to newly discover enablers for those prerequisites. It was found that the prerequisites can be divided into four categories according to their relevance for economically viable cooperatives. The prerequisites belonging to the fourth category were found to clearly distinguish economically viable cooperatives from the unviable ones and include: experience in the field; member commitment; access to finance; supply chain integration; and market adaptation. When afterwards analysing the enablers, specific attention was paid to how these prerequisites can be facilitated. From the interviews it became clear that different existing initiatives are already being useful for cooperatives in meeting the prerequisites. Examples are government support programs, youth council meetings, and implementation of sustainability certifications. However, existing initiatives have proven not to be sufficient in turning cooperatives into vertically integrated, economically viable organisations that contribute to a sustainable food system. To reach that, this thesis concludes that a less incremental and more dramatic shift is needed in which science and technology such as Food Traceability Systems can lead to competitive advantage. Multi-Stakeholder Partnerships can make this possible – even for small cooperatives – by bringing together many different actors such as governmental organisations, businesses, innovative product holders, and cooperatives.