Cooperative organisations are of major importance for the biobased economy

Even though countries differ appreciably in culture, everywhere in the world farmers growing wet crops organise in cooperative organisations. That will not be different in the biobased economy. On the contrary: such cooperatives, well rooted in their regional communities, will become the backbone of the biobased economy.

The ARD R&D centre in Pomacle, France, is a fine example of an industry firmly rooted in regional cooperatives.

Farmers’ cooperatives are a popular organisation form where farmers grow wet crops: potatoes, sugar beet, cassava, tapioca, grapes…. Wet crops start degrading after the harvest, storage is difficult or expensive, and therefore there is a premium to quick processing in a local factory. Although the meaning of the word ‘local’ might be stretched: as a rule, potatoes are grown within 50 km of the factory, but this distance might extend to 100 km. In cooperatives, farmers get better prices for their produce; and cooperatives dampen price fluctuations. Wheat farmers form much less cooperatives, that might well result from the much better storability of wheat.

Cultural differences
Farmers are independent in their crop choice, and therefore there is always some uncertainty for Northwest European cooperatives like AVEBE (potatoes), SuikerUnie (sugar) and Agrifirm (wheat). Wheat and potatoes are more or less interchangeable in crop rotation schemes, and they carry about the same income to the farmer. One percent more or less in a crop’s share will add up to many tons. Sugar beet, hemp and rapeseed are other alternatives. Typically, farmers are a member to a number of cooperatives, none of these is a monopolist.

Cultural differences do play a role in the daily operation of cooperatives. In a rather hierarchical culture like France, the cooperation would benefit from a strong chairman, whereas in a more egalitarian culture like the Dutch, farmers rather tend to view themselves as owners of the organisation. In Germany, farmers are more tended to value the short term and they have a greater tendency towards selling their produce to others than the cooperative, whereas in the Netherlands farmers are more willing to reserve funds for long-term like research. Nevertheless, in all cooperatives discussions tend to be fierce and protruded.

BioAmber ARD
BioAmber, the company that successfully developed the production of biosuccinic acid, also has a plant at the ARD site.

In the biobased economy as well
If cooperatives innovate sufficiently, they will try to valorise their produce to the maximum. In doing so, they might become a driving force towards the biobased economy. Because of their size and their solid financial basis, they can invest in long term developments. In particular if farmers, who usually tend to be careful in their finances, discover the potential of ‘forward integration’: venturing into the production of products higher up the value chain. For as we progress in the value chain, the return on capital becomes better. Farmers themselves yearly earn a mere 5% on their investments, often even less. In the agribusiness, to which the cooperatives belong, earnings tend to be more than double that amount. Chemical industry requires a return on investment of at least 25%. If cooperatives discover that they can double their earnings by engaging themselves in the chemical sector, we might witness swift developments.

This moving up the value chain is precisely what cooperatives like SICLAÉ and Cristal Union (that took the initiative for development centre ARD in Les Sohettes), SuikerUnie (with daughter Corbion) and AVEBE (with daughter Solanic) do. For the time being, they operate carefully, as would befit good and solid cooperatives.

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