‘Co-operative Identity’ – a Concept for Economic Analysis and Evaluation of Co-operative Flexibility: the Dutch Practice and the Hungarian Reality in the Dairy Sector

Dr Gábor G Szabó

Problems of farmers and co-ordination of (agricultural related) activities cannot be solved simply by EU and/or government support; instead, private-market co-ordination institutions, like emerging producers’ groups and co-operatives seem to be vital in establishing bargaining power. In theory and according to Western European (Dutch, Danish etc) and US practical experiences, one of the main important private institutions which can strengthen producers and help to co-ordinate (agricultural) chains is the co-operative form. In order to be able to fulfil the basic co-operative aims and to be able to compete in a more market-oriented environment (eg more liberal agricultural policies, opening European and world market, etc) they will execute new marketing strategies. To be able to implement such new marketing strategies, co-operatives have to collect more risk-bearing capital and this is currently precipitating some fundamental financial and organisational changes in Western European agricultural co-operatives. To be able to keep the basic co-operative character, they are undertaking internal and external organisational changes, which in a number of cases will create so called new co-operative structures/models. In this paper, the concept of the ‘co-operative identity’ (consisting from the definition, aims and functions of co-operatives, as well as the so-termed co-operative principles) is proposed to serve as a general theoretical background for the economic evaluation of the flexibility of (agricultural) co-operation. Approaching the concept of the ‘co-operative identity’, the Dutch (dairy) co-operative development is used as an example, which suitably illustrates and represents the processes currently taking place in the European Union. The main goal of our study is to show Dutch dairy co-operative development, with conclusions for the Hungarian situation. It is necessary to state that Hungarian agriculture and co-operatives are at a different stage of development, so one can not expect the most recent organisational forms to be established in Hungary, especially taking into account that the Hungarian dairy market is already dominated by multinational nonco-operative (investment oriented) firms. However, further establishment of the collecting and the bargaining type co-operatives and the development of existing dairy producers’ groups would be essential for the Hungarian milk producers. ‘Co-operative Identity’ – a Concept for Economic Analysis and Evaluation of Co-operative Flexibility: the Dutch Practice and the Hungarian Reality in the Dairy Sector