Over the last years, best practices and organisational models have been assessed to find those elements that foster the development of the bioeconomy in the EU primary sector. In 2019, the European Commission stated in a report -resulting from a workshop on the role of cooperatives and cooperation structures of primary producers for mainstreaming the bioeconomy- that cooperation-based structures presented the right preconditions for the successful development of the bioeconomy.
What is a cooperative? The EU framework
The term cooperative means:
“An autonomous association of persons united voluntarily to meet their common economic, social and cultural needs and aspirations through a jointly-owned and democratically-controlled enterprise” – R193 Promotion of Cooperatives Recommendation”, Geneva, ILO (2002).
These associations are key agents for the EU economy: there are 250,000 cooperatives in the European Union (EU), owned by 1/3 of the EU population (163 million citizens) and employing up to 5.4 million people in the EU. Moreover, their market share in the EU primary sector is substantial in some areas, for example:
- Agriculture: 83% in the Netherlands, 79% in Finland, 55% in Italy and 50% in France
- Forestry: 60% in Sweden and 31% in Finland
5 reasons that make cooperatives attractive to EU primary producers:
There are different reasons that make the cooperative business model attractive to EU primary producers. Namely, cooperation-based structures:
- Increase the bargaining power of primary producers: a bigger production volume allows the development of economies of scale, necessary for the creation of certain value chains.
- Reduce market risks for primary producers: bigger entities enjoy reduced transactional costs, better access to resources, and a strengthened competitive position to distribute and commercialise their products.
- Contribute to the establishment of new practices in primary production, fostering technology transfer and innovation.
- In many cases, support environmentally friendly products and practices: from production to the market.
- Finally, fully involve primary producers in the business model, helping farmers capture a higher share in the food supply chain.
How do cooperatives foster development in the bioeconomy?
Cooperatives foster the deployment of the bioeconomy in various ways:
- Cooperatives allow individual farmers to maximise their economic benefits through positive practices for the bioeconomy. Through cooperatives, individual farmers better valorise the biomass produced, make use of resource-efficient systems and optimised business models, apply new circular models, and develop new alliances.
- Cooperatives make farmers stronger to face climate change challenges. Cooperatives provide technical advice, foster knowledge exchange, capacity building and innovation, supporting the development of sustainable business models in the bioeconomy.