Uruguay has a vibrant agricultural sector with an important cooperative sector. However, the sector is decreasing in influence, as their traditional economic services (input supply, storage and marketing) are increasingly delivered through contract farming arrangements by corporate food companies. The main instrument of family farmers for collective action in markets, the cooperative, needs to adjust its internal structure to the changing dynamics of markets and service provisioning. Traditional ways of serving the membership and to generate investment and working capital (e.g. through the state Development Bank) face strong disincentives that affect their competitiveness.
During 2009-2010 ESFIM activities concentrated on the good practices that exist in the cooperative sector and the possibilities and constraints for adopting these in other sectors. A survey on (differences in) members commitment to the cooperative was held in February 2010 .
In 2011, the research has broadened towards the study on the capacities in the cooperative for “agricultural innovation” and its use for small holders. The relevance of this theme is based on the fast developments and growth in the Uruguayan agriculture sector. The sector is booming, primarily by the corporate sector, mostly international companies, that benefit from their strength to generate investments, attract highly skilled personnel and access to low cost forms of financing. This results in a high density of technological innovations and high levels of specialisation. Economies of scale result in high productivity.
ESFIM Progress Report 2011
The ‘Support to advocacy agenda through collaborative research’ component of the ESFIM programme assists NFOs in developing countries with formulating feasible, evidence-based propositions for changes in key elements in the institutional environment that will enable effective market access for small-holders. In the annual report (ESFIM Progress report January-December 2011-En), an update of the progress of AGRINATURA research support is presented for the year 2011.
ESFIM-Uruguay Policy Issues
ESFIM-Uruguay in 2011-2012
Uruguay economic policies gear around innovation. The National Agency on Research and Innovation (ANII) is an inter-ministerial agency, created in 2007, and has commissioned a study on innovation in agriculture in 2010. The scope of that study is broad. Since the relevance of this theme for CAF, it decided to complement the ESFIM research activities to this study on innovation form the perspective of the cooperative sector. The attention will be on the social capital in the agricultural sector (including cooperatives, contract farming, etc.) necessary to link to the innovation system and improve competitiveness; and to the limitation in the innovation system from the perspective of cooperatives.
The board of CAF contracted the lead consultants in July 2011. The team is composed of two researchers that undertook a range of interviews with the key persons in Uruguay’s innovation system. They are closely involved with the key persons from ANII/INIAA as advisors of the study. In September they developed the conceptual framework for the study, and discussed this with the CAF board. The conceptual framework is available through this link: Macro conceptual- informe CAF-30 set
In November, additionally, CAF contracted three sectorial experts to focus the research to the innovation obstacles most relevant to the cooperatives in four sectors: agriculture, dairy, livestock and sheep products. Each sector has its own characteristics, as the relative competitiveness of the cooperative sector and the logistics and challenges in each of the value chains is different. The field research on innovation in the cooperatives will start in January 2012 and the research will be validated in a national workshop in March 2012.
ESFIM-Uruguay in 2009-2010
Complementary to the national workshop in December 2009, research had been done on the situation of the cooperatives compared to other institutional arrangements that link smallholders to markets, especially contract farming arrangements with agribusiness. A telephone survey was held to explore the loyalty of the members with their cooperatives. This survey on “Belongingness of cooperatives members with their organization” has been object of the analysis of the MSc thesis of Sabrina Samson (WUR), between March and July 2010. She analyzed a random sample of nine cooperatives. As part of the ESFIM-Program, the study focused on “Finance, capitalization and membership of cooperatives”, related to difficulties of Uruguayan cooperatives to generate their own capital. This problem can be stretched out even further, since in case of lending, the bank requires collateral, which in Uruguay is common to be provided by the board members personally. Through this, board members are discouraged to engage in more dynamic business strategies. A weak sense of belonging of members to the cooperatives can makes the cooperative functioning inefficient. The research objective of this study was to evaluate the social and economic performance of Uruguayan cooperatives by mapping differences between cooperatives and their members in relation to their perceptions on the performance of the cooperative’s service provisioning and internal governance systems. The study used a mixed design of qualitative and quantitative research methods on a random sample of Uruguayan cooperatives. Through Principal Component analysis two social performance indicators were distilled from the questionnaire, and compared with three economic performance indicators: return on equity, turnover per member and leverage of external capital.
As a side activity, in June 2010, ESFIM collaborated with CAF in a consultation process of the dairy cooperatives in Uruguay, Brasil and Argentina to explore new ways of generating capital from members and allied enterprises, by facilitating contacts with Onno van Beckum, an expert on European dairy cooperatives.
ESFIM-Uruguay Documents
Documents and Workshop Reports
The MSc-thesis of Wageningen University scholar Sabrina Samson, evaluates the social and economic performance by mapping differences in opinion on the 9percveived) performance on the cooperatives’s service and internal governance.
Performance and dynamics of Uruguayan Cooperatives: MSc thesis – Sabrina Samson
The survey on belongingness of cooperatives members with their organization has been analyzed in more detail in the MSc thesis of Sabrina Samson. She analyzed a random sample of nine cooperatives. As part of the ESFIM-Program, the study focused on “Finance, capitalization and membership of cooperatives”, related to difficulties of Uruguayan cooperatives to generate their own capital. This problem can be stretched out even further, since in case of lending, the bank requires collateral, which in Uruguay is common to be provided by the board members personally. Through this, board members are discouraged to engage in more dynamic business strategies. A weak sense of belonging of members to the cooperatives can makes the cooperative functioning inefficient. The research objective of this study was to evaluate the social and economic performance of Uruguayan cooperatives by mapping differences between cooperatives and their members in relation to their perceptions on the performance of the cooperative’s service provisioning and internal governance systems. The study used a mixed design of qualitative and quantitative research methods on a random sample of Uruguayan cooperatives. Through Principal Component analysis two social performance indicators were distilled from the questionnaire, and compared with three economic performance indicators: return on equity, turnover per member and leverage of external capital.
Download the entire document: Performance and Dynamics of Uruguayan Cooperatives
