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.