The agri-food sector – livelihood and local self-sufficiency

Livelihood and local employment

The revitalization of Cooperatives

Socially supported agriculture

Supporting local self-sufficiency

The food sector is one of the three main sectors, on which the livelihood of the economically weak depends, in the most necessary goods needed for living. For many also, small agricultural crops and animal husbandry are a supplementary income, supporting the low-wage earners as well as offering additional jobs for the social needs.

For a significant part of society, the minimum wage is barely enough for basic needs and only covers survival, such as energy, food and housing, while it does not cover the needs for education and health. Thus, the participation of these citizens in agricultural or consumer cooperatives can provide additional income or even reduce the cost of living. In addition, it can create opportunities to boost local employment, where economies of scale are needed to benefit smallholder farmers. And this makes it necessary to promote the social economy in the agricultural sector in the form of productive and consumer cooperatives.

More generally, in Europe it is observed that there is a tendency for the revival of cooperatives. And as we emphasized in previous chapters the inactive resources both in the Local Government and in the small landowners. These conditions are challenging for the utilization of inactive resources through cooperatives.

The food crisis and the precision in agricultural products that threatens, among others, Europe, is an additional reason to consider local agro-food self-sufficiency as well as dealing with the effects of increased energy costs and the energy crisis affecting agricultural production.

The revitalization of Cooperatives and the viability of small producers

In Europe, the renaissance of cooperatives in the last decade is a remarkable event for economic trends. The number of cooperative enterprises that operate in Europe, having 123 million members and offering work to 5.4 million people. In fact, in countries such as Germany, Italy, France or Spain, appear to have relatively higher performance, while emerging more stable in periods of crisis.

These are mentioned, among other things, in an opinion of the European Economic and Social Committee on “Cooperatives and restructuring”, in which it is characteristically pointed out that “the evidence shows that in times of crisis cooperatives aremore durable and stable than other forms of business and are able to develop initiatives”.

At an organizational institutional level there are over 3,800 large secondary producer associations that have been recognized by national authorities in 25 different member states. Germany, Spain, France and Italy are the four Member States with the most Producer Groups or Associations of Producer Groups. The Commission recognizes the positive effects of Producer Organizations in the primary sector.

More than 50% of recognized producer organizations operate in the fruit and vegetable sector (1,851). Over 100 recognized organisations, active in seven other sectors, milk and milk products (334), olive oil and table olives (254), wine (222), beef (210), cereals (177) and pork (101).

In the UK co-operatives are booming for everyone the sectors and it is typical that after 2009 the turnover them increased by 10% when the British economy contracted by 4.9%. In 2010 the cooperative sector continued to growing by 4.4% compared to growth rate on  of the entire UK economy of its class 1.9%.

In Italy, employment in cooperatives increased by 3% in 2010, while total employment in the private sector saw a decline in class  of 1%. The crisis in the field of social welfare has a resulting in the multiplication of the number of social cooperatives at a rapid pace. Cooperatives have a larger life expectancy. One third of the cooperatives established between 1970 and 1989 they still operate against one fourth in the case of other businesses.

In the case of Spain, which has been seriously affected by the crisis, the decrease in employment in 2008 and 2009 was of order of 4.5% in the cooperative sector compared to 8% in conventional ones businesses. The European Economic and Social Committee estimates that the cooperatives should be considered in all policies of the EU that contribute to smart, sustainable and inclusive development, noting at the same time that safeguarding is required equal conditions of competition between cooperatives and other forms businesses. He also emphasizes that the programs and funds that are foreseen for the upcoming fiscal period 2014-2020, should be useful tools to support themcooperatives.

Greece has a limited extent of cooperative activity in the context of the social economy. Only 0.4% of the total economy is the participation of agricultural cooperatives. However, there are several qualitatively good examples that show us that, where Cooperative entrepreneurship is properly implemented, it has a catalytic effect on local society and local employment.

To what do cooperatives owe their economic viability?

Cooperatives owe their resilience to the fact that they emphasize cooperative growth, not shareholder profits. That is why 40% of the profits are reinvested in the common cooperative “bank”. The corresponding percentage in conventional businesses is only 5%. The majority of cooperatives are self-financing and do not rely on the state. Cooperatives appear where small and medium enterprises leave due to low profitability whereas cooperatives operate even with very low profit.

Given the conditions of low profitability in the agri-food sector, the only realistic way to achieve economies of scale is to massively increase the degree of cooperation within the cooperative organization, at all levels and in all ways.

Traditionally, we know that cooperatives have been a way of survival for small and medium-sized enterprises, pooling cash to buy raw materials and products at discounts, reducing their operating costs and maintaining common departments with economies of scale. In their development, however, many of them became normal joint-stock profit-making companies and were cut off from their original purpose. Of course, any form of entrepreneurship is acceptable and can contribute to the sustainable well-being of society, but it does not have the same social impact or the same social benefit to be sponsored by the state and the community.

First, the gradual shrinking and withdrawal of the welfare state which increases the needs of social solidarity.

And second is the growing technological unemployment.

When the state began to withdraw, private philanthropy tried to fill the gap by funding non-profit initiatives, but the funds available to communities were small compared to state revenues. Caught between an increased social burden but with reduced revenue to address critical community needs, nonprofits began to look for new business models that could match their primary mission and provide a supplemental source of income. income for the operation and expansion of their services.

The prospect of a paradigmatic model that can reduce marginal cost to near zero makes private enterprise less efficient because its survival depends on profit maximization. Cooperatives are therefore the only business model that will be able to work in a sector where the competitiveness of large monocultures has dramatically reduced the income of small farmers.

The key to small farms therefore lies in investing in social enterprises that do not aim at profit, but offer work and additional income to the local community and, on the other hand, reduced costs of social services.

With this approach we foresee a growing demand for social, energy and consumer cooperatives with the aim of reducing transaction costs and supplementing household incomes.

Socially supported agriculture

Organizational innovation in the agri-food sector is socially supported agriculture. The consortium of producers and consumers.

This means direct cooperation between an organized group of Consumers with one or more producers of food products, where the benefits and losses of Agricultural activities are shared jointly by producers and consumers without Commercial mediation. It is a more advanced stage of cooperation than producer cooperatives.

Organizational communication today between consumers and producers is facilitated by the internet.

“Community Supported Agriculture” was born in Europe and Japan in the 1960s and spread to America and Canada in the mid-90s today it is spreading throughout Europe.

“Socially Supported Agriculture” in process and design is similar to Contract Agriculture but differs in social goal. In Contract Agriculture, producers cooperate with large traders of agricultural products, while in Socially Supported Agriculture, small producers cooperate with consumers.

Today, these communities of Producers and Consumers in the agri-food sector, together with the energy communities are the catalysts for the development of the social economy.

But how does this cooperative relationship of consumer producers work in practice?

In essence, consumers become partners-shareholders in the production process in order to secure the products they consume from specific farms.

Consumers, usually living in cities, pay a fixed amount of money to cover the farmers’ annual expenses. In return, they receive a share of the harvest. Typically, the share consists of a box of fruit and vegetables delivered to their doorstep (or a pre-arranged pick-up point) immediately after they are harvested, resulting in a steady flow of fresh local produce to consumers.

Most of these farms use ecological practices and organic farming methods. As Community Supported Agriculture is a cooperative venture, based on the sharing of risk between consumers and farmers, consumers benefit when the harvest is good and suffer the consequences of a bad harvest. If the crop is damaged by bad weather or some other accident, consumers absorb the losses by reducing the food items they deliver on a weekly basis. This kind of sharing of risk and reward unites consumers and farmers in a common enterprise.

The Internet plays a decisive role in the contact between farmers and consumers, as it enables the distributed and cooperative organization of the food chain. Thus, within a few years, Community Supported Agriculture has expanded internationally from a dragon of pilot consortia to nearly three thousand businesses supplying tens of thousands of consumers.

The “Community Supported Agriculture” model particularly appeals to the younger generation, who are familiar with the idea of ​​collaboration in digital social spaces and extends to the agri-food sector. In addition, the growing appeal of Community Supported Agriculture reflects both growing consumer consciousness and interest in the need to reduce the ecological footprint. By helping to eliminate petrochemical fertilizers and pesticides, carbon dioxide emissions, and packaging, advertising and promotion costs associated with the existing food production and distribution chain, consumers participating in the Community Supported Agriculture model enjoy a more sustainable way of life.

More and more farmers participating in the Community Supported Agriculture model have started to convert their farmhouses into small power plants, using solar energy, wind energy, geothermal energy and biomass, thereby reducing energy costs. Consumers also benefit from this saving, as the amount of money they pay as a subscription is reduced.

In all of these new collaborative business practices spanning the entire spectrum of the economy, the horizontal structure trumps the vertical structure of traditional corporate giants that hierarchically organize economic activity.

.As a consequence, the movement of products from door to door creates needs for the employment of human resources, and in fact without particularly technical qualifications.

Supporting local self-sufficiency

The problem of local self-sufficiency in nutrition is imperative after energy and food precision in Europe. At the same time that the globalization of the economy is becoming expensive in basic items such as energy and nutrition. At the same time that the monoculture model of large farms is becoming problematic due to the high cost of energy and transport. These effects also reflect in the agricultural sector with a limitation in employment.

We know that globalization has promoted large monocultures at the expense of what was once local agro-food self-sufficiency.

Dominate markets in terms of competitiveness by finding cheaper labor costs and energy costs. This resulted in the demographic abandonment of the rural area since the industrialization of agriculture required fewer hands.

However, the globalization model of Georgia is currently showing cracks due to the unemployment it causes. But also for the effects on the cultural issue of internal migration from the village to the city (urbanization) causing the demographic desolation of the countryside and consequently the reduction of employment in the rural area where there are many fragmented resources.

After a century of petrochemical-based agriculture that made family farms an endangered species and gave birth to agribusiness giants like Cargill and ADM, a new generation of farmers is tipping the scales by selling their produce directly to consumers .

Indeed, since globalization for a number of reasons is becoming more expensive as “cheap labor costs” increase in developing countries, the question of local self-sufficiency as an alternative attitude to sustainability in the local economy is naturally raised.

The problem cannot be addressed only in the context of the globalization of the market but by reducing production costs at the local level as well.

Thus we observe that in the agri-food sector there is a demand for employment for workers but there is no corresponding supply because the unemployed are in the urban centers and it is difficult to relocate to the in villages without social infrastructure.

How could this problem be addressed through strengthening the collaborative culture?

The economic goal for local self-sufficiency requires a change in the paradigmatic model and institutional and organizational infrastructures for the development of cooperation and the social economy which is a necessary condition for local self-sufficiency.

The issue of material and social infrastructure is of fundamental importance and requires intervention by the State and Local Government.

Social housing programs are needed to relocate young farmers. Allotment of prime lands for social farms with tree crops and forests to cooperatives. Infrastructure for natural parks and agritourism infrastructure.

Empowering energy communities to drastically reduce energy costs.

Water reservoirs to support animal husbandry and agriculture with cheap animal feed with the aim of the sustainability of agricultural and livestock holdings but also the strengthening of local employment.

Finally, there is a need for intervention by the Local Government in the local social economy and a program with an annual budget to strengthen the infrastructure of social entrepreneurship.

Footnote: “Today, over a billion people are members of cooperatives – that’s one in seven people on Earth. Over one hundred million people are employed by cooperatives, or 20% more than the workers in multinational companies. The three hundred largest cooperatives have as many members as the tenth most populous country in the world. In the United States and Germany one in four is a member of a cooperative. In Canada, four out of ten residents are members of cooperatives. In India and China four hundred million people belong to cooperatives. In Japan, one in three families is a member of a cooperative, and in France thirty-two million people are members of cooperatives. In the United States there are 29,000 cooperatives, with one hundred and twenty million members, and they have 73,000 business premises throughout the country. J. Rifkin