Transcript Gert van Dijk

Farming and cooperative
agribusiness in Central Europe:
lessons learned and members’
involvement
Gert van Dijk –President of COGECA, Brussels,
Wageningen University and
Nyenrode Business University,
The Netherlands
Finnish Cooperative Movement
110 Years: Celebratory Conference
Chapter 1
Globalisation means new influences on
on food, farming & agribusiness
Global environment
• Trade
– The EU has become the biggest raw material importer and
biggest processed foods exporter
– The Doha Round remains a priority for the EU
• World economy
– Current reflections are taking place against the backdrop of
volatile agricultural prices and economic downturn
• Climate change
– Awareness of its effects is growing
– It conditions much of our thinking in time and space
2007 and 2008 years of ‘Agri-flation’
• In the period 2007-2008 most agri commodities have doubled
in price
 Global demand raw materials was higher than supply
 Stock levels of commodities historic low
 Net production shortage of 3-5% in cereals
 Population growth
 Accelerating growth in use of agricultural commodities as
feedstocks to produce biofuels.
• Reduced crops due to adverse weather in last 3 years in
Australia, Ukraine and elsewhere.
• Increasing participation of hedge funds and investment funds
in commodity markets.
Cross border liabilities
International liabilities (% GDP)
800%
700%
600%
500%
400%
300%
200%
100%
0%
US
JP
GE
FR
ITA
UK
1980
SP (81) NL (82)
1990
2000
SWI
(83)
2006
2007
CAN
FIN
ICE
AUS
AVG
Ownership cross border
International assets (% GDP)
800%
700%
600%
500%
400%
300%
200%
100%
0%
US
JP
GE
FR
ITA
UK
1980
SP (81) NL (82)
1990
2000
SWI
(83)
2006
2007
CAN
FIN
ICE
AUS
AVG
Growth in speculative investments in ‘food commodities’
Commercial and non-commercial open
contracts
February 2005 vs February 2008)
Total open
‘05
‘08
Maize
657
1452
Wheat
223
449
Soya
272
596
Sugar
400
979
% noncommercial
’05
16.9
28.0
19.9
34.8
’08
43.2
42.3
46.0
33.7
Sources: Commitments of traders reports; Commodity Futures Trading Commission
Chapter 2
EU’s food & agribusiness has lost
competitive positions to
A. New Zealand dairy industry
B. US food & agri-business
C. US biotech & seed industry
Bron:rabobank
Chapter 3
EU antitrust policy is more favourable
for retailing than for manufacturing
F&A&H suppliers are dealing with powerful
customers
Top 10 foodservice
Top 10 retailers
(food sales for 2006 in
$bn)
(total sales for 2006 in
$bn)
1. Wal-Mart Stores
2. Carrefour
3. Tesco
4. Ahold
5. Lidl
6. Kroger
7. Rewe
8. Aldi
9. Edeka
10. Metro
1. McDonald’s
2. Yum! Brands
31
3. Compass Group
4. Sodexho Alliance
5. Wendy’s
6. Burger King
7. Aramark
8. Accor
9. Subway
10. Starbucks
159
72
53
47
46
43
41
40
40
36
Total:
As
a % of the total market:577
10%
Source: Rabobank, 2007
57
20
16
14
13
12
9
9
8
As a % of the total market: 9.1 %
Total:
189
Top 10 food
manufacturers
(food sales for 2006 $bn)
1. Nestlé
2. PepsiCo
3. Kraft Foods
4. Unilever
5. Tyson Foods
6. Coca-Cola Co.
7. SABMiller
8. Danone
9. InBev
10. Heineken
65
35
34
27
26
24
19
18
17
15
Total:
280
As a % of the total market: ca.
5%
Food distributors are at the winning end of the food
chain
Key developments in
food retail:
-Discounter growth
‘The supply chain funnel’
Consumers
Supermarket outlets
Supermarket formats
-Large purchase
organisations
Buying desks
Suppliers
-Private labels
(semi) processors
-Service retail vs
Farmers
discounters
-Ongoing consolidation
> 16 million
5,000
27
7
1,500
> 6,500
> 80,000
number of players in the Netherlands
Source: EFMI, 2007
Chapter 4
Political fall out affects CAP
Financial conditions in member states
• Budgetary deficits
• Aging
• Future pressure on labour markets: high costs
for governments
Farming and CAP
• Enlargement has laid emphasis on common
market issues (levelled playing field,
competition policy)
• CAP determined by WTO negotiations and
Ministers of Finance of member states
• too big differences in agricultural
development between members prevent
common policy and common budget
alternative views on cost of CAP
CAP cost in 2007
(in absolute terms)
CAP cost in 2007
(in relative terms)
50%
140
EU-27
120
100
40%
44% of EU
budget
30%
80
60
20%
0.43% of
EU GDP
40
10%
20
0%
0
% of GDP
Billions of euros
CAP expenditure
EU budget
CAP expenditure
AGRI-L1
CAP
perspectives
21
All EU public expenditure
Redesigning the CAP
• No grand strategy / back to the drawing
board?
• - Wishes – Sketches - Measuring up possible
effects– Planning – Specifications
• Debate is down due to political fall out
Van Goghs vision on CAP
(according to Cropper)
Chapter 5
EU needs its own grand strategy
which requires the participation
of the entire chain – indeed also
of the retail business
The CAP debate: seeking the common
ground
•
Agriculture is still a strategic sector in Europe
– Diversity of the EU agriculture should be a key element
– Agricultural activities should be maintained in all regions
•
Issues arising from the Health Check debate:
– Decoupled payments – the most efficient means
– Market-orientation is desirable - but safety nets & market
management instruments are required
– Rural development objectives continue to apply beyond
2013
• Modernisation
• Public goods
• Rural society and new societal challenges (climate change)
25
Chapter 6
Cooperatives
–Strategies
–Business models
– EU cooperatives needed to act as market leader
Competition between cooperatives
presents a new chapter
Strategies of coops
• Forward integration/consolidation
• Regional /niche
• Institutional contracting support of members
Total turnover by cooperatives in the EU
(in bln Euro)
Conclusions and recommendations
Chapter 7
Conclusions and recommendations
1. Future strategies of cooperatives will have to
be designed at the interfaces of
- Business
- Food & Farming strategy
- Public policy
2. It is not a question anymore of member-farmers’
involvement in cooperative business but of
cooperative business involvement with members