Producer organisations 'strengthen farmer position in chain' - EU study

Producer organisations (POs) and associations of producer organisations (APOs) help to strengthen farmers’ position in the food supply chain while providing technical assistance to their members, according to a new EU study.

Such organisations also benefit other actors in the food supply chain, as well as the local communities where they operate.

These are among the main findings of the ‘Study on the best ways for producer organisations to be formed, carry out their activities and be supported’, published by the European Commission today, Wednesday, October 23.

When defining POs as “any farmers’ cooperation based on a legal entity”, the number of POs in the EU reaches more than 42,000.

The EU acknowledges the special role played by POs and, as a result, they can ask for recognition from the EU country they are based in. As of mid-2017, there were 3,505 recognised POs and APOs.

It was noted that France, Germany and Spain are the three member states with the most recognised POs and APOs, with respectively 759,658 and 588 recognised entities.

Regarding sectors, more than 50% of the recognised entities belong to the fruit and vegetable sector. The other sectors with the most recognised POs and APOs are the milk and dairy sector, olive oil and table olives, and wine.

Objectives

The study finds that the main objectives of recognised POs and APOs are common across sectors and include: production planning; adapting to demand; concentration of products; and placing of products on the market. Many non-recognised POs pursue the same activities as recognised ones.

In both cases, these activities can bring economic, technical and social or human benefits to their members, the study found.

It was noted that POs can ensure higher market penetration and greater bargaining power with other actors of the food supply chain.

They can also contribute to mitigating economic risks and costs by ensuring, for example, security of payments or sharing of investments.

Regarding technical incentives, findings outlined that POs add value to business activities by providing infrastructure for production, storage or processing.

Finally, for the social or human dimension, the study concluded that most farmers value the openness of POs towards new members and their democratic functioning. This helps consolidate and maintain trust in the organisation.

While these organisations can take different legal forms, whether recognised or not, the study finds that agricultural cooperatives (co-ops) are the most common.

Obstacles

The study identified certain obstacles to joining POs, such as the fear for farmers to lose their entrepreneurial freedom. Many farmers are not aware of the benefits of being a member of a PO and are concerned by the costs for setting them up.

In general, the findings of the study indicate that internal and external factors need to be considered when analysing what will contribute to the success or failure of POs.

It concluded that the most important internal factor is the existence of a well-established tradition in agricultural cooperation at member state level.

For external factors, the most important aspect is for POs to be able to operate and compete in the current globalised markets.