FloraHolland Magazine number 12, page 6-7, 2012
The cooperation handbook can be found on every notary's bookshelf
Cooperations. Great for agriculture and horticulture, but not if you want to turn a quick profit. That was the common assumption until recently.
A crisis indicator looks at the world differently given the soundness and the transparency of the cooperative model. Ruud Galle, director of the National Cooperative Council (NCR), has noticed this. "Every notary has the cooperation handbook back on the shelf.''
What attracts you to the cooperative model?
"A cooperation is a type of business enterprise with another goal and another form. It is not concerned with returns on contributed capital, but on the material benefit for its members. Profit is not a goal, but a means.
The form, enterprise in a cooperative partnership, is different. This form is widely approved by society and the political circles. That is logical in times of crisis and after the scandals with listed companies.
In cooperations the members keep the top in line. That is sympathetic, modern and transparent. In the Netherlands 300 new cooperations are created each year. Until recently, they were mainly evident in agriculture and horticulture, now they are appearing in other sectors. Notaries recommend the cooperative organisation form increasingly often."
How does it work?
"The members of the NCR, including FloraHolland, work according to a code of good governance. This is strictly upheld. In 2014 we shall be examining our compliance closely. If necessary, the code will be updated.
The code contains a section about the members' involvement. Members must be economical with their say. Within the cooperation their say, as well as the permanent education of the members, are safeguarded. By permanent education I mean that the cooperation informs its members about new developments in fields like commerce, logistics and automation. This permanent education can extend far. Innovation leads to changes that affect everyone. When the dairy factories got rid of milk cans, the farmers had to invest in milk tanks and new stalls. Not everyone can do that, of course, but the cooperation is for the survivors, not for the losers. It has to be done nicely, of course. People must be given the time to cope with the changes."
What does members' involvement demand of the cooperation?
"Members have a three-fold relationship with their cooperation. They are the owner, have a say in its decisions, and use its services.
Research has shown that only 5 percent of the members want to manage it. But all members want to derive benefit and knowledge from the cooperation and exercise influence over it. That must be arranged. In FloraHolland this occurs through the FPCs, RACs, advisory councils and the general members' meeting. Other cooperations employ a members' council. The form chosen is not so important, as long as it is done nicely. The cooperation is ultimately the responsibility of the members. Say and influence demand transparency."
What can the cooperation expect of its members?
"First and foremost, loyalty. You earn your say by doing business with the cooperation even when times are hard. We have little use for people who walk away. The system is founded on members' loyalty and commitment. Thus, members must exercise their influence pro-actively, not just afterwards. Ultimately, they pay for the cooperation's strategy. It's only logical that they want to have a say in it."
FloraHolland wants to merge the board and the supervisory board. How do you feel about that?
"Jus like many other cooperations, FloraHolland wants to reduce its administrative hierarchy from three levels to two. This need not negatively influence the transparency and the communication with the rank and file. In the new administrative model the members still form the majority of the supervisory board. That board appoints the management and keeps close watch on them.
Making the administrative structure more efficient is not a bad thing. It will go wrong if the administrative top and the members no longer communicate. If the contact with the members weakens, it is difficult to make that work again. Luckily, I see many entrepreneurs in cooperations, even young ones, ensuring that the lines remain open. I know that FloraHolland is striving to encourage more involvement of members. The NCR helps with such processes."
Is it true that the decision-making in cooperations takes longer than in listed companies?
"It is true that cooperations hold a lot of meetings. That is how you involve the members. But decisions are taken after the discussion. This has been working so well for 130 years that the Netherlands has a strong agricultural sector despite a cost-price disadvantage. The relative slowness ultimately delivers good management."
With internet symbol.
The NCR code for good governance for cooperations can be downloaded from www.cooperation.nl.