Empowering Fonterra farmers
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Date
2004
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Other
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Abstract
The co-operative business model has been in existence since 1844.
It is estimated that today, at least 50% of the world's population is, in some way,
affected by co-operative activity. Most of this activity is in the agricultural sector
where groups of farmers have formed co-operatives. This provides them with some
collective strength and security to ensure their produce is processed and marketed
accordingly.
The relationship between a co-operative and its members is formalised through a set
of co-operative principles that outline what responsibilities members have to the cooperative,
and vice versa.
Co-operatives have certain requirements of their members, namely that members
own and control the business equitably and they are the providers of capital.
While the supporting objectives of a co-operative business model and an investor driven
model are similar, the prime objectives are different. A co-operative's prime
objective is to deliver benefits to members, while the investor-driven business
objective is, quite simply, to deliver a return on investment of capital.
Fonterra's impact on the New Zealand economy is significant. It is New Zealand's
largest company, by some margin, with turnover of $NZ12 billion, and employs
20,500 people worldwide.
Fonterra's farmers are a diverse group of people who, as individual farmers, have
differing goals and objectives. They do however, have a common requirement of
their co-operative; to collect, process, and market their milk.
As New Zealand's largest business, and a co-operative, Fonterra should lead an
initiative that will lift the profile of 'doing business' using the co-operative model.
The risks that Fonterra faces, as a result of commodity price fluctuations, or currency
variances, are relatively small when compared to the risks that poorly informed, nonparticipative
members could place on the co-operative.
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