carry out a feasibility analysis of pros- and cons- of...

Capacity building to the AgricultureCooperatives Development Agency (ACDA)

Carry out a feasibility analysis of pros- and cons- of restructuring ACDA

into a membership-based organization

Capacity building to the Agriculture

Cooperatives Development Agency (ACDA)

Project funded by The European Union

EUROPEAN NEIGHBOURHOOD PROGRAMME FOR AGRICULTURE AND RURAL DEVELOPMENT (ENPARD)

Europe Aid/136454/DH/SER/GE

Project implemented by

Experts

Ana Cano

Egon Cervera

Lorena Tudela

Sandra Guzmán

May 2017

Disclaimer

“This Report was prepared with the financial assistance of the European Commission. The views expressed in this report are those of the consultants and do not necessarily reflect those of the European Commission”

Capacity building to the Agriculture Cooperatives Development Agency (ACDA)2

Abbreviations and Acronyms

ACDA Agency for Agricultural Cooperatives Development CACV Agri-food Cooperatives Federation of the Valencian Community CEPES Confederation of the Social EconomyBusiness CV Valencian Community ENPARD European Neighbourhood Programme for Agriculture and Rural Development ETIs Education and Training Institutions FAO Food and Agriculture Organization of the United Nations GDP Gross Domestic Product Geostat National Statistics Office of Georgia. GoG Government of Georgia ICCS Ministry of Agriculture Information and Consultation Centres M&E Monitoring and Evaluation MoA Ministry of Agriculture NGO Non-Governmental Organization OECD Organization for Economic Co-operation and Development SAT Agricultural Transformation Societies SME Small and Medium-sized Enterprises SWOT Strengths, weaknesses, opportunities and threats TA Technical Assistance TL Team Leader TNA Training needs assessment/analysis ToR Terms of Reference ToT Training of Trainers (Programme) WD Working days


Table of Contents

ABBREVIATIONS AND ACRONYMS ................................................................................. 2

ACKNOWLEDGEMENTS .................................................................................................... 4

COMMENTS ON THE DRAFT REPORT ............................................................................. 5

SUMMARY ........................................................................................................................... 6

INTRODUCTION .................................................................................................................. 7

AIMS AND OBJECTIVES OF THE PROJECT .................................................................... 7

Description of the context .................................................................................................................................... 7 Description of the stakeholders involved in ACDA ................................................................................................ 7 Definition of the objective .................................................................................................................................. 11 Overview of the approach and methodology ....................................................................................................... 11

MAIN REPORT .................................................................................................................. 12

SITUATION AND CONTEXT ANALYSIS ..............................................................................................12 Agricultural situation and context analysis ......................................................................................................... 14 Cooperatives situation and context analysis ....................................................................................................... 14

IDENTIFYING AND INTERVIEWING KEY STAKEHOLDERS IN GEORGIA AND ABROAD .................................15 COMPARATIVE ANALYSIS OF COUNTRY EXPERIENCES ......................................................................17

Comparative analysis of EU countries experiences ............................................................................................. 17 Analysis of Spanish and Valencian scenario ....................................................................................................... 19 Analysis of the Legal framework in Valencian Community .................................................................................. 20 ComparativeanalysisbetweenACDA vsValencianFederation ............................................................................... 22

SWOTS ANALYSIS ......................................................................................................................23 ANSWERING KEY QUESTIONS ........................................................................................................29

What are the strengths, weaknesses, opportunities, and threats of ACDA's restructuring in a membership-based

organization? .................................................................................................................................................... 29 If such set-up is concluded to be feasible and fit into the country context, what would be the right legal status to

avoid conflict of interests? ................................................................................................................................. 29 What kind of set-up would be the mostly approximated to the existing regulations and practices of EU? ............. 30 What functions should the Government maintain to support the development of cooperativism in Georgia? ........ 31 Assessment of operational capacity of ACDA in the long term ............................................................................ 32

CONCLUSION AND RECOMMENDATION ...........................................................................................32 Annex 1: ToR of STE .......................................................................................................................................... 34 Annex 2: Work plan ........................................................................................................................................... 36 Annex 3: Questionnaires .................................................................................................................................... 37 Annex 4: List of meetings first visit ..................................................................................................................... 41 Annex 5: List of meetings second visit ................................................................................................................ 42 Annex 6: Content of the statutes of a membership-based organization................................................................. 43 Annex 7: Cooperatives Registry Service of Public Administration ....................................................................... 46 Annex 8: History of Spanish Confederation of AgriFood Cooperatives ............................................................... 47 Annex 9: Time-line and history of Valencian Federation of Agrifood Cooperatives ............................................. 56 Annex 10: ACDA Strategic Plan ......................................................................................................................... 60 Annex 11: Power Point Presentation .................................................................................................................. 61 Annex 12: List of documents consulted ............................................................................................................... 75


Acknowledgements

We would like to express our gratitude to the many people who have contributed by providing their experience, information and knowledge to the preparation of this report. Especially the entire ACDA team, from its Chairman to those responsible for each work area with whom we have held meetings, analysed information and exchanged documents and impressions. We would like to express also our gratitude to the Evoluxer team that has always made our work easier, making our stays in Georgia very pleasant and fruitful. And finally, to the colleagues of CACV, as well as of the Polytechnic University of Valencia, that have contributed remarkably to the success of the mission.


Comments on the draft report

Below there is a list of comments to the draft report, received e upon delivery of the presentation during the second visit. Page 13, Paragraph 8 - We have included as indicated in the project's terms of reference (Annex I: Terms of Reference, Capacity Building to the ACDA). Page 19 - In this regard, the Agency shows interest in knowing how the government supports the coops: the programs that support the integration and the criteria to select the beneficiary coops of those programs. Page 29, Paragraph 6 – During the presentation for Evoluxer, ACDA working group, three different cooperative members and representatives of the Ministry of Agriculture, a general agreement was adopted on the proposal to maintain ACDA as a public entity and promote a membership-based organization. ACDA should maintain its competences in registration, monitoring, support programs, coordination, elaboration and implementation of regulations and dissemination of the cooperative model as a public entity and promote creation of a membership-based organization, focus on the representation and defense, as well as the provision of services such as training, technical assistance or advice. It is also highlight that it is not necessary to create a new entity, it should be used what already exists (taking advantage of entities and associations that already exist). Page 24 , ACDA SWOT analysis - According to the Ministry of Agriculture 2015-2020 action plan, Agricultural Cooperatives Development Agency planned to emphasize the need to reinforce ACDA in the local regions jointly with the MoA. Pages 27 and 28 - The tables of pros and cons are very welcome. Page 29 - In this regard, the Agency shows interest in regulatory issues and credit coops, banks, credit sections ... and co-financing formulas. Information support is very important. Agency needs information. Pages 30 and 31, Strategic evolution - It is also considered that Georgia Cooperatives Confederation will need public funding until it has developed areas of activity that allow it to generate income from services. In this regard, we agree to extend the period of time of the funding schedule.

Annex 8 and 9 - Information of the historical evolution of the cooperative movement and Federation in Valencia region is very important to better understand the progress of growth. For this purpose, we have added an annex with detailed information. Annex 10- An strategy of cooperative development and the role of ACDA on it has been demanded by the Agency’s Chairman. Agency needs information to guide and re-orient its own evolution. For this purpose, we have add an annex with more information.


Summary

The report presented, developed based on consultations, interviews, references review, accumulated experience and analysis of the evolution of agri-food cooperativism in different environments, as well as the normative, aimed at evaluating a possible restructuring of ACDA into a membership-based organization. This intense work allows us to develop a SWOT analysis on the advisability of carrying out this restructuring. As a result, it could be appreciated that: both the possibility of maintaining ACDA within the public sphere as a single agent of Georgian agrarian cooperativism, as well as making it fully a membership-based entity with all competences transferred to the private sphere, have drawbacks which suggest that none of the options is the most desirable. The analysis of the European context (Germany, France, Italy and Spain in more detail) leads us unequivocally to a clear conclusion: the competences for the registration of cooperatives and their monitoring of accounts annually, corresponds to entities of public character. In addition, there are private entities that have the legal responsibility of representation and defence of the cooperative movement and the provision of services to its members. These private entities are the Confederations and Federations of Cooperatives, being most of them not-for profit entities.

The Federations and Confederations are entities whose interest goes beyond their own membership. They are fundamental tools for governments and therefore have public support for their activities. They are very useful allies for the public consultation, elaboration, discussion and implementation of State policies. All organizations have a beginning and an evolution. The rhythm is marked mostly by the availability of resources and this is linked to the sensitivity in the policies of governments to accelerate or not the development of different initiatives. In Georgia there has been clear support for the development of cooperativism. Possibly it is time to strengthen this business movement, through policies that favour a greater dimension (more partners, more land, more cattle, more cooperative activity, new sections, mergers, alliances of inter-cooperation, etc.) and support the consolidation of cooperative’s representation entities. The conclusion of this study leads us to propose not the reconversion of ACDA into a membership-based entity, but rather creation of an entity that imitates the Federation model, widely extended in the international environment, and the maintenance of public competences into ACDA.


Introduction

This is the Assessment Report for the technical assistance project to carry out a feasibility analysis of pros- and cons- of restructuring ACDA into a membership-based organization submitted by Ana Cano, Sandra Guzmán, Egon Cervera and Lorena Tudela. The main purpose of this report is to identify the most feasible options and ways of potential restructuring of ACDA into a membership-based organization, in order to analyse the pros and cons of this process. To do so, a feasibility study was conducted based on the experiences and lessons learnt concerning the creation and consolidation of a membership-based organization (See Annex 1 and 2)

Aims and Objectives of the project

The goal of the project is to contribute to increase food production in Georgia and reduce poverty. The project purpose is to strengthen institutional capacity and skills of the Agriculture Cooperatives Development Agency (ACDA), to institutionalize continued training programmes for registered cooperative managers and management leaders, to strengthen the management capacity and install proper governance at registered cooperatives and to improve understanding among cooperatives members of the meaning and purpose of cooperative enterprises and an increased sense of ownership of their cooperatives. The project activities are carried out throughout Georgia.

Description of the context

In July 2013, the Parliament of Georgia approved the Law on Agricultural Cooperatives, by which a Legal Entity of Public Act under the Ministry of Agriculture (MoA) - the ACDA was created. The Agency’s responsibility is to:

implement various State measures in support to cooperative development

to promote the cooperatives' development

to provide consultancy services to the cooperatives

to co-ordinate state programs in support to the coops

to grant the cooperative status and to monitor the cooperatives' performance. Since spring 2014 until April 2017, ACDA has registered 1544 cooperatives, distributed in all regions along the country.

The creation of this large number of cooperatives, most of which have a very low number of members (an average of 7 members per cooperative) has been due to the impetus offered by the Georgian Government which has offered very interesting tax benefits to the cooperatives, which have seen in this formula a way of reducing costs.

During this time, ACDA has worked intensively on registration and monitoring these cooperatives, awareness-raising, legislative and regulatory processes, as well as on improving the competitiveness of cooperatives through programs to support specific sectors, mainly: hazelnut, honey, wine and dairy.

Description of the stakeholders involved in ACDA

It is obvious that the main skateholder of this report is ACDA itself. However, we must not forget that the agency is a public entity directly subordinated to the MoA, which can greatly influence the future and the possible restructuring of ACDA, therefore is another of the agents clearly involved.


And finally, the Georgian cooperatives themselves constitute another relevant stakeholder, as they are the main ones affected by the possible restructuring of ACDA. AgricultureCooperatives Development Agency Nowadays, ACDA is a public law entity under the supervision of the Ministry of Agriculture, totally subordinate to the policy of cooperative development of this Ministry and conditioned to the budgetary availability of the same.

Its structure is based on four services under the supervision of a Chairman with the help of a Deputy Chairman and a Secretary-specialist: registration service, monitoring service, project service and administrative service. Cooperatives Registration Service

This service currently has 5 workers, and is dedicated to information and legal advice dissemination, correction and registration of agricultural cooperative status applications and maintaining the agricultural coop register.

Monitoring Service

Seven people in charge of evaluating the performance of registered cooperatives work in this unit. Targeted Projects Service

The project unit has only 4 employees, being its main tasks the analysis of the sector, the identification of objective cooperatives and the implementation of projects to support development and competitiveness. Currently, they carry out 4 support programs based on:

- State Program on Fostering Hazelnut production development through promotion of agricultural cooperation

- State Program to Support Beekeeping Agricultural Co-operatives. - State Program to Support Dairy Production Agricultural Co-operatives.

- State Program for Equipping Agricultural Co-operatives with agricultural equipment

Administrative Service The administrative unit currently has 8 workers specialized in various areas of work: procurement, accountant, logistics, IT specialist, law and public relationships. From this service, the annual budget of ACDA is managed and negotiations are carried out with the Ministry of Agriculture in relation to the annual budget of the Agency. The presence of a lawyer within the service is essential at the moment. The data collected and analysed serve to make proposals for the design of agrarian policies, cooperatives and the tax system. Another of the fundamental services of this unit is the Public Relations area. The website is actively being used to disseminate information on ongoing activities such as trainings, seminars, workshops within the ACDA organization, and on the support plans managed by the project unit.


Ministry of Agriculture The main function of the Ministry is to develop and implement a unified government policy on the development of Georgia's agricultural sector. The main objectives are:

Carry out agrarian reforms considering international experience as well as historical and national traditions of the country;

Support the development of agricultural cooperation;

Promote processing of primary agricultural and food products;

Ensure increase of income and food safety in the agri-food sector in line with the principles of sustainable development of agriculture;

Support the use of export potential and strengthen the positions on the international market;

Collect / analyse information about conditions and tendencies of internal and external markets;

Promote and organize scientific-consulting services, capacity building and hands-on training courses of agricultural entrepreneurs;

Register and organize pesticides, agrochemicals, testing new animal and/or plant breeds;

Support the accessibility and renewal of agricultural equipment and technologies;

Forecast the need of pesticides and agrochemicals and promote their application.

In order to carry out all its tasks, the MoA counts under its supervision with different institutions, such as Nation Food Agency, Scientific Research Centre of Agriculture, National Wine Agency and, of course, ACDA. One of the most relevant agencies within the ministry is the NNLE, Agricultural Projects Management Agency. This agency, created in 2013, aims to develop projects that create an environment that will contribute to the increased competitiveness, higher and sustainable production of high quality goods, and introduction of the international food safety standards in agriculture sector. Some of these projects are:

Preferencial Agro Credit Project

Co-funding Project of Agricultural Processors and Cold Storage Operators

The Agricultural Insurance Program

Small Farmers Spring Works Support Project

Plant the Future Project

Tea Plantation Rehabilitation Program

Support to Processing of Agricultural Products Undoubtedly, all these programs must be perfectly compatible with those coordinated directly by ACDA and contribute to the improvement of the cooperative and agricultural system in general. The importance that the Ministry of Agriculture attaches to agricultural cooperatives is large, as can be seen in measure 3.1.6 of the Strategy for Agricultural Development in Georgia for the years 2015-2020:


Measure 3.1.6- Supporting the development of cooperation in agriculture

Currently, institutional arrangement comprising support to agriculture cooperation generates most sustainable results in terms of sustainability. This enhances competitiveness and provides an opportunity for farmers to have affordable access to agricultural inputs, services and markets. Active work of cooperatives bolstered by efficient, systematic and result-oriented support of the Government, in a long-term perspective, will result in improvements in some crucial directions, such as: improvement of the quality and quantity of agricultural products; increasing growth rates of sales (both on domestic and international markets). Measures for support of cooperation include development of the product life cycle incorporating primary production, processing, packaging, storage and marketing, as well as funding and providing services to the members. The value of production increases at each of the stages and the members of cooperatives will be able to get considerably more income as a result of selling of the final product. Establishment of product life cycle within the framework of cooperation is probably one of the best mechanism of risk reduction. This creates opportunities to supplement existing commercial credit available to agriculture with other schemes of financial support or some other combined models.

Also, agricultural cooperatives provide the best platform for poverty reduction. Development of cooperation improves involvement of vulnerable groups, women and young farmers in economic activities.

Currently, vast majority of cooperatives lack the necessary information for better planning of their activities and forecasting of anticipated results. Within the framework of strategy implementation LEPL Agriculture Cooperative Development Agency will create efficient, mobile and flexible communication tools with cooperatives, target groups and wider public. For awareness raising purposes the Agency will actively collaborate with media, NGOs, business representatives and other stakeholders.

For encouraging local agricultural production, LEPL Agriculture Cooperative Development Agency will introduce the unified IT system and information bank. This will simplify all the activities related to production, marketing, planning and, etc.

Relevant measures will be undertaken to transform LEPL Agriculture Cooperative Development Agency into a membership based organization, as well as to establish sustainable structures that will support cooperatives.

The programs targeted at capacity building of the cooperatives will be a key priority. This will comprise programs for capacity building to members/managers of cooperatives, improvement of marketing capacity, financial support of cooperatives and, etc. Special measures to promote Georgian farmers at local, regional and international levels will be developed.

The Law of Georgia on Agriculture Cooperatives triggered introduction of new and rational organizational forms to agriculture. This will bring direct benefits to Georgian population. Although, the dynamics of agriculture cooperatives development, the need of undertaking measures prescribed by the strategy, and international experience demonstrated the necessity for further upgrade of legal framework.

GeorgianAgricultureCooperatives The Georgian cooperative movement in agriculture is still very young. As described in the previous section, most cooperatives are very small (both in the members and in the size of the holding), many of which are exclusively family-owned and with a clear vocation towards the benefit of the exemption of the taxes. During the last years, the Government and the ACDA have made an effort to promote cooperativism in the field of health, according to data as of April 2017, there are 1544 cooperatives registered in the country for the most important sectors: honey, Wine, hazelnuts, dairy products, greenhouses etc., Most of the cooperatives are still very weak and it is not feasible, therefore, a membership of a Federation or a government for services which, according to them, are currently compensable. Today it is not feasible that it be an entity based membership with a social basis of characteristics.


However, according to the information gathered through interviews with ENPARD consortium members, there are approximately 250 leading cooperatives that receive program support and begin to stand out as real cooperatives. The restructuring of the ACDA or the creation of a new Federation of Cooperatives should be based on these cooperatives, which may constitute an important mechanism for the development of agricultural cooperatives.

Definition of the objective

To identify the most feasible options and ways and means of potential restructuring of ACDA; the project proposes to conduct a specific feasibility study that will accumulate advanced learning and experiences especially the one of the EU and will provide well-evidenced overview and risk assessment with regard to pros and cons in relation to the possible restructuring of ACDA into a membership-based organization. This report assesses pros and cons of the restructuring of ACDA into the membership-based organization. This pros and cons analysis should be built from evidences and advanced learning and experiences especially the one of the EU. To identify the most feasible options and the ways and means of potential restructuring of ACDA, the methodology of the study is based on answering key questions about the different challenges that specific the restructuring process should address.

Overview of the approach and methodology

To complete the present report a series of works have been carried out:

- Desk research in relation to international regulations, practices and experiences

Consideration has been given to the currently available bibliography of different European countries on the cooperative sector regulations, practices and experiences. Notarial instruments, the historical development and the statutes of the Spanish Confederation and CACV have also been consulted in-depth. Lastly, some cooperative laws form different regions has been studied.

- Identifying and interviewing key stakeholders in Georgia and abroad

Primary information was collected by combining in-depth interviews with ACDA management, staff, and stakeholders of the MoA, NGOs active in the field of cooperatives, ENPARD project partners and cooperatives members who are relevant for the implementation of cooperative practices. In order to seek and incorporate the different views of potential experts in Georgia and abroad an online coops-questionnaire was prepared (Annex 3)

- Consultations with the state bodies including parliament committees and members

Several interviews with state bodies including parliament committees and ACDA members were conducted during the missions. Specifically, in the second mission a participatory workshop was organized at which these actors attended. The workshop aim was to consider the results of the feasibility study conducted and to promote a debate and discuss in order to achieve an agreed decision and a proper action plan.

- Situation and Context analysis

This analysis includes collecting initial data and information, reviewing previous reports of the ENPARD project partners and MoA annual reports.

- Comparative analysis of country experiences

An in-depth bibliography review has been conducted through European and OCDE countries experiences on the cooperative sector to collect advanced learning and


experiences and well evidenced overview and risk assessment of pros and cons in relation to the possible restructuring of ACDA into the membership-based organization.

- SWOT and pros- and cons- analysis

The SWOT analysis is the process of exploring the internal and external environments of an organization and extracting convenient strategies based on its Strengths, Weaknesses, Opportunities and Threats. This report presents a SWOT analysis, based on all the information and data collected along the study. It is hoped that the SWOT could be useful to assess the feasibility of restructuring ACDA into a membership-based organization. In addition, pros- and cons- analysis, based on advantages and disadvantages of the restructuring process, has been elaborated.

MAIN REPORT

Situation and context analysis

Consultations carried out in different sources indicate that there are 3,729,500 people registered in Georgia in 2014(Graph 1), with a very proportional distribution between urban (53.6%) and rural (46.4%).

Graph 1. Distribution of population in Georgia in 2015

Source: FAOSTAT 2017

Georgia has huge potential for growth and offers huge opportunities in terms of quality and capability of production and investment. The Gross Domestic Product (GDP) in 2016 was 12.848Mill € and it has also grown by 2.7% compared to 2015. The graph bellow shows the increasing trend increase of the Georgian economy as a whole.

Rural population

46%Urban population

54%


Graph 2. Annual evolution of GDP

Source: Source: FAOSTAT 2017 (Units GDP Mill. €)

However, in the international context, Georgia ranked the number 118 out of 196 countries in the world´s GDP ranking. And the index measuring the concentration of income (Gini)1in Georgia was

40.1 (the number 104 out of 156 countries in the world´s Gini ranking). As the graph below shows,

this index shows an increasing trend in the last decade. The indicator reached a maximum value

of 42.13 in 2010 and a minimum value of 37.13 in 1996.

Graph 3.GeorgianGini Index evolution

Source: World Bank 2017

1Gini indexis is a measure of statistical dispersion intended to represent the distribution of the residents of a nation, and is the one that most commonly uses the measure of quality. A Gini coefficient of zero expresses perfect equality (where everyone has the same income). A Ginicoefficientof 1 (or 100%) expresses the maximum inequality.

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

GDP Mill. €

34

35

36

37

38

39

40

41

42

43


Agricultural situation and context analysis

Regarding the agricultural context, the entire Georgian area of agricultural land is approximately 3 million hectares, which are distributed as follows: arable land 27%, perennial crops 9%, fields and pastures 64% (Geostat 2017). The agricultural sector in Georgia is characterized mainly by four key sectors: dairy, honey, hazelnuts and wines. These sectors must be specially considered by the Government because they are those who contribute to rural, local, and business development and are the main source of employment in rural areas. It is important to highlight that 75% of the agricultural land is state property (FAO 2016). As a result of privatization process, gradually the land is divided in a lot of small ones according to type of land, and those people with access to it are obtaining their titles of land propriety. As the graph 1 shows almost half of the population lives in the countryside, where main source of living is entirely or partly self-sufficient farms of low productivity, being the average size of farms about 1,25 hectares.

The small size of farms -most families having only small land plots (less than 1 hectare)-could represent a constraint for them to invest, to mechanize, to adopt irrigation systems, etc. Besides, the low productivity of these farms in rural areas are undergoing an intensive migration process to the cities. However, the family farms could be highly specialized in initiatives with high value to the final product; by the high quality of their products, their environmental value, and landscape, and biodiversity, cultural, nutritious and gastronomic attributes. Although the approach of the state to food security has radically changed since 2013, when the Government declared assistance to agriculture development as one of main priorities (Ministry of Agriculture of Georgia, 2015), Georgia is very vulnerable from the point of view of food security, especially in a context where 70% of food is imported (FAO, 2016). During the interviews the farmers also reported the low level of chemicals products used on farms. So, local products are kinder to the environment and maintain better taste and other organoleptic properties, in addition to nutritional values. Likewise, in some traditional crops there is an in-depth knowledge of local varieties, which promote the conservation of biodiversity. The internal food markets might be understood as a successful alternative and become a real economic activity. These features must be understood as a framework for increase the agricultural opportunities and a better rural development. As indicated in the project's terms of reference (Annex I: Terms of Reference, Capacity Building to the ACDA), the failure of the modernization of Georgian agriculture is one of the main causes of the persistence of high levels of poverty in the country. Obviously, this situation could and should be reversed; the government could articulate the appropriate policy measures to evolve an agriculture still quite craft and primary. Training process is the most effective and efficient tool that allows farmers to increase the productivity of their farms. If this is done also through the cooperative system, we will be favouring networking relations and this will allow to move forward with firmer and more agile steps.

Cooperatives situation and context analysis

Looking closely at the cooperative movement situation, since July 2013, in which the Georgian Parliament has approved the Agricultural Cooperatives Act to create the ACDA, the Legal Entity of Public Law of the Ministry of Agriculture, 1544 cooperatives have been registered, with a social group of approximately 10,808 people, distributed in regions as shown in the following table.


Table 1. Cooperatives registered in Georgia until April 2017

Region of Georgia Number of Cooperatives

Kakheti 154

KvemoKartli 198

Mtskheta-Mtianeti 85

ShidaKartli 112

Samegrelo – ZemoSvaneti 128

Guria 52

Adjara 150

Samtskhe-Javakheti 352

Imereti 132

Racha-Lechkhumi 128

Tblisi 53

Source: ACDA, April 2017

The government's strong commitment to the activation of the social economy through cooperatives in the agricultural sector is evident, which is not only a sector of economic activity but a strategic one because it is responsible for producing food for society, in addition of other products, goods and services.

Most cooperatives have a very small number of members; it is indicated that the average is about 7 people per cooperative. If these people will contribute all their land, with the indicated average of 1,25 hectares, we would obtain companies with 8,75 hectares. However, the reality is not precisely that, but the partners and members only inscribe in the cooperative a part of their farm.

We cannot question the lack of confidence in the cooperative model -most likely related to the Soviet heritage-, but we can affirm that these practices hugely weaken cooperativism. Strength and competitiveness are gained when there is more confidence, when the cooperative activity is not compromised by the competition of the partners themselves who market their products competing in the same markets with their own company, "the cooperative."

Likewise, it may occur in the case of input cooperatives that should function as a large purchasing central with bargaining power as a whole and will weaken and negatively affect if its partners do not use and make purchases of machinery, fuels, fertilizers, phytosanitary, seeds, etc. outside the cooperative channel.

We must also point out the shortcomings that have manifested to us in the many meetings held in relation to the lack of competence on the part of the cooperatives that request training in various subjects: legality, taxation, accounting, marketing, etc. as well as more technical issues related to food quality and safety and the different references or standards that must be achieved and certified to reach the markets.

Identifying and interviewing key stakeholders in Georgia and abroad

Based on wide interviews and meetings held a set of evidences has been collected. The analysis of all these evidences helps to better understand the contextual framework. These findings were broken down into two blocks; one at State level of action and the other one in terms of the cooperative approach.


Findings at the state level

- Participation of agriculture in the economy 9.2% (Geostat 2014).

- Georgia relies heavily on food imports (70% of imported food). Georgia is very

vulnerable in the face of security insecurity, it is necessary to strengthen the market.

- The State owns the agricultural land.

- Although 50% of the population is engaged in agriculture (employment in

agriculture), the percentage of professional farmers is lower.

- The average of the units grouped in cooperatives is 1.25 hectares.

- Political instability due to potential risks due to changes of ministers.

- Consumers value disposable products

- Increase in the allocation of foreign capital in the agri-food sector

- The database collected by MoA (within the information of more than 100,000

farmers) could be used as a useful tool to better understand the demands of the

cooperative.

- A legislative framework has been created in cooperatives and ACDA (in 2013 and

2014, respectively). Relations between the cooperative sector and the government

are still in the initial planning phase (more time is needed to better understand the

impact of ACDA and cooperative standards).

- Increased transfer of knowledge and services provided by ACDA.

- The monitoring and registration services provided by ACDA work properly.

- ACDA projects are oriented to invest in machinery and installations

Source: Authors own elaboration from consultations and interviews conducted (2017)


Findings at the agricultural cooperative level

- Training co-operatives on economic capacities (accounting, taxation, marketing and

sales ...). There is usually a lack of experience and professionalism.

- Extension of cooperatives (integration of small cooperatives) and creation of second

level cooperatives, aimed at increasing efficiency and competition in the market.

- The advisory, defense and representation services must be carried out by a private

non-profit organization.

- Difficulty in exporting to the EU due to lack of quality standards in local products.

- Insufficient marketing capacity of the products (difficulty of negotiation with the large

distribution)

- Great possibility of diversifying the activities of cooperatives, in order to increase the

value of heads. Possibilities to promote local, ecological and high quality products.

There is also room to improve the processing and processing of products for greater

profitability.

- Cooperatives can not agree with a private entity for their services.

- We need to distribute the priority subsidies by technical criteria (size, quality

standards, innovative strategies ...) so that the cooperatives have greater

possibilities of growth.


Comparative analysis of country experiences In this section, we have identified three level of comparative analysis. Firstly, a comparative analysis among EU countries has been carried out. Secondly, a comparative analysis between ACDA and CACV. Finally, we carry out an in-depth description of Valencian Federation case study for a broad exchange of views.

Comparative analysis of EU countries experiences

In order to analyze the different representative structures of agri-food cooperativism in several countries belonging to the European Union, we present a comparison with the other organizations in Germany, France and Italy.


Table 2.Comparative analysis of EU countries experiences

Country Germany

France

Italy

Organizations DGRV

Deutscher Genossenschafts-und Raiffeisen Verband

Coop. De France Conf. cooperative-FEDAGRI

Mission

Representation and defense of the agro-food cooperative sector of Germany. It also supports cooperative development activities at the global level to contribute to improving the performance and social and economic structures of cooperatives.

Representation and defense of agricultural cooperatives before the French and European public authorities, the media and civil society

Representation, assistance and protection of the cooperative movement and of Italian social enterprises

Estructure

At the general level, there is the Confederation of Cooperatives (DGRV), with more than 5,900 cooperatives and specifically, at theagri-food level, the DRV entity, a national organization that carries the institutional representation and lobby action of the agri-food sector, with 2,400 cooperatives. In addition, there are 6 regional federations (soon 5 by the merger of 2) plus one in East Germany exclusively dedicated to auditing production cooperatives.

Thereare 12 regional federations, sectoral organizations and other companies of the "Cooperative Promotion" Group (PROMOCOOP). They represent 2,600 cooperatives. They are in the process of internal restructuring based on the integration of regional and sectoral

3 representative organizations: Confcooperative, AGI and Legacoop. Currently a process of integration of the 3 is being carried out in a single one. Conf.cooperative represents Italian cooperatives from all economic sectors. It has a territorial and a sectoral structure. The sector is made up of 9 federations, one for each economic sector. The federation of agri-food cooperatives is called FEDAGRI, with some 3,200 cooperative members.

Organigram

-General Meeting: meets once a year -Presidium: member selected every 3 years and proposed by the regions among cooperative leaders, representatives of cooperative regions, cooperative banks, cooperative insurance companies and the president of the main agrarian union - Sectoralcouncils: ofthe main productive sectors and other specific horizontal issues

-President -Bureau: 16 electedofficialsrepresentingthesectors -Administrative Council: 30 people representing the regional federations - National Assembly: Supreme body held once a year

-The Sectoral Assembly has its President, the Governing Body and Assemblies -Cooperative Funds President, Governing Board and General Assembly - The Governing Council of FEDAGRI is formed by its presidents and some presidents of cooperatives chosen by the Regions according to their importance.

Activities and services

Its main service is representation. A few months ago, they created a service company dedicated to the member cooperatives on specialized services and economic studies. These services are billed separately, they are not included in the general fee.

Its main activity is to represent and defend cooperatives. They also perform services but focus on representing cooperatives and "promoting change" (communication, legal, social and fiscalmatters)

FEDAGRI's main activity is there presentation and defense of its agri-food cooperatives. Legal and tax matters have been carried out since Conf. cooperative. Recently they have created a Society of Services financed outside the Confederation

Human Resources

35 staff 100 staff, plus another 100 in the regional federations

15 staff in FEDAGRI, plus 4/5 in theservicescompany


Financing

90% comes from membership fees. Small cooperatives pay regional federations and part goes to national, while large cooperatives pay directly to national.

67% are membership fees, 17% of the billing for services and 16% of the subsidies. The quotas come from regional federations, sectoral member organizations and large cooperatives

Almost 100% of both FEDAGRI and Conf cooperative comes from the quotas. The cooperatives contribute their quota to Conf cooperative which is the one that distributes the funds to each of the sectoral federations like FEDAGRI.

Source: Respective Annual report of DGRV, Coop. De France, Conf. cooperative-FEDAGRI

Analysis of Spanish and Valencian scenario

CACV is the organ of representation of the cooperative agri-food movement of the CV. It is constituted as a non-profit entity, based on the free and voluntary association of the agri-food cooperatives of the region, boasting the defence and representation of agricultural cooperatives in its geographical area.

This same representation, but in this case, at the national level, is carried out by Agri-food Cooperatives of Spain. Formerly called Confederation of Agrarian Cooperatives of Spain, it is the organization that represents and defends the economic and social interests of the Spanish agrarian cooperative movement. It is formed by 16 Federations, including the CV, which offer their services and have their scope of action in their respective Autonomous Communities.

Thus, Agri-food Cooperatives of Spain is the body that represents the Spanish cooperatives of all the Spanish territory before the National Administration, European Union and before the rest of social and economic agents of the sectors in which the agricultural cooperatives carry out their activities.

Our entity, besides belonging to the Agri-food Cooperatives of Spain, belongs to the Confederation of Cooperatives of the Valencian Community. The Confederation is the maximum organ of representation of all the cooperative companies (electrical, transport, consumer, educational…) in the CV. It is a non-profit organization that integrates all the federations of cooperatives existing in the autonomous community. Its basic function is to defend the interests of the Valencian cooperatives, representing them at institutional level in all matters that concern them in a global way, and communicating to public opinion the principles and values of cooperativism.

In turn, the Confederation of Cooperatives of the Valencian Community and Agri-food Cooperatives of Spain, are part of the Spanish Confederation of the Social Economy Business (CEPES). This entity is a state-level business confederation whose inter-sectoral nature makes it the most representative institution of the Social Economy in Spain, constituting itself as a platform for institutional dialogue with the public authorities.

CEPES, as an agglutinative organization of various economic activities existing under the concept of the social economy, integrate 26 organizations. All of them are state or autonomous confederations and specific business groups, representing the interests of Cooperatives, Labour Societies, Mutualities, Enterprises, Special Employment Centres, Fishermen's Guilds and Associations of people with disabilities, with more than 200 structures of support at the regional level.


Figure 1. Structure of Confederation of Cooperatives of the Valencian Community 2017

Source: Confederation of Cooperatives of the Valencian Community 2017

Analysis of the Legal framework in Valencian Community

The Cooperatives Law of the CV is, currently according to the experts consulted, one of the best in the Spanish state and in the UE and, for that reason, we consider it appropriate to use it as an example. The mentioned Law in the Title II regulates the cooperation between cooperatives. We would like to highlight three chapters:2 In the Chapter I of the Title II (articles 100 to 103), establishes general provisions and regulates

second-degree cooperatives, consortia, cooperative groups and other unions. We do not develop this point because it is not the object of this report, although it can be consulted if it is considered interesting as formulas that allow small cooperatives of Georgia to gain dimension, through processes of integration in entities of greater rank. In Chapter II of the same Title II (articles 104 to 106), regulates the Federations of Cooperatives,

establishes the general provisions, as well as their constitution and legal framework, the objective and implementation process. Article 104. General provisions. In order to represent, defend and promote their interests, cooperatives can freely and voluntarily associate in federations. These federations are made up mainly of cooperatives subject to this law. However, also can be members of these entities those cooperatives that, independently of the legislation applicable

to them, carry out their activity in the Region of Valencia and have in this territory their company

address. In the associative entities constituted by the agrarian cooperatives also the agricultural transformation societies (SAT) were integrated; In the constituents by cooperatives of associated work also integrate the labour societies. Also, notwithstanding the possibility of creating their own

2Note that the original law is Spanish. If there are doubts, please, refer to the original document


associative entities, cooperatives of community exploitation of land are integrated into the constituents of agricultural cooperatives and associated work. Article 105. Constitution and legal regime.

1. Federations shall be composed of cooperatives of one or more classes. Associations that prove to be constituted, mainly, by cooperatives that meet the requirements established in article 104 of this law to form part of a federation may also be integrated in them. 2. The territorial scope of action established in the statutes of the federations shall be that of the entire Valencian Community, and shall group, directly or through associations, at least 20% of the cooperatives registered. 3. The federations shall observe in their constitution the same procedures required in this law for cooperatives. Once registered in the Registry of Cooperatives, they acquire legal personality and

have full capacity. The rules established in this law for cooperatives, except for the obligations to

designate a lawyer. 4. Only the term "Comunitat Valenciana", which expressly refers to the class or classes it integrates, may be used in its name, that federation that accredits to associate the largest number of registered cooperatives with an open registration sheet of each one of them. 5. Multi-purpose cooperatives may be associated with as many federations as types of activity are included in their corporate purpose. 6. Federations may, in accordance with their statutes, integrate sectoral unions with at least five cooperatives of the same class or sector of activity among their associates. These unions will have legal personality since their registration in the Cooperatives Registry; Shall be governed, where appropriate, by the same rules as federations; And in its bylaws, shall be expressly the federation of which they are party. Article 106. Purpose and operation.

1. It is the responsibility of the federations of cooperatives: A) To represent the associating members according to what they establish their statutes. (Annex 6 annexes the model of statutes of a federation, model inspired in the case of the Valencian federation). (B) To organize and finance advisory, auditing, legal and technical assistance services, and all those that are suitable for the interests of its members. C) Fostering cooperative training and promotion. D) Exercise any other activity of a similar nature.

2. Cooperative federations shall not engage in risky economic activities, and shall operate on a budget, which shall include the determination of the contribution of members and partners to the annual budget. Federations pay the confederations according to the weight of the cooperativism that is calculated considering not only the turnover but also the number of cooperatives that contribute and the mass. To cover their fixed assets investments, they may have a surplus, the destination of which shall be the irreparable reserve. Federations may be associated with non-profit entities that carry out preparatory activities, complementary or subordinate to those of the federation itself. 3. For the approval of the general meeting, as governing financial statutes, the governing board shall present the balance and settlement of the budget and shall also accompany the draft budget for the following financial year, in addition to the management report. The federations must be subject to an external audit, the report of which will be brought to the attention of the general assembly. The financial statements, the management report and the audit report shall be submitted to the Cooperative Registry for deposit within one month after its approval by the general meeting.


Chapter III. The Confederation of Cooperatives of the Valencian Community Article 107. The Confederation of Cooperatives of the Region of Valencia

1. The Confederation of Cooperatives of the Region of Valencia will be the highest representative body of cooperatives and their organizations in this area. 2. They shall have the right to integrate into the confederation the existing federations and associations of cooperatives referred to in section 105 (1) that are not part of any federation. Exceptionally, and in the terms provided for in the by-laws of the confederation, cooperatives were also directly associated with the cooperative activity in the Valencian Community which has the status of large enterprise, provided that it does not belong to an associative society already integrated in the Confederation. 3. Corresponds to the Confederation of Cooperatives of Valencian Community:

A) To publicly represent the Valencian cooperativism. B) To participate in the diffusion of cooperative principles and to stimulate the formation and cooperative promotion. C) Organize services of common interest for cooperatives. D) To establish relations of collaboration with the organizations representative of the cooperativism of other autonomous communities, as well as with the international scope and of other states, mainly European. E) To establish relations of collaboration with public companies, savings banks and other foundations of general interest, insurance mutual, mutual societies of social welfare, labour societies, agrarian transformation societies, and associations of any kind, as well as with the organizations created by the entities of the program, in order to coordinate and strengthen the Social Economy. F) Establish relationships with trade unions and business organizations. G) The other functions of representation, defence and promotion of Valencian cooperatives that are assigned to them in their statutes and which are entrusted in the future by the public authorities.

4. The social statutes of the confederation shall contain at least its economic regime and the regulation of its governing bodies, namely the governing council and the general assembly. The rules of this law for the corporate regime of cooperatives are applied to the confederation, except for the obligation to appoint counsel or counsel, and the economic and accounting system of unions and federations, as well as their rules Audit 5. The confederation, from the moment of its constitution, by means of a public document and its registration in the Cooperatives Registry, legal personality and full power to comply with the judgments and the exercise of the functions that legally corresponds.

Comparative analysis between ACDA vs Valencian Federation

Here we would like to compare ACDA versus CACV, in order to highlight the main characteristics of each one and to identify differences and similarities.

To establish the differences, a detailed study of the Georgia Agricultural Cooperatives Act and the

ACDA statutes, obtained from Bo Rosenqvist's "Capacity building to the Agricultural Cooperatives

Development Agency (ACDA)" report, was made to define the main differences with The

Cooperative Agri-Food Law of the CV and bylaws of the federation.


Table 3.Comparative analysis ACDA vsCACV

ACDA CACV

Legal form Juridical person under public law under the Ministry of Agriculture of Georgia, totally subordinate

Private non-profit legal person

Law

It is governed by the Agrarian Cooperatives Law, Public Law Entities Act, and other primary and secondary laws of Georgia and its Statutes.

It is governed by the Cooperatives Act (in our case, the Valencian Community) and its bylaws.

Direction The direction is carried out by the Chairman, the Vice Chairman and the unit of service through weekly meetings.

The Governing Council is the governing body, representation and management. In our federation is formed by a president, 2 vice-presidents, secretary and vowels. They meet approximately every month and a half. The Governing Board has appointed a director with permanent dedication that assumes part of the proper functions of the council by delegation.

Main Services Registration and Monitoring Services Registration service (including monitoring) is of a public nature task and is not performed by Federation.

Financial issues

Financing: specific with charge to the budgets of the Ministry; Funds received as a donation; Other income allowed by its legislation.

Financing: 70% private (membership fees, service delivery, courses ...) and 30% public (agreements and grants).

Registry of cooperatives

The application for obtaining the status of agricultural cooperative is presented to ACDA.

The application is made to the Registry of Cooperatives where the registration of the cooperatives, their unions and federations and the Confederation of Cooperatives

Obligations

It is obliged to carry out the calculation of the financial and economic activity of the accounts, to compile the balance and submit it to the Ministry for approval

It is obliged to present independent annual accounts before the Cooperative Registry. The annual budget must be approved at the Annual General Meeting

Economic Balance

The annual balance of the agency is controlled by an independent auditor appointed by the Ministry

Conducts auditing of accounts from an external auditor hired directly by the Federation to be approved by the Annual General Meeting

Structure Structure: administrative services, registration of cooperatives, monitoring, projects

Structure: director, dept. Technical, dept. Administration, dept. communication. The registration and monitoring function is exercised by the Registry of Cooperatives

Taxes

- General VAT Law (applies pro rata for purposes of deductions when performing activities exempt from VAT)

- Entities under public law are exempt from corporation tax (in Spain)

- Non-profit entities are partially exempt, including federations


SWOTs Analysis Below, two SWOTs analyses are presented to easily compare and verify the strengths, weaknesses, opportunities and threats between ACDA and a membership-based entity.


The realization of these SWOTs has been carried out with all the information gathered in the previous sections: analysis of situation and context, consultation of experts and agents involved, documentary and normative review, bibliographic studies and our own experience. Table 4. ACDA SWOT analysis

Strengths

Weaknesses

Public financing. Directly charged to the public budgets

The hierarchical structure prevails

The proper functioning of key services are: 1.registration of cooperatives, 2. monitoring of their performance, 3. implementation of grant schemes, 4. delivery of organizational and technical assistance initiatives that target agricultural cooperatives, 5. proposition of policy initiatives in the field of farmer cooperation (ACDA is providing advises on elaboration of the law of cooperatives)

ACDA is recently established. Currently, the transition from government agency into membership-based entity is seen as premature. The cooperative movement in Georgia is young and weak - it requires a lot of financial, technical and political support from the private sector, from development entities, from the government.

Updated information on the state support programmes for agricultural cooperatives

The sustainability of ACADA is strictly based on the existing enabling environment in terms of tax incentives that motivates COOPs to obtain status from ACDA; if such incentives are no more in place ACDA will no more be attractive for them.

Update of database for agricultural cooperatives (ACDA shares existing data on cooperatives and membership; provides any additional information upon request)

Very basic criteria to be registered as a cooperative

ACDA is already well-established and well-structured entity with a clear mandate and qualified staff

Lack of presence in the local regions

Opportunities

Threats

Provision of services Political instability. Frequent change of ministers

Support for the integration of cooperatives to make them more competitive

Cooperative activity is only a small part of the farm

Training oriented to the needs of cooperatives Lack of willingness to invest in the long term

Integration of the entity into EU programs and other international funding schemes

Resistance to change by staff

Source: Own elaboration from the data provided by consultations and interviews.


Table 5. Membership-based entity SWOT analysis

Strengths

Weaknesses

Independence and autonomy from the public authorities

Need for own financing by its members

Participation of partners in decision-making. Own governance

Constant maintenance of the organization's activity

Greater agility in decision making Inexperience of staff in the new entity

Power of influence and interlocution before the Administration (Public Organisms)

Investment for its creation

Opportunities

Threats

Creation of a strong and agile structure for the promotion of cooperativism and the sustainability of the country's agriculture

Conflict of interest with public policies. Lack of support and lack of funding: (i) There may not be sufficient number of cooperatives, to cover ACDA's annual operational cost through their membership fee; (cooperatives may not be ready to pay a membership fee). (ii) The government may likely to suspend providing financial support to ACDA preventing it from the implementation of new programmes in support of cooperatives development; (iii) ACDA may lose opportunity to use services provided by ICC staff in the regions.

Increased constituency (if coops are convinced to join the organization), louder (but not necessarily stronger) advocacy voice

Lack of transparency.

Provision of new services according to the demand of its cooperatives members

Lack of confidence among the cooperatives and

To think that this model only aims at the creation of wealth

Lack of professional staff and leadership.

Duplication in functions with a couple of other players. Lack of an internal structure of the supervisory and management bodies)

Source: Own elaboration from the data provided by consultations and interviews.

Based on the evidences of the SWOTs above, in order to probe more deeply and to identify the most feasible options and ways and means of potential restructuring of ACDA, the study also proposes to conduct specific comparative analysis of advantages and disadvantages. The initial hypothesis is that the current ACDA it is restructured in membership based organization where the cooperatives would be the members and self-organize. The table below shows these pros (arguments in favour) and cons (counter arguments) from the different perspective like from the side of the Government and from the perspective of cooperative, in relation to the possible restructuring of ACDA into the membership based organization.

http://www.linguee.es/ingles-espanol/traduccion/conflict+of+interest.html

Capacity building to the Agriculture Cooperatives Development Agency (ACDA) 27

From the perspective of the Government

Pros (advantage)

Cons (disadvantage)

One of the basic arguments favouring this set-up is that it would reduce burden for the state and would foster further activation of the private sector. This affects in particular to the Government, because the state budget will not have budget spending of couple of millions of GEL per year for the agency. * Must be considered that these kind of public services always are paid by the state.

Based on the international experience, especially from the EU member states, it shows that several support tasks are normally considered state functions (mainly the register process and the law regulation). In spite of having an active Membership-based organization the State should play a supervisor role and keep the financial support for those specific public services. For example, the State has an obligation to guarantee that the law is enforced.

The staff will be provided with relocation support and the high volume of new staff will also receive induction and initial training at the start-up-phase of their employment.

Membership-based organizations are decentralized rather than hierarchical. The Membership-based would enable fast and efficient communication with management in charge of the cooperatives. Short hierarchical links promote considerably easier coordination in the future.

This lack of centralization is another disadvantage of Membership-based organizations, because decentralization can lead to coordination and control problems for management. A state Agency or similar entity with the legal mandate to register the cooperatives, monitor their functioning and provide them technical support would be a better option as such modality would be better aligned with central management.

An advantage that could be highlight is the existence of a Membership-based organization may facilitate the collection of structured data.

May be a lost in the control process of the cooperative movement


From the perspective of the Cooperatives

Pros (advantage)

Cons (disadvantage)

If ACDA is membership based and coops pay membership fees they automatically become the decision makers, they decide what kind of support and lobby they need.

The main role of a Membership-based organizations is to foster awareness campaigns and lobby on an international, regional or local level. For example, being member of partner of COPA-COGECA or others international networks. By promoting a membership organization, better links

could be built with UE States, regional organizations and non-governmental organizations and the stakeholders of the cooperative world. This is fully in line with the European neighbourhood policy.

There are numerous strong counter arguments on the table to be considered, related the nascent stage that most of the coops are placed. Given context as well as the current situation of the coops most of them will require the continued assistance and support and might be that next five

years coops will not be ready to pay or to have financial sustainability and without state support they might become bankrupts or stop functioning.

In this line, the current small scale of the coops might lead to different demands rather than to pay for that kind of membership. For example, in the nascent stage, there could be a need of e policies to attract investment and promote consolidation.

Finally, given the nascent stage of the creation process of the coops, it is not surprising that the integration process to growth in scale has still not been properly addressed. In this line, the lack

of professionalization and experience on the part of the managers and heads of the cooperatives is often a barrier to the effective promote of sustainable development with long term vision of the cooperatives movement in the country.

Membership-based organizations filter decision making down to all levels of management, while traditionally public entities rely on top management to make decisions. Membership-based

organizations require that all coops participate in the decision-making process. This means that the cooperatives would self-organize in

terms of standardization, methodology, organizational audit, etc. So, coops feel they are part of the total organization, rather than isolate initiatives. Consequently, Membership-based organizations run more efficiently and effectively, giving them a competitive edge in today's global

markets. Finally, through a Membership-based organization better representation and defend could be achieve. (Promote better representation of cooperative members encourage more participation of those people is a key issue in the long-term vision)

Other concern is that assigning these responsibilities to a private law association whose members will be the cooperatives would create high risk of conflict of interests as advanced international experience especially that of EU member countries shows that such overseeing and support

tasks are normally considered state functions (Add references). There is a certain risk that minority groups might not be fully represented and not achieve their objectives. For example, youth, women, people in rural areas, and some minority crops could be excluded.

No real coordination between state and private functions.

Membership-based organizations achieve progress toward a common goal while completing individual tasks. Cooperation is critical in Membership-based organizations, and this type of

organization must be structured to facilitate communication. Membership-based organizations are less hierarchical, and they exhibit more flexible structures that foster problem-solving, participation in decision-making and teamwork to achieve organizational goals. In short, in this

organizations, labour and management must work cooperatively. Therefore, could be understood as a first step to promote inter collaboration among the cooperatives.

Recognition for individual achievement within a hierarchical organization is a motivator and a

factor in determining compensation. However, membership-based organizations value team performance over individual performance. In this sense, the lack of this type leadership in the agricultural sector may also be a constraint and can lead to failure. It is precisely the lack of

leadership that causes discontent and the lack of successful pilot projects.

Membership-based organizations could help in the increasing awareness of the cooperative movement

Membership-based organizations could help to achieve targets in other sectors and territories.

Potential conflict of interest (The main sectors/actors will tend to influence more and others less

powerful)

May need budget


Answering key questions Being the main objective of the report the following sections discuss more in detail the four key points:

What are the strengths, weaknesses, opportunities, and threats of ACDA's restructuring in a membership-based organization?

In the previous section you could find a detailed SWOT analysis that shows the main strengths, weaknesses, opportunities and threats to keep ACDA as a current organization or to restructure it into a membership-based partnership. As it can be seen, neither option offers advantages over the other, nor do we see weaknesses that suggest that we avoid one system over the other. Therefore, based on these analyses and the experiences of other European regions, the most advisable situation is the creation of a dual scenario, based on the existence of ACDA and the creation of a federation based on membership, each with its own competencies. Therefore, the question is not whether ACDA's restructuring into a membership-based entity is feasible. The question would be whether Georgia needs a membership-based entity. In the report of these experts, we do not propose the transformation of A in-to B. We propose an A to legal requirements and create B. ACDA must maintain its competencies in registration, monitoring, support programs, coordination, elaboration and implementation of regulations and dissemination of the cooperative model, while gradually renewing the association based on representation and defence, as well as the provision of services such as training, technical and assistance.

If such set-up is concluded to be feasible and fit into the country context, what would be the right legal status to avoid conflict of interests?

First, it eluded in another way, although the current legislation creates the Cooperative Agency as a legal person of public law, but does not provide other options. Therefore, it is understood that to carry out a transformation of the current ACDA, the relevant legal adjustments should be made. In our opinion, a public-private partnership could be designed. For this, it is recommended to take as an example the Cooperatives Law of the CV, considered one of the best in Europe and detailed in one of the previous sections. This law provides for the creation of a federation of cooperatives, while maintaining certain competencies in the public sector. Undoubtedly, relying on this law and the scenario it raises could be a great example to create a scenario where there are no conflicts of interest between the different agents involved. It would also be useful to examine the legal framework of other non-agricultural and / or non-cooperative associations to assess whether "partnerships" should form the appropriate basis for the creation of a land-based cooperative entity. In this case, it is advisable to analyze the organizations, associations and other entities that already exist in Georgia, which are related to the agri-food sector and to the agricultural cooperative, since they are possibly among the members of a future agency of representation and defense of the Agri-food cooperativism. It is also possible for these organizations to identify who will take the leadership, from the private sphere, for the creation of this organization and to guide it in its own steps. Let us acknowledge that these efforts have been carried out by the Administration, in tune with a sensitive government that, for the construction of a new model, has been driven by other countries with very consolidated and stable systems.


What kind of set-up would be the mostly approximated to the existing regulations and practices of EU?

In the EU, cooperatives are grouped into Federations normally of a sectoral nature, for business or productive activities or regional, as is the case of Spain and other countries. Also in Confederations that maintain the sector scope and acquire national scale, such as the Agro-food Cooperatives of Spain; Or those that maintain the regional scope and extend their representation to all productive sectors, as is the case of the Confederation of Cooperatives of the Valencian Community. The analysis carried out in other European countries reveals that in most cases there is a scenario in the public domain with competencies in the registration and monitoring of cooperatives, financed from government budgets, which may also have competencies in the establishment of standards, elaboration, implementation, monitoring, profit management, etc. And another private scenario, based on the membership, representation and defence of the cooperative, which is financed with part of the salaries and another of the partners. The construction of these trials, mentioned in the previous paragraph, has been an evolutionary process of transformation of the system of harvests in the different countries. In Georgia, very little time has passed since the beginning of this new social economy movement. Progress has been made with great agility in the creation of cooperative enterprises. Now it would be necessary to go with a steady pace and a less accelerated pace to consolidate this structure. Specifically, in the case of a small country like Georgia, to simplify processes and decision-making, and also to shorten routes, avoiding intermediaries, bureaucracy and unnecessary expenses, the most recommendable formula is directly a National Confederation of Cooperatives that could have different sections by activity sectors, being the agricultural probably the most relevant. It would be a private non-profit entity and legally endorsed as the highest representative body, which will need an important government tutelage until it is strengthened. This new entity can be born from the embryos of other organizations that already exist in Georgia, if the parties so decide. It is also considered that this Confederation of Cooperatives of Georgia will need public funds until it has developed areas of activity that allow it to generate income of services. Here is a schedule and distribution of funds for this possible new Confederation: 1) Strengthen ACDA organization - Immediate intervention (0 – 2 years) (90% public money + 10% share of cooperative members)

- Creation of the Confederation of Cooperatives of Georgia having made the adjustments in the legislation and the elaboration of the statutes.

- Identification of territorial and sectoral leaders and creation of the first council.

- Celebration of a Constituent Assembly. - Appointment of management staff, technical area, administration, etc.

- Design of work packages: training, projects, grants, legal-tax-accounting-labour counselling, product promotion, tourism, ....

- Initiation of formal relations with the different departments of the government. - Initiation of relations among trade unions, professional organizations, NGO, foundations

and all key social actors of interest. - Conduct a search for results to obtain several ways of financing, for example, in the

European context, to continue making progress through concrete EU projects. 2) Consolidation Membership Based Organization - Medium Term (2 – 6 years) (80% public money + 10% fees + 10% service revenues)

- Increase the presence of the activities of Confederation through different performances and presence in the media, social networks, etc. For example, a) Celebrate the


International Day of Co-operatives; b) Creation a call for prizes or recognition to the best cooperative each year (can also be sectoral and / or territorial)

- Normalize relations with the government. - Normalize relations with social partners. - Advance relations with the member cooperatives.

- Create territorial structure. It is important to highlight the need to decentralise. - Offer the services in a coordinated and synchronized manner, acting over all sectors and

territories. Avoid leaving room for speculations and wrong interpretations.

3) Combine public-private partnership - Major Organizational Change (6- 10 years) (60% public money + 15% fees + 25% service revenues)

- Progressively consolidate services. Prioritize and concentrate efforts on those lines of work that are most in line with the cooperative members’ demands. Thus, in a simple and non-traumatic way for the cooperatives to grow by their own regardless of public money.

- It should be noted that in other European countries the subsidy of representative entities, such as the one proposed, is around 90%. Despite the EU representative entities are very consolidated and strengthened. This is due the need of the public administrations to outsource certain key services.

What functions should the Government maintain to support the development of cooperativism in Georgia?

Since 2013, the Government has created a strong support system and has decided to create business cooperatives to improve food production that contribute to poverty reduction. These cooperative enterprises are obviously necessary to support the local and social economy, to develop economies of scale that favour the evolution of primary production and contribute to the creation of added value in agricultural products.

Georgia is a country with enormous agricultural, agro-environmental and agri-food potentialities, with a relevant biodiversity that must also be valued and used and managed in a respectful way at the service of society. It's only been three years since the start of creation of cooperatives in Georgia, a short path that has not yet facilitated the consolidation of these companies. It is important to develop the cooperative model in Georgia and do so with the support of the Public Administration, through the elaboration of rules that facilitate the strengthening and consolidation of these cooperatives that are still very young in age, fragile and vulnerable to the ups and downs of the Markets. It is necessary to prepare the cooperative movement and to invest in training, and facilitate access to this training for managers and cooperative members in key areas and capabilities, such governance, accounting, taxation, legality, marketing, food safety standards, etc.

Economic support must also be maintained, depending on the local conditions and taken in account the characteristics of each region, each product, each sector, as appropriate and, of course, depending on the availability of economic resources. For example:

- Focalise subsides to cooperatives to increase their size in membership, area, livestock housing, joint marketing of products, common access to the acquisition of inputs, etc. - Establish priority criteria to give subsidies to those cooperatives which are making efforts to reach quality standards, because they require greater investments to satisfy the standards (Global GAP, BRC, IFS, organic production, etc.). It could be also subsidized as a measure to promote these production models.


Moreover, the government can support the organizations through specific projects and can channel funds addressed to capacity building and training of specialized staff. Finally, the government also can monitor and evaluate performance without too much intervention in the functioning of the organization. Several tasks such as: registration procedures, specific promotion, awards campaigns, and support programs for cooperativism and positively discriminating the members and the cooperatives in the generic lines of support to the agri-food sector could be a key role played by the government.

Assessment of operational capacity of ACDA in the long term

The operational capacity of ACDA, according to the European scenarios, must be maintained in the long term with regard to its role of public entity as Cooperative Agency delegated by the Ministry of Agriculture: registration, monitoring, standardization and monitoring of its implementation, support through aid, etc. Its competencies are basically those that it holds, although they must be strengthened through continuous training processes to update knowledge, as suggested by the expert Bo Rosenqvist in his 2016 report on "ACDA CAPACITY ASSESSMENT". Likewise, ACDA should assume the role of training entity of cooperatives and their members until other means exist. In addition, it is also advisable, as far as possible, to develop the Agency at the regional level to bring services closer to the reality of cooperatives, sectors and territories, thus gaining efficiency. The investigations and consultations carried out undermine the conclusion of these experts who propose a scenario in which, in parallel with the maintenance and strengthening of ACDA, the mechanisms for the creation of a Representative Entity based on Membership should be put in place, as has happened in the European countries.

Conclusion and Recommendation

1. The membership-based entity should be based on a strong cooperative base: strong, food-

producing, resilient, and wealth-generating enterprises.

2. Over 1,500 cooperatives have been created from the spring of 2014 to the year 2017. Only a

short period of time has been enacted under the Cooperatives Act. Most cooperatives are still very

young, they must grow and mature to form a solid foundation.

3. As mentioned above, agri-food cooperatives are young and fragile due to their scale. They

need to strengthen and gain dimension: more partners, more cooperative land, more livestock,

more activity activities, financial acquisitions, joint marketing, cooperative stores, use of natural

sources of energy, development of irrigation systems, etc.

4. To consolidate, cooperatives must be competitive: do benefits to the merbers and meet

demands of society. However, there is no public support.

5. Competitiveness can be achieved through specialization and / or reach an appropriate

dimension and this will require sufficient training and time.

6. Cooperation among cooperatives, interconnection, new alliances and synergies with other

stakeholders that also strengthen the cooperative system.

7. The process of setting up cooperatives to consolidate businesses and identify successful

initiatives that will become the leaders of tomorrow is appropriate in this framework.


8. The membership-based entity is an organization with great representation and defense of

agri-food cooperativism (model of Federation or Confederation): the expression of a sector for

society and administrations.

9. A membership-based entity should be an appropriate legal framework for regulation and

support its competencies.

10. In the organizational model of cooperativism, the competencies of public institutions should

allow for the recognition and follow-up of cooperators, promulgation of standards and

implementation monitoring, and relevant financial support. And ACDA is working properly with all

these issues in Georgia.

11. The grassroots organization must be a private, non-profit organization and a tool for the

representation and defense of cooperativism, created from the base and not vertically, with

educational and training functions and also in the promotion of The formulations of the social

economy. It must emerge with strong public support and with the direction of the administration, but

within the dependency. Public support will be justified in its role of dialogue with the administration

and with social actors. In addition to other activities that may be framed in the structure of

cooperativism.

12. It is therefore proposed to maintain ACDA in its competence in the public sphere. And it is

proposed the creation of a representative entity based on affiliation (Confederation), private and

non-profit. A schedule is defined in the short, medium and long term and possibly funded. Thus,

within a period of about 5 years, Georgia will have developed an organizational model that is

exposed in different European countries.


Annex 1: ToR of STE

ToR1.17 Carry out a feasibility analysis of pros- and cons- of restructuring

ACDA into a membership-based organization Position: Expert for preparation of feasibility analysis of pros- and cons- of restructuring ACDA into a membership-based organization (Activities 1.17 – 1.18) Duration of task package: 3 months (March – May 2017), Expert man-days: Service Contract(Two visits of expert, 10 working days each) Objective of the Assignment To identify the most feasible options and ways and means of potential restructuring of ACDA; the project proposes to conduct a specific feasibility study that will accumulate advanced learning and experiences especially the one of the EU and will provide well evidenced overview and risk assessment with regard to pros and cons in relation to the possible restructuring of ACDA into a membership based organization. Aims and Objectives of the project The goal of the project is to contribute to increase food production in Georgia and reduce poverty. The project purpose is to strengthen institutional capacity and skills of the Agriculture Cooperatives Development Agency (ACDA), to institutionalize continued training programmes for registered cooperative managers and management leaders, to strengthen the management capacity and install proper governance at registered cooperatives and to improve understanding among cooperatives members of the meaning and purpose of cooperative enterprises and an increased sense of ownership of their cooperatives. The project activities will be throughout Georgia. General Tasks The Service Provider/Expert will work under the supervision of the EU expert (Team Leader / Institutional Expert) and in close cooperation with the project team and the project counterpart (Agriculture Cooperatives Development Agency ACDA). The expert will also link with other EU / international donor funded projects in Georgia and project stakeholders. Profile and responsibilities The Service Provider/Expert will contribute to the successful performance of activity 1.17 Carry out a feasibility analysis of pros- and cons- of restructuring ACDA into a membership-based organization while ensuring strict adherence to all project policies and procedures and activity 1.18 Organize a 1-day workshop to present findings of the feasibility analysis to the senior management of ACDA and provide relevant recommendations including preparation of analysis report

Key activities / tasks of the assignment and the related time-lime / deadline will be:

Activities Start End Duration

1.17 Carry out a feasibility analysis of pros- and

cons- of restructuring ACDA into a membership-

based organization

01.04.2017 14.06.2017 3 months

1.17.1 Carry through a desk research in relation to

international regulations, practices and experiences

01.04.2017 15.04.2017

1.17.2 Identify and interview key stakeholders in

Georgia and abroad

16.04.2017 22.04.2017

1.17.3 Consult with state bodies including parliament

committees and members

24.04.2017 29.04.2017

1.17.4 Carry through a situation and context analysis 01.05.2017 15.05.2017

1.17.5 Carry through an analysis of comparative

advantages for ACDA future priorities

16.05.2017 30.05.2017

1.17.6 Carry through a SWOT analysis and risk

assessment

01.06.2017 14.06.2017

1.18 Organize a 1-day workshop to present findings

of feasibility analysis to the senior management of

ACDA and provide relevant recommendations,

prepare analysis report

15.06.2017 30.06.2017

1.18.1 Present and discuss draft study report (feasibility

analysis) at a special workshop

15.06.2017 16.06.2017

1.18.2 Approve draft study report 17.06.2017 24.06.2017

1.18.3 Prepare final study report 25.06.2017 30.06.2017


Project indicators: Draft study report is presented, discussed and agreed Draft & final reports (English) – Service Provider/Consultant should submit draft report first and after the project comments, finalize it. The report will include the following: a. Description of the context in which the assignment was conducted b. Description of the primary clients of the assignment and the stakeholders involved c. Definition of the objective of the assignment and its scope. d. Overview of the approach / methodology and the tools used; e. Information of similar organizations in EU and other developed countries f. Analysis of the situation and context g. Analysis of comparative advantages for ACDA future priorities h. Analysis on the priority services as well as gaps and needs of ACDA i. Assessment of operational capacity of the ACDA j. SWOT analysis and risk assessment k. Conclusions and Recommendations on the necessary technical and operational capacity building and training areas Annexes: Annex 1: Terms of Reference of the expert Annex 2: Work plan Annex 3: Assessment Questionnaire Annex 4: List of Stakeholders Interviewed Annex 5: Power Point Presentation The Service Provider/Senior Expert will have to provide sound experience in a certain number of activities to perform his/her tasks in the project in an adequate and professional manner.

For this reason, the expert will have to show the following qualifications:

university degree in a subject relevant to the post

a minimum of 10 years working experience

at least 5 years of experience with agricultural coops and related institutions/organizations

knowledge of agriculture and/or agribusiness situation in Georgia is an advantage

experience in institution building, agriculture economics, business planning (incl. business/market analysis and marketing plan, operation/investment planning and budgeting, cash-flow forecast, cost-benefit analysis, training modules, taxation, risk analysis and economic impact analysis)

working experience in international projects is a plus

proficiency in oral and written English

communication and presentation skills

proven ability to perform the duties for which he/she will be recruited

good IT experience (Word, Excel, PPP)

free to travel to Georgia in a period of two months (March - May 2017)

Application Requirements Applicants are requested to send their detailed Curriculum Vitae in English with copies of certificates of education and references of relevant working experience. The applications can be submitted by e-mail to EVOLUXER: [email protected] The applications will be evaluated, based on the CV’s. The project has a policy of none discrimination and equal opportunities, regardless of age, ethnic origin and gender.

This Project is funded by the EU as part of the ENPARD Programme


Annex 2: Work plan

Activities Deliverables Status Year 2017

April May June

1.17. Carry out a feasibility analysis of pros- and cons- of restructuring ACDA into a membership-based organization

Meet stakeholder

Complete

Collect data

Complete

Analyse data

Complete

Carry through a situation and context analysis

Complete

Prepare work plan and methodology Delivery of a detailed

Work Program Complete

1.18 Present findings of feasibility analysis to the senior management of ACDA

Present and discuss draft study report (feasibility analysis) at a special workshop

Power Point and draft Technical report

Complete

Approve draft study report

Complete

Prepare final study report Power Point and final

Technical report Complete


Annex 3: Questionnaires


Annex 4: List of meetings first visit

Date Location Name of stakeholder Type of Meeting

27/03/2017 Valencia Staring meeting Briefing

03/04/2017 Tbilisi Briefing with Manfred Schuessel (ENPARD) Briefing

03/04/2017 Tbilisi Meeting with KonstantineKobakhidze (ACDA) Briefing

03/04/2017 Tbilisi Meeting with KonstantineKhutsadize (Deputy ACDA)

Interview

03/04/2017 Tbilisi Meeting with GiorgiMisheladze (President ACDA)

Interview

04/04/2017 Tbilisi Meeting with Alex Potapov (Min of Ag) Interview

04/04/2017 Tbilisi Meeting with LevanDadiani (Oxfam) Interview

04/04/2017 Tbilisi Meeting with Giga Sarukhanishvilli (Mercy Corps)

Interview

04/04/2017 Tbilisi Meeting with George Glonti (CARE) Interview

04/04/2017 Tbilisi Meeting with David Mamukelashvili, Head of Target Programmes (ACDA)

Interview

05/04/2017 Tbilisi Meeting with PatiMamardashvili (ISET) Interview

05/04/2017 Tbilisi Meeting with Nino Melia, Public Relations Manager (ACDA)

Interview

05/04/2017 Mtskheta Municipality

Visit to the ENPARD Cooperative Interview - Visit

05/04/2017 Tbilisi Meeting with GiorgiZakaidze, President, Georgian Association of Agricultural Cooperatives

Interview

05/04/2017 Tbilisi Meeting with KonstantineKobakhidze (ACDA) General overview

19/04/2017 Valencia Meeting with Sergio (ACDA) General overview

26/04/2017 Valencia Meeting with Prof. Jose Maria Garcia and Prof. Victor Martinez, UniversitatPolitècnica de València (UPV)

Exchange ideas meeting

16/05/2017 Skype Meeting with Silvia Sanjuan (CARE) Exchange ideas meeting

*Note: A document with the presentation of the Federation of Agri-food Cooperatives of the Valencian Community was sent by email to all interviewed in Georgia


Annex 5: List of meetings second visit

Date Location Name of stakeholder Type of Meeting

22/05/2017 Tbilisi Briefing with Evoluxer team (ENPARD) Briefing

22/05/2017 Tbilisi Meeting with head of Regional Coordination Department of Ministry of Agriculture (MOA) Mr. Shalva Kereselidze at the Ministry of Agriculture

Interview

22/05/2017 Tbilisi Meeting with the head of Policy- Analysis Department of MOA MS. Eka Zviadadze at the Ministry of Agriculture

22/05/2017 Tbilisi Meeting with Mr. Valeri Gulbani (TOR 1.21 – Develop cooperative financial and management assessment tool and to ensure regular implementation ) at the hotel

Interview

23/05/2017 Tbilisi Presentation for Evoluxer and ACDA working group and three different cooperative members and representatives of the Ministry of Agriculture, At Hotel "Vedzisi"

Presentation of both reports

23/05/2017 Tbilisi Interview with the members of three different cooperatives: 1) Iakob Lomsadze – Director of Coop. ,, Agroabi’’ – Beekeeping 2) Amiran Khanishvili – Chairman of Coop. ,,Rancho’’ – Cattle Farming, 3) Nana Kirmelashvili – Chairman of Coop. ,,Nagomari’’ – Tea Production A nd Mr. George Zaqaidze (GACA)

Interview

23/05/2017 Tbilisi Meeting with Ms. Nino Zambakhidze – Chairwoman of Georgian Farmers Association (4 Khorava street)

Interview

24/05/2017 Tbilisi Meeting with chairman of ACDA Mr. George Misheladze at ACDA office

Interview

24/05/2017 Tbilisi Briefing with Evoluxer team (ENPARD) Briefing

25/05/2017 Tbilisi Meeting with Deputy Minister of Africulture Mr. George Khanishvili

Interview

25/05/2017 Tbilisi Meeting with Cristina Casella and NuNu Mosiashvili from EU delegation and Javier Sanz at 13:00 at the hotel "Vedzisi"

Interview

25/05/2017 Tbilisi Attend the Monthly ENPARD-ACDA Coordination Meeting

Attend a meeting

25/05/2017 Tbilisi Meeting with the PIN (People In Need) project manager Mr. Buba Japarli at the Hotel "Vedzisi"

Interview

25/05/2017 Tbilisi Briefing with Evoluxer team (ENPARD) Briefing *Note: A document with the presentation of the Federation of Agri-food Cooperatives of the Valencian Community was sent by email to all interviewed in Georgia


Annex 6: Content of the statutes of a membership-based organization

CONTENT OF THE STATUTES OF A FEDERATION / CONFEDERATION OF COOPERATIVES

1. Denomination. Legal regime. 2. Address. 3. Territorial Scope. 4. Purposes / Activities.

a) The representation and defense of the interests of the partners, both before the Public Administrations and individuals, natural or legal persons, and before the National and Supranational Institutions, as well as those interests of the partners whose defense is delegated.

b) Dissemination of cooperative principles and collaboration with institutions, agencies, national and international associations for the promotion of cooperative education and training and development of the presence of the cooperative agri-food movement in society.

c) Maintain, promote and disseminate the cooperative principles in accordance with the guidelines and recommendations of the International Cooperative Alliance and the applicable cooperative legislation.

d) Promote business or commercial initiatives for its partners that meet an objective of commercial concentration or organization of production.

e) To collaborate in the configuration and implementation of policies that affect cooperatives, the agricultural and food sector, their participation in rural and sustainable development, or the whole of the socio-economic activity, by itself or with other national and international organizations.

f) To assume tasks of generic promotion of the products of its associates and to promote the rationalization and modernization of the economic activity of agrarian and agri-food cooperatives and their qualification, providing collaboration for their full insertion in the agri-food system as a whole.

g) To foster solidarity and the participation of inter-professional organizations in order to promote the management and transparency of the activities of the agri-food sector.

h) The promotion, preparation and publication of studies, publications, competitions, exhibitions, fairs and similar activities related to cooperation in general and to agrarian and food cooperatives in particular.

i) Collaborate with other national and international cooperative associations and federations to promote cooperative principles, the interests of cooperatives and other entities of similar nature, as well as the integration of the cooperative movement.

j) Provide its partners with the services they request in matters such as advice and management; technical assistance, training, information and propaganda; coordination; conciliation and arbitration between the partners and between them and their members; recruitment; conducting studies, reports, analyses and audits; any other services within their reach and always to the extent that they were implemented.

k) Any other performance or activity of a similar nature that, from the instrumental and / or representative character of the promoted interests, is in the interests of its associates. 5. Electronic Headquarters. 6. Partners. 7. Admission conditions and procedures. 8. Of the low of the partners.

a) Volunteer b) Mandatory

9. Expulsion. 10. Rights of partners. 11. Obligations of the partners. 12. Economic resources.

a) Periodic Fees b) Grants and donations c) Income generated by your assets and economic rights


d) Resources generated by your services and activities e) Extraordinary contributions f) Entry Fees g) Sanctions

13. Training and Cooperative Promotion Fund.

Irreparable, with the purpose of training the members and workers of cooperatives; the promotion, diffusion and development of cooperativism; promotion of intercooperative relations; cultural, professional and social promotion. It is formed with the following assignments: a) The part of the net surplus of each fiscal year agreed upon by the general assembly. b) The amount of liquid assets arising from the liquidation of cooperatives. c) The sanctions imposed on the partners. d) Grants, donations and other assistance made to the entity for the purposes of the fund.

14. Voluntary Reserve Fund.

Of free disposition. It will be provided with the surplus and extraordinary profits available that the general assembly may agree upon, and it may be charged with losses of any nature, in addition to other legally prescribed applications. It will have irreparable character among the partners.

15. Social bodies. a) The General Assembly b) The Governing Council

16. The General Assembly. Constituted by the duly assembled members, it adopts by majority the social agreements that, being the maximum expression of the social will within the legal competence of the assembly, are obligatory for all its members, including absentees and dissidents.

17. Convocation of the General Assembly. 18. Constitution and operation of the General Assembly. 19. The Governing Council.

It is the governing body, management and representation of the entity, with exclusive and exclusive character.

20. Powers of the Governing Council.

a) Formulate the annual accounts, the management report, as well as the annual budgets of income and expenses.

b) Agree the admission of new members and the expulsion of new members, in accordance with these Statutes.

c) Represent the entity, in and out of court, before all kinds of persons, institutions and bodies. d) Agree the convocation of general assemblies, setting the agenda of the matters to be discussed. e) Hire and dismiss the workforce. f) To create and organize the services and activities of this federation by appointing and

separating the technical, administrative or subordinate personnel, who will perform them. g) In general, to carry out all actions aimed at the fulfilment of the entity's own purposes, provided

that they are not expressly attributed to the competence of other corporate bodies. 21. Election of directors.

The members of the governing council shall be elected by the General Assembly, among the members, by secret ballot. It shall be the competent body to appoint from among its members the persons who shall hold the positions of President, 1st Vice-President ,2nd Vice-President, Secretary and Members.

22. Duration of the positions and functioning of the Governing Board.

The term of office of the members of the Governing Board shall be four years. The renewal of the members of the Governing Council shall take place in halves every two years. In the first renewal, two years after his election, the 1stVice-President, the Secretary and the numbered members will be elected. In the second renewal, two years after that, the President, the 2ndVice-President, and the odd-numbered Members, and so on every two years. The Governing Council is constituted with the presence of more than half of its components. Absent directors may not be represented.


The agreements shall be taken by majority vote of the attendees and shall bind all members, including absentees and those who have voted against. Each counsellor will have one vote. The vote of the president will decrease the ties.

23. Social documentation.

- Partner Registration Book - Book of Proceedings of the General Assembly

- Book of Proceedings of the Governing Council - Journal Book

- Book of Inventories and Balances - Book of Reports of the Censorship of Accounts 24. Dissolution. 25. Settlement.


Annex 7: Cooperatives Registry Service of Public Administration

COOPERATIVES REGISTRY SERVICE OF PUBLIC ADMINISTRATION

1. Qualification and registration of cooperative societies and associations of cooperatives. 2. Qualification, registration and certification of acts that, according to current regulations, must access said Registry, among which are the following:

a. Constitution b. Modification of company bylaws c. Grant d. Modification or revocation of powers e. Appointment and dismissal of the members of the corporate bodies f. Fusion g. Cleavage h. Transformation i. Dissolution j. Extinction k. Reactivation l. Firm disqualification

3. Legalization of corporate books and accounting of cooperatives. 4. Deposit of annual accounts, management and audit reports, as well as books and social documentation in cases of liquidation. 5. Appointment of auditors or auditors and other independent experts, in cases where it corresponds to the Registry. 6. Annotation of very serious sanctions for breach of cooperative legislation. 7. Prior qualification of draft statutes. 8. Issuance of certification of denomination. 9. Issuance of registry certifications.


Annex 8: History of Spanish Confederation of Agri-Food Cooperatives

HISTORY OF SPANISH CONFEDERATION OF AGRIFOOD COOPERATIVES

The parent entities

The Spanish Association of Agricultural Cooperation (AECA) U. de Coop., Was established on December 18, 1986. They formed AECA, U. de Coop. As founding partners, the following territorial and sectoral entities, in addition to some cooperatives:

Union of Cooperative Wineries of Spain (UBCE),

Union of Agrarian Cooperatives of Extremadura (UCAEX),

Federation of Andalusian Farmers and Livestock Cooperatives (FECOAGA),

Cooperativa General Agropecuaria Azucarera (ACOR),

Sociedad Cooperativa Agrícola and Caja Rural del Jalón,

Hortícola de Navalcarnero (Madrid), S. Coop.

The philosophy of AECA, U. de Coop. Was defined from its inception, and thus contained in its bylaws, for three main purposes: first, the defense of the interests of agricultural cooperatives in all national and community forums, as Spain had just entered on March 1 Of 1986 as a full member of the so-called European Economic Community, where the policy to be followed in the different productive sectors is discussed and set. A second objective was to promote and improve the internal business structures of cooperatives to strengthen their development and prepare them to become more competitive in the markets. Finally, it was considered fundamental also the promotion of the cooperative fact, in general, and of the agrarian, in particular, before the society and before the public administrations to be sensitive them of the reason or reasons to be of these entities. Its structure and functioning was inspired by the French model and was based on the harmonization between a two-sided territorial and sectoral perspective: the first, with a more political tone, to respond to the autonomous model enshrined in the current Spanish Constitution of 1978 and the second, with a more pragmatic character, to better defend the common and specific economic interests of the homogeneous and concrete productive sectors. From the outset, the work of AECA, U. de Coop. Was oriented to implement the necessary actions to try to achieve these objectives. The promotion is well documented, culminating in the formal constitution and registration of various territorial or autonomous entities such as the Union of Agricultural Cooperatives of Madrid (UCAM); The Union of Agricultural Cooperatives Castellano-Manchegas (UCAMAN), the Galician Association of Agricultural Cooperatives (AGACA); The Union of Agricultural Cooperatives of the Principality of Asturias (UCAPA), which, after completing the process of their legal constitution and registration, requested their entry into this Union of Cooperatives state and after their admission and approval by the corresponding bodies being integrated in Her as full members. The Union of Agrarian Cooperatives of Spain (UCAE), was established on 8 September 1987. The following territorial entities were found as founding members of this union of cooperatives:

Federation of Agricultural Cooperatives of the Valencian Community (FECOAV),

Federation of Agricultural Cooperatives of Catalonia (FCAC),

Federation of Agricultural Cooperatives of the Region of Murcia (FECOAM),

Andalusian Federation of Agricultural Cooperatives (FACA),

Union of Agricultural Cooperatives of Navarre (UCAN) and

Provincial Union of Cooperatives of the Field of Asturias.

In the philosophy of this organization, the territorial representative current rather than the sectoral one. In fact, at no time did it show support for the creation of representative bodies of a sectoral nature and this, among others, was one of the main causes of discrepancy between the two representative organizations of existing agricultural cooperatives.


The Genesis. Fusion Protocol

After several months of negotiations, with frequent ups and downs as is often the case in this type of situation, the initial roughness gradually narrowed and the positions were approximated until reaching a proposal for an agreement that first the respective Governing Boards and later the General Assemblies of both organizations, should ratify to consolidate the constitution of a single organization by merging the two Cooperative Unions at the state level. The new representative entity would adopt the legal form of Confederation of Cooperatives.

Birth of the Confederation of Agricultural Cooperatives of Spain

With the denomination of Confederation of Agrarian Cooperatives of Spain, U. of Coop., by fusion of the Union of Agrarian Cooperatives of Spain, U. of Coop. and the Union of Cooperatives Spanish Association of Agricultural Cooperatives, a Confederation of Cooperatives is constituted with full juridical personality and capacity to act for the fulfilment of the purposes foreseen in the legislation and the present Statutes and that will be subject to the principles and dispositions Of the current Law 3/1987, General of Cooperatives, of April 2. It happened on November 7, 1989 when at the time agreed by the negotiating teams of both parties - 12: 00 in the morning - were meeting in a hotel in Madrid delegates representatives appointed by the two organizations of existing state-level agricultural cooperatives, AECA and UCAE, to celebrate the general constituent assembly from which, from that date, it would be the only representative entity of the Spanish agricultural cooperative, because of the merger of both parent entities. The members of the first Governing Council of the Confederation of Agricultural Cooperatives of Spain were ratified, which according to the final pact reached in the negotiations carried out in recent months would consist of 38 members, 19 of each of the parent organizations. Given the large number of component members of the Governing Council, the Executive Board then proposed to the Executive Board within the Board of Directors, composed of ten members, five from each organization, including the three elected positions (president, Vice president and secretary). The Confederation of Agricultural Cooperatives of Spain (CCAE) was born, thus clarifying and strengthening the representative landscape of Spanish agrarian cooperatives, which in this way gained more weight before the General State Administration and gained strength and credibility in the new consultative field Community and international, opened on the incorporation of our country to the European political and economic space.

Start up At the outset, the registered office for the newly formed Confederation of Agricultural Cooperatives of Spain was La Montera Street, 48-5º left. Of Madrid, until then headquarters of UCAE and that, from now on, would be the common address and unique for all the effects. With this reason, all the staff of AECA had to move to that headquarters. Meanwhile, during the first months of existence, technical and administrative work continued to develop, with more or less fluidity, pending the arrival of the new CEO. As a matter of urgency, all the administrative requirements to complete the registration in the General Register of Cooperatives, central section, of the Confederation of Agricultural Cooperatives of Spain as an entity representative of Spanish agrarian cooperativism and to acquire full juridical personality and capacity to act, for the better fulfilment of its aims and objectives. This process ended on March 1, 1990, as stated in the resolution issued by the General Directorate of Cooperatives and Labor Societies.

1990. The first steps

First CEO

On February 20, 1990, Mr. Francisco Marín García, a graduate in economics and a business diploma from the State on leave of absence, was hired as general manager.


Opening of office in Brussels

In February 1990, the permanent office of Spanish agricultural cooperatives was opened in Brussels, in order to be close to the centers of consultation and decision, both official (Commission and European Parliament, Consultative and Management Committees), and Representatives of other member states (Copa-Cogeca, Agri-food Industry Organizations, etc.). Our membership was formalized as members of the General Committee for Agricultural Cooperation (COGECA), a representative body of the European Agrarian Cooperatives, and represented, together with the Spanish Agrarian Organizations associated with COPA, representation, including charges for Spain in the various Committees and Working Groups.

Territorial organization

At the territorial level, the integration of some previously unrelated regional entities (in the case of Castilla y León) was still pending, as was the unification of the regional entities existing in those autonomous communities where there were more than one at the time of the merger of the National entities (case of Andalusia with FACA and FECOAGA). They were still without a formally integrated representation Cantabria, La Rioja and the Basque Country. All of them will be incorporated years later Anagram and logo: evolution

Activities performed

As outstanding activities in this first year of life of the Confederation of Agricultural Cooperatives of Spain, the following should be highlighted:

Campaigns to promote various products o Citrus fruits (oranges, mandarins and lemons) o Apples o Dried fruits (almonds, hazelnuts and carob) o Consumption of pasteurized fresh milk

Collaboration agreement with the Ministry of Agriculture

In the second half of 1990, an agreement was signed with MAPA's General Directorate of Agricultural Production, which covered a number of issues that particularly affected agricultural cooperatives, related to Agri- cultural Treatments Integrated in Agriculture (ATRIAS), the media of common production (agricultural machinery and equipment) and industrialization (agro industrial machinery and equipment). It was also contemplated the training of technicians responsible for phytosanitary treatments and the creation of the figure of promoter-dynamizer of ATRIAS in the


Federations or Territorial Unions and also the coordinator of several of these groups, with official aid.

Legal Affairs of the EEC

In this working group of the Copa-Cogeca created for the purpose, the issues related to a new regulation in elaboration that affected to existing regulation, to evaluate its scope and to make proposals that tried to influence its orientation with a new approach were studied. Now, topics such as biotechnology, draft statute for the European Cooperative Society, financing of cooperatives, competition law, breeder's right for new plant varieties, etc. were topics of interest to the group.

Taxation

In this area, there were two open fronts: the community, located in the Copa-Cogeca and focused on issues of fiscal harmonization in the various products and countries and the internal national applied in matters such as the new Tax Regime of Cooperatives; VAT on certain productions such as flowers, as well as the evacuation of various consultations on the matter raised by the Federations or Territorial Unions or directly by the cooperatives.

Agricultural insurance

Social Security Agraria

This case was particularly concerned by the fact that the Labor Administration had drawn up several agrarian cooperatives, due to the problems created by the recruitment of workers under the Special Agricultural Regime (OAS). Fulfilled certain conditions, which repeatedly caused them sanctions that had to be appealed.

Technology equipment

In March 1990, procedures were initiated with MAPA's General Directorate of Agrarian Industries to implement a computerization program, with its corresponding hardware and software equipment, in the central office of Madrid in a first phase, which would continue to develop its implementation in later stages in the different federations and territorial unions.

Situation of the productive sectors

The technical sectoral operation of the organization took shape in the subdivision into two large areas: one of agriculture or of vegetable production and another of livestock or animal production.

1991. Adaptation to change. New headquarters

Advances in sectoral organization Faced with the difficulties that arose in 1990, due to the lack of an internal standard to standardize the procedure for holding sectoral assemblies, in February 1991, the Executive Committee of the Confederation approved an Internal Operating Framework Regulation, on the basis of which the process continued Of sectoral organization initiated the previous year, in order to give form and operation to all the productive and economic structure that the Confederation represented, also qualifying each sector according to its characteristics and needs, its internal operating rules and its own governing bodies. Representation, choosing the persons responsible for them and identifying, each according to their interests, the issues that make up their most current and immediate problems, to devise the strategies and find the necessary means for their channelling and resolution. In accordance with this procedure, the cereals, olive oil, cotton, wine, dairy, fruit and vegetables, nuts, sheep and goats and oilseeds sectors, as well as the specific groups of rice, rabbit, pig, Meat and poultry and eggs.

Training

During the 1990-1991 biennium, several training activities were carried out under the agreement signed between the organization and the General Secretariat of Agricultural Structures of MAPA, through an important budget allocation. Within the program were held several technical days of


sectorial cutting, with issues related to the management and improvement of production, management of the cooperative enterprise and the market of the different products.

Communication and image

The Governing Council decided in 1991 to launch the institutional magazine called "Agrarian Cooperation", thus recovering the headline that AECA created in 1987 for the same information and opinion purposes and information on the sector in general and on the work carried out, in particular. During this year, he decided to create this department, and from that moment on he worked on communication and image, on relations with the media and on the coordination of the institutional magazine. In the same way, during this year the edition of Sector News Bulletins of the most relevant sectors was initiated by its number of cooperatives and turnover.

Economic and financial activity

In the current year, the creation of a Financial Intermediation Company was called ECOS Financiación SA, initially with a capital of 900 million pesetas and with the vocation to facilitate access to credit to cooperatives and other Spanish entities of the social economy.

Change of venue

The progressive increase in activity resulting from the demands of the sectors, once structured and organized, and the need for new and better means, also demanded a new and more comfortable space where work could be carried out as efficiently as possible. Satisfy such demands in the best conditions. After the pertinent administrative concession and after carrying out the corresponding conditioning works, in mid-June 1991 the transfer was made to the current headquarters located on the 4th floor of the building located at CalleAgustín de Bentancourt, 17 de Madrid, a building called The extinct Conca shared, among others, by the professional agrarian organizations Spanish (Asaja, Coag and Upa). The transfer to this new site came to imply a new and important step in the consolidation of the representative organization of Spanish agricultural cooperatives.

Reform of the PAC

In 1991, the Mc Sharry Reforestation was started, for reference to the name of community agriculture commissioner, the Irishman Ray Mc Sharry, who promoted it. In February 1991, the Commission launched its first discussion paper on this reform, the first since the incorporation of Spain and Portugal into the European Common Market. The Confederation organized two general and massive meetings to analyse the proposals of this new reform and to establish its position on the matter. It also held several sectoral meetings in which the impact, particularly in the sheep and goat, wine, fruit and vegetables, olive oil and cereals sectors were analysed, assessed and discussed.

Impulse to business concentration

Two major projects were promoted in 1991, such as the creation of Sogescoop SA for participation in the public company Lactaria Española SA in the dairy sector and Iberfrut SA for the marketing of fruit in the domestic market. Other similar initiatives began to emerge in the cereal and olive oil sectors. Unfortunately, for various reasons, these initiatives failed, as was intended with their creation and implementation. Cooperative Census Update

An in-depth prospecting study was therefore necessary and urgent in order to refine and update data on existing agricultural cooperatives, with special attention to those that remained active, specifying the sectors in which they operated and quantifying the scope and the value of their activity and the material and human resources available to carry it out. In order to get the job done and to obtain a real and reliable socioeconomic database of agricultural cooperatives, with possibilities for periodic updating, an agreement was established between the Confederation and the Institute for Agrarian Associative Development (IFA), an organ attached to the Ministry of Farming. For the computer processing and ordering of the data obtained, the specialized company Centrisa was subcontracted. It was a long, complicated and expensive, but ultimately enlightening, and useful work for the Confederation and its associated entities, as an element of consultation.


Other highlights Labor, legal and tax advice. By necessity and by the demands of federations and associated

unions, the Confederation had to respond to a number of issues of this nature, raised, in turn, by cooperatives in matters such as the special agrarian vs. General social security system in the cooperative industries; Operations with third parties; Corporation Tax of cooperatives; Amortization of investments with public aid; Allocation of consolidated profits obtained in cooperative groups (2nd grade); Treatment of excise duty on agricultural gas oil in agricultural cooperatives, in general, and in which they have section of use of machinery in common, in particular. This type of consultations has become more frequent and numerous, so it was necessary to equip themselves with the appropriate technical and human resources to meet these demands and provide the required responses in a timely manner. Agricultural insurance. The Confederation continued to participate in the general commission of

ENESA and in the various specialized commissions, as a collaborating entity of the state agency regulating agricultural insurance. With this in mind, the collaboration agreement between ENESA and the Confederation for the dissemination of agricultural insurance, in general, and of cereals and beef in particular, was renewed.

1992. An emblematic year Organizational and functional consolidation

In its three years of existence, the Confederation of Cooperatives had succeeded, on the one hand, in establishing its internal structure and, on the other hand, achieving recognition of its representativeness before the national and community administrations and other organizations representing production and industry of the agri-food sector, both in Spain and in Europe. Also noteworthy are the progress achieved in the technical means available, which helped to facilitate the work carried out by the human team and with it a substantial improvement in the services provided to the partners. At the end of 1992 the Confederation represented around 3,500 agricultural and livestock cooperatives, grouped in 15 federations or territorial unions plus Agro-Cantabria, a cooperative of second degree, dedicated to providing agricultural services in that autonomous community. The Regional Union of Agricultural Cooperatives of Castilla y León (URCACYL) and the Federation of Agrarian Cooperatives of the Basque Country (FCAE) were also incorporated. The organizational scheme of the entity followed the model of the Autonomous State, enshrined in the Spanish Constitution of 1978, being covered now by a representative entity for each autonomous community, except for La Rioja. The associated territorial entities had and have their statutory representation in the organs of the Confederation, either the General Assembly or the Governing Council, which by adaptation of the by-laws was formed at that time by a representative member of each of them, Generally, the president. Following the holding of sectoral assemblies and the establishment of sectoral councils in 1990 and 1991, the Confederation in 1992 already had an organizational and management framework which, assisted and advised by the various sectoral experts and other experts on issues Horizontal, consolidated definitively as a functional and representative entity, for all purposes and in all fields, of Spanish agricultural cooperativism. The team of agricultural cooperatives consisted of 30 professionals who attended the different areas of activity that had been generated, the initials since the merger and those that have been created based on the needs of the cooperatives, the availability of resources and following the guidelines of the governing bodies, general assembly and Governing Council. To make it more agile and effective in favor of the cooperatives themselves, their daily work is complemented by the technical services of the different federations and regional unions, as well as the advances made in the technical means of management through the continuous improvements in the centralized computer equipment which now included the electronic management of the fax and began to circulate e-mail. Several training courses were necessary to instruct the staff of the Confederation and the associated territorial entities themselves in the management of the office programs and the new installed technological endowments.


Representative activity

The Governing Council, with its president at the head, exercised, by legal and statutory imperative, the maximum action of representation of the entity before the state and community agencies, in the same way that the territorial entities exercised it in their respective fields of competence, Without prejudice to representation by delegation in specific sectoral areas, to counterpart organizations and even to the various bodies of the Spanish or Community administration.

Opening of sectoral panels

The new minister made a deep organizational and functional re-modelling of the ministry, piloted in what concerns our agricultural cooperatives by the three general secretaries: one of agricultural productions and markets, another of food and a third of agrarian structures. On the part of the General Secretariat of Productions and Agricultural Markets, a series of sectoral roundtables were set up through the different sub-directorates general to report on the results of the respective councils of ministers, the committees for the management of the community agricultural policy and to discuss the specific problems of the sectors at all times. These tables, which also involved other organizations linked to the different sectors, were an ideal forum to transfer the concerns of cooperatives to better defend their particular interests. The sector managers together with the technicians and experts in the different sectors were the usual attendees to these meetings that were celebrated with a variable periodicity, between one and two months, depending on the sector in question. Specific tables on cereals and legumes (arable crops) were instituted; Animal health and plant health; Porcine and poultry; Beef and veal, vegetable fats; Wine musts and alcohols; Industrial crops (cotton, sugar beet and tobacco); Seeds and nursery plants and milk and dairy products.

Other participation forums in Spain

Through various representatives of a political-representative, managerial or technical nature the Confederation was entering to participate in different forums, some already existing and others of new creation:

Economic and Social Council (ESC). High consultative and representative body of economic, business, union and social economy interests. Newly created body (November 1992) attached to the Ministry of Labor and competent to issue opinions, mandatory, but not binding, on legislative projects.

Board of Trustees of the Institute of Cooperative Studies. Organ of the Complutense University of Madrid for the research and organization of training courses for students in matters related to the social economy and similar disciplines.

National Institute for the Promotion of Social Economy (INFES). Autonomous organization of the Ministry of Labor, responsible for all matters related to cooperatives of any type or specialty, as a member of its board of directors.

Likewise, the Confederation of Cooperatives became part of other associative entities such as the Spanish Wine Confederation (CEV). He also participated in the Spanish Confederation for the Development of Fruit and Vegetable Trade (CODECO), for the exploration and production and production reports of the different markets and products of the sector, together with the Federation of Exporters and the OPA. This year, the Confederation joined the Spanish delegation in the International Office of Vine and Wine (OIV), an intergovernmental scientific and technical organization for the study and research of issues related to viticulture, oenology and the wine economy. Finally, the presence in the Spanish Association of Cereal Technicians (AETC) was consolidated with other companies, associations, laboratories, etc. For the study of the quality of the Spanish wheats and the elaboration of reports on this matter.

Participation in international forums At the international level, the Confederation of Agricultural Cooperatives participated and collaborated during 1992 with other institutions, organizations or interest groups, namely. Eurokenaf. We continued in the GEIE research on non-food use of agricultural production, kenaf, along with other member states, holding the group's secretariat.


Cepfar. European center for promotion and training in agriculture and rural areas. Eurofrut. Organization responsible for the promotion of apple consumption, with other producing countries. Eurorural. Organization involved in the study of the integrated development of the European rural

world. Mediterranean Commission of Vine Products. Platform for wine production in southern Europe, in the face of chaptalisation (use of sucrose to raise the alcoholic strength of wines), together with representative organizations of countries in this environment. European Union of Rice. Entity in charge of watching over the economic and market interests of this sector. The entity participated in the International Cooperative Alliance (ICA) where cooperative organizations from any country in the world are integrated, structured by sectors of activity and also in the Spanish section of CIRIEC (International Information and Research Center on Public, Social Economy and Cooperative).

Agreements with the Spanish administration

In 1992, a number of collaboration agreements were established with various government agencies and others were extended from previous years, for which the organization received certain economic compensation, to be shared with the different federations and territorial unions, as collaborators in the actions of promotion, namely:

Seed agreement.

Agricultural insurance agreement.

Information and dissemination agreement of the new CAP.

Agreement for the dissemination of the Milky Reordering Plan.

Agreement for updating the census of agricultural cooperatives.

Other relevant actions Participation in the establishment of the Citrus Inter-Professional Committee. Renewal of the members of the regulatory councils of agri-food products of supra autonomic scope or of autonomous communities without competences in the matter. Commissions to monitor homologated contracts. Constitution of Hispafrut. In May 1992, a group of five second-degree cooperatives with extensive

export and commercial experience decided to take a firm step in concentrating and planning the supply of their wide and varied horticultural production for the supply of fresh fruits and vegetables to Through food chains and large areas, throughout the year. Training. During 1992, this activity was carried out thanks to various sources of funding through the official agreements signed and received a special boom, both due to the number of days and courses held (259) and the number of hours taught (11,242) Number of assistants registered (6,649) and the amount of investment aid (total investment, 299,5 million pesetas, aid, 215,5 million pesetas, 72%). The dissemination of the use of certified seeds and plants, the different lines of agricultural insurance, the milk plan, the new CAP that emerged from the last reform and training in the management of new technologies (office automation), as well as the Respective sectoral concerns were the main disciplines imparted by the Confederation and by the different federations and associated territorial unions. Promotion and research. The promotion campaigns already underway in previous years on the

consumption of citrus fruits, apples, nuts and pasteurized milk, co-financed by the European Commission and the sector, represented by takeover bids and cooperatives, continued this year. Sociological research firm MetraSeis conducted the tests on the impacts of these campaigns with an average score of seven points. Also, in order to ensure a better adaptation of production to the demands of consumption, research lines were opened on new varieties, production processes, handling, preservation and presentation of the products covered by each line. Information and communication. Professionally established the previous year, the press office

developed an intense activity in two main fronts: the internal communication and the external information. At the internal level was the publication of the magazine of general agricultural information (agrarian cooperation) and the different sectorial bulletins (wine cooperation,


horticultural cooperation, olive co-operation and arable crops cooperation). In the field of external communication, the issuing of press releases and the organization of press conferences on activities carried out or to be carried out, positions on current topics of interest, in the various fields of action of the Confederation, sectoral or horizontal.


Annex 9: Time-line and history of Valencian Federation of Agri-food Cooperatives

TIME-LINE AND HISTORY OF VALENCIAN FEDERATION OF AGRIFOOD COOPERATIVES

INTRODUCTION

UTECO del Campo de Valencia was founded in 1943, providing at all times service to agricultural cooperatives. It was decided and imposed, as a result of the policy of the victorious side of the civil war. During this period, the positions of the National Union (UNACO) and Provincial Territorial Unions (UTECO) were appointed from the political power. This system involved the expulsion of Spain from the International Cooperative Alliance (ICA). Representatives of local cooperatives related to the Union as their own and convenient to jointly address agrarian and cooperative problems. The grassroots partners came to participate in the calls for UTECO in defense of a better agricultural policy, protesting the cessation of wine imports or seeking a valid treatment to the Sections of Credit. The Unions were used to distribute important quotas of fertilizers and insecticides, scarce and expensive, trying to put a little order and efficiency. Nevertheless, from the cooperative side, the agrarian chambers and the Brotherhoods suffered from the participation of the same with different attitudes, even predominating at certain times, in the distribution of supplies granted by the State Administration. After a few years, UTECO promoted credit cooperativism on two broad fronts. On the one hand, it created the Caja Rural Provincial de Valencia and on the other hand, it fomented the creation of Sections of credit of the Agricultural Cooperatives within a unique process in Spain, providing them protection and defense before the repeated aggressions of the economic policy of the State. UTECO of Valencia played a notable role in the democratization of the country by establishing the Union and the Cooperatives as true platforms for coexistence and democratization, which allowed agricultural cooperatives to advance the same Valencian society in the process of Democratic normalization. This was possible by practicing to a great extent the Rochdalian principle of leaving the political issues to the doors of the institutions, without prejudice to the ideology freely and individually held by certain leaders of the cooperation. Once democracy was established, UTECO constituted a factor of stability and social cohesion. Participated from positions of unity and progress in how many platforms, organizations and events were held or celebrated. If cooperativism agrarian vertebrae the cooperative activity through Services and Cooperatives of superior grade, like ANECOOP and COARVAL, with a peculiar agricultural credit fabric, UTECO was the impeller of this fabric. BACKGROUND Valencian cooperativism has its roots in the noble sentiment of human solidarity, especially in the Guilds, Prisons, associations and mutual benefit society, having been outstanding in the Spanish whole in the use of waters through Associations, Community of irrigators and Societies of Wells. More closely, after precedents before the law of June 30, 1887, at the end of the nineteenth century some cooperatives and rural banks were organized, very constrained by the hard fiscal arrangement they suffered. It is known that the 1906 law greatly facilitated the creation of Cooperatives, better known then by the denomination of Agricultural Unions. In the Valencian Community, the cooperative structure was organized to a large extent through the Catholic Federation of Agrarian Unions. This Federation, in turn, was part of the National Confederation located in Madrid. In 1934, the Ministry of Agriculture assigned to Valencia 157 agricultural unions, with 53,558 members. From 1939 onwards, it was tried, from the old Valencian Federation of Catholic Cooperatives, the reconstruction of Cooperatives and their activity. The repeal of the Law of 1906 on September 2, 1941, involved the absorption or transformation of some local Rural Savings Banks. In the middle of that chaos, attempts were made to promote cooperation, through the precarious Federation of Valencian Agricultural Unions, working in solidarity actions with the Confederation and its brand "CONCA".


Within vertical syndicalism, it was framed from top to bottom to all agricultural cooperatives. First by the creation of the National Union in 1942 and later, through the Provincial Territorial Unions of the Field, which, in turn, were framed in the National Union. The Unions represented all the Cooperatives of their corresponding province. These, which in their case called for the denomination of trade unions, were controlled, provincial and nationally, by the Union Work of Cooperation, whose respective chiefs had capacity and power of intervention, deciding and proposing the positions of rector. CREATION OF UTECO VALENCIA (MARCH 28, 1943)

Between March 22 and 29, 1943, the First Provincial Council for Economic Planning was held in Valencia, and the Territorial Union of Cooperatives of the Field was constituted, encompassing 58 cooperatives in principle. All the agricultural cooperatives, federated or not, were integrated in the Union with the spirit of the Catholic unions of the first time. THE UTARQUIA (1943-1958)

From the outset, the UTECO Governing Council worked hard to provide fertilizers, anti-cryptogams and insecticides. By the end of the first year, the number of cooperatives stood at 137. In the early 1950s, a Technical Assistance Service was set up to visit the Cooperatives, village by village to close the differences between the latter and the Brotherhoods. UTECO Valencia initiated the work of merging cooperatives of the same town, considering already then a negative circumstance. One of the most interesting achievements of this period was the greater participation of the Cooperatives in the Sections, reorganizing them and improving the choice of the collaborating members who were responsible for each of them. The lack of a cooperative spirit was lamented, the setback of the 50-year sales structure with many positions in Spain's major wholesale markets and the need for the Union to become an intermediary for Cooperatives. However, the cooperative framework was growing slowly. In this way, in June 1956, the Interprovincial Cooperativa Valenciana de Apiculture was organized, in addition to initiating an approximation between the three UTECOs of our Community. ECONOMIC DEVELOPMENT (1959-1975)

During the sixties, there was a notable proliferation of marketing cooperatives, mostly citrus exports. The inexperience and, to a large extent, the predominance of small farms that also produced little commercial varieties, made cooperative results difficult. But little by little, as the data from the Regional Delegation of Commerce reflected, the results between the individual initiative trade and the cooperatives were getting closer. However, in general terms and in entrepreneurship, the cooperatives did nothing more than repeat the traditional trade model. On July 8, 1967, the preliminary draft of the Provincial Service for citrus fruit cooperatives was presented. The proposal analysed the difficulties presented by the external markets to the orange co-operatives. This preliminary project opened to the commercialization of citrus fruit and vegetables, marking from 14,000 to 15,000 tons as the minimum volume to be contributed by the set of cooperatives in solidarity for the implementation of the Service. The preliminary draft, of course, did not settle. During this period, the following principles continued to be systematized:

- A village, a cooperative - Access economies of scale from bottom to top

- In cooperation can be as progressive as you want in ideas, but you have to be very conservative in the implementation of material realities


THE DEMOCRATIZATION (1975-1983) UTECO, in advance of the Professional Organizations or Trade Unions, provided a basic service of awareness raising, always raising the differences between cooperativism and unionism, in the media, in the General Assemblies and their respective Memories. UTECO, since its founding, had been maintained without the perception of quotas and thanks to a part of the surplus generated with the supplies. However, since this activity was largely developed, the problem lay in the comparative grievance suffered by those who maintained exclusivity in service over those who, even when important, used it circumstantially and at their convenience. The solution came precisely from the Royal Decree of 17 June 1977 which established the flat freedom of association in Unions, for activities and for no economic purposes. The rule therefore obliged the Unions not to carry out economic actions, marking the path of the splitting up between representativeness, which was joined by the assistance and training tasks, and the economic activities to be carried out in the future by one or more second-level cooperatives grade. THE COOPERATIVE UNIT (1984-1993)

Within this stage, the activity of UTECO was developed with great vividness, standing out the definitive achievement of the Spanish cooperative unit. Important actions and actions were taken, such as the First Cooperative Congress of the Valencian Community, the effort to renew the Valencian Cooperatives Law, mediation in the support of the Valencian Government to the Agriconsa project, close collaboration with the Generalitat in the implementation of agricultural insurance and the creation of Mutua del Camp, as well as the promotion of training and services provided by UTECO. Having as basic idea the unity of the cooperative movement, although the achievement could not depend on the Valencian attitude, the Federation of the Unions of Alicante, Castellón and Valencia, already raised, was a fact the 23 of December of 1985. In 1989, the protocol of fusion between the two existing federations, UCAE and AECA was signed, being the Confederation of Agricultural Cooperatives of Spain on November 7. NEW TIMES

Many cooperatives began to partner in second-degree cooperatives, allowing them to achieve adequate economies of scale to provide adequate services. FUSION BETWEEN THE FEDERACIO AND THE PROVINCIAL UNIONS

On February 2, 2011, the merger took place between Federació Cooperatives Agroalimentàries and the Cooperative Unions of Alicante, Castellón and Valencia. That merger was justified by the following considerations:

I. Constitution of a solid federation of Cooperatives, whose strength lies in the direct action of its own cooperatives.

II. Increase of its representation and activity in the Confederations to which it belongs, mainly in the Confederation of Agrarian Cooperatives of Spain and the Confederation of Cooperatives of the Valencian Comunitat.

III. To ensure that the new federation is the employer of the Valencian agrarian cooperatives, directing their actions to:

a) Representation: defense of their interests as agrarian and rural enterprise b) Promotion: improving competitiveness c) Training: development and training of people (partners, counselors and workers) d) Communication: improving influence and image before society, public administrations and

economic and social agents. IV. The merged entity comprised a group of 364 partners, the great majority of agricultural

cooperatives in the Valencian Community. V. Increased power in all public and private orders, influence and image.


The organization followed the following organizational structure: a. A unitary, direct, efficient and responsible management of all areas of action of the

federation: headquarters and substations; Trunk and sectoral structures; Central and peripheral departments; Horizontal and sectoral matters; Economic and financial matters; training; of personal; Etc., with an agile, frequent and orderly communication with the member cooperatives.

b. Effective management of public funds and other resources that nourish budgets, so that both cooperatives and companies substitute unions, receive optimum optimization and benefit from the diligent conduct of the same, for the development, promotion and Competitiveness of cooperativism.

c. A human team aligned functionally with objectives and whose direction by objectives is conducive to a participatory style that generates enrichment and personal development, because the skills and talent capacity that is generated is one of the main resources federation.

d. A departmental organization and distribution conceived in criteria of efficiency, flexibility and versatility, in accordance with the most modern models of business organization.

This structure was designed taking advantage of the existence of the superior structures of the cooperative organization, to avoid duplication of services and activities and to benefit from the synergies that could be achieved within representative associationism, trying to optimize the existing resources of cooperativism.


Annex 10: ACDA Strategic Plan

Currently in Georgia, we can find a total of 1,544 agri-food cooperatives, with an average size of 7

members. With this scenario, it should be the main aim to increase the competitiveness of

cooperatives from a larger dimension, from the realization of the most suitable cooperative

integrations. The graph below shows the evolution of the number of Spanish agri-food cooperatives

has been decreasing over the years. This trend is the result of the integration process that most of

the Spanish cooperatives follow. In short, most cooperatives tend to merge to increase size and

gain bargaining power over the value chain. It is important to realize that throughout this process of

cooperative integration, the economic result (total turnover) has been increasing, as well as final

production volume.

13

Coops evolution in Spain and Georgia

The economic benefits follow an increasing trend

The main challenges for the Georgian cooperative movement should focus in the coming years on

several aspects: a) Promotion of cooperativism, b) Increased investment and support, c) Support

training courses and support Technification and d) Cooperative integration.

In this whole process the key mission of ACDA is to promote a cooperative business model,

profitable, competitive, professionalized, generating value and with a relevant dimension.

To achieve this, the main challenges that ACDA3 should achieve in the coming years are:

enlarge or find alliance on the European or OECD countries cooperative movement.

1. Stress collaboration with the Ministry through the signing of a series of agreements, in order

to subsidize the structural expenses of the organization and some of the activities carried

out by the organization.

2. Strengthen collaboration with foreign donors. Find alliances on the European or OECD

countries cooperative movement.

3. Maintain support for the training and professionalization processes of members of

cooperatives.

4. Facilitate the development of appropriate legal frameworks for the growth of Georgian

cooperatives.

3 In this Annex we wish to refer to the main challenges that ACDA should focus on in the coming years. We only try to identify some

of them, indicating some of the possible actions that could be carried out to achieve them. They do not have to follow all of them, since they are not unique, we only try to identify them so that they can serve as a guide to the organization in the future.


Annex 11: Power Point Presentation

Capacity building to the AgricultureCooperatives Development Agency (ACDA)

Project funded by The European Union

EUROPEAN NEIGHBOURHOOD PROGRAMME FOR AGRICULTURE AND RURAL DEVELOPMENT (ENPARD)

Europe Aid/136454/DH/SER/GE

Project implemented by

Carry out a feasibility analysis of pros-and cons- of restructuring ACDA into a

membership-based organization

2

Submitted by:

Ana Cano, Egon Cervera, Lorena Tudela and Sandra Guzmán

Agri-Food Cooperatives of the Valencian Community


Outline

3

1. Aims and objectives

2. Methodology

4. Identifying and interviewing key stakeholders

5. Comparative analysis of country experiences-EU countries

6. Comparative analysis ACDA vs CACV

7. Case study Valencian Federation

8. ACDA SWOT analysis

9. Membership-based entity SWOT analysis

10.Answering the key questions

11. Recommendatios and conclusions

1. What kind of set-up would be the mostly approximated to the existing regulations and practices of EU?

2. If such set-up is concluded to be feasible and fit into the country context, what would be the right legal status to avoid conflict of interests?

3. What kind of set-up would be the mostly approximated to the existing regulations and practices of EU?)

4. The role of the government in supporting the development of agricultural cooperation in Georgia

Definition of the objective

To identify the most feasible options and ways and means of potential

restructuring of ACDA; the project proposes to conduct a specific feasibility study that will

accumulate advanced learning and experiences especially the one of the EU and will

provide well evidenced overview and risk assessment with regard to pros and

cons in relation to the possible restructuring of ACDA into a

membership based organization

4


Overview of the approach and methodology

Desk research in relation to international regulations, practices and experiences


Consultations with the state bodies including parliament committees and members

Situation and Context analysis

Comparative analysis of country experiences

SWOT analysis and risk assessment

5

•Legislative Decree 2/2015, of May 15th, of the ValencianRegion, and the statutes of the Confederation •Federation Notarial instruments and the historical development of the Confederation and the Federation •Bibliography of different European countries

Interviews with ACDA management, staff, and stakeholders of the Ministry of Agriculture (MoA), NGOs active in the field of cooperatives, ENPARD project partners and cooperatives members who are relevant for the implementation of cooperative practices

Several interviews with state bodies including parliament committees and ACDA members were conducted during the missions.

Review previous reports of the ENPARD project partners and MoA annual reports European and OCDE countries experiences on the cooperative sector Two online questionnaires

Description of the context - State

6

3,729,500 population in Georgia in 2015.GDP evolution

Rural population

46%Urban

population54%

Source: FAOSTAT 2017

0

2.000

4.000

6.000

8.000

10.000

12.000

14.000

GDP Mill. €

Growing economy & half of rural population


Description of the context

7

Region of Georgia Number of Cooperatives

Kakheti 154

Kvemo Kartli 198

Mtskheta-Mtianeti 85

Shida Kartli 112

Samegrelo – Zemo Svaneti 128

Guria 52

Adjara 150

Samtskhe-Javakheti 352

Imereti 132

Racha-Lechkhumi 128

Tblisi 53

Source: ACDA Report (spring 2014 / april 2017)

From spring 2014 to April 2017, ACDA has registered 1544 cooperatives, with a social group of

approximately 10,808 people, distributed in regions:


8

Findings at the state level

- Share of agriculture in economy 9.2%

- Georgia highly depends on food imports (70% of food is imported).

- The state is the main owned of the agricultural land.

- Legislative framework in Cooperatives and ACDA has been recently created

- Although 50% of the population is involved in agriculture (Employment in agriculture)

- The average size of the holdings grouped in cooperatives is 1.25 hectares.

- Political instability or expected risks due to changes of ministers.

- Consumers value local products positively

- Increasing trend of entry of foreign capital into the agri-food sector

- The database created by MoA might be used as useful tool to better understand the cooperative

member's demands.

- Increase the knowledge transfer and services provided by ACDA is needed.

- The public competencies provided by ACDA are properly working.


Competencies of a publicentity a)the recognition andmonitoring of cooperativesb) the promulgation ofnorms and the follow-up forits implementation, c) andrelevant financial support.

Only a very short time has passes since the

Cooperatives Act was promulgated

And ACDA is working properly with all these funcions in

Georgia



9

Findings related to the Cooperatives

- Cooperatives need training

- Two ways of improvement:

- Enlarge the scale of cooperatives (integration of small cooperatives) and create

second-level cooperatives is needed to increase their efficiency and market

competition.

- Possibilities to promote local, ecological and high quality products. There is also

room to improve transformation and processing products to obtain a greater

profitability.

- Advice & defense and representation services must be exercised by a non-profit private

entity.

- Difficulty in exporting to the EU due to lack of quality standards in local products.

- Great possibility of diversifying the activities of cooperatives, in order to increase the

added value.

- Need to distribute the subsidies prioritizing by technical criteria (size, quality standards,

innovative strategies...) to those cooperatives with bigger possibilities to growth.

Cooperatives may not be willing to pay a fee to a private entity for its

services.

There are actually some 250-300cooperatives which have thepotential to gain competitiveness,so it is foreseeable that the otherswill experiment changes.

Most cooperatives are still very young and and also fragile because their small scale


Comparative analysis of country experiences-EU countries

10

GermanyDGRV

FranceCoop. De France

ItalyConfcooperative-FEDAGRI

MissionRepresentation and defenseSupport cooperative development activities

Estructure

2,400 Agrifood - cooperatives. 6 regional federations (soon 5 by the merger of 2)

12 regional federations2,600 cooperatives. They are in the process of internal restructuring based on the integration of regional and sectoral

3 representative organizations: Confcooperative, AGI and Legacoop. Currently a process of integrationterritorial and a sectoral structure. 9 federations one for each economic sector. The federation of agri-food cooperatives is called FEDAGRI, with some 3,200 cooperative members.

Territorial and a sectoral structure Integration process are ongoing

On the States remain the public services(legislation, registration, monitoring,implementation, research)



11

GermanyDGRV



Organigram

- General Meeting: meets once a year

- Presidium: members elected every 3 years and proposed by the regions among cooperative leaders, representatives of cooperative regions, cooperative banks, cooperative insurance companies and the president of the main agrarian union

- Sectoral councils: of the main productive sectors and other specific horizontal issues

- President

- Bureau: 16 elected officials representing the sectors-Administrative Council: 30 people representing the regional federations

- National Assembly: Supreme body held once a year

- Each sectoral federation has its President, Governing Board and General Assembly

- Confcooperative has its President, Governing Board and General Assembly

- The Governing Council of FEDAGRI is formed by the sector presidents and some presidents of cooperatives chosen by the Regions according to their importance.

Activities and services

Their main activity is the representation & defense of agri-food cooperatives. They also perform services but focus on representing cooperatives and promoting (communication, legal, social and fiscal matters)

Governing Board and General Assembly


12

GermanyDGRV



Human Resources

35 staff100 staff, plus another 100 in the

regional federations15 staff in FEDAGRI, plus 4/5 in the

services company

Financing

90% comes from membership fees.

Small cooperatives pay regional federations and part goes to national, while large cooperatives pay directly to national.

67% are membership fees, 17% of the billing for services and

16% of the subsidies.

The quotas come from regional federations, sectoral member

organizations and large cooperatives

Almost 100% of both FEDAGRI and Confcooperative comes from the

quotas.

The cooperatives contribute their quota to Confcooperative which is

the one that distributes the funds to each of the sectoral federations like

FEDAGRI.

These organizations have been financed by public budget in theearliest periods


13

Coops evolution in Spain and Georgia

The economic benefits follow an increasing trend

Comparative analysis of country experiencesGeorgia vs Spain

14

Georgia

ACDA

Spain

Public Register

Agri-food Cooperatives

Federation of VC

Juridical person under public law under the Ministry of Agriculture of Georgia

Registration and Monitoring Services mainly, projects and law framework

There is not a General Assembly. The direction is carried out by the chairman and the ACDA staff.

Legal non-profit person of private law

Representation and defence / promotion / services

The executive board under the General Assembly of Cooperative Members.

Registration and Monitoring Service


Cooperatives Law of the Valencian Community

15

The Cooperatives Law of the Valencian Community

(Legislative Decree 2/2015, of 15 May)

The mentioned Law in the Title II regulates the cooperation between cooperatives:

In the Chapter I of the Title II (articles 100 to 103), establish general provisions and regulates

second-degree cooperatives, consortia, cooperative groups and other unions.

In Chapter II of the same Title II (articles 104 to 106), regulates the Federations Confederation of

Cooperatives

A very solid and stable legal framework is neededThis needs time!

The first Legislative Decree was on 1869

16

ACDA SWOT analysisStrengths Weaknesses

Public financing. Directly charged to the public budgets The hierarchical structure prevails (under state)

The proper functioning of key services ACDA is recently established.Currently, the transition from government agency into membership-based entity is seen as premature.

Updated information on the state support programmes for agricultural cooperatives

Update of database for agricultural cooperativesThe sustainability of ACADA is strictly based on the existing enabling environment in terms of tax incentives that motivates COOPs to obtain status from ACDA; if such incentives are no more in place ACDA will no more be attractive for them.

ACDA is already well established and well structured entity with a clear mandate and qualified staff

Lack of presence in the local regions

Opportunities ThreatsProvision of services Political instability. Frequent change of ministers

Support for the integration of cooperatives to make them more competitive- Training oriented to the needs of cooperatives

Lack of willingness to invest in the long term

Integration of the entity into EU programs and other international funding schemes Resistance to change by staff


1

Membership-based entity SWOT analysisStrengths Weaknesses

Independence and autonomy from the public authorities Need for own financing by its members

Participation of partners in decision-making. Own governance - Greater agility in decision making

Constant maintenance of the organization's activity

Inexperience of staff in the new entity

Power of influence and interlocution before the Administration (Public

Organisms)

Investment for its creation

Opportunities ThreatsCreation of a strong and agile structure for the promotion of

cooperatives and the sustainability of the country's agriculture.

Conflict of interest with public policies.

Lack of support and lack of funding

Increased constituency (if coops are convinced to join the organization), louder (but not necessarily stronger) advocacy voice

Lack of transparency. Lack of confidence among the cooperatives

Provision of new services according to the demand of its cooperatives members

Lack of professional staff and leadership.

Duplication in functions with a couple of other players. Lack of an internal structure of the supervisory and management bodies)

18

What are the strengths, weaknesses, opportunities, and threats of ACDA's restructuring in a membership-based organization?

Georgia needs a membership-based entity?Yes! We do not propose to transform A into B. We propose to adjust A to the legal requirements and create B

ACDA should maintain its competencies in registration,monitoring,support,

programs, coordination, elaboration and implementation of regulations and

dissemination of the cooperative model,

while gradually leaving to the new association based on membership representation and

defense, as well as provision of services such as training, technical assistance or advice.

The analysis carried out in other European countries reveals that the most

widespread model has a scenario in the public domain. And another

private scenario, based on membership, for the representation and

defense of cooperatives, which is financed with a portion of state

money and another of the partners themselves.


19

To carry out a transformation of the current ACDA, the relevant legal adjustments

should be made.

First of all, the issue may be raised in another way, since the current legislation creates the ACDA as a legal entity under public law, but does not provide for other options.

A public-private partnership could be designed. For this, we recommend taking as an example the Law of Cooperatives of the CV, considered one of the best in Europe and detailed in one of the previous sections.

If such set-up is concluded to be feasible and fit into the country context, what would be the right legal status to avoid conflict of interests?

21

The role of the government in supporting the development of agricultural cooperation in Georgia

It is important to develop the cooperative model in Georgia and do so with the support of the Public Administration:

• Elaboration of rules that facilitate the strengthening and consolidation of these cooperatives

• Invest in training, and facilitate access to this training for managers and cooperative members

• Economic support must also be maintained through focused programs:• Increase cooperative size in membership, area, livestock housing, joint marketing

of products, common access to the acquisition of inputs, etc• Promote qualitiy production models


22

The role of the government in supporting the development of agricultural cooperation in Georgia

• Channel funds addressed to capacity building and training of specialized staff (ACDA staff and MoA staff)

• Support cooperatives in contracting professional services or technical staff (ATRIAS network)

• Several task such as: registration procedures, monitoring, specific promotion, awards campaigns… could be a key role played by the government.

23

Immediate intervention

0 – 1 years

Medium Term

1 – 3 years

Long Term

3 – 5 years

Assessment of operational capacity of the ACDA in the long term

2) Consolidation Membership Based Organization (1 – 3 years)

(80% public money + 10% fees + 10% service revenues)

1) Strengthen ACDA organization (0 – 1 years)

(90% public money + 10% share of cooperative members)

3) Combine public-private partnership (3- 5 years)

(60% public money + 15% fees + 25% service revenues)


Recomendations

Most cooperatives are still very young, must grow (strengthening and gaining dimension) and mature to form a solid base.

To consolidate cooperatives, they must be competitive. Competitiveness can be achieved through specialization and / or reaching an appropriate dimension and this will take adequate training and time. For this they need public support.

It is appropriate in this new stage to slow down the process of creating cooperatives to consolidate these companies (intercooperation) and identify the successful initiatives that will become the leaders of tomorrow.

24

Recomendations

A membership-based entity is an organization with a greater scope than the representation and defense of agri-food cooperativism (Federation or Confederation model): it is the expression of a sector before society and administrations.

A membership-based entity must be born under an appropriate legal framework that regulates and endorses its competencies.

25


Conclusions

There is no single recipe that we can offer for Georgia to develop and consolidate a strong, competitive, modern, profitable, professionalized and value-generating cooperative

The EU experience shows that the most common model is based on the coordination of public entity and private one based on membership (sectorial and territorial).

Our research and experience let us to a conclusion: It must be maintaineda public agency (ACDA) but also must be created a membership-basedorganisation.

26

Conclusions

27

ACDA should maintain its competences in the sphere of the

public: recognition and monitoring of cooperatives,

promulgation of norms and follow-up for its implementation,

and relevant financial support.

Promote a private and non-profit representative entity

based on membership with public support and guidance

(fundamental in the first years).

This will take adequate training and time


“Finally, we would really like to express our wish to see how this cooperative seed grows up in Georgia. We hope

to see a strong and robust cooperative tree that bears many and quality-full fruits”


Annex 12: List of documents consulted

Fernández, C. B. (2012). Coopearativismo agrario en la Comunidad Valenciana. Investigacionesgeográficas, (57), 101-128.

FAOSTAT (2017). Food and Agriculture Organization of the United Nations. Country Investment Statistics Profile. Available at <http://www.fao.org/faostat/en/#home>

FAO (2016). Georgia Case Study Prepared for FAO as part of the State of the World’s Forests 2016 (SOFO). Food and Agriculture Organization of the United Nations. World Bank (2017). World Bank Open Data. Available at <http://data.worldbank.org/> Geostat (2017). National Statistics Office of Georgia. Available at <http://www.geostat.ge/>

Ministry of Agriculture of Georgia (2015). Strategy for Agricultural Development in Georgia 2015-2020.

Web pages

1) MAPAMA 2017 <http://www.mapama.gob.es/es/alimentacion/temas/ley-de-fomento-de-la-integracion-cooperativa/>

2) AGROALIMNETARIAS <http://www.agro-alimentarias.coop/ficheros/doc/03806.pdf>

3) MAPAMA 2017 <http://www.mapama.gob.es/es/alimentacion/temas/consumo-y-comercializacion-y-distribucion-alimentaria/cadena_valor_tcm7-7870.pdf>

Legal documents

4) Law 12/2013, of 2 August, measures to improve the functioning of the food supply chain (http://www.mapama.gob.es/es/alimentacion/temas/ley-de-medidas-para-mejorar-el-funcionamiento-de-la-cadena-alimentaria/Ley_12-2013_de_2_agosto-EN_tcm7-297949.pdf).

5) MAPAMA 2017.

<http://www.mapama.gob.es/imagenes/es/leydefensacalidadalimentaria_tcm7-391000.pdf>

6) Law 13/2013, of August 2, to promote the integration of cooperatives and other associative entities of agri-food character.

7) Law of the Value Chain in the agri-food sector.

http://www.mapama.gob.es/es/alimentacion/temas/ley-de-fomento-de-la-integracion-cooperativa/

http://www.mapama.gob.es/es/alimentacion/temas/ley-de-fomento-de-la-integracion-cooperativa/

http://www.agro-alimentarias.coop/ficheros/doc/03806.pdf

http://www.mapama.gob.es/es/alimentacion/temas/consumo-y-comercializacion-y-distribucion-alimentaria/cadena_valor_tcm7-7870.pdf

http://www.mapama.gob.es/es/alimentacion/temas/consumo-y-comercializacion-y-distribucion-alimentaria/cadena_valor_tcm7-7870.pdf

http://www.mapama.gob.es/es/alimentacion/temas/ley-de-medidas-para-mejorar-el-funcionamiento-de-la-cadena-alimentaria/Ley_12-2013_de_2_agosto-EN_tcm7-297949.pdf



http://www.mapama.gob.es/imagenes/es/leydefensacalidadalimentaria_tcm7-391000.pdf

http://www.mapama.gob.es/imagenes/es/leydefensacalidadalimentaria_tcm7-391000.pdf

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