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May 24, 2018 12:00
Cooperativism in Parana

The success of intercooperation

"What few know is that more than 55% of Parana's agricultural production is in the hands of cooperatives"

The Parana state has the most organized and developed cooperativism in the country, being an example for several other regions. There are 13 branches or sectors that include credit cooperatives, health, labor, housing, education, mining, consumption, production, infrastructure, tourism and leisure, transportation and special sectors organized under the umbrella of the Cooperatives Organization of Parana - Ocepar .

All of us have some kind of relationship with some cooperative, either because we are associated with one or because we buy products and services from this type of organization. It is estimated that 1 in 7 people in the world is associated with any of the 2.6 million cooperatives registered.

The agribusiness is one of the most important sectors in Brazil, representing nearly 25% of Gross National Product (GNP). In Parana, this number is even higher, reaching 30% of all wealth generated in the state. What few know is that more than 55% of the state's agricultural production is in the hands of cooperatives. And the numbers are really impressive, considering that they make up just over 70 cooperatives in the sector. The ranking of the Exame magazine identified, in 2016, 17 agro-industrial cooperatives from Parana among the Biggest and Best Companies in Brazil.

The Agribusiness cooperatives are complex organizations with modern and transparent management and governance systems, and operate according to the 7 principles of cooperativism, which have existed since the first manifestations of this type of business in 1844 in Rochdale-Manchester, in the interior of England. Are they:

1) Voluntary and free membership: cooperatives are open to all who wish to participate, without discrimination;

2) Democratic management: all its members participate in management by means of assemblies, and the vote of each one has the same weight, regardless of its size;

3) Economic participation of members: members contribute equitably to the capital of the organization, and receive their share of the results;

4) Cooperatives are autonomous organizations, of mutual help, controlled by their members, and nothing should change that;

5) Education, training and information: cooperatives promote education and training so that its members and workers can contribute to the development of businesses and, consequently, the places where they are present;

6) Intercooperation: cooperativism is working together. Acting together, cooperatives give more force to the movement and serve cooperatives more effectively.

7) Interest in the community: contributing to the sustainable development of communities is something natural to cooperativism.

Based on the 6th principle of intercooperation, three large cooperatives from Parana state - Castrolanda, Frísia and Capal - located in the Castro and Carambeí Region, started an innovative intercooperation process, considered unique in the country's history.

Founded in 1925, Frisia is the oldest cooperative in Parana, and its production is focused on milk, meat and grains, mainly wheat, soybeans and corn. It has 760 associates and operates in more than thirty counties of Parana, with a revenues of R$ 2.4 billion in 2017.

Capal originated in 1980 from a small group of Dutch farmers in the city of Arapoti. At first its main economic activity was the production of milk. Today it focuses on agriculture (soy, corn, wheat and beans) and swine and milk production, as well as coffee production in some areas. It operates in 80 counties in Parana state and in the interior of São Paulo, with 16 production units. Earned revenues of R $ 1.2 billion in 2017.

Castrolanda was founded in 1951 and is located in Castro city. It has 2.9 thousand employees in two large business units: operations (meat, agricultural, milk, potato, bean and corporate) and industrial (meat, milk and potato). With 878 cooperatives, its revenues reached R $ 2.83 billion in 2017.

These cooperatives created Unium. This is not a merger or a new cooperative, but rather an umbrella brand, which has below it the product brands of the three cooperatives, which longer using their manufacturer's brands. But it was not only a question of brand management of dozens of products ranging from beans, milk, yogurts until beer and meats and processed foods, but also includes a complex model of business management, production and logistics.

The model is based on the leadership of each three cooperatives in specific businesses, where the leading cooperative already has a more developed structure or expertise, but maintaining its organizational and legal identities. This model seeks to optimize the industrial cooperatives plants and avoid duplicate investments or unnecessary competition between them. For example, Castrolanda is a leader in milk processing and meat industrialization, while Frísia leads the milling of wheat, and so on. Although the operation is the cooperative responsibility that takes the lead, decisions are made in common agreement with the three cooperatives, through management committees. Shares are proportional to each shared unit.

This was intended to: increase focus on results, away from political influences; increase scale and, consequently, competitiveness; direct capitalization of the business unit; dilution of corporate costs, among others.

Investments also have their own model, where the cooperative enters with 60% and the cooperated with 40%, with participation in the results (industry) guaranteed. That is, the cooperative has the opportunity to add value to its production of direct form, through the business unit in which it invested.

This process, which began in 2010 and now reaches maturity with the creation of Unium, resulted in a model involving 5,000 cooperated families; 3 million liters of milk processed per day; 115 thousand tons of milled grains per day; 3,200 swines slaughtered per day, and 1.8 thousand tons of processed meat per month. In addition to exporting to 25 countries in South and Central America, Africa, the Middle East and Europe, this cooperatives group has the only Paraná certification in animal welfare in swine.

By Alex Ferraresi, Ph.D. in Administration from FEA / USP and coordinator of the Postgraduate Program in Cooperative Management at PUCPR (Professional Master's Degree)