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2014 DQ 168 (2014)
Transnationalization of Agricultural Cooperatives in Europe

handle is hein.journals/doveq2014 and id is 184 raw text is: Transnationalization of Agricultural Cooperatives in Europe Jos Bijman, Perttu Pyykk6nen & Petri Ollila* 1 Introduction Agricultural cooperatives in Europe have recently star- ted a new phase in their internationalization strategies. For many decades, cooperatives have expanded interna- tionally through exporting and investing in foreign dis- tribution networks, either individually or in joint ven- tures with foreign partners. However, over the last 15 years an increasing number of cooperatives has expan- ded internationally by inviting foreign farmers to become members. Cooperatives that have members in two or more countries have been called transnational cooperatives.1 Currently, the most transnational agricultural coopera- tive in Europe is the dairy cooperative Arla Foods. Arla was established in the year 2000 by the merger of MD Foods from Denmark and Arla from Sweden. After subsequent mergers with Hansa Milch and Milch- Union Hocheifel (both from Germany) and Milk Link (UK) and Walhorn (Belgium), Arla Foods now has members in Denmark, Sweden, Germany, Belgium and the UK but also in Luxembourg and the Netherlands as Walhorn also had members in those countries. The sec- ond most transnational cooperative, also in dairy, is FrieslandCampina, headquartered in the Netherlands and with members in three countries: Netherlands, Germany and Belgium. Is it a coincidence that these two transnational cooperatives both are in dairy and both have their headquarters in a small country (respectively Denmark and the Netherlands)? Internationalization, and even more transnationaliza- tion, has always been a much debated issue among the cooperative members. While exporting as an interna- tionalization strategy has always received broad support, foreign investments have often encountered substantial * Dr. Jos Bijman, Management Studies Group, Wageningen University. Dr. Perttu Pyykk6nen, Pellervo Economic Research PTT, Helsinki. Dr. Petri Ollila, Department of Economics and Management, University of Helsinki. This article is based on the results of the project 'Support for Farmers' Cooperatives (SFC)' which was contracted by the European Commission, DG Agriculture and Rural Development (Contract Num- ber: 30-CE-0395921/00-42). 1. Federation of Danish Co-operatives 2000. In this article, a transnational cooperative is defined as a cooperative with members in more than one country, while an international cooperative is a cooperative with mem- bers in only one country and non-member farmer-suppliers or farmer- customers in one or more other countries. criticism. As cooperatives generally are conservative in their business decisions and investing abroad is usually more risky, the decision to invest in foreign activities was not taken lightly. However, inviting foreign farmers to become members raises even more discussion. As international membership leads to higher costs in mem- ber relations and in the governance of the cooperative, due to differences in history, culture and language, domestic members are reluctant to accept foreign mem- bership. Ollila et al. found that the most loyal members were the most reluctant towards foreign membership.2 Nevertheless, several cooperatives in Europe have embarked upon the course of transnationalization. This article seeks to explore this trend and to explain why cooperatives, despite the obvious disadvantages, contin- ue to grow transnationally. Most of the literature on internationalization of agricul- tural cooperatives discusses the activities of the coopera- tive firm in exporting, setting up joint ventures and establishing or acquiring foreign production facilities.3 Besides the work of Nilsson and Madsen, research on transnational cooperatives is rare.4 Our article is the first to provide original data on international membership in agricultural cooperatives for the whole of the European Union. We do not seek to answer all questions as to the why and how of transnationalization of agricultural cooperatives. Our data and research methods do not allow such a comprehensive treatment of the topic. Rather, our ambition is more modest. Our objective is to present and discuss recent data on the number and type of transnational cooperatives in the EU, as any further dis- cussion of the topic should start with the facts. Are there differences between countries and sectors to be found and what explains these differences? What are the motives for cooperatives to become international/trans- national? The article is structured in six parts, beginning with this introduction. In section 2, we discuss the strategies of internationalization and transnationalization of agricul- tural cooperatives, and we present examples of coopera- tives following such strategies. In sections 3 and 4, we present the results of our empirical study into the inci- dence of transnational membership in the EU. In sec- tion 5, we discuss our findings, reflecting on the motives 2. Ollila etal. 2014. 3. See, e.g., Guillouzo & Ruffio 2005; Theuvsen & Ebneth 2005; Heyder et al. 2011. 4. Nilsson & Madsen 2007. doi: 10.5553/DQ/221199812014002004005 DQ December 2014 1 No. 4

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