The integration processes between cooperatives: A comparative study of the legal framework in Canada and in Spain

TOPIC 18– STAGE 4- MACRO Spanish and Canadian co-operatives have some similarities such as a complex legal framework (a national co-operative Act and regional legislation), a similar weight on the GDP, certain tax... [ view full abstract ]

TOPIC 18– STAGE 4- MACRO

Spanish and Canadian co-operatives have some similarities such as a complex legal framework (a national co-operative Act and regional legislation), a similar weight on the GDP, certain tax advantages, an export production vision, etc. But also they have some differences such as governmental support, culture of co-operatives, etc. In particular, Spanish producers have to face an important problem: structural atomization. Co-operatives are small, not well structured, without bargaining power, without enough knowledge about foreign markets, etc. Due to this structural problem, Spanish co-operatives may not have the same benefits from economies of scale as co-operatives from Netherlands, France, Italy or Scandinavian countries.

This topic is currently important in Spain. Although integration processes among different regions remain being difficult due to legal aspects, national and regional governments foster different integration processes to make stronger and more competitive the agricultural producers. Two good examples are the Act 13/2013, 2nd August, to promote the integration of co-operatives and other agribusiness associative entities and the Act 12/2013, 2nd August, of measures to improve the performance of the food chain. However, co-operatives’ members are usually reluctant to amalgamate with other co-operatives because they want to preserve their own independence, keep members’ control and that co-operatives continue trying to meet their needs. Also, consumer may be worried about the impact that amalgamations may have in the prices and in product offering. Thus, integrations have to be respectful with competition law, members’ rights and social impact.

Canada has some relevant examples of agricultural co-operatives that have tried to grow rapidly but they lost their co-operative nature (the Saskatchewan Wheat Pool), or there are a trend of amalgamation among different credit unions, or the foundation of second-tier co-operatives in the wholesale and retail sector (Federated Co-operatives Limited), etc. From the Canadian experience, Spanish institutions and co-operatives could learn about different mechanisms of growth and which one may be more suitable for the Spanish agricultural co-operatives.

Firstly, the general Canadian co-operatives legal framework is studied. Secondly, emphasis to restructuring process of co-operatives in Canada is given: vertical and horizontal integration processes and other trends of the last decades: amalgamations among credit unions, second tier co-operatives in retail and wholesale co-operatives, co-operative conversions in agricultural sector, and new organizational structures (such as New Generation Co-operatives). The paper will be focused especially on amalgamation regulation. All these issues will be compare with the Spanish framework.