Organizational challenges of cooperatives and the institutional environment:

Topic 4 - Stage 4 - Meso. This paper presents an innovative approach to understanding the relationships between agricultural cooperatives and the institutional environment. While cooperative development may benefit from an... [ view full abstract ]

Topic 4 - Stage 4 - Meso. This paper presents an innovative approach to understanding the relationships between agricultural cooperatives and the institutional environment. While cooperative development may benefit from an enabling institutional environment, it is not a priori clear what this enabling environment should be. Depending on the sector, the stage of cooperative development or the characteristics of the market, cooperatives may require different types of support from the institutional environment, such as clear regulation, financial and other business services, or market organization. This paper explores the demands that marketing cooperatives have towards the institutional environment.

We focus on three organizational challenges – in which the interest of the group may differ from the (short term) interest of the individual members – that most marketing cooperatives face: the need to apply an effective and efficient quality assurance system; the need to apply a transparent payment system which can accommodate the financial needs of both members and organization; and the need to apply a human resource management policy that enables the cooperative to attract and maintain high quality managers and staff. Our paper aims to provide better insight in these organizational challenges, the solutions found by the cooperatives and the role of the institutional environment in facilitating and supporting those solutions.

We used case studies as our research approach. Five case studies of dairy cooperatives in Morocco have been carried out. The sample includes both collection and processing cooperatives in two different areas of the country surrounding the capital city, Rabat. About thirteen interviews were held with cooperative leaders (presidents, vice presidents and managing directors) as well as with employees in charge of milk collection.

Findings from our research point to a lack of connection between dairy cooperatives, public authorities and agribusiness. In addition, we found a lack of financial and organization capacity to invest in adequate quality assurance equipment, hindering market position. Moreover, we found that the institutional environment, despite the presence of a dairy inter-professional organization and agreements between sector representatives and government, provides little direct support to the smallholder cooperatives.

The research suggests recommendations to cooperative leaders and to policy makers, such as strengthening negotiation power by better collaboration among cooperatives and developing rules that make value chains more transparent as well as the need to strengthen the regulatory role of the State in the implementation of dairy related policies.