Producer organizations found to be important asset for farmers

Producer organizations (POs) and associations of producer organizations (APOs) help to strengthen farmers’ position in the food supply chain while providing technical assistance to their members. These organizations also benefit other actors in the food supply chain, as well as the local communities where they operate. These are among the main findings of the study on the best ways for producer organizations to be formed, carry out their activities and be supported published recently by the European Commission.

When defining producer organizations as “any farmers’ cooperation based on a legal entity”, the number of producer organizations in the EU reaches more than 42,000. The EU acknowledges the special role played by producer organizations and, as a result, they can ask for recognition from the EU country they are based in. As of mid-2017 there were 3,505 recognized producer organizations (POs) and associations of producer organizations (APOs).

France, Germany and Spain are the three Member States with the most recognized POs and APOs, with respectively 759, 658 and 588 recognized entities. Together they represent about 60% of the total at EU level. Regarding sectors, more than 50% of the recognized entities belong to the fruit and vegetable sector.

The study finds that the main objectives of recognized POs and APOs are common across sectors and include: production planning, adapting to demand; concentration of products; and placing of products on the market. Many non-recognized POs pursue the same activities as recognized ones. In both cases, these activities can bring economic, technical and social or human benefits to their members.

POs can ensure higher market penetration and greater bargaining power with other actors of the food supply chain. They can also contribute to mitigating economic risks and costs by ensuring, for example, security of payments or sharing of investments. Regarding technical incentives, POs add value to business activities by providing infrastructure for production, storage or processing.

While these organizations can take different legal forms, whether recognized or not, the study finds that agricultural cooperatives (coops) are the most common

The study identified certain obstacles to joining POs, such as the fear for farmers to lose their entrepreneurial freedom. Many farmers are not aware of the benefits of being a member of a PO and are concerned by the costs for setting them up.

In general, the findings of the study indicate that internal and external factors need to be considered when analyzing what will contribute to the success or failure of POs. It concluded that the most important internal factor is the existence of a well-established tradition in agricultural cooperation at Member state level. For external factors, the most important is for POs to be able to operate and compete in the current globalized markets.

Click here to read the full report.

For more information: 
European Commission 

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