Management and financial performance of agricultural cooperatives: a case of Portuguese olive oil cooperatives

João Fernandes Rebelo,Ânia Teixeira,Carmem Teresa Leal

doi:10.5209/reve.53243

Abstract

In Portugal, as in other countries, agricultural cooperatives have an important economic role in the food system. Similar to other economic organisations, agricultural cooperatives have witnessed structural changes in recent decades in terms of governance and/or management models. Portuguese agricultural cooperatives have been compelled by their context to adopt a traditional model of ownership and control. The main goal of this study was to analyse issues related to the management structure and financial performance of cooperatives, based on data collected for olive oil cooperatives located in the northern interior region of Portugal. Combining a qualitative analysis of structure and decision-making, a financial assessment and the application of a multi-criteria approach (PROMETHEE II), the overall results are in line with expectations (e.g. low levels of member participation, nonprofessional management, low profitability ratios, low leverage and an ability to fulfil financial commitments), except for the relationship between professional management and financial performance. The existence of professional management does not lead to better financial performance. This result reinforces the belief that cooperatives that are structured differently have different and conflicting stakeholder interests

Highlights

Agricultural cooperatives have an important economic role in the European Union (EU) food system
The main goal of this study was to analyse issues related to the management structure and financial performance of cooperatives, based on data collected for olive oil cooperatives located in the northern interior region of Portugal
Beyond the three statutory bodies (i.e. general assembly (GA), board of director (BoD) and supervisory board (SB)) can be delegate management power to executive directors or managers, who in turn control the daily activities of the other departments

Summary

Introduction

Agricultural cooperatives have an important economic role in the European Union (EU) food system. At the end of the first decade of the twenty-first century, 54% of EU farmers were members of agricultural cooperatives. There were 38,000 agricultural cooperatives, and these held a 60% market share in the collecting, processing and marketing of agricultural products. In the case of Portugal, detailed information about the quantity of agricultural raw materials marketed through cooperatives is scarce It is clear that cooperatives have an important role in dairy (i.e. milk), wine, olive oil and fruit and vegetables food chains, with a market share, in 2009, of 70%, 42%, 30% and 25%, respectively (Rebelo & Caldas, 2012; 2015)

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Results

Conclusion