Report Year: 2008

To get a better understanding of the mechanisms that co-operatives have developed to fund their strategic goals, this report firstly discusses the co-operative model and the five fundamental issues and constraints that they commonly face. One of their main constraints is their ability to raise capital.

In the agricultural sector there are two basic co-operative models, the marketing or output co-operative and the supply or input co-operative. This report primarily focuses on the marketing and output co-operative, especially in the meat industry sector.

Globalization has seen some very significant changes in the value chain, between producer and consumer, with power shift changes giving supermarkets significant advantages.

Supermarkets have been consolidating and are increasingly operating across borders. Consumer preferences for their food requirements are moving towards the so called ‘ready made meal’ or ‘quick food’ range of products.

Meat marketing companies, which supply supermarkets, and other outlets, with consumer products, have had to adapt to remain competitive. They have and are currently adopting strategies that revolve around:

1. Economies of scale ( horizontal integration)
2. Increasing control in the value chain ( vertical integration)
3. Product Development
4. Diversification
5. Specialization

Many of these strategies are capital intensive.

Co-operatives operating in this sector have all adopted one or more of these strategies, but to overcome the co-operative problem of raising capital they have developed a range of solutions.

These solutions often involve some form of structural change and tend to move the co-operative away from the traditional model towards the investor owned firm (lOF) model( which is not a co-operative), with many alternatives in-between.

As the co-operatives progress away from the traditional model towards the IOF, issues arise around the level of control the co-operative members retain and in some cases the conflicting demands for profit distribution.

Finally, this report briefly looks at seven case studies of co-operatives (in their various forms) which give an insight into the mechanisms which have been adopted to fund their strategic goals and how the potential friction between member shareholders and investor shareholders are managed.

Genetic Modification (GM) also referred to as Modern Biotechnology, is being researched, promoted or utilised in numerous countries throughout the world. Acceptance is at a variety of levels, with many affluent countries having strong political and consumer resistance. Genetically modified crops for pest and or herbicide resistance have now been grown for 12 years and the exploration of the use of animals to produce biopharmaceuticals has resulted in the approval of the first beneficial drug for humans.

In New Zealand researchers have been investigating GM in plants and animals for over twenty years; most of this has been in the laboratory but recorded applications for field testing in controlled situations have been approved during this period. The Environmental Risk Management Authority (ERMA) approves any work involving GM and in the last ten years higher profile approvals have been for the field testing of GM sheep, cows, brassica, onions and trees. All this work is untertaken in Ministry of Agriculture and Forestry (MAF) approved and supervised Facilities. Each application in recent years has normally been challenged by New Zealanders who do not want this type of research carried out for a variety of reasons.

The purpose of this project is to explore what New Zealand Farmers think about GM and whether they would consider using, or accept others using, GM plants or animals if they were approved for release into the New Zealand environment. Releasing a GM organism is an application process which no one working with GM has contemplated undertaking at this time.

Previous research projects have explored this subject or more specific aspects such as Biopharming, generally providing scenarios and then asking opinions relative to the scenario given. It is my view that the scenarios as presented are rather different from what is likely to occur if the type of programs they portray proceed. Also talking with farmers and others provided a more positive view of GM than the results these research projects portrayed.

A questionnaire was decided on to accurately capture the information in a consistent and usable form as discussion at field days or events was often unstructured. Email was used to distribute the link to questions as widely as possible.

A pre-test questionnaire received a good response and returned a generally positive response, with the proviso that consumer view was important to be considered.

The main questionnaire had a very poor response rate and the resulting view aligned with that portrayed by previous polls of farmers and the wider population, mainly negative, but more acceptant of environmental or Human medical or nutritional benefits. Combining the results gives a much higher general acceptance but it is still difficult to define a clear position.

Realistically it is likely it will be some time before genetic modification moves out of controlled facilities or situations in New Zealand.

This will provide ample time for in my view the required more open discussion, question answering and wider distribution in lay language, of information surrounding GM. It is still relatively unknown what could be realistically achieved if possible modifications are successful.