Cooperatives: a resilient business model in time of crisis

Pablo Fernández Álvarez de Buergo works at Agri-food Cooperatives of Spain where he supports over 3,000 farming groups find innovative solutions to market challenges. He thinks farmers have proven their resilience through the coronavirus pandemic, but they could come out of the crisis stronger – if governments take the right steps now.

How have Spanish farmers adapted to the coronavirus pandemic?

Almost half of the market is gone with the closure of places likes hotels and restaurants. This is a huge impact, especially in Spain because it is very dependent on tourism. In the agri-food sector, we will need a lot of workforce over the next months to perform harvesting tasks. This is a concern for cooperatives because it is not just about hiring these workers, they will also have to feed and host the new labour. This is a situation that they are trying to figure out. However, the large organisation that Spanish cooperatives have usually boosts fast solutions to these types of challenges.

Cooperatives are also finding new ways to sell their products, but in the long run this approach will not probably be enough. There does seem to be more local channels or online options at the moment, but there is not enough demand there to match the previous market situation – farmers need something bigger. Some national sectors are trying to find new export markets that are experiencing problems in other countries, but that’s a tough task due to existence of many international competitors. Innovation will be key to success because it will bring a strong and unique selling point, but this takes time and money to develop, and for that a stable agri-food market is needed.

How can farmers be more resilient after the pandemic has passed?

We need to have a post-crisis view and we need to keep our focus on the future. Nowadays, many cooperatives are focused on dealing with the market problems they are facing, which is necessary to overcome the pandemic, but they must also think about what is coming next. Generally, those cooperatives which had already diversified and strengthen their business model through different markets are in a better position now. They were able to be more resilient because they had diversified in the past, which allowed them to balance their problems across markets and spread their risk.

But diversification needs research and innovation, which requires investment. This is difficult when you are facing an economic crisis, especially the longer it goes on. That’s why governments need to stabilise the economy as soon as possible. In Spain, the government considers the agri-food sector as an essential service, which means they encourage businesses to work as normal, but with new rules to protect workers. It is their approach to make it easier for supply chains to function, but we will have to see if the government finally takes the measures that the agri-food sector is demanding in order to overcome this situation.

Can you give an example of diversified approach suited for a post-pandemic future?

In Rubizmo, we have a case where one of our cooperatives in the olive industry has diversified into the bioenergy market and they also produce some bio-components for the cosmetics and pharmaceutical market. This is a successful business model because they have not concentrated their business and are in a more flexible position right now. Other business can follow this path when the time comes because the agri-food sector will survive this crisis – it has faced many setbacks in recent years and it is still alive today. Farmers have continued to provide food for society throughout, it is now a question of how to face the new issues that will appear in the future.

Interview by Steve Gillman

Photo by Milada Vigerova on Unsplash