G&O Cooperatives in Europe: The Urge to Change to Continue Thriving

Cooperatives are key strategic actors in the competitive European landscape for grains and oilseeds (G&O), and they have been growing in their role for several decades.

Report summary

In the next decade, there will be a number of challenges that are likely to impact not only how farmers operate, but also how they purchase inputs and produce outputs, which, in turn, will impact the G&O cooperatives. To begin with, the EU’s Farm-to-Fork Strategy (F2F) and Green Deal will pose challenges, but also weather and climate volatility will have an effect on G&O yields and, consequently, on harvest volumes. And the growing competition and pressure in the supply chain will force cooperatives to take new and/or stronger strategic directions. These new steps will also be relevant in order to capture the opportunities that lie ahead: for example, growing potential for grain exports to Africa; long-term growth in demand for malt; and rising demand for G&O as an ingredient for alternative proteins.

Our financial analysis shows that cooperatives are often highly leveraged and do not generate sufficient cash flow to execute major transactions. Mergers are one likely option that allows cooperatives to grow in size, to continue the consolidation process without necessarily taking on more debt. In order to overcome financial challenges, cooperatives will need to find ways to open up to external investors, but this will, in some cases, require a change in their legal structure.

Finally, most cooperatives will need to further modernize their governance structures. They can do this is by introducing member councils in order to streamline the decision-making process and by increasing gender inclusion and the number of professionals who can help to set new strategic directions, improve digitalization, and/or implement organizational changes in the supply chain