New strategies for co-operatives: Understanding and managing co-operative creation, transition and transformation FP7-PEOPLE-2013-IAPP Marie Curie Industry-Academia Partnerships and Pathways (IAPP ) Social and economic transition of agricultural cooperatives in Bulgaria Prof. D.Sc. Julia Doitchinova Assoc. Prof. Dr. Darina Zaimova

Outline: Introduction and general facts New strategies for co-operatives: Understanding and managing co-operative creation, transition and transformation Outline: Introduction and general facts Overview of cooperative movement in Bulgaria General results of policy interventions and present state Future perspectives and conclusion C-BIRD (PIAPP-GA-2013-611490)

Introduction and general facts New strategies for co-operatives: Understanding and managing co-operative creation, transition and transformation Introduction and general facts Agricultural sector provides 5,2% of the GVA for 2014. The area with agricultural designation in 2014 is 5 192 940 ha, which represents approximately 47% of the territory. Utilized agricultural area amounts to 4 976 815 ha or 45% of the country’s territory. The number of the registered agricultural producers for 2014/2015 is 94 815. C-BIRD (PIAPP-GA-2013-611490)

Introduction and general facts The agriculture end production value (value of production after deduction of internal turnovers) under basis prices (prices with included subsidies on products) for 2014 is 3920550 euros. The interim consumption is reported at 2354300 euros, with decrease of 10% from the previous period (2013). The number of the agricultural holdings is 254 142. The holdings with UAA less than 0,5 ha have decreased by 34%. C-BIRD (PIAPP-GA-2013-611490) C-BIRD (PIAPP-GA-2013-611490)

Pre-reform land tenure and progress reforms Cooperative movement - overview Pre-reform land tenure and progress reforms Main characteristics 1. Pre-reform farm type in percentage of land area Cooperative: 100 % (but cooperatives function more like state farms) 2. Agency in charge of realizing privatization: Municipal Land Commission; Liquidation Councils. 3. Progress of privatization in terms % of state/ cooperative land: For 11% of land: owners have land titles; For 76% of land: owners have provision titles. C-BIRD (PIAPP-GA-2013-611490) C-BIRD (PIAPP-GA-2013-611490) C-BIRD (PIAPP-GA-2013-611490) C-BIRD (PIAPP-GA-2013-611490)

Pre-reform land tenure and progress reforms Cooperative movement - overview Pre-reform land tenure and progress reforms Main characteristics 4. Cooperative farm transformation Mechanism used – limited restitution of land to former owners and then to the others; Basis for rights to land ownership: 5.1. Old owners who are to have land restituted using “real borders” (original plots of land), but reduced by a “reduction factor”. 5.2. Previously landless to be allocated state land and then other land. 5.3. Basis for distribution of farm assets – formula for distribution: 50% on basis of (newly distributed) land ownership; 50% on basis of work done in the cooperative. C-BIRD (PIAPP-GA-2013-611490) C-BIRD (PIAPP-GA-2013-611490) C-BIRD (PIAPP-GA-2013-611490) C-BIRD (PIAPP-GA-2013-611490) C-BIRD (PIAPP-GA-2013-611490)

Pre-reform land tenure and progress reforms Cooperative movement - overview Pre-reform land tenure and progress reforms Main characteristics 5. Size of farms General practice is that farmers who have outstanding claims to land may make use of 80% of that land, while claim process is settled; Legal limits on farm size – 20-30 ha per family, depending on soil quality 6. Land transactions Land selling is not allowed in first 3 years, unless to family or state; Land renting is allowed. 7. Farmer associations There are current logistics cooperatives for trade; Farmers are not allowed to start new production cooperatives until the ownership of the land has been established. C-BIRD (PIAPP-GA-2013-611490) C-BIRD (PIAPP-GA-2013-611490) C-BIRD (PIAPP-GA-2013-611490) C-BIRD (PIAPP-GA-2013-611490) C-BIRD (PIAPP-GA-2013-611490)

The results 4 million private agricultural owners in possession of more than 20 million parcels, including: Diversity of property rights; Sharp decline of all economic sectors; Absence of stable legal basis to back up the emerging relations in commodity, capital and labour markets. C-BIRD (PIAPP-GA-2013-611490) C-BIRD (PIAPP-GA-2013-611490) C-BIRD (PIAPP-GA-2013-611490) C-BIRD (PIAPP-GA-2013-611490)

1990 1992 2000 2003 2008 Productivity: 1. Food security 2. Improving productivity 3. Market stabilization 4. Income support Competitiveness: 1. Reduced surpluses 2. Environment 3. Income stabilization 4. Budget stabilization Sustainability: 1. Deepening the reform process 2.Competitiveness 3. Rural development Modernization: 1. Structural changes 2. Farm viability 3. Environment 4. Social dimension of rural development Health Check: 1. Simplified policy implementation 2. Market orientation 3. Diversification and off-farm employment C-BIRD (PIAPP-GA-2013-611490) C-BIRD (PIAPP-GA-2013-611490) C-BIRD (PIAPP-GA-2013-611490) C-BIRD (PIAPP-GA-2013-611490)

Cooperatives - today The number of agricultural cooperatives is 811 (2013); They use 15 % of the utilized agricultural area; Average size is 691,13 ha; Most of cooperatives (about 98 %) are production cooperatives; Cooperatives produce wheat, sunflower and other cereals. C-BIRD (PIAPP-GA-2013-611490) C-BIRD (PIAPP-GA-2013-611490)

Structure of UAA by holdings C-BIRD (PIAPP-GA-2013-611490) C-BIRD (PIAPP-GA-2013-611490) C-BIRD (PIAPP-GA-2013-611490)

The results Average size is 10,1 ha and increases more than twice last 7 years, but: 67 % of holdings (0-10 ha) use – 2 % of UAA; 2 % of holdings (over 500 ha) use 84 % of UAA; 70.6 % of holdings (1-2 cows) breed 25 % of cows; 0.8 % of holdings (over 50 cows) – 24.2 % of cows. C-BIRD (PIAPP-GA-2013-611490) C-BIRD (PIAPP-GA-2013-611490) C-BIRD (PIAPP-GA-2013-611490) C-BIRD (PIAPP-GA-2013-611490)

The results C-BIRD (PIAPP-GA-2013-611490)

The results A new economic appraisal of the market and the market players was necessary to be made. Producers have limited opportunity to participate, control or modify their relations with processors, suppliers, and retailers and also to take part in and control over the process of pricing. During the period of economic transformation individualism has become main characteristic in the agricultural relations. This resulted in mistrust in different types of organizations and to some extend explained limited number of registered producers groups. Farmers lacked of professionalism in management their finances and market risk, production process and market distribution. Entrepreneur initiative was missing which has lessened their market success. C-BIRD (PIAPP-GA-2013-611490) C-BIRD (PIAPP-GA-2013-611490) C-BIRD (PIAPP-GA-2013-611490)

The results - CAP and Bulgarian agriculture Index 2007 2014 % BDS for sector Agriculture, forestry and fishery (million Euro) 1443 1607 11% Share of BDS for sector “Agriculture, forestry and fishery” of the total BDS 4.7 4.8 2% Production from horticulture (million Euro) 1,566 2,485 59% Production from livestock breeding 1,246 1,087 -13% Production from branch “Agriculture” 3,315 4,009 21% C-BIRD (PIAPP-GA-2013-611490) C-BIRD (PIAPP-GA-2013-611490) C-BIRD (PIAPP-GA-2013-611490)

CAP – results and changes Engaged with agricultural decreased - 89,66 percent (2015) in compared to those in 2006; Employed in agriculture increased -117, 8 percent (2015) in compared to those in 2006; An increasing proportion of employees of total employment in agriculture - from 11.24 percent in 2006 to 14.47 percent in 2015. Most employees work in cooperatives and commercial companies. C-BIRD (PIAPP-GA-2013-611490) C-BIRD (PIAPP-GA-2013-611490) C-BIRD (PIAPP-GA-2013-611490)

CAP - results and changes Average wages in agriculture remains among the lowest in the country. From 1581.45 euro per year in 2006 it increased to 4429.90 in 2015 or 280 %. In 2006 average wages in agriculture was 73.87% of the national average, and in 2015 was 81.88%. C-BIRD (PIAPP-GA-2013-611490) C-BIRD (PIAPP-GA-2013-611490) C-BIRD (PIAPP-GA-2013-611490)

RDP - results and changes Cooperatives are among the beneficiaries of the measure 121 "Modernization of agricultural holdings”, representing 20% of the projects. Varying economic performance and difficulties in financing the projects are among the reasons for their relatively weak activity. Production cooperatives are also participating in the implementation of local strategies Leader - such projects are 14.3% of the LAGs. C-BIRD (PIAPP-GA-2013-611490) C-BIRD (PIAPP-GA-2013-611490) C-BIRD (PIAPP-GA-2013-611490)

CAP - results and changes C-BIRD (PIAPP-GA-2013-611490) C-BIRD (PIAPP-GA-2013-611490) C-BIRD (PIAPP-GA-2013-611490)

The results Four groups of members in producer cooperatives: Land, capital and labour and the members live on the same territory; Capital and labour and members live on the same territory; Land and capital and members live on the same territory; Land and capital and members don`t live on the same territory – about 80 % - 90 % of members. C-BIRD (PIAPP-GA-2013-611490) C-BIRD (PIAPP-GA-2013-611490) C-BIRD (PIAPP-GA-2013-611490) C-BIRD (PIAPP-GA-2013-611490) C-BIRD (PIAPP-GA-2013-611490)

The results: Share in used agricultural land C-BIRD (PIAPP-GA-2013-611490) C-BIRD (PIAPP-GA-2013-611490)

Future perspectives and conclusion The farmer … The engine … The road … C-BIRD (PIAPP-GA-2013-611490) C-BIRD (PIAPP-GA-2013-611490)

Thank you! Prof. D.Sc. Julia Doitchinova juliadoj@abv.bg New strategies for co-operatives: Understanding and managing co-operative creation, transition and transformation Thank you! Prof. D.Sc. Julia Doitchinova juliadoj@abv.bg Assoc. Prof. Darina Zaimova dzaimova@gmail.com C-BIRD (PIAPP-GA-2013-611490)