Producer organizations for long term development of horticulture sector

Andris Miglavs, Latvijas Valsts agrārās ekonomikas institūts (LVAEI)

Nīderlandes - Latvijas/Lietuvas dārzeņu ražotāju organizāciju attīstības atbalsta projekta noslēguma seminārkonference “Kāpēc un kādām būt dārzkopju ražotāju organizācijām?”, notika Rīgā, 2007.gada 29.jūnijā. Šis ir viens no runājumiem konferencē. ### Lasāmākā formātā šis runājums pievienots kā Bilžrāde PDF formātā. ### Pievienots arī tulkojums Latviešu valodā.

Producer organizations for long term development of horticulture sector

Andris Miglavs 

Latvian State Institute of Agrarian Economics

To remind: 
What is needed to have successful business? 

Higher price for product marketed

better product

greater market power 

Less productions costs 

lower input prices

less use of inputs

Markets’ physical availability

ability to meet market demand and fulfil the requirements



delivering schedule

Comparable competition environment 

state support 

Modern business philosophy

Successful producer organisation – it’s a cooperative, self- run unit, having: 


logical set of goals (goal tree)- 

not only getting state support payments


active and interested in developing

not only in consuming the benefits 

idea, how to reach the goals

which is better as “capital business units” do have

there are activities better carried out in separately run business units

tools to reach the goals

resources and technologies

efficient decision taking mechanism

strategic and daily decisions are separated each from other

clear and reasonable profit distribution mechanism

all the factors involved in production are remunerated

relationship - participation, management and distribution

To remind – producer organisation (PO) in FVS according to the Article 11 of 2200/96: 

established by the  initiative of the producers

has goals:

to provide planinng and adjustment of the production to the demand, specially in terms of qualilty and quantity

to facilitate concentration of the supply and marketing of products produced the members of the PO

to lower the production costs and to stabilise producer prices

..... is, which statutes require from the member: 

to follow the rules approved by the organisation ....

to be a member of only one PO of the type regarding the correspondent product category

to sell all the produce of that category only via PO, with minor exemptions

<25 % directly on the farm for final consumers

that product and in amounts, which according to the PO decision is not important for the PO

and few more...

to provide the own PO with the information requested by it, mainly for statistical purposes

to make all the members’ payments agreed in the PO statutes


Cooperative will never be efficient, if:


will not be agreed commonly and/or they will be contradictory

members are

consumers rather then developers

there is no idea how to reach the goals

because of the lack of knowledge (or ability to use) - modern business

there are no resources to reach the goals

no resources available already and no investment resources to set up

decision making mechanism is not working properly

strategic decisions can not be taken, because

there are no commonly agreed goals

members don’t recognise the business realities or they do have too different understanding and /or interpretation about the solutions

daily business decisions are problematic, 

coop does not have a well recognised leader, he is not professional

possible conflict of interests: - manager – one of the members

Profit distribution mechanism 

contradiction between the ownership, management and distribution

members urge to benefit not to take duties

Cooperative – preconditions for the development


clear recognition

goals and the ways, how to reach them

the need for the resources

management needs

cooperation needs 

understandable formulation of the common operation platform and joining on its basis 


ability to attract financial resources




solving of the contradiction between the understanding of the cooperative as

public organisation or business organisation

one member – one vote, openness , ... 

NL PO from our view point

They are really huge

market power  - volumes and relationship

technology development level

international business cooperation

They have well developed management


quality management 

financial management and also services

information exchange and distribution

However there are some clearly useful things (features) to take: 

Producers have joined to generate profits (no for crying) and not only for subsidy harvesting

Cooperatives are managed by the members 

with strong daily business management 

Targeted to the increase the profits

cost saving

newer technologies


organisational and IT solutions 

market power – volumes, assortment, all year supplies

also imports 

Quality management and improvement

standards, new products, monitoring 


Latvijas Valsts agrārās ekonomikas institūts (LVAEI)


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