Grains Research and Development

Date: 01.04.2005

Demutualisation - Lost values erode a rural bastion

Cooperatives, and other organisations once proudly owned and controlled by members, are falling like dominoes in the rush to demutualise.

The chairman of the Co-operative Federation of Victoria (CFV), Graeme Charles, asks when the "cooperative fightback" is going to start in this country and who will lead it. The demise of the cooperative sector is nowhere more obvious than in the Australian dairy industry, where Victorian-based processor Warrnambool Cheese & Butter Factory (WCBF) is just the latest in a line of producer-centred organisations to restructure and list on the Australian Stock Exchange. In NSW, the Dairy Farmers Group has already restructured and announced its intention to partially list.

But it is not just the agricultural cooperative sector that is affected. Once-proud mutuals such as the Australian Mutual Provident Society (AMP) have been demutualised - and rapidly devalued by the market in the process.

Mr Charles believes demutualisation is a result of a cooperative or member-based culture that actually fails to practise cooperative values and principles: "Difficulties with capitalraising are often put forward as a reason for the need to demutualise - but these problems are a symptom, not a cause of this failure," Mr Charles says.

"Capital-raising issues should be continually addressed and planned for, long before the need becomes so urgent and significant that the only quick-fix alternative available is a public float. And, sadly, the push for demutualisation often comes from the very people elected to serve the interests of members - the board of directors."

Mr Charles was recently in the UK where a failed attempt to demutualise one of the country"s biggest cooperatives, the Co-operative Group, became the catalyst for a rediscovery of the "value of cooperation". The Co-operative Group introduced compulsory training in cooperative values and principles for all its managers and all its directors.

"People cannot defend what they don"t understand," Mr Charles says.

He says education has long been seen as the life-blood of the cooperative movement and the Australian cooperative sector is sowing the seeds of its own decline by not paying attention to member education.