ABSTRACT Current Status of Agricultural Cooperatives in Chile The only Law that governs cooperatives in Chile is the Cooperatives Act Nr. 20190, which was passed on September 25, 2003 and last amended in 2007. It divides Chilean cooperatives into those working in the field of agriculture, farming and fishery, labor, services, consumers, special agriculture and special power supply. It is fair to say that cooperative principles have been present in several activities in the history of Chile. Terms like minga or mingaco continue to be used, given the country s geography, traditions and life in the rural communities. Those terms comes from the Quechua minga, which refers to collective and community work that pursues social aims. In an attempt to improve the living conditions of typographers, in 1887 the Mutual Aid Society of their union created the consumers cooperative La Esmeralda, linked to a group of artisans in Valparaiso. In 1904, the government promoted the creation of the railway workers consumers cooperative, which was implemented by the railway workers themselves. This was followed by a number of cooperatives registered in sectors like services, insurance, agriculture, construction and savings, and in the electricity sector, among others. Between 1904 and 1924, 40 cooperatives registered in various sectors. In the absence of a legal framework regulating them, they were actually corporations, but were called cooperatives, because they were based on the principles of mutual aid and free membership. The Cooperatives Act, which came into effect on May 4, 2003, was intended to meet the cooperative sector s aspiration to have a modern and effective
regulation, and to slip Chile into the international economic community, where the cooperative movement has been able to strive. As is the case of Europe, Canada, the United States and a number of other countries, Chile is increasingly recognizing the role played by the cooperative model as an instrument for the coordination of economic stakeholders, as an effective tool that can open new jobs and help solve social problems. According to the Cooperatives Department of the Ministry of Economy, 2,404 cooperatives are currently active, with 667 being in the metropolitan area. In addition, and in accordance with the land register, there are 58 cooperatives engaged in banking credits across the country. The most numerous are those of farmers (289), closed housing (163) and drinking water (145). In the last decade, following the restoration of democratic institutions (1990) and with a very rigid General Cooperatives Act ( 1978), in a free market economy context, the cooperative movement in Chile has developed haphazardly. First, the number of cooperatives created outpaced those going out of business, indicating that they continue to be an option and a valid model for many people. On the other hand, however, the rate of their activity has dropped, reflecting that many of these entities have faced problems related to their operations, organization and/or funding. Between 2010 and the first 11 months of 2012, 141 new cooperatives were created; of those, 33 are related to agriculture / farmers (26 and 7, respectively). According to the data reported by DECOOP, currently there are 70 farmers cooperatives and 51 agricultural cooperatives operating in Chile. These partnerships are considerably low in Chile, where a census showed that 76% of farmers reported not to belong to any organization; in the scope of this study, only 3.27% mentioned being part of a cooperative. There are regions, such as Region II ( Antofagasta) and XI (Aysen), where DECOOP has no cooperatives registered. Most agricultural cooperatives are
concentrated in the Ninth Region of Araucania and Los Lagos, as well as in the metropolitan region and Bio Bio (both with 15 cooperatives). Three sectors are to be highlighted: dairy, wine and pisco. On one side we have the economically relevant dairy cooperatives that congregate mainly small farmers, smallholders and entrepreneurs. Among these, COLUN 1 accounts for over 80% of the cooperative production of milk and dairy products at a national level, with about 21% of the domestic market share (based on the volume of milk delivered) and about 15% of the exports worth. Pisco. Pisco is an alcoholic beverage that is made with grapes from varieties regulated by decree. The most relevant cooperatives are CAPEL 2 and CONTROL 3. While some pisco grape growers are not (or have ceased to be) part of any cooperatives, most of them supply one of the two abovementioned cooperatives. Wines. Four leading companies dominate the market of grapes for wine, and enjoy the greatest purchasing power, i.e., Concha y Toro, San Pedro, Santa Rita and Santa Carolina; they are not cooperatives, but they produce and export wine. These four buy over 70% of the wine grapes in Chile, concentrating much of that business. The first wine cooperatives were formed in the 20 s; there was a time when there were 20 of them active. Currently, however, market-related factors and lack of supportive public policies have caused them to vanish. In 2012, only four remain in business (all of them are the agricultural type). Loncomilla and Cauquenes, located in the VII Region, are the most relevant agricultural cooperatives devoted to the production of wine; together they grouped a total of 461 members. Loncomilla bottles a reduced number of bottles (not more than 20,000 bottles a year), which are distributed among their partners, or given away. 1 Cooperativa Agrícola y Lechera de La Unión Limitada 2 Cooperativa Agrícola Pisquera de Elqui Ltda 3 Cooperativa Agrícola Control Pisquero de Elqui Ltda
During the last ten years, only 13 farmer cooperatives could join the exports process, and only one of them, the rural beekeepers cooperative Valdivia Ltda has managed to keep continuity in foreign markets. Although agricultural cooperatives export larger volumes, they still have a marginal presence in the country s exports. Between 2002 and 2012, only ten such cooperatives participated, and in 2012 only five did, primarily focusing on dairy products, wine and pisco. In recent decades there have been no differential public policies to support and strengthen family farming, to improve those farmers access to markets through cooperatives ( especially all the existing ones that show favorable potential outlooks). This weakness observed in the cooperative agricultural sector should be addressed from different points of view. The first step would be to reach consensus on the future of cooperatives. Although much is said about its importance, the facts show that the Chilean government is still to develop a strategy that integrates cooperatives as a tool to support the country s growth and development. A first major effort is to install a relevant social dialogue in the country, to raise awareness and inform about the strategic importance of cooperativism for rural development. This dialogue should lead to differential public policies and create suitable conditions, while taking the opportunity to build policies with the public s engagement. Another future step will be to develop the coordination of public agencies (INDAP DECOOP, SERCOTEC, inter alia) involved with incentive measures in the agricultural sector and with representatives of family farmers and their agricultural cooperatives. The ultimate aim is to define a plan of action to enable capacity building and the dissemination and development of skills among farmers in the cooperatives. Among the significant issues to be discussed, there are legal aspects, including the Law on Cooperatives itself, which requires appointing a group of
experts (professionals and producers) and drafting a bill consistent with the country's development strategy. The law is intended to become a state policy, to promote equity, welfare and a greater distribution of wealth through cooperatives. Patricio Nayan Daniela Encalada Francisco Serón Santiago de Chile, October 2012