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Estonian agriculture cooperatives featured in Dutch journal

21. December 2018 - 12:20
Illustration: industrial grain houses.
Photo: Simo Sepp / Ministry of Rural Affairs.

Estonian agriculture cooperatives featured in 15 December 2018 issue of the Dutch agricultural journal Nieuwe Oogst (New Harvest) written by Bert Hartman. The article focused on Estonia’s use of cooperatives as a way for producers to work together and further their own enterprises.

Toomas Kevvai, Secretary General for Food Safety, Research and Development, said that collaboration is crucial for the better marketing of agricultural products. “The problem is that there is still a big reluctance towards the old planned economy, so many entrepreneurs prefer to do it on their own. This is an impossible task on a free European market.”

The Ministry of Rural Affairs has placed cooperation and entrepreneurship high on the agenda, which is also why it is working on an agricultural development plant until the year 2030.

As Estonia offers few financial supports to individual entrepreneurs, the Ministry of Rural Affairs is committed to stimulating partnerships. As proof of success, a group of dairy farmers are in the process of forming a dairy cooperative. At the same time, a group of beef farmers are working on a common processing line for the domestic market, which is largely controlled by a Finnish enterprise. There are several examples of cooperatives in the grain sector as well, most notably Wiru Vili for organic grain growers and Kevili which has two grain houses in Estonia.

Kevili has undergone rapid development with a fourfold increase in turnover since its foundation in 2010. However, because of the extremely dry season, this will not be the case in 2018, says Janno Toomer, Head of Development at Kevili. “Because of the heat, production has fallen. It varies for each area, but some farmers have harvested less than half of what they did in previous years.”

Kevili now has 150 members. With a limit of two hundred members, there is still room within the cooperative. “Certainly after such a difficult year as this,” says Toomer. “The limit has probably even increased slightly. Especially when taking into account that we also had to buy a lot of grain from non-members this year in order to use the capacities at our two locations as optimally as possible.”

The grain market in Estonia is traditionally largely in Danish hands. Nevertheless, Toomer expects Kevili to be able to double its market share in the coming years from 15 to 30 percent. “We are already catching up. Our strength lies in the pure cooperative idea. Unlike our competitors, we do not aim for big profits from the sale of seeds, fertilizers and plant protection products. We try to keep the costs for the members low so that they can achieve an optimal net yield per hectare. Our members are our capital.”

This partly the reason why Kevili invests in best practices and study clubs. “A lot of time and energy is spent in meetings to learn from each other. On a technical level, but also on business economics,” says Alar Sõro, CEO of the Tartu office. “There is certainly a willingness to exchange results with each other. There is a collegial atmosphere. Farmers do not see each other as competitors. Sometimes they also work together on their machinery.”

Janno Toomer also pointed out that some of the investments in the grain terminals have been completed with EU subsidies. “That in itself is good for the cooperative, but the farmers individually look at the EU with mixed feelings. The farmers receive direct payments per hectare, which is sometimes only one third compared to the other Member States. Some members would think it would be better for no one to get anything, for a fairer competitive position on the free market.”

Toomas Kevvai recognizes the sentiment among Estonian farmers, but also in other sectors. “We will continue to work hard in Brussels to harmonise the level of direct payments. Internally, we will focus more on competitive entrepreneurship, which is aimed towards cooperatives, marketing and innovation. That is our objective for 2030.”

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