**2.2. Co-operative farming**

farming industry has declined by 80% since 1976 (Barr et al., 2005). The future of the family

Restructuring is contemplated by Share, Campbell and Lawrence (1991) who looked at this issue, considering vertical restructuring of agricultural commodity chains, and horizontal or spatial restructuring of the labour markets and industries. Vertical integration is a process through which family farming could be integrated into areas of industrial capital. "It is most likely to be initiated in situations where available marketing or supply channels are being closed to the farmer or where pricing mechanisms are deteriorating" (Williamson, 1987, p. 4). Farm-based food and fibre production shifts from 'formal' to 'real' subsumption of capital: industrial capital takes over part of the production process (i.e. fertilizer, pesticide, herbicides, marketing of farm commodities), but the farmer is reduced from a relatively autonomous producer to a labourer (Davis cited in Share et al., 2005, p. 2). Vertical restructuring by industrial or transnational capital affects the integration of family farms into capitalist production and will change the nature of farm work, the marketing and distribution of

Horizontal restructuring relates to changes in the spatial distribution of industry sectors and labour markets. Lash and Urry (cited in Share et al., 2005) found that within so called disor‐ ganised capitalism global capital has become "increasingly spatially footloose, while the global labour force is tied to specific localities" (p. 2). This means that global capital takes advantage of optimum production conditions. As a consequence, in a rural area farming may just be one area of development and a region may have several combinations of capital, for instance different industries may co-exist. Share et al. (2005) also discussed traditional primary industry incorporating newer tourist development. There could be relocation of manufacturing or service industries into the area. It is very possible that a region unable to attract mobile capital will decline. Help from the government is not forthcoming: Australia has, in response to global restructuring, removed protection barriers and exposed its economies to international market forces. Keynesian policies have been dismantled, meaning that government support for agriculture is now severely cut because of the introduction of user-pays principles and the

Apart from the issues discussed, there are also personal perspectives of farming families. Gray (1991) explored the values of these families and looked at motivations which guide farm decision making, i.e. foster an understanding of farm responses to economic conditions. He concluded that the ideal of generational succession has persisted mainly among couples to whom the rural aspects of farming are very important. In other families, attitudes which

While the ideals traditionally associated with family farming appear increasingly unrealistic as the viability of small farms

diminishes, the traditionally valued features of farm life also appear less important as economic concerns become

constitute the ideological foundations of the family farming have weakened:

overwhelming and the farm system moves toward fundamental change (Gray, 1991, p. 67).

farm, as Australia knows it, seems unpromising unless restructuring will take place.

278 Environmental Change and Sustainability

agricultural products. It will change the autonomy and control of farmers.

withdrawal of subsidies, concessions and price underwriting.

A co-operative is defined as an autonomous association of persons united voluntarily to meet their common economic, social, and cultural needs and aspirations through a jointly owned and democratically controlled enterprise. (Wickremarachchi, 2003). A co-operative may also be defined as a business owned and controlled equally by those people who use its services or who work at it. Co-operation is intrinsic to human organisation, and the history of modern co-operative forms dates back to the agricultural and industrial revolutions of the 18th and 19th century. In today's Australia, co-operatives exist in most industries, including agriculture, and they are regulated by State and Territory Government legislation (Wickremarachchi, 2003). An agricultural co-operative incorporates primary producers who try to achieve common commercial objectives more successfully than they could individually. All objectives relate to continuation and improved profitability of members' farm enterprises (Australian Co-operative Links, n.d). The most common forms of agricultural co-operatives in Australia relate to marketing, input supply, and agricultural services. Marketing co-operatives embark on transformation, packaging, dispersal, and promotion of farm products. Supply co-opera‐ tives accrue purchases, and store and distribute farm inputs. Agricultural services co-opera‐ tives include banks, dairy, food processing, and educational services. In the Riverina area, around Wagga Wagga, the Rural Australian Education Centre Co-operative Ltd., Henti Machinery Field Days Co-operative Ltd., Orange Field Days Co-op. Ltd., and Primary Management and Training Concepts Co-operative Ltd. can be found (Co-operative Develop‐ ment Services, 2012). In recent times the co-operative systems have been criticised. According to a report by David Griffiths (2008), farmers have always looked to the co-operative model to provide them with some protection in the free market, but business advisors are now claiming that co-operatives are unsustainable. Griffiths warned:

Co-operatives are member-owned, member-controlled businesses designed in the case of dairy farmers to maximise the return they receive for supplying their milk. Other business forms, such as publicly listed companies, exist for the sole reason of maximizing the value their share holders receive by way of dividends and increasing share price … the two cannot live together harmoniously for very long. Either you maximise the milk price at the expense of profit and returns to shareholders or you minimise the milk price in order to increase profit and returns to shareholders. There is no middle way (Griffiths, 2008).

Griffiths concluded that the indifference of farmers and their advisors toward the co-operative model could lead to a situation where farmers will have no access to the profits derived from value-adding to the produce they supply.

There can be no doubt that farmers and their co-ops operate in a highly unstable environment (Williamson, 1987). Bijman (2002) raised concerns about co-operative farming and found that many changes in the organisation of agrifood transactions have taken place, that consumers demand high quality products, more variety, and more convenience. Consumers have become concerned about food safety, production conditions, environmental protection, and animal welfare. These changes challenge farmer-owned co-operatives. How do co-operatives deal with the combined innovation in product and marketing? Where does innovation take place: at the level of the member company or at the level of the co-operative? Does the co-operative have the capability to carry out new activities? If so, do members have sufficient knowledge to control the managers executing these new tasks? Can members raise sufficient capital to make the necessary investments in innovation and marketing? Can co-operatives build sufficient market power vis-à-vis large food processing companies and retailers?

Chaddad and Cook (2002) also raised concern regarding co-operatives. These organisations may be referred to as member-owned, however, when they depend on outsiders for financial support that ownership is lost because the financial contribution of the co-operative member‐ ship is small compared to the non-member contribution. Despite of the one-member, one-vote principle, non-members who are the major suppliers of capital usually determine the main priorities of the co-operative business. Oczkowski (2004) analysed agricultural bargaining cooperatives that negotiate, on behalf of member farmers, with food processors over price and quantity for raw agricultural output. He flound that

… the level of prices … depends upon the co-operative's relative bargaining strength. … Given the typical financial, physi‐ cal and human resources of investor-owned firms such as large food processors and the relatively small resources of farmer bargaining co-operatives, it is expected that members would be more impatient (less able to hold-out) in negotiations. Fur‐ ther there is a general expectation that farmers exhibit a relatively greater degree of risk aversion compared to the entrepre‐ neurial focused investor-owned corporate processor. The consequence of a low co-operative's bargaining strength are relatively low levels for co-operative objective values, and market and member prices (Oczkowski, 2004, p.16*).*

In 2006, Oczkowski looked at structural changes necessary for co-operatives to survive: the effects of globalisation on agriculture cannot be ignored. He argued that the restruc‐ turing of the agricultural sector needs substantial amounts of additional capital which will lead to new co-operative forms. These forms would maintain some of the old tradi‐ tions and present viable alternatives to full demutualisation and conversion to the invest‐ ed owned form. Von Pischke and Rouse (2004) provided strategies for mobilising capital in agricultural co-operatives: restructure members' incentives in ways that work con‐ structively (in a commercial sense), and harmonise members' roles as users of the co-op‐ erative with their role as investors providing the capital.

The question here is can co-operative farming save the Australian family farm? How much capital can the cash-stricken, small scale farmer invest in these institutions in order to benefit in such a way that the family farm can be saved?
