Cooperatives’ Survival

EghtesadOnline: Outdated retail shops and basic foods such as rice, milk, cheese and edible oil remind most Iranians of cooperatives, since these foods were distributed in the market through cooperative retail stores and via coupons in the 1980s.

News ID: ۷۷۶۹۱۳

11 June 2017

But the truth is that cooperatives sector has experienced huge changes in the last few decades, thanks to the new trends in business models and technologies.

Cooperatives cover a wide range of business fields, including construction, handicraft, transportation, education, agriculture, banking, insurance and even healthcare.

The cooperative economy is active in many fields and suggests the most democratic form of business enterprise, according to Financial Tribune.

As it has faced many challenges globally in this millennia, the big question is whether new generations would prefer to become familiar with cooperatives and its merits or not.

The following would discuss the three main challenges of cooperatives movement in Iran:

Old Demography

The first challenge mainly concerns human resources in the cooperatives sector.

First of all, we see a relative high median age in cooperatives. The other issue is that cooperatives suffer from low education levels in terms of computer sciences, English language and general knowledge.

It is evident that this is common in all countries that have a high median age in cooperatives sector and no inclination to update themselves. This does not undervalue the elderly population in cooperatives, but its clear consequence is that cooperatives are unable to keep up with the new trends.

Impoverishment

“Oppression” is a familiar catchword between Iran’s cooperatives officials who want to justify the weak performance of Iran’s cooperatives movement.

It seems that Iranian cooperatives have been waiting for a helping hand from outside all the time, since being oppressed means someone withholds a helping hand or inflicts cruelty! So a better word to describe this situation would be “inability” rather than “oppression”, which emphasizes the weaknesses of cooperatives themselves.

The other issue is the conceptual and financial dependency of cooperatives on governments.

Since the economy of cooperatives is people-oriented rather than equity-oriented and based on group cooperation, cooperatives have received more funds in comparison with private companies from governments and international organizations such as World Bank and International Monetary Fund.

Appraising the governments in terms of budget deficits and debts to pension funds and social security, it becomes clear that governments can’t play a sustainable role in providing cooperatives with resources. So the cooperatives’ dependency on government is not valid anymore and the continuity of this dependency would let the government intervene further in the cooperatives sector.

The proof of this claim is the Iranian government’s proposal to parliament to expand the government’s authority to intervene in cooperatives sector, which needs rapid fundamental revisions.

Unresponsive to IT Trends

Cooperatives are new to electronic approaches in sales, distribution, customer relationship management, etc. and e-cooperative business models have remained unknown for many cooperatives business fields.

As private sector competitors follow up all trends and utilize new IT-based approaches to claim a bigger market share, the continuity of this challenge would irreparably damage the cooperatives movement across the world.

To sum up, social and official mindsets about cooperatives sector must change and everyone should become familiar with the potentials and advantages of this sector.

Cooperatives have to look for new advantages in competition with private sector companies, since their past considerations are obsolete or have no place in new modern business environment.

A key solution lies in devoting serious attention to human resources in the cooperatives sector that can help overcome the challenges discussed in this article.

Unless there is a speedy, thoughtful response to these challenges, the private sector would claim and, of course, grab the cooperatives sector’s market share in the Iranian economy.

Alireza Gharagozlou is the deputy for international affairs in Iran Chamber of Cooperatives and also a board member of International Cooperative Alliance - Asia-Pacific.