The COCOREADO project is designed to rebalance the position of the farmer. Although COCOREADO has just recently started, the objective has been a common denominator of the national and regional food supply chain related projects of LUT University Supply Chain & Operations Management Research Team. Together with close collaboration with Kymi Organic Coop, an organic grain farmers’ cooperative situated in Southeast Finland, the latest projects have focused on instruments of cooperation between farmers and on the relationships of the actors in the food supply chain.
The national project, soon to be finished in June 2021, has tackled with business risk management of the farmers and their cooperatives in organic grain related production. Although the traditional risk management practices are obviously underutilized in agribusiness (as well as in many other businesses), more comprehensive planning practices were found necessary both at single farm, and at farmers’ cooperative level. The key issues that were identified are:
- systematic continuous improvement including risk assessment,
- business opportunity and risk assessment,
- activities in sharing risk and in development of a farmers’ organization or of a cooperative.
Continuous improvement is a key element in for example LEAN methodology, and the practices are to some extent general and applicable to both farming and agribusiness. Farming requires above all simple but systematic knowledge and data collection of causes and effects of cultivation as well as of trade practices.
Business opportunity and risk assessment stem from the nature of business. Making profit requires risk taking. This means there should be a continuous, supposedly annual process where a farm should relate to its customers, products and production, and then identify a business prospect portfolio, select some of the prospects in the portfolio for development and continue to test and implement.
Last, but not least, the farmers’ organization or cooperative can have a significant role supporting the planning and risk management process of a single farmer. It is also obvious that a joint coordinated development activity can produce applicable results, cut business development time and costs and share risk of failure. However, it requires a clear, jointly agreed rules how the profits and risks of the developed businesses are divided.
Although the project ends however, the research work continues. Currently these ideas are implemented in a cooperative led project where production of new crops with high quality requirements in organic crop rotation and direct supply chain to its customers are set up.
The project has been funded from the Rural Development Programme for Mainland Finland (partly EU funded).
Petri Niemi – LUT University