For-Profit Cooperatives in Action

The 3 hour drive from Bologna to Trentino in Northern Italy today was a feast for the eyes. Old homes and businesses on the outskirts of this medieval town gave way to fields and vineyards. Periodically a fast flowing river or stream carrying snow melt from the Dolomites would appear nearby only to disappear from view a few hundred yards later. About an hour out of town the plains were replaced by gentle rolling hills dotted with little hamlets, churches and farmhouses. Finally we headed into the mountains and a landmark – a castle that used to belong to the Von Trapp family. So my humorous Sound of Music comment in yesterday’s blog almost came true! A photo is attached.

Located close to the border with Austria, the Germanic influence is strong and visible. Signage is in 2 languages and the flower laden window boxes are a reminder of the fact that until the early 20th century this region was a part of the Austro-Hungarian Empire.

Trentino is home to 600 co-operatives with 227,000 members (total population 500,000!). They are active in financial services, consumer goods, agriculture housing and social services. 70% of banking in Trentino is provided by Co-operative Banks. What an amazing success story right there.

Our first halt was to meet with the head of the European Research Institute on Cooperative and Social Enterprises ( www.euricse.eu ). EURICSE provides a platform and framework for research & development, education & training and consultancy, etc. to individuals and institutions globally. Some of the work is in partnership with UNDP.

Here is a clear example of one of the co-operative principles at work – the secrets of your success are to be shared so that others can be successful too. This is in stark contrast to our world, where the lack of success for others is intrinsic to our own victories.

In the afternoon we were guests at the Federazione Trentina della Cooperizione. No prizes for guessing what that means in English. This umbrella organization provides governance, legal advice and other assistance to its members. One more amazing piece of geeky data and an astonishing related factoid: The cumulative capital in the cooperative movement in Trentino is €2.4 Billion. If a cooperative closes the capital remains in the community. Incidentally the word for capital is patrimony.

Once again we confronted the issue of a non homogenous society. Here again we find how the Italians are making it work. The society has 3 entrenched major linguistic groups plus 40,000 new immigrants who bring scores of new cultural, religious and ethnic variations to this formerly uniform social structure. Sure there is conflict but the approach is that the culture is enriched and the overall outcome is positive.

The President had some interesting info that caught our attention. Co-op Banks have traditionally loaned moneys based on relationship and not collateral. Their loan losses at 1.5% have traditionally been lower than those of their counterparts. Their lending increased during the recession when big banks were closing their doors. Sure, loan losses increased to 2.7%, however this was still lower than that of the big guys. More importantly,the president did not think that non-collateralized lending was to blame –in bad times challenged businesses will fail regardless of loan security structures. The validity of the approach is borne out by the fact that today even big banks are looking at relationship banking as the way of the future.

Last halt, the CAVIT Wine Co-op. CAVIT is a federation of 11 wine co-ops. They account for 65% of the wine produced in the region – mostly for export. I am not a drinker but Rob Malli told me that he has seen some of the brands in BC Liquor stores. The individual vintners bring crushed, fermenting grape juice to this multi million Euro, state of the art facility. Here it is processed, finished, tested for quality, graded, bottled and stored. The cost savings to the members is enormous. I shall soon post photos of wooden barrels that have a 30,000 bottle capacity, 3 story high stainless steel ...... containers (can’t think of the right word), wooden casks and wine tankers. Yes, you read that right. They look like our gas transporters but consumption of the contents will definitely not allow you to drive down he road in a straight line.

Everybody who says shopping in Europe is very expensive has obviously not visited small town Europe. Over the last few days, some of us have bought all season Tasmanian wool suits for €130, Italian leather shoes for €30 and beautiful ties for €5. The ladies have been out shopping too but I don't have specific details.

Tomorrow I shall share my recent chai (tea) drinking experience. Ciao.