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46 2 An Original Business Model: The Integrated Biorefinery

preindustrial scale. This is a vital intermediate phase to validate the technology and
finalise “process book” as preparation for full industrialisation.
Apart from the consequences of this mistake, which led to success via improved
production processes, other endogenous factors drove the cooperatives to review
their strategies.
In the next section, we look at the consequences that the heavy investment
involved had on the cooperatives’ financial structures.

2.2.2 Funding Heavy Investment
As the 2008 financial crisis has made access to capital more difficult, cooperatives
have to review their financing and capitalisation strategies. In this area, actors on
the Bazancourt-Pomacle site are no exception to the rule. In the following subsec-
tion, we will look at the challenges and opportunities engendered by the cooperative
business model in terms of financing. Then we will consider the investment made
on the Bazancourt-Pomacle site and highlight the importance of bank partnerships.

Challenges and Opportunities of the Cooperative Business Model
According to Chomel et al. (2013), whilst French law provides a precise legal
framework for cooperatives, and particularly for agricultural cooperatives, it does
not define them. The only definition available is that drawn up in 1995 by the
International Cooperative Alliance (ICA). In its Manchester declaration, the ICA
defined a cooperative as “an autonomous association of people voluntarily united to
satisfy their collective economic, social and cultural aspirations and needs, by
means of a jointly-owned, democratically controlled enterprise.” According to the
same author, this definition is completed by the universal values and principles that
characterise cooperatives (c.f. Box 2.3).

Box 2.5 Cooperative Values and Principles According to the ICA (1995)
Values Principles
• Individual and mutual management and • Voluntary membership open to all
responsibility • Democratic power exercised by the
• Democracy members
• Equity and solidarity • Financial contribution by members
• Members’ commitment to ethical principles of • Autonomy and independence
honesty, transparency, social responsibility and • Education, training and information
altruism • Cooperation between cooperatives
• Commitment to the community

Traditionally, cooperatives used retained earnings and members’ contributions
to finance their activity. Today, like any other firm, cooperatives operate in a very
different business environment (c.f. Fig. 2.13). They need more funds to grow and
remain competitive, at a time when it is more difficult than ever to obtain funds
(Lewi and Perri 2009).