Page 79 - Biorefinery 2030 Future Prospects for the Bioeconomy (2015)

2 Changes in the Environment that made the Bazancourt-Pomacle Biorefinery 47

Fig. 2.13 Structural needs and new challenges (After the PWC study (2012), Cartographie et
grands enjeux du monde coope ´ratif agricole a ` l’e ´chelle mondiale)

Funding development is an increasingly difficult challenge and it goes hand-in-
hand with more general issues such as expansion and differentiation in the market.
However, even though the unique cooperative business model makes access to new
funding sources more difficult, it also provides opportunities.
In a 2012 study, Deloitte’s identifies the limitations of the cooperative business
model (c.f. Fig. 2.14). The study notes that:

– The ownership structure limits access to capital since generally cooperatives do
not issue shares. 36 Indeed, such a strategy, which gives outside investors the
opportunity to own and control the firm would go against cooperative principles,
according to which ownership and control are reserved for the members. This
limits the rate of capital funding and the cooperative’s ability to grow. Further-
more, although traditional internal funding sources are necessary, they are not
always enough to satisfy development requirements, particularly as the fall in
the agricultural population makes it impossible to expand the capital. Meanwhile
retained income is not always sufficient since it depends on annual profits and in
the long term raises the question of funding by the membership. 37

36
Avoidance strategies are nonetheless possible, as shown by the examples of TEREOS (stock
market listing and open bond issue) and VIVESCIA (closed bond issue).
37
As the profits are owed to the members, retaining profit is synonymous with looking for funding
sources to repay the members.