The credit sections of agri-food cooperatives are essential to sustain their activity and that of their associated farmers or ranchers. Despite being one of the most unknown services of these entities, they are a key element in their economic viability and an important source of financing for their partners.
Andalusia is a region where this service has taken root, mainly due to its agricultural and livestock character, the large number of small municipalities that are spread throughout the region and the significant number of cooperatives. It is not surprising, therefore, that one out of every three credit sections of Spanish cooperatives is Andalusian.
In 2011 the Andalusian Cooperative Societies Law was published and opened a new scenario for credit sections in the autonomous community. The subsequent modification of said regulation, in 2018, once again led to the need to adapt the operation of these entities to current legislation. For it, Agro-food cooperatives of Andalusia makes a continuous effort to train, inform and advise the credit sections of Andalusian cooperatives in order to guarantee their proper functioning and adapt them to the new regulations.
One of the lines of work carried out in this regard is part of the project ‘Preparation and implementation of a procedure manual of good practices in the operation of credit sections in agricultural cooperatives’. Funded by the Ministry of Employment, Training and Autonomous Work within the Support Program for the Promotion and Development of the Social Economy for Employment, through this biannual program complete advice is provided to the credit sections of cooperatives and it helps them adjust to the new norm.
To this end, Cooperatives Agro-alimentary de Andalucía has prepared a useful and functional good practices manual, which aims to be a tool to facilitate the governance of credit sections.
The document regulates in detail, among other aspects, governance, discipline and standards of conduct, as well as how the constitution of a credit section should be reflected in the cooperative’s bylaws. Likewise, the financial requirements that the sections must meet are reported and the most frequent contract forms are included.
Also “special emphasis is placed on the figure of the director of the credit section with permanent dedication to it, who must meet the conditions of capacity, technical preparation and experience to develop the functions of the position, as well as all the requirements that both he and the entity must comply ”, explains Santiago García Montagut, member of the legal department of Cooperativas Agro-alimentary de Andalucía. This section includes all kinds of good practices in the sections, the prevention of money laundering and those related to external auditing and accounting.
In addition to personalized and continuous advice to cooperatives with credit sections, the Andalusian federation has held different seminars on this matter, as well as a digital technical conference on credit sections, in which more than 110 professionals participated. Within this framework, the federation agreed to create, together with the Employment Department, a working group to study the strategies with which to improve the profitability of the credit sections.
HISTORICAL RELATIONSHIP
The credit sections strengthen the bond between the member and his cooperative, at the same time that they provide added value, professionalism and modernization to the company. They are extremely useful to offer liquidity to cooperative members when they require it and under conditions appropriate to their needs. Hence, campaign advances or loans to undertake investments in farms are currently some of the services that cooperative members demand the most from them.
It has not always been this way. The credit sections of the Andalusian cooperatives were born at the beginning of the 20th century with the fundamental objective of covering the lack of financing then so common in the agricultural sector and thus promoting the ease of credit for farmers and ranchers.
Through these sections, the purchase of means of production or the development of common use infrastructures for the cooperative was also promoted, an activity closely related to the origin of the agri-food cooperatives. Over the years, the services of the credit sections have varied and adapted to the needs of the cooperative members. In one way or another, its function continues today in perfect harmony with cooperative principles.
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