Assessment of Cooperatives in the Poultry Industry - 2013.pdf - Seda

Research Report: Addressing the Needs, Opportunities and Challenges of Cooperatives
and Collectively Owned Enterprises in the Poultry and Related Industries
The decision on profit sharing may be made for any of a number of reasons. When cooperatives
were asked how they decide what to do with their profits, most provided a response which indicated
that there is no standard in place and very little thought around the process. Most gave answers
which were not concerned with the decision making process, but rather a statement of what they
have always done and thus continue to do. For example, when asked how they decide on profit
sharing, cooperatives answered that profits are divided annually, that money is always shared
monthly as salaries, or that the money is reinvested into the business. Less than 20% of respondents
indicated a deductive process in thinking about profits; they responded that decisions regarding
around profits are made differently depending on the amount of profit earned by the cooperative.
When asked again whether any profits were reinvested into the
business, 58% of cooperatives stated that money was reinvested
into the cooperative. However, in the question above only 45%
stated that money was reinvested (or saved, which is another
form of reinvestment). This discrepancy may be representative
of a lack of understanding of the financial situation of their
cooperative. Asking what is done with profits is an open ended
question and allowed cooperatives to provide an honest answer.
Less than 20% of
respondents
indicated a
deductive process
in thinking about
profits
When asked whether any money is reinvested, cooperatives know that they should reinvest money
and thus say “yes”, even if it is not entirely true. Many cooperatives have received government
support in the past and thus when surveys are conducted they are likely to respond to certain
questions in a way in which they think government departments would like to hear.
The greatest challenges that cooperatives highlighted in managing their finances are limited income
and a lack of training in financial management. The figure (4-11) below shows the percentage of
responses concerning various challenges in financial management.
Figure 4-11: Challenges in Financial Management
Limited income
39%
Lacking training on financial management
32%
Inconsistent cash flow
11%
No financial management system
7%
Other
11%
0% 5% 10% 15% 20% 25% 30% 35% 40% 45%
Source: Urban-Econ Survey, 2013
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