Fenaco

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Fenaco

Postfach, Erlachstrasse 5
Bern,
Switzerland
Telephone: (41 031) 308 91 11
Fax: (41 031) 302 93 05
Web site: http://www.fenaco.com

Cooperative Company
Incorporated: 1993
Employees: 7,034
Sales: CHF 2.2 billion ($3.6 billion) (2005)
NAIC: 424910 Farm Supplies Merchant Wholesalers; 311119 Other Animal Food Manufacturing; 333294 Food Product Machinery Manufacturing

Fenaco is the central hub for most of the Swiss cooperative agricultural sector. Formed in 1993 through the merger of the six largest Swiss cooperative federations, Fenaco represents more than 52,000 farmers, 80 percent of the total number of farmers in the country. Fenaco operates through four regional offices, in Bern (also the company’s headquarters), Sursee, Winterthur, and Puidoux.

These in turn coordinate the activities of 350 regional cooperative federations, known as Landi. As such, Fenaco’s operations cover nearly all of Switzerland (the exceptions being the cantons of Schaffouse, St. Gall, and Appenzell). Landi is also the name of the group’s network of farmer supply stores, which provide a full range of farmer supply services. Many of these stores, which are also open to the general public, also sell hardware items and a limited range of primarily farm fresh food items.

In addition to the Landi network, Fenaco governs 780 Volg grocery stores, which primarily serve the rural German-speaking regions of Switzerland. Fenaco also oversees the production of animal feed; the commercialization of animals, through subsidiary Anicom; the sale and distribution of petroleum products, through subsidiary Agrola; butchery and deli meats operations under the Carnavi group of companies; logistics and transportation, through Traveco; Landor fertilizers and Halag Chemie farm hygiene products; soft drinks, particularly cider, through Unidrink SA and its Granador and Pomdor brands; and the Volg Weinkellereien wine store network, among other operations. Fenaco also produces a number of food products, such as french fries and other potato products, for the food service and retail sectors. With more than 7,000 employees of its own, Fenaco’s total revenues top CHF 2.2 billion per year ($3.6 billion).

SWISS AGRICULTURAL COOPERATIVE MOVEMENT IN THE 19TH CENTURY

The cooperative movement that swept Europe during the 19th century provided a strong response to the dramatic changes brought on by the Industrial Revolution. The development of democratic governments also transformed the social relationship of the much of the European population during this time. This was especially true for the agricultural sector. On the one hand, the appearance of new farming tools and machinery led to dramatic production increases. On the other, the development of new processing and food production techniques had begun to shift the value of the foods themselves—meaning that the basic food stuff eventually represented only a small amount of the final processed food price.

By the late 1800s, farmers in Switzerland, as in many other areas of Europe, were especially exposed to fluctuations in the market. A series of crises that swept through the agricultural sector in the later half of the century provided the growth bed for the cooperative movement. Farmers began turning to the mutual assistance models developed by Wilhelm Raiffeisen and others in Germany, as well as the building society movement then gaining strength in the United Kingdom. Among the first of the Swiss farmer cooperatives was one created in Lausanne in 1868, which later developed into the UCAR federation, and especially the cooperative founded by Conrad Schenkel, created in Elsau, in the canton of Zürich, in 1874. The original cooperatives operated primarily on a local level, and were generally composed of farmers from the same community.

The farming crisis years of the 1880s, however, soon encouraged the local cooperatives to band together into larger federations. The Elsau cooperative became the pioneer in this effort, forming the Verband Ostschweizerischer Landwirtschaftlicher Genossenschaften (or the Federation of Agricultural Cooperatives of Eastern Switzerland) in 1886. Known as Volg for short, this federation grew strongly, and by the end of the 19th century counted more than 100 cooperatives, primarily in the cantons of Zürich and Argovie, but stretching as far as Grisons and Thurgovie.

By then, most of the other nine major Swiss cooperative federations had been formed, and notably VLG Bern (for Verband Landwirtschaftlicher Genossenschaften von Bern und benachbarte Gebiete). VLG Bern later grew into the country’s largest federation, alongside Volg. Into the 20th century, the number of agricultural cooperatives grew to more than 400. By the end of the first decade, all of the nine major cooperative federations had been created. These included the six that made up the later Fenaco: UCAR, in Lausanne; VLGZ Luzern, created in 1989; NWV Solothurn, established in 1905; and FCA Fribourg, founded in 1907.

While both VLG and Volg represented the agricultural community, separate cooperatives soon appeared to group dairy farmers and cattle and other livestock producers. In the meantime, Volg emerged as perhaps the most militant of the federations, going so far as to attempt to form its own political party.

Volg, VLG, and the others soon began to extend their operations into a number of directions, such as food and beverage production. Among the later Fenaco’s holdings featured Volg Weinkellereien, founded in 1899 to support the Swiss grape growing and wine producing sector. Similarly, Fencos subsidiary Unidrink grouped two juice beverage brands, Granador, created by a Hitzkirch-based cider cooperative in 1902, and Pomdor, established by the Emmentalische Obstweingenossenschaft Ramsei in 1910.

The cooperative federations also developed a wide range of support operations, providing feed for animals, seeds for crops, farm machinery and equipment, and the like. These activities led to the cooperatives’ entry into the retail sector, with the formation of the depots and stores that later grew into the Landi chain. Volg also moved into the consumer retail sector, founding its own chain of Volg-branded grocery stores—in part in response to the growing strength of the Swiss retail cooperative movement led by Coop Schweiz and Migros. Volg also became the first of the federations to launch its own transport operations, starting with a horse-and-carriage in 1895. In 1903, Volg had added its first motorized vehicle and soon built up its own fleet of delivery trucks.

COMPANY PERSPECTIVES

Together with the Fenaco-Landia group, Swiss farmers are an essential link in the chain for the successful production of food products. This mission of production implies, however, certain duties. Because of this, the actions and goals of the group are imbued with a strong corporate ethic and the conscience of its social responsibility at the human and environmental levels. As a corporation belonging to Swiss farmers, Fenaco must also comply with the principles of sustainability: in other words, only production methods that respect nature will guarantee success in the long term.

The Swiss agricultural cooperative market grew strongly through the first half of the 20th century; by 1940, there were more than 1,000 cooperatives in existence. By the 1950s, the cooperatives counted more than 100,000 members. Over the next two decades, the number of farms in Switzerland began to drop, primarily due to the increased productivity of modern farming techniques, machinery, and equipment. The investments cost in modern farming methods in turn forced the creation of a smaller number of far larger farms. This in turn led to a steady drop in the number of farmer members, especially from the 1970s.

RESPONDING TO NEW MARKET CONDITIONS FOR THE NEW CENTURY

Nonetheless, the membership of the Swiss cooperatives remained fairly consistent through the period. One reason for this is that as the cooperatives began adding to their range of operations and support services, an increasing number of members came from outside the immediate farming community. An example of the cooperatives’ extension in other sectors was the creation of dedicated logistics and transport operations. Volg, for example, established its own subsidiary in this area, Otto Junker Transport, in 1963.

Another area of expansion came in 1958, when the Volg cooperatives acquired rival Winterthur-based farm products group Agrol, founded just one year earlier. The main attraction of Agrol, however, was its operations in the delivery of fuels, including diesel and heating oils, to the farming community. Renamed Agrola, the addition also allowed Volg to develop its own network of service stations.

By then, these operations were themselves subsidiaries of a far larger organization called Fenaco. The changing nature of the European market, especially following the creation of the European Union (EU), promised to have an extreme impact on the Swiss farming community. The dropping of trade barriers among EU members in 1992 created a newly dynamic and highly competitive environment. Despite the Swiss population’s rejection of EU membership in 1992, Europe remained Switzerland’s most important trade market, and the Swiss government quickly launched negotiations to establish a new trade relationship with the single European market.

The Swiss agricultural community recognized that it needed to prepare for the planned opening of Switzerland’s markets. In 1993, six of the nine federations (including Volg, VLG Bern, VLGZ Luzerne, NWV Solothurn, UCAR Lausanne, and FCA Fribourg) decided to group together into a unified body capable of competing on a national scale. This led to the founding of Fenaco, which took over as the federation’s central coordinating body.

Part of Fenaco’s responsibility was to rationalize the various elements of its operations. For one, the company streamlined the network of Landi stores, reducing the number from nearly 640 at the beginning of the 1990s to just 385 by the middle of the first decade of the 21st century. The company also restructured the production units under its control, creating a new series of subsidiaries, while regrouping similar activities into a smaller number of companies. As such, the company’s Groupe Carnavi took over the group’s six major meat, poultry, and deli meat producers. Similarly, the company grouped its transport operations under the Otto Junkers transport wing, which in turn was regrouped as Traveco in 1998. Other Fenaco subsidiaries included Landor, for the production of fertilizers, and Halag Chemie, which specialized in the production farm cleaning and hygiene products.

Into the 2000s, Fenaco continued to restructure its operations, creating four core divisions (Agriculture, Food Products, Retail, and Combustibles and Fuels), as well as a fifth division for its remaining operations and services. By 2006, Fenaco had prepared itself, and its more than 50,000 farmer member/owners, for the looming lowering of Switzerland’s trade barriers for Europe. Representing the force of 80 percent of the Swiss farming community, Fenaco expected to play a major role in newly dynamic Swiss market.

M. L. Cohen

KEY DATES

1886:: Founding of Volg, Switzerland’s first agricultural cooperative federation.
1889:: Founding of VLG Bern, which, with Volg became one Switzerland’s two largest farm cooperative federations.
1958:: Volg acquires Agrol, launching delivery of heating oil and diesel fuel under Agrola brand.
1963:: Volg establishes transport subsidiary Otto Junkers.
1993:: Six of nine Swiss cooperative federations, including VLG and Volg, merge to form Fenaco.
1998:: Otto Junkers operations are renamed as Traveco.
2005:: Fenaco restructures, creating five core divisions just before the lowering of trade barriers between Switzerland and European Union.

PRINCIPAL SUBSIDIARIES

Agrodatanova S.A.; Agrola; Anicom; Carnavi; HALAG Chemie S.A.; LANDI Suisse S.A.; LANDOR S.A.; Traveco S.A.; UFA S.A.; Unidrink S.A.; Volg; VOLG Weinkellereien.

PRINCIPAL DIVISIONS

Combustibles and Fuels; Agriculture; Food Products; Retail.

PRINCIPAL COMPETITORS

Cooperative Schweiz (Genossenschaftsverband); Migros AG; DKSH Holding Ltd; Ameropa AG; Bayer (Schweiz) AG; LV-St Gallen; Metro Holding AG; Valora Holding AG; Denner AG; Cooperative Mineraloel AG; Carrefour Suisse; Pick Pay Betriebs AG.