A Durable Business Model

COPAG

1. No Poverty 2. Zero Hunger 4. Quality Education 5. Gender Equality 8. Decent Work and Economic Growth

Overview

This innovation is represented by the durable business model that COPAG has developed. As mentioned earlier, COPAG does not have traditional suppliers of raw materials. Instead, it is a cooperative with members and adherents who provide it with its raw materials, which then are converted by COPAG's factories to the final products it provides to its customers. This reflects how COPAG's members are the backbone of its success, and thus COPAG is concerned with the satisfaction of its members just as much as it is with its customers. Mr. Elalaoui, COPAG's marketing director, said: “We are always in touch with our members throughout meetings, workshops, travels… This way, we get to listen to them, understand their problems, and work on solving them. That is the sense we carry as a cooperative.”

With that in mind, COPAG has assigned itself the mission of providing multiple services to its members and adherent cooperatives. This way, COPAG manages to grow itself as a for-profit company while ensuring the perfect environment for its members simultaneously. The services COPAG provides to its members go hand in hand with some of the SDGs as they contribute to fighting poverty and hunger, limiting gender inequality, as well as providing quality education. By doing so, COPAG is actively helping to achieve socio-economic development in the region and Morocco in general.

Authors

Mohamed Arous

Mohamed Arous

Marwa ATMANE

Marwa ATMANE

School

Al Akhawayn University

Al Akhawayn University

Professor

Mary Grace Neville

Mary Grace Neville

Innovation

Providing Agro-Supplies, Machines, Tools, and Gaz: COPAG's members are farmers who have to do farming work in order to provide COPAG with raw materials. However, sometimes it can be very challenging for these farmers to do their work, especially with the huge amounts they need to produce. COPAG decided to facilitate its members' work through the provision of all the resources they might need. For instance, Mr. Elalaoui explained that the southern region suffers from a harsh climate and very limited pasturing areas, which imposes a huge challenge against farmers to take care of their cows. Hence, COPAG comes and provides agro-supplies and feed for its members' cows. COPAG also provides heavy machinery and basic tools that farmers need to perform their farming work effectively, along with the fuel to run these machines, and even tractor drivers in case the farmers cannot drive. Mr. Elalaoui explained that If the farmers wanted to buy these supplies themselves, it will be very costly as they will be buying amounts that are only sufficient for their current needs. COPAG, and thanks to economies of scale, buy large amounts of all the supplies farmers might need at an optimized price. This way, it helps farmers save money and at the same time provides them with everything they need.

Providing Nurseries: Some rural areas in the southern region of Morocco suffer from education wastage. The number of schools is very limited and is far away from most houses. Students find it extremely challenging to make it to schools, let alone perform well. There is also an extreme lack of sources of information and no internet access. COPAG decided to provide nurseries for its members' children where they can receive lessons in different subjects. The kids benefit from lessons in languages, mathematics, and other subjects in order to strengthen and support their learning curve. These nurseries are not a substitute for schools, but a service that targets the weaknesses that these students suffer from. As explained by Mr. Elalaoui, the purpose behind these nurseries is "to provide a chance of quality education for these kids, and help educate them as if they were raised in cities instead of rural areas.”

Training and Formation: The southeastern region of Morocco is not a very rich region. Parents struggle all the time to provide for their kids, and sometimes kids themselves have to help provide for the family. Thus, farmers’ children find themselves obliged to drop out of school to help their parents with the farm work and house chores. COPAG decided to help its members who suffer from this problem. It takes their children to centers, "which are like a university campus," where they benefit from housing and dining services. In these centers, students, who once lost their education opportunity, have a new chance to continue their studies. They receive quality formal education about farming where they learn the fundamental theories and practices through the help of experts in the domain. The students are not charged any expenses. Instead, all the expenses are taken care of by COPAG. The ultimate goal is to create a formally educated team of farmers who will get a certified diplomat after graduation, which opens many possibilities for them and helps them find job opportunities, especially that farming is the main activity in the region.

Creation of Cooperative Complexes: Mr. Elalaoui explained that COPAG has members from all over Morocco, and many of them are from rural areas, which makes it very hard for them to bring their milk to COPAG, especially if they need to bring it early in the morning. He emphasized that It would be very tough on them, let alone the lack of means of transportation because of the poverty that the region suffers from. COPAG, in Mr. Elalaoui's own terms, "decided to move closer to its members." It created cooperative complexes in different locations of Morocco with economic, administrative, and social infrastructures. These complexes come with collection centers where farmers have to cross only a couple of Kilometers to drop their milk. Afterward, COPAG through its own logistics, and with over 700 cold trucks, go to these centers and collects the milk to take it to its 12,000 tons storing units and eventually to its 550 million liters processing plants. This way, the farmers can still provide their milk and at the same time not suffer from the lack of transportation means and the hardship of transporting the milk.

The complexes also come with administrative and accounting supervision to ensure that there are not any mistakes made when farmers drop their milk. Farmers weigh their milk and an accountant records the amount brought to them to ensure transparency when farmers get their biweekly payment. Furthermore, COPAG provides small retail stores in all of its complexes where farmers can find and purchase all the products they consume daily, such as flour, oil, and sugar. They can also purchase household appliances such as TVs, washing machines, and fridges. due to the lack of cash and credit/debit cards in the region, these retail stores are operating with a bartering system where farmers are allowed to pay with their milk. Each farmer has a serial number which they provide at the retail stores. Through this serial number, every farmer can make purchases of whatever products they are in need of and have their value linked to the farmer's account. The farmer then pays with a certain amount of milk which covers the value of his/her purchases. So far, 26 complexes have been built all over Morocco. COPAG's objective is to build a total of 40 complexes to ensure an easy life for its members and a smooth production to satisfy the needs of its customers.

Although this services menu might seem to have discreet components, they all contribute to the durable business model that COPAG has built. This business model serves its rights as a for-profit organization as well as actively strengthens the socio-economic development of the region and Morocco in general.

A Durable Business Model

Inspiration

"The mutual need we both share." Mr. Elalaoui said about what sparked this innovation. He explained that these farmers are in need of someone who would buy milk from them. If they fail to sell their milk, they will have no occupation nor a source of income. This will result in huge regional unemployment rates and will ultimately result in a severe crisis of poverty and hunger. Farmers will find themselves obliged to flee rural areas in the hope of better life opportunities, disposing of their previous lives and their "passion of farming and love for the earth." Mr. Elalaoui emphasized that "many farmers have already been victims of these tough conditions before COPAG existed."

On the other hand, COPAG is also in need of its members' milk to produce dairy products which are one of COPAG's biggest business units. Without them, it will have to shut down production, incurring a massive loss that will eventually impact the economy. Mr. Elalaoui explained that both parties are in need of each other, and have to take care of each other in order to ensure a durable business model and a flourishing community.

Overall impact

According to Mr. Elalaoui, this innovation was very successful as it played a massive role in "reviving the regional communities." Through this innovation, COPAG managed to provide thousands of job opportunities for people, allowing them to pursue their passion and love for farming, and contributing massively to fighting the poverty and hunger that the rural areas in the region suffer from. Thanks to this innovation, farmers can benefit from a stable source of income to provide for their families while doing what they truly love.

COPAG also managed to prepare a strong future generation of farmers through the training and education it provides for the children of its members. Mr. Elalaoui explained that through this innovation, COPAG managed “to maintain the spirit of loving earth and farming as well as to grow this passion in the hearts of the future generations who will be the future of this innovation.”

Evidence suggests that this innovation was indeed a huge positive impact on the socio-economic system. The growing prosperity of the innovation along with the positive impressions left with the farmers urged thousands of male and female farmers to ask COPAG to become its members. Three 100% feminine cooperatives have been created as well, and COPAG has always recognized their work by organizing special ceremonies and events, promoting a culture of gender equality, and proving that women have a huge potential and can be just as powerful as men. "I feel very proud to be a part of this." Mr. Elalaoui expressed the impact of the innovation.

Business benefit

As Mr. Elalaoui explained, COPAG adopts the business model that "makes the farmer an owner of the business rather than a supplier." The company’s job then is to ensure a high-quality conversion to the final product and to market these products afterward. This unique strategy has encouraged more farmers to join COPAG and has therefore shown more community involvement and more local production. By committing to this business model, COPAG keeps attracting farmers and motivating them to produce more while maintaining very high quality.

COPAG went from producing 12 Tons of milk to 1,200 Tons, which allowed it to introduce new products to its customers as well as target new markets. It launched different types of UHT milk, including full, semi-skimmed, and lactose-free. It also managed to target different markets through the introduction of new low-cost and premium products. The number of employees hired has also increased since the adoption of this business model, to reach around 7,200 direct employees and 75,000 indirect employees.

The growing prosperity of the company along with the satisfied customers allowed COPAG to raise its turnover to 5 billion MAD, making it one of the most successful businesses in Morocco.

Social and environmental benefit

In terms of societal impact, COPAG adopted the long-existing spirit of cooperation in the Moroccan culture in order to create a more productive environment. In fact, this cooperation goes both ways between the company and the farmers. COPAG, unlike mainstream companies, chose to headquarter in a rural area, staying near its farmers. Knowing that COPAG will always be there for them, farmers feel supported and thus more motivated to work hard. The social benefit drawn from this innovation is with no doubt the fact that more farmers are encouraged to stay in these rural areas, pursuing their passion and living their life the way they want, especially that nowadays many farmers are obliged to relocate to cities rather than the countryside because they are not given enough support or credit for what they do. Not to mention how their occupation can become non-reliable and unable to provide for their families. COPAG believes, as in Mr. Elalaoui’s own words, that “the whole society needs farmers more than farmers need it,” that is why COPAG makes sure its farmers never go through such hardships by making them "the owners of the business" and committing to value and market all of their daily production. This way, local production is boosted, and the country’s economy is also actively supported and stabilized.

Furthermore, COPAG contributes to raising awareness about gender equality by massively supporting the feminine cooperatives and actively writing about them in its magazines. It also contributes to fighting illiteracy in rural areas by providing training sessions and supporting lessons to the children of its farmers, which will ultimately ensure a better future for Morocco and its future generations. As Mr. Elalaoui said: "Our society and its communities are of critical importance to us. This has always been a part of COPAG's DNA."


Interview

Hicham Elalaoui, CMO

Photo of interviewee

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COPAG

COPAG

Taroudant, MA

Business Website: http://www.copag.ma/

Year Founded: 1987

Number of Employees: 5001 to 10000

Created by Moulay M'hamed Loultiti in 1987, COPAG is a Moroccan cooperative that operates within vegetal and animal production with over 20,000 members and 7,200 employees. It is made of 3 major strategic business units: Jaouda which offers dairy products and juices, Jayda which operates within the meat industry, and COPAG Delight which is a leading citrus and vegetable producer.

Along with offering a rich and diversified business portfolio to its customers, COPAG is engaged actively in reviving the socio-economic life in Morocco. Instead of going public and issuing shares, COPAG has a unique business model based on members. The latter provide COPAG with the milk and meat it uses in its production. COPAG is a cooperative that has assigned itself the mission of guaranteeing the continued sustainability of value-added agriculture.