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Limagrain’s cooperative

governance: a strength

Limagrain draws its strength from

its cooperative roots. This governance

remains unprecedented among leading

international seed companies. As the parent

company of Limagrain, the Cooperative

extends its values of a “partnership

company” throughout the Group

and to the development of its activities.

Assured of the stability of its shareholders,

Limagrain can develop a long-term

strategic vision and thus lasting

economic success.

Limagrain is directed by farmers, members

of the Cooperative: a particularity that

provides legitimacy and trust for all

its stakeholders, and which creates an

intimate link between Limagrain

and its region.

This culture of cooperation runs through

all the veins of the Group: it is shared

by Limagrain’s farmer members and

employees and extends to all its scientific,

industrial and commercial partners.

The Cooperative is at the heart

of Limagrain’s organizational structure

Limagrain is an international leader in the seeds market that has remained loyal

to its purpose as an agricultural cooperative: to be an efficient and sustainable

extension of its members’ farms.

The Limagrain Cooperative: the parent company of an international group

Limagrain’s roots lie in the world of agricultural

cooperatives that sprung up at the end of the 19th century

in a number of countries. In 1942, farmers in the Limagne

plain (Puy-de-Dôme, France) formed a cooperative

to gain control over the supply of seeds required

for their activities. This cooperative became Limagrain

in 1965 and continued to support the growth of these farms

through the production of seed corn.

Today, Limagrain represents:

• nearly 2,000 farms in Puy-de-Dôme county

and in the south of Allier county;

• 45,000 hectares of production under contract,

i.e. approximately 50% of crop land in Puy-de-Dôme

county;

• the parent company of an international group active

in 41 countries.

GLOSSARY

a Cooperative: an autonomous association

of individuals who have come together

to meet their shared economic, social or

cultural aspirations and needs. A cooperative

company’s property is owned collectively

and power is exercised democratically

according to the principle of “one person,

one vote”. In agricultural cooperatives,

farmers are both partners and suppliers

as well as customers. They meet at least once

a year at an Annual General Meeting where

they elect the individuals who will serve

on the Cooperative’s Board of Directors.

a Governance: broadly speaking,

the governance of an organization

represents the set of processes, practices,

policies and structures that determine

the way in which it is managed, administered

and controlled. Defined more narrowly,

the term “corporate governance” is used to refer

to the interplay between shareholders

and the company’s management.

a Stakeholders: an organization’s stakeholders

include those who contribute to its economic

activity (members, employees, clients, suppliers

and shareholders), those who observe it (unions,

NGOs, the media, local residents, etc.) and

those over which it has a more or less direct

influence (civil society, local authorities, etc.).

“Our aim is to be the preferred

company of farmers in the Limagne plain.

By serving our members, our goal is to provide

the best agronomic expertise and to bring

value to their farm holdings. We are pursuing

this goal in our agri-food chains: Limagrain

Coop is the leading supplier to Limagrain

Europe (seeds), Limagrain Céréales Ingrédients

(semolina corn and wheat) and Jacquet

Brossard (wheat flours produced by Limagrain

Céréales Ingrédients).”Jean-Yves Marrec, Deputy CEO

of Limagrain Coop

Field Seeds

Cereal Products

Sandwich bread, specialty breads,

crispbread, pastries.

Bakery

Products

Wheat and corn semolina

and flours, cereal-based texturing

agents, functional, flours,

food fiber, bioplastics.

Cereal

Ingredients

Vegetable Seeds

Vegetable and flower seeds,

turf seed, flower bulbs.

Garden Products

Tomato, melon, bell pepper, carrot,

bean, cauliflower, onion, squash,

watermelon, lettuce, cucumber, etc.

Vegetable Seeds

Limagrain Coop

Limagrain Coop

Serving farmer members

of the Limagrain Cooperative

Crop production, advice

and distribution.

Corn, wheat, sunflower, rapeseed.

Field Seeds

2

The Limagrain Cooperative:

a company of people

Like all cooperatives, Limagrain is a company born

out of the shared economic interests of a group of people

who have come together to advance these interests.

A group of farmers sought to share their means of

producing, transforming and marketing their agricultural

products within an agricultural cooperative: this company

is an extension of their own farms.

Our farmer members (or “farmer partners”) provide

the capital that is necessary for their cooperative

by purchasing shares in the company. They are not

anonymous shareholders. Instead, they are committed

to operating according to the democratic principle

of “one person, one vote”: the weight of each individual

in any decision does not depend on the amount of shares

he or she holds.

Limagrain is thus a “company of people”.

The role of farmer partners within

the Limagrain Cooperative

They are at the same time partners, “suppliers” and “customers”.

The Limagrain Cooperative

supplies its members with

the services and products needed

for their farms (seeds, fertilizer,

plant treatment products

and more).

2, 000Nearly

members The Limagrain Cooperative

members purchase a number of

shares in proportion to the amount

of business they conduct with

the Cooperative. This number may

vary from one year to the next.

• “One person, one vote”: for every

decision that is made at the Annual

General Meeting, each farmer

partner has the same number

of votes, no matter the number

of shares owned by the individual.

• Transfer of shares with

the authorization of the Board

of Directors.

• Indivisibility of reserves:

should farmer partners leave

the Cooperative, they will be

reimbursed only for the price

of their capital stock. Any reserves

they helped to amass during their

time as members will remain

the property of the Cooperative.

• Remuneration of shares will

consist primarily of dividends

and interest payments.

The Limagrain Cooperative members contribute

a portion of their farm’s production. A contract sets

out the terms and conditions of this relationship

(in particular quantity as well as quality, with detailed

specifications). This contractual relationship enables

Limagrain to smooth out any fluctuations in prices

of agricultural raw materials and to ensure that

its local chains (agricultural product transformation

units) receive the supplies they need.

Every year, members sign production contracts

with Limagrain. These contracts cover more than

45,000 hectares of land. They supply the following

to their cooperative:

• seeds (corn, sunflower, straw cereals, vegetable

seeds): 7,500 hectares. For corn, these contracts

represent approximately one third of all units sold

by Limagrain Europe;

• corn to be transformed into semolina:

the 10,000 hectares of land under contract cover

all of Limagrain Céréales Ingrédients’ corn milling

needs (Ennezat, Puy-de-Dôme);

• wheat (20,000 hectares), which is transformed

by Limagrain Céréales Ingrédients and covers

60% of Jacquet Brossard’s bakery products needs.

These farmers also produce sunflower, rapeseed,

sugar beet, tobacco, garlic, onion, vine, and other

crops. Some of these crops are under contract

with the Limagrain Cooperative or other regional

cooperatives or organizations.

“Working for a company of people

means allowing the general interest to express itself on

a daily basis rather than conceding to more individualistic

or financial interests. As both the Chairman of the

cooperative and a farmer, I see myself as a usufructuary,

or someone who has the right to use and enjoy the fruits

of the company but does not own it.

I am fully committed to this cooperative model, which

focuses on the stability of capital and the continuity of

our strategic vision, and which chooses to re-inject much

of its profit in order to prepare for the future.”Jean-Yves Foucault, Chairman of Limagrain

3

The specific characteristics of the Limagrain

model of cooperative governance

Limagrain is a cooperative, which means it follows the principles of a cooperative.

The Group has also been innovative in developing its own specific form of governance.

Three highly specific principles ensure a close relationship

between farmers and employees, between the Board of

Directors and the Executive Committee and, ultimately,

allow for a deeper understanding of the company’s activities

and a shared vision of its strategy:

• The Chairman, an elected farmer, and the CEO,

an employee appointed by the Board of Directors,

form a tandem which co-manages the Group.

• This tandem — one elected Director and one salaried CEO —

is reproduced in each company’s Board of Directors.

• Since 1999, the company’s Top Executives, no matter their

nationality or status, contribute to the Cooperative’s capital

in the same way as the farmer members, and are represented

on the Board of Directors.

Limagrain has several strengths that truly make it stand out

from other cooperatives:

- the background and skills of the Directors;

- their active involvement in the governance of the Group;

- the tight network that has been developed in the region

combined with a close relationship between farmer members

and elected Board Members. The 2,000 members are

represented by around forty section delegates at the Annual

General Meeting.

The farmer members’ active contribution to the Group’s

strategic discussions should also be mentioned,

in particular their involvement in the Progress Clubs,

which organize training sessions as well as study tours

in France and abroad.

Finally, the governance of Limagrain includes minority

shareholders in the capital of Groupe Limagrain Holding

— among such other shareholders as Bpifrance (a public

investment bank) and Crédit Agricole. Ongoing relationships

were developed with institutional investors and the individual

shareholders of Vilmorin & Cie, a company listed on the stock

market that pools the Group’s seed activities.

THE SEVEN PRINCIPLES

OF THE COOPERATIVE MODEL

a 1. Membership is voluntary and open to everyone: a cooperative is volunteer-based

and membership is open to anyone interested

in using its services and willing to accept

the responsibilities that go along with being

a member, without discrimination.

a 2. Democratic control is exercised by its members: according to the principle

of “one person, one vote”, the members

of a cooperative have equal voting rights

in making decisions that will affect the future

of their cooperative and in order to appoint

the representatives that will be accountable

to them.

a 3. Members’ economic participation: members only receive a limited amount of

compensation for the capital subscribed upon

joining the cooperative. They allocate surpluses

for the purpose of achieving certain pre-defined

objectives, which will benefit them directly.

a 4. Autonomy and independence: the cooperative is an autonomous organization

managed by its members. Its agreements

with other organizations or governments

and the raising of external capital must never

undermine its autonomy as a cooperative.

a 5. Education, training and information: the cooperative provides its members with

the training required for their effective growth.

It informs the general public about the cooperative

and advantages of cooperation.

a 6. Cooperation among cooperatives: the cooperative adds strength to the cooperative

movement by working with local, regional, national

and international inter-cooperative organizations.

a 7. Commitment to the community: the cooperative contributes to the sustainable

development of its community and its region,

in line with the policies approved by its members.

A CULTURE OF COOPERATION

By its very nature, Limagrain cultivates cooperation

as an asset: cooperation is what allows us to do more

than if each of us worked alone. Limagrain collaborates

actively with other cooperatives, especially by offering

seed production contracts to partner institutions.

This spirit of cooperation is also reflected in our

strategic research or trade partnerships in the form of

joint ventures with other institutions, some of which

are cooperatives.

Lastly, Limagrain has developed a number of

collaborative relationships in the spheres of academia,

science, industry and business.

GOVERNANCE PRINCIPLES SPECIFIC

TO AGRICULTURAL COOPERATION

a Exclusiveness: at least 80% of an agricultural

cooperative’s business must come from its

farmer partners.

a Territoriality: the cooperative’s activities

are limited to a specific region defined in

its by-laws. The Limagrain Cooperative can

operate throughout continental France but,

in practice, its activities are concentrated

in Puy-de-Dôme county and in the south

of Allier county.

4

Limagrain:

an effective decision-making system

Decision-making is shared

between the elected Board Members

and the salaried Top Executives,

with the aim of bringing different

perspectives and active consensus

to the table before any final decisions

are made by the Board.

The Limagrain governance model is reproduced

within the six operational activities(1) located throughout

the world. Power is shared between a farmer Chairman

and a salaried Top Executive, who serve on the Board

of Directors of each of the Group’s companies.

The elected officials direct and control, while the employees

make suggestions and implement decisions. This sharing

of responsibilities is grounded in the active search for

consensus. Decisions can be made in agreement with all

stakeholders involved on the ground, with a quick response

time, everywhere in the world. This mode of governance

combined with an organizational structure broken down

into fourteen Business Units (BU) allows subsidiaries

to respond quickly and pursue opportunities in line

with the Group’s strategic choices.

(1) Limagrain Coop, Field Seeds, Vegetable Seeds, Garden Products, Cereal Ingredients and Bakery Products.

“Our decision-making system is

grounded in the active search for consensus among

elected farmers and employee Top Executives.

It allows for sharing alternative perspectives, examining

different options and choosing the best path as part of

a long-term vision. It means the essence of decision-

making can be shared with the stakeholders in the field,

everywhere in the world where the Group is present.

It provides the means to act quickly and to seize

opportunities that are consistent with our strategic

choices.”Daniel Chéron, CEO of Limagrain

The Limagrain Cooperative

Nearly 2,000 members

Annual General MeetingSection meetings

Elect section delegates (one person, one vote)

6th section

Limagrain

Top Executives

5 geographical

sections

A democratic decision-making process

Executive Committee

10 members

(General Management,

VPs for Business Activities,

Holding VPs)

Board of Directors

18 Cooperative member Directors

and 1 Top Executive Director

One third elected every year with a 3-year mandate.

Decides on the strategy and controls

the orientations, elects the Chairman and

the Bureau, appoints the CEO

Analyzes the strategic choices and

the major files for the Cooperative

and the Group

Proposes the strategic choices

and implements the orientations

Group Bureau

7 Directors

(from the 18 on the Board of Directors)

and 5 Top Executives

as support

ELECTS AND CONTROLS

CHAIRMANCEO

5

Diversity and effectiveness of elected Board Members

and salaried Top Executives

Strategic continuity. No influence from short-term strategies

based on fluctuations in share prices or the drive for immediate

profits. Over the past 50 years, Limagrain has had only four

Chairmen and four CEOs.

Much of the company’s profit is reinvested internally; modest

return on capital

A capital structure that makes hostile takeovers nearly

impossible

Solid local roots. Relocating the Cooperative is not

an option

A group controlled by farmer members

Board Members are involved operationally

(corporate representatives)

and are specialists in their fields of activity

A variety of perspectives among Board

Members and salaried Top Executives

allows for a better understanding of issues

Involvement of the upstream

and downstream sectors (vertically integrated

corn and wheat chains in Auvergne)

A commitment to addressing major worldwide

farming challenges (food safety, etc.)

The operational organizational structure of the Group

and delegation of authority

Local-level engagement: job creation, land-use planning,

corporate initiatives, etc.

Cooperation with other cooperatives

A culture of partnership (multiple examples of cooperation,

from research to marketing)

The specific characteristics

of the Limagrain governance model

The advantages of Limagrain’s governance

Limagrain’s growth is based on striking the right balance

between its farmer shareholders’ roots in Auvergne

and its international dimension. Thanks to this stable

and solid system of shareholding, which bears a long-term

vision, Limagrain is assured of long-lasting successful

economic performance. The Group’s values are the same

as those of the agricultural world: progress, perseverance

and cooperation. These values give meaning to its relations

with its key stakeholders.

Long-term

strategic vision

Legitimacy

and trust

Culture

of cooperation

6

For a FARMER MEMBER,

being a farmer partner of the Limagrain Cooperative means:

• helping to ensure the long-term sustainability of his farm;

• being supported as it is set up;

• participating in decisions thanks to the democratic model

of “one person - one vote“;

• being committed to bringing value to one’s region.

For an EMPLOYEE,

working for Limagrain, a group directed by farmers, means:

• working for a company of men and women that puts People

at the heart of its concerns;

• enjoying the benefits of job stability supported

by the continuity of our strategy and a long-term vision;

• participating in a dynamic of strong growth, supported

by prospects of growing markets.

For a CUSTOMER,

buying products from Limagrain, a group directed by farmers,

means:

• being sure that one’s needs will be anticipated and understood;

• being certain about the quality and traceability

of food products;

• cooperating in a climate of trust, based on a shared

understanding of the farmer profession and agriculture,

generating a natural proximity;

• co-building development projects over several years through

stable commitments, encouraging local anchorage.

For a SHAREHOLDER,

supporting Limagrain, a group directed by farmers, means:

• supporting a group bearing a long-term strategic vision

that is consistent over time;

• contributing to solid development, with growing markets,

very good knowledge of agricultural challenges and a strong

ability for innovation;

• investing in a French leader, with modern governance.

For a PARTNER,

developing projects with Limagrain, a group directed

by farmers, means:

• being able to build long-term partnerships with confidence;

• being stronger together to launch ambitious projects;

• investing in a Group bearing a long-term strategic vision

that is consistent over time;

• counting on long-term regional involvement.

“We conduct long-term research programs.

Working for a farmer-led Group makes sense

to us: we speak the same language as our

clients and our actions are designed with a view to long-term

sustainability.”Ido HORRESH – Support Unit Manager, Research and Development,

Hazera – Brurim (Israel)

“Limagrain is unique in reproducing

its governance model within its Business

Units; it is one of our real strengths.

This allows us to always be connected both with our shareholders

and our markets, and to thus be more responsible when making

operational decisions.”Rémi BASTIEN – CEO of Limagrain Europe – Saint-Beauzire (France)

Limagrain’s governance

seen by its stakeholders:

“I decided to become a member

of the Limagrain Cooperative because

of its organization in integrated chains

– in a fluctuating situation, it is reassuring to know that my

products are fully valorized and that my income is secure –

and the fact that I can participate in the Group’s strategic decisions.”Laëtitia POUZADOUX – Young Farmer – Artonne (France)

“The fact that Limagrain is a cooperative

really influenced our decision to form a

partnership*. Having ourselves been a cooperative

until 1996, we share a common vision and history.”Morgan NZWERE – CEO of Seed Co – Zimbabwe (Africa)

*In 2013, Limagrain took a 15% minority stake in the company Seed Co,

an African seed company.

“Limagrain’s governance is truly unique: the

Group knows how to combine the influence of

farmers with the perspectives of managers and

outside shareholders. It is both an agricultural cooperative and

partially listed on the stock market. Finally, Limagrain knows how

to balance its strong local roots with international growth.”Michel LÉONARD, External Director, Groupe Limagrain Holding

“Our work with Limagrain Céréales

Ingrédients has allowed us to improve

our overall performance. Limagrain’s close

relations with farmers and their corn breeding expertise

have helped to optimize our production and maintain

a high level of quality for our products, with lucrative prices

for the entire supply chain.”Julien MOREAU – Purchasing Manager at Europe Snacks,

client of Limagrain Céréales Ingrédients – Montaigu (France)

“I appreciate my relationship with Limagrain.

Being a farmer myself, the fact of working

with a company that is held and managed

by farmers reassures me – even though we live on different

continents.”Nathan REA – Farmer and Limagrain Cereal Seeds Customer –

Milton Freewater, Oregon (United States)

7

Limagrain, an international cooperative group founded and directed by French farmers, moves agriculture forward to meet food

challenges. As a creator and producer of plant varieties, Limagrain markets seeds intended for farmers, growers and home gardeners. The

Group extends and exploits this know-how on the markets for cereal ingredients and bakery products intended for agri-food industrialists

and consumers.

Limagrain is the fourth largest seed company in the world (through its holding Vilmorin & Cie), the European leader for functional flours

(through Limagrain Céréales Ingrédients) and the No. 1 French industrial baker (Jacquet Brossard).

Limagrain makes sales of almost 2 billion Euros, is active in 41 countries on five continents and employs over 8,600 employees

(of 66 nationalities), including more than 1,800 working in research.

The Limagrain Cooperative has nearly 2,000 farmer members.

Cooperatives around the world

The cooperative model is flying high: there are 2.6 million cooperatives

throughout the world, representing one billion members and clients,

generating 250 million jobs and $3 billion in annual income. The agricultural

collective model was born in Europe and has spread around the world, although

there are differences related to the agricultural, economic and political history

of each country.

The first agricultural cooperatives were created in Europe

in the 19th century. Farmers generally banded together to make

group purchases of fertilizer, among other things. Their goal was

to work together to fight certain suppliers’ abusive practices,

or to obtain price reductions according to the quantity

purchased. Other cooperatives grew as a natural extension

of their members’ farms, in order to process their production

(dairy cooperatives, wine cooperatives, etc.). This organizational

innovation quickly spread beyond the borders of Europe.

Today agricultural cooperatives are located primarily in Europe,

North and South America and in Oceania. They are active in

every step of the agricultural and agri-food industry: research

and development, farm supply, production and production

collection, transformation and distribution. And they are involved

in every business sector: field crops, dairy, meat, wine, fruits

and vegetables, and more.

Top 100 agricultural cooperatives

“Limagrain’s governance

is unusual in the seeds sector as well as in

the world of cooperatives. Three specific

characteristics stand out: proximity, coherence

and competency. Proximity, because

the distance between farmer members and

directors is almost nonexistent. Coherence,

because pairs of elected Board Members and

Top Executives have joint responsibility for

steering the group, thus guaranteeing a shared

strategic vision. Last but not least, competency,

because Limagrain invests in the human

capital of its elected Board Members in order

to prepare them for the highest positions

of responsibility.”Bertrand Valiorgue – Lecturer in Business

Strategy and Governance, Holder of the Chair

in Alter-Governance – Université d’Auvergne –

Clermont-Ferrand (France)

January 2015

Photography credits: Limagrain and its subsidiaries,

P. Bonnefoy, V. Bouchet, J. Chabanne, D. Pourcher, P. Soissons

Designed and published by: Limagrain Corporate

Communications and Public Affairs Department

Creation: R.C.S. 352 321 285 - 14120637

Translated by Métaform-Langues

CS 20 001

63�360 Gerzat - France

Tel: +33 (0) 4 73 63 40 00

Fax: +33 (0) 4 73 63 40 44

www.limagrain.com

#Limagrain

e-mail : limagrain@limagrain.com

North America Canada

South America

Oceania: a long-established history

of cooperatives in New Zealand contrasts

with the declining trend in Australia

North and South America: mainly specialized cooperatives

Asia: large Asian

cooperatives are national

federations of agricultural

cooperatives

Europe: cooperatives active in every business sector

Six of the fifteen largest French agri-food groups

are cooperatives

Source: Analyses PwC – 2012