A farmer from Zanambo Rano cooperative, Mozambique, showing the improved yields of maize.

A farmer from Zanambo Rano cooperative, Mozambique, showing the improved yields of maize.

A cooperative is “an independent association of women and men, united voluntarily to meet their common, social, cultural needs and aspirations through a jointly owned and democratically controlled enterprise.”[1] An agricultural cooperative is a “formal form of farmer collective action for the marketing and processing of farm products and or for the purchase and production of farm inputs.”[2] They aim to increase member’s production and incomes by helping better link them with finance, agricultural inputs, information, and output markets.[3] Specialisation may be in production, service provision, production or marketing or offer all, or some combination of, support within the various stages.

Collective action is the core resource of agricultural cooperatives.[4] Cooperatives create social relations that enable individuals to achieve goals that they may not otherwise be able to achieve by themselves. For example, cooperatives can help farmers benefit from economies of scale to lower their costs of acquiring inputs or hiring services such as storage and transport. Agricultural cooperatives also enable farmers to improve product and service quality and reduce risks. They may also empower their members economically and socially by involving them in decision-making processes that create additional rural employment opportunities, or enable them to become more resilient to economic and environmental shocks.[5]

Contribution to Sustainable Intensification

Forming or joining cooperatives can help smallholder farmers increase their access and improve their negotiating power with respect to acquiring a wide range of services including: ‎‎knowledge and extension services; productive assets such as seeds and tools; and marketing information and skills to capture greater value from the sale of their products. They can also improve empowerment by facilitating smallholder participation in decision-making processes, support them in securing land-use rights, and negotiate better terms for engagement in value chains or contract farming. The challenge remains to scale up successful projects. It may be necessary for farmers to develop alternative institutional and management structures and learn from the experience of successful smallholder farmer organisations. This may ensure that the benefits of cooperation materialise on a wide scale.[6]

Benefits and limitations

Mixed performance

The ability of agricultural cooperatives to improve the welfare of smallholder farmers in Africa is mixed and contextual. Some cooperatives have not performed well as the result of poor governance structures, multiple and competing goals, but also problems that arise from insufficient trust between members.[7]   In some cases, top-down approaches where cooperatives have been established by external agents, rather than farmers themselves, have produced unfavourable results.[8] Elements for successful agricultural cooperatives include: appropriate legal frameworks and governance aligned with national policies; support for business development, business skills and governance capacity; access to markets and trading links, especially for competing in international markets; and the need for improved understanding of the dual nature of cooperatives as business and civil society members.[9]

Yields and incomes

Farmers who are effectively organized can form a collective voice to advocate for their needs and access services at more affordable prices that can help them increase their yields, sales and profits. Producer organizations can achieve competitiveness for smallholder farmers.[10] For example, farmers in Ethiopia who are members of cooperatives tend to achieve higher yields and staple crops that are marketed through cooperatives attain a price premium of around 7-8%.[11] The Zano Ranambo cooperative in the Manica province of Mozambique reported doubling the value of their sales compared to previous attempts at individual sales.

The benefits of participation

Farmers in cooperatives have more bargaining power, lower transaction costs in getting loans, and better access to information.[12] Farmers have more individual power and control over production, including inputs and land use, than they do through contract farming, and therefore may be more food secure within a cooperative.[13] Since cooperatives are based on values of democracy, equality and equity, they can play a particularly strong role in empowering women, especially in developing countries.[14]   Cooperatives also provide farmers with training on production and post-harvest handling, as well as education in literacy, business or marketing that can build their human capital.

Inclusiveness

Whilst cooperatives are meant to be inclusive, they may at times be exclusionary; in particular women can be excluded and lose out on opportunities to access credit or benefit from ‎‎training and extension services. Other marginal groups such as widows, HIV-AIDS affected households or ethnic minorities are also underrepresented in cooperatives. For example, in Nigeria, widows constitute just 6.7% of cooperative members.[15]

Sustainability

Cooperatives may face problems if they are created by external actors as part of a public investment strategy or a rural development programme, rather than by farmers themselves.[16] A top-down approach may limit the formation of social capital, reducing the various potential benefits and threatening sustainability.

Corruption is also a common problem and threatens sustainability. Corruption includes bribery (the act of giving money or goods in exchange for favours) and embezzlement (stealing assets). In many countries, corrupt public administrations can be a heavy burden on small organizations. Corruption in justice systems means that ways to seek an equal footing can be closed off. Embracing transparency will help cooperatives maintain trust within their communities and will help them avoid corruption[17].

References
  1. [1] International Labour Organization (ILO) 2002, Recommendation 193: Promoting Co-operatives Available from: http://www.ilo.org/dyn/normlex/en/f?p=NORMLEXPUB:12100:0::NO::P12100_ILO_CODE:R193 [10 July 2015].
  2. [2] Bijman, J, Muradian, R, & Cehin, A 2011, ‘Agricultural coopeatives and value chain coordination’ in: eds. AHJ Helmsing & S Vellema, Value chains, social inclusion and economic development: Contrasting Theories and Realities, Routledge, London & New York, pp. 82-101.
  3. [3] Ethiopian Agricultural Transformation Agency (ATA) Agricultural Cooperatives Sector Development Strategy 2012-2016, 2012, Available from: <http://www.ata.gov.et/news/resources/sector-strategies/> [10 July 2015].
  4. [4] Grootaert, C & van Bastelaer, T 2001, Understanding and Measuring Social Capital: A synthesis of findings and recommendations from the social capital initiative, Social Capital Initiative Working Paper no. 24, The World Bank Social Development Family, Washington, DC.
  5. [5] Food and Agriculture Organization of the United Nations (FAO) 2012, Agricultural cooperatives: paving the way for food security and rural development, FAO, Rome.
  6. [6] Poole, N, & de Frece, A 2010, A review of existing organisational forms of smallholder farmers’ associations and their contractual relationships with other market participants in the East and Southern African ACP region, Food and Agriculture Organization of the United Nations (FAO), Rome.
  7. [7] Nilsson, J, Svendsen, GL, & Svendsen, GT 2012, ‘Are large and complex agricultural cooperatives losing their social capital?’ Agribusiness, vol. 28 no. 2, pp. 187-204.
  8. [8] Ruben, R, & Heras, J 2012, ‘Social capital, governance and performance of Ethiopian coffee cooperatives’ Annals of Public and Cooperative Economics, vol. 83, no. 4, pp. 463-484.
  9. [9] International Labour Organization (ILO) 2008, Areas of Work, Available from: <http://www.ilo.org/public/english/employment/ent/coop/africa/areas/index.htm> [10 July 2015].
  10. [10] World Bank 2007, World Development Report 2008: Agriculture for Development, Washington, DC.
  11. [11] Wanyama, FO 2008, ‘The Qualitative and Quantitative Growth of the Cooperative Movement in Kenya’ in: eds. P Develtere, I Pollet & O Wanyama, Cooperating Out of Poverty – The renaissance of the cooperative movement in Kenya, International Labour Office, Geneva.
  12. [12] Motiram, S, & Vakulabharanam, V. 2007, Corporate and Cooperative Solutions for the Agrarian Crisis in Developing Countries. Review of Radical Political Economics, vol. 39. No. 3, pp. 360-467.
  13. [13] Motiram, S, & Vakulabharanam, V. 2007, Corporate and Cooperative Solutions for the Agrarian Crisis in Developing Countries. Review of Radical Political Economics, vol. 39. No. 3, pp. 360-467.
  14. [14] United Nations Department of Economic and Social Affairs (DESA) (no date), Cooperatives in Social Development, Available from: <http://social.un.org/index/Cooperatives/WhatisaCooperative.aspx> [10 July 2015]
  15. [15] Innocent, Y & Adefila, JO 2014, ‘Farmers cooperatives and agricultural development in Kawli Area Council Federal Capital Territory Abuja, NigeriaInternational Journal of Humanities and Social Science, vol. 4, no. 7, pp. 161-169.
  16. [16] Ruben, R, & Heras, J 2012, ‘Social capital, governance and performance of Ethiopian coffee cooperatives’ Annals of Public and Cooperative Economics, vol. 83 no. 4, pp. 463-484.
  17. [17] LaSalle, M 2012, Global corruption: a problem for cooperatives? Cooperative News, Availabe from: <http://www.thenews.coop/38619/news/co-operatives/global-corruption-problem-cooperatives/> [10 July 2015].

Case Studies

Download These Case Studies (pdf)
Case study 1 Kibinge Coffee Farmer’s Cooperative Society (KCFCS), Uganda
Kigundu Gerald, a KCFCS member since 2006, with his coffee plants. Credit, KCFCS.

Kigundu Gerald, a KCFCS member since 2006, with his coffee plants. Credit, KCFCS.

In 1995, 4 coffee farmers in Kibinge, Central Uganda, formed an association in the hope that collectively they could improve the quality and volume of their coffee production. The original association was run as a company, but as it grew it struggled to turn a profit. In 2009 the management decided that the business should be converted into a member-owned, registered cooperative. The cooperative has since grown rapidly, and currently has around 2,000 registered members, one-third of whom are women. In 2011 the Kibinge Coffee Farmer’s Cooperative Society (KCFCS) became Fairtrade certified.[1]

The cooperative employs ‘promoter farmers’ who work directly with the farmers as a link to the cooperative to ensure good communication and high standards. Farmers are divided into Promoter Farmer Coffee Zones and sub-divided into groups with an elected coordinator. KCFCS buys the coffee from the farmers and then processes and exports the coffee on their behalf. They also provide regular ‎‎training on good agricultural practices, ensuring higher productivity and quality.

With the extra funds generated from Fairtrade certification price premiums, KCFCS decided to establish a KCFCS Farm Supply Shop in 2013 that is conveniently located and offers inputs at competitive prices. Members can also buy inputs using credit obtained through the KCFCS Savings & Credit Unit, also established in 2013. Additionally, the cooperative runs social, economic and environmental projects in the local area such as a project to supply the local health centre with electricity and improve, grade and repair local roads. In 2014 KCFCS won the Fairtrade Africa small-producer of the Year award.[2]

References
  1. [1] Fairtrade Foundation (no date), Kibinge Coffee Farmers’ Co-Operative Society, Kenya Available From: http://www.fairtrade.org.uk/en/farmers-and-workers/coffee/kibinge [29 June 2015].
  2. [2] Kibinge coffee (no date), Who We Are Available From: http://kibingecoffee.com/who-we-are/ [15 June 2015].
Case study 2: Ghana Grains Partnership (GGP)
Masara N’Arziki farmers association

Masara N’Arziki farmers association

Yara and Wienco (a local Ghanian input provider) partnered to develop the Ghana Grains Partnership (GGP) in 2008, inviting a bottom-up dialogue including local growers to establish the farmers organization Masara N’Arziki, meaning “Maize for Prosperity.” Masara N’Arziki has grown to become one of West Africa’s largest grain growing associations. Yara and Weinco financed the initial input requirements through the creation of a revolving fund for input credits and two long-term loans totaling $3 million. On behalf of its members, Masara N’Arziki purchases the farmers’ maize and pays them minus the cost of inputs they received. Mazara N’Arziki then sells the crops on their behalf. Meanwhile the GGP provides storage, transport, seeds and fertilisers on affordable credit terms.

As a result, Masara N’Arziki farmers have seen yield levels triple. The estimated revenues to the farmers were about US$4 million in 2012, or on average about US$369 per farmer per hectare, after costs were repaid. In 2009, Masara N’Arziki started with 2,200 members. By 2013 more than 8,000 members joined, cultivating 28,600 acres, with 95% of farmers remaining in the programme each year. The debt recovery rate from the programme reached 92% in 2011, despite a drought affecting 1 in 5 farmers in the programme.[1]

References
  1. [1] Yara (no date), Partnership in action: A New Global Partnership with Business Available From: www.yara.com [29 June 2015].
Case study 3: Meki Batu Fruit and Vegetable Grower Farmer Cooperative Union, Ethiopia
Chairman Challa Gurre Ashemi of the Meki Batu Union with onoin bulbs. Credit, S. Eades, Self Help Africa.

Chairman Challa Gurre Ashemi of the Meki Batu Union with onoin bulbs. Credit, S. Eades, Self Help Africa.

The Meki Batu Union was established in 2002 in Oromia, Ethiopia, as the first irrigated farmer cooperative union in the country. The union aims to sell its members’ produce to local and foreign markets; supply their members with agricultural inputs, credit and timely market information; and provide training and support to member farmers. From an initial 12 cooperatives with 527 members, there are now 135 cooperatives in the union with almost 7,000 individual farmer members.

The union produces more than 50,000 tonnes of vegetables and fruits per year, which are supplied to local market outlets as well as exported to Djibouti and Holland. The union also produces hybrid maize seed, meeting 68% of regional seed demand. Overall the union’s capital base has increased 60-fold over eight years.

Initially, Self Help Africa provided capital to start the union, including support for irrigation pumps and building warehouses; equipment or seed to farmers; staff salaries and training in management, planning and leadership, as well as developing its value chain. The union now operates independently with no further direct support from Self Help Africa.[1]

References
  1. [1] Self Help Africa (no date), Cooperative Deverlopment and Farmers Associations, Available from <http://www.selfhelpafrica.org/ie/how/farmers-associations-cooperatives> [29 June 2015].