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ARGENTINA
San Juan Federation of Agricultural Cooperatives
The producers. The San Juan Federation of Agricultural Cooperatives (FECOAGRO) produces annual seeds of horticultural, floral and forage crops. The federation's administrative council develops a cultivation plan for each crop. Using this plan, each member cooperative allots the areas to be cultivated on the 430 ha held by members. Farmers deliver their produce to the cooperative, which, in turn, consigns it to FECOAGRO, which issues a provisional receipt. The harvested seed is transported to a FECOAGRO plant, where it is processed.
The markets. Seeds are sold on the domestic and international markets, including Japan, the Rep. of Korea and emerging markets of Southeast Asia.
The linkages. Samples of processed seeds of each lot are sent to a laboratory authorized by the National Seed Institute for testing. If the sample seeds are within the legal limits, a definitive receipt is issued for the lot, which is used to collect payment. The lot is then labeled and the seed is marketed. FECOAGRO participates in activities organized by the Argentine Agrarian Federation (FAA), such as national meetings of representatives of small- and medium-scale producers' organizations, and maintains close linkages with the National Institute of Agricultural Technology (INTA) and the Credicoop Bank. Linkages with both the Rural Agricultural Network (REDAR) and the Cooperative Program for the Development of Rural Agroindustry (PRODAR) in Latin America and the Caribbean facilitate participation in international trade fairs.
Training and support services. FECOAGRO participates in training courses organized by the San Juan National University's School of Social Sciences and maintains close links with the provincial cooperatives office for logistic, legal and institutional support.
The results. Seed production generates an estimated 300 jobs for approximately five months of the year. The 100 percent commercialization of production through the second-tier cooperative organization has been decisive in making FECOAGRO the only beneficiary of the Law of Industrial and Agricultural Promotion, which targets small-scale farmers.
Lessons and distinct features. Because it is a cooperative, FECOAGRO does not pay taxes on earnings. The federation redistributes surpluses among members, who pay taxes if their income exceeds the established maximum. A major limitation was Argentina's economic crisis - FECOAGRO's production is sold in pesos on the depressed local market, which has little purchasing power, whereas it must buy inputs in dollars.
Source: "Alternatives to improve negotiation and market access capabilities of small-scale rural entrepreneurs in Latin America" by P. Santacoloma and H. Riveros - AGSF Working Document No. 4 (FAO. 2004)
BRAZIL
CEPEMA and the Projeto Café ecológico, State of Ceará
The NGO and the farmers. Created in 1990, the CEPEMA Foundation is an NGO that is part of the international network "Land of the Future", based in Stockholm. Its main activities include professional training in agroecological practices, cooperativism, associativism and popular education. CEPEMA initiated the Projeto Café Ecológico in 1995 in rural communities in the Baturité mountain range of Ceará state. The project currently involves 158 producers, of which 110 are certified as organic producers. Farmers are organized by the Association of Ecological Growers of the Baturité Mountains (APEMB) and the Mixed Cooperative of Coffee Growers from the Baturité Mountains (COMCAFE).
The markets. Initially, Baurité coffee was exported to Sweden as a specialty product - i.e. organic shade-grown coffee from the Atlantic Forest of Ceará - following the principles of the fair trade market.
The linkages. The first shipment of ecological coffee, directly to the Swedish roaster Classic Kaffe, was made in 1997, through an agreement between CEPEMA, APEMB, the Swedish Society for Nature Conservation, the Land of the Future international network and the State government of Ceará. The marketing strategy focused on offering shaded coffee which the roaster blended with other types of shaded coffee from Central America. Organic certification of produce was made by a Swedish agency and the Biodynamic Institute for Rural Development of the State of São Paulo. Sixty women from the community were employed in coffee selection. By trading directly on the international market, growers received US$160 per bag at a time when market prices ranged between US$100 and US$110. However, the partnership between Baturité growers and Classic Kaffe lasted only three years. Following a steep drop in international prices, Classic sought to reduce costs. Competition among organic coffee producers also intensified. Attempts to link to another organic coffee buyer in North America failed owing to high costs of marketing, in particular the cost of organic certification. In response, a broader project now envisions the creation of a network to sell organic products, including fruits and vegetables, to help meet certification costs. Another proposal is to add value by roasting coffee locally.
External assistance and training. Funding for the project came from the Swedish Society for Nature Protection and the from Land of the Future. Some funds have also been channeled through the National Fund for the Environment (FNMA/MMA) of Brazil's Environment Ministry, as part of an educational program focused on sustainable development of areas of the Atlantic Forest. To improve coffee growers' productivity and enhance biodiversity in areas where shade coffee is grown, COMCAFE distributed 150 000 seedlings of native species and coffee cuttings to farmers. Technical visits to farms by Agents for the Development of Ecological Agriculture, trained by CEPEMA, helped foster new practices and ensured the commercial and ecological quality of the coffee.
Features. It proved possible, at least temporarily, to increase returns to farmers, albeit with significant external support. Organic certification is a thorny problem - in addition to being a costly process for small farmers, some certificates are not adapted to the region's agroforestry production systems. Also, certification imposes a technological package on growers, e.g. obliging them to use animal manure in fertilization. In the case of Fair Trade, certification requirements enormously restrict the number of hectares per farmer.
Source: Alianzas Productivas: Estudio de Caso - "Actions to promote sustainable development: The case of Baturité shaded coffee, State of Ceará, Brazil" (FAO/RLAC, 2001) http://www.rlc.fao.org/prior/desrural/
alianzas/pdf/norico.pdf
COSTA RICA
Dairy Production and Industrialization Association (APILAC)
APILAC produces a wide range of dairy products, principally long-life milk, which represents an estimated 41 percent of sales, powdered milk and ice cream (25 percent), yoghurt and custard (20 percent) and cheese and fresh milk. Currently, APILAC buys milk from 136 small- and medium-scale milk producers, of which 79 are APILAC members, in the Pérez Zeledón zone and the southern region of the country. Producers own dairy farms with eight to ten cows, and deliver an average of 65 litres of milk daily. Members give six percent of their production to the company in order to build capital savings, which is used to fund operations. APILAC employs the latest technology and has a processing capacity of 20,000 litres per day. The plant is currently operating at 47 percent capacity.
The markets. Dairy products are widely consumed in Costa Rica, with annual per capita consumption at 152 kg, the highest in Central America. The market for dairy products is growing in Central America and the Caribbean thanks to improved quality, and the application of quality standards for raw materials.
The linkages. APILAC and the organizational and productive structure that supports it do not have specific linkages or chains in the region, other than those associated with procurement of milk and manual labour, and informal linkages with private businesses, public institutions, academia, NGOs and community-based organizations, in accordance with the different areas of company development. Agricultural and veterinary inputs, such as refrigeration and milking technology, are mainly imported, as are pulp for the production of beverages and some ice creams and concentrates. Improved feed is purchased locally from Servicios Científicos Agropecuarios, which imports many of its products.
Training and support services. Loans are available for production, with favourable conditions for producers, through the company's agreements with Banco Popular and the Counterpart Fund. APILAC provides education and training of human resources in the areas of dairy farm and pasture management, milk collection and business management.
The results. The company has a solid market position. Thanks to its supplier-members who work near the large-capacity plant, it has grown in terms of sales volume and is now the third-largest company in the regional market. It has comparative advantages in terms of distance and transport costs. APILAC offers its members a guaranteed market, which generates stable family income at a time when the coffee sector is stagnating. APILAC has generated direct and indirect employment and increased alternative income for an estimated 2 200 people.
Lessons and distinct features. APILAC has promoted the development of production units of small- and medium-sized producers through guaranteed demand, fair prices, provision of complementary services and access to mechanisms of participation and decision-making.
Source: "Alternatives to improve negotiation and market access capabilities of small-scale rural entrepreneurs in Latin America" by P. Santacoloma and H. Riveros, AGSF Working Document No 4 (FAO, 2004)
EL SALVADOR
Agroindustrial Cooperative Society (SOCOAGRO)
The producers. The Agroindustrial Cooperative Society (SOCOAGRO) promotes the cultivation of Tabasco peppers and their collection and processing to prepare an intermediate product, chili paste. Members plant a total of between 21 and 38 hectares per year, with the average production plot measuring 30 sq m. The cooperative receives the raw material at its plant, where quality is verified before grinding. SOCOAGRO is also responsible for marketing the product. It has registered the trademarks of its Techan and San Andrés hot sauce brands and obtained the corresponding health certificates.
The markets.
Hot chili paste is sold wholesale on the domestic market to large companies such as McCormick of Central America. Retail marketing takes place through negotiations with coffee shops, restaurants and other businesses.
The linkages. The SOCOAGRO Cooperative purchases 100 percent of the production agreed upon with primary producers provided they meet quality requirements. Prior agreements are made on the area to be planted, and payment is made 15 days after the product is received. With regard to the international market, the society participates in the Export Platform Program, which provides access to the agro-food trade fair in Vancouver, Canada. Product samples have also been sent to Japan, Nicaragua, Germany and the US. Linkages between producers in the chain can be formal or informal. Sometimes, producers sign purchase-sale agreements, specifying the quality required; alternatively, they can sign letters of intent of purchase.
Training and support services. SOCOAGRO is part of the agro-industrial cluster that has received support since its inception from the Department of Agribusiness of the Ministry of Agriculture and Livestock. Linkages between SOCOAGRO and international cooperation agencies - such as the Canadian Government, the El Salvador Canada Fund and the Canadian Hunger Foundation - have resulted in the donation of capital investment funds, working capital and credit for producers. The El Salvador-Canada Development Fund has supported SOCOAGRO activities through commercial contacts, many of which have resulted in new clients.
The results. Thanks to these linkages, it has been possible to generate between 20,000 to 25,000 workdays per year. Phytosanitary management has improved through the proper use of pesticides, while irrigation systems have been automated. Distribution companies for irrigation equipment have begun to train producers in irrigation management and efficient water use. However, during 1999 and 2000, SOCOAGRO faced difficulties because of falling sales, and high financial and administrative burdens of that time caused deficits, which continue to be carried over.
Source: "Alternatives to improve negotiation and market access capabilities of small-scale rural entrepreneurs in Latin America" by P. Santacoloma and H. Riveros, AGSF Working Document No. 4 (FAO, 2004)
GHANA
Afife Rice-Vegetable Irrigation Cooperative Farmers and Marketing Society
The farmers. The Afife Rice Irrigation Project was established by the Ghanaian Government in 1982 at Afife, in Ghana's Volta Region, and is managed by Ghana Irrigation Development Authority (GIDA). In all, about 880 ha of land is being cultivated by 800 farmers who are organized into five cooperatives. Cooperative formation was initiated by GIDA, which asked the Department of Cooperatives to provide the farmers with training. The umbrella Afife Rice-Vegetable Irrigation Cooperative Farmers and Marketing Society (ARVICOFAMS) was formed in 1996. The society's steering committee is made up of two representatives of each cooperative, together with GIDA management.
The linkages. Since the formation of ARVICOFAMS, GIDA has facilitated the establishment of linkages between the society and other agribusiness enterprises. To ensure prompt and bulk supply of inputs, the society purchases fertilizers and herbicides on credit from Wienco, an agro-chemical company, with repayment made after harvest. The Agricultural Development Bank (ADB) also provides loans and in some years procures fertilizers for the farmers on credit. In 2001, GIDA facilitated links between the society and House of Remma, a rice processing and marketing company. Farmers receive loans from the ADB, and deliver the equivalent of the loan in paddy to House of Remma, which is financed by the same bank. Farmers then have the option of selling any surplus paddy to the company or finding other outlets. The price of paddy is agreed upon between the co-operatives and the processing company at planting. The society also deals with a packaging company that supplies sacks in bulk on credit.
Training and support services. Through the GIDA, the Ministry of Food and Agriculture provides irrigation services and technical advice on crop husbandry practices and Integrated Pest Management (IPM). Research institutions also provide improved rice seeds. These technical services contributed to yield increases from about 4mt/ha in 2000 to 5mt/ha in 2001. The Ministry also offers farmers tractors and power tillers on concessionary terms. Farmers are expected to pay 40 percent of the cost of a tractor or power tiller "up front", and pay the balance over two years.
Lessons and distinct features. The society benefits from a guaranteed market for its produce at the project site and better prices, which have resulted in higher income levels. Evidence of improved income status includes improved housing and schooling of members children. Cooperative members now see farming as a business rather than "a way of life" and there is wide participation in decision making among members through regular meetings. Relations with suppliers and marketing outlets are good thanks to timely delivery of inputs and prompt payment of farmers for their produce.
Source: "Farm-agribusiness linkages in Ghana", by Angela Dannson - a report prepared for FAO, 2002
GHANA
The Sampa Jimini Zongo Cooperative Cashew Processing Society
The farmers. The Sampa Jimini Zongo Cooperative Cashew Processing Society was established in 1994 with the help of Technoserve, an American NGO, in the town of Sampa in the Brong Ahafo Region of Ghana. Technoserve encouraged the farmers to form the society in order to process their raw cashew nuts into kernels, which attract better prices. The society has 55 members and employs a factory manager, two assistants and 16 workers. The society has elected executives and operates on the guidelines of a cooperative. Dues are promptly paid and meetings are held regularly. Contributions from members were used to purchase processing equipment (cutters, boilers and an oven).
The markets. Cashew was introduced into Ghanaian agriculture in the early 1980s. Originally nuts were sold to buyers from Cote d'Ivoire, at low prices. In the early 1990s Ghanaian companies began purchasing nuts for export. Cashew nuts processed by the society are currently sold to a company in Accra, which provides final processing and export to international markets.
The linkages. Farmers supply the society with raw nuts for processing. The society, in turn, trains the farmers in treatment and drying practices that produce good quality nuts. The society provides no credit or input assistance to farmers, but does offer higher prices and spot payment (other buying companies postpone payment until a later date). These purchasing strategies have ensured a regular supply of raw nuts to the factory and have also built trust between the farmers and the society. The linkage between the processing society and the company was facilitated by Technoserve in order to ensure a ready market for the society's products. The linkage is strengthened by the fact that the processing society owns shares in the company.
Training and support services. Ghana's Department of Cooperatives provided the society's members with training in cooperative organization and operations. Technoserve sponsored training in Nigeria for a member in cashew processing, facilitated linkages with farmers and with the company, and helped the society to acquire locally manufactured equipment.
The results. Operations began in the year 2000, when four metric tonnes of raw nuts were processed into 1.14 tonnes of kernel (a recovery rate of 28.5%). Between 2001 and 2002, some 15 metric tonnes of raw nuts were purchased and processed. Unfortunately, in 2002, the company experienced problems with marketing of the kernels which delayed payment to the society. As a result, the society has sought other sales and marketing outlets in Tamale and Accra.
Lessons and distinct features. Technoserve played a key role in establishing the society and in facilitating linkages with farmers and marketing outlets. The society has been strengthened by the commitment and hard work of its members who, in return, have enjoyed increased levels of income. The benefits of the society's operations include premium prices paid to farmers and employment given to the youth in the area.
Source: "Farm-agribusiness linkages in Ghana", by Angela Dannson - a report prepared for FAO, 2002
GUATEMALA
Unión Cuatro Pinos, Santiago Sacatépequez
The producers. Members of the Unión Cuatro Pinos are small-scale farmers with plots ranging from a 0.3 ha to around 2.25 ha. Cooperative members pay a membership fee of US$3.10 and must be producers who reside in the area. The agricultural produce - mainly vegetables - that is processed and marketed by the Cuatro Pinos Cooperative comes from member producers (80-90 percent) and intermediaries (10-20 percent). There are local collection centres, overseen by a manager and two or three assistants, in each of the eight communities that participate in the cooperative. Members pre-select, weigh and store their produce at the collection centres and the amounts received are registered. The cooperative headquarters has a central collection centre and a plant for postharvest operations, including pre-freezing, grading, cleaning and storage.
The markets. The Cuatro Pinos Cooperative exports fresh vegetables to the US and the UK. The main export products are green beans, zucchini squash, artichokes, pimento peppers, tree tomatoes and snow peas. Snow peas are the "star product" of the cooperative, and the Cuatro Pinos Cooperative was the first company to ship snow peas to export markets.
The linkages. The cooperative makes production contracts with its members during the distribution of seeds, which it controls. The produce is transported from the cooperative to the shipping ports in 30,000-pound capacity refrigerated vans. There are currently four or five buyers in the USA and Europe, with whom the cooperative works through verbal agreements or non-legalized letters. No formal contracts are made with buyers abroad.
Training and support services. For the first 14 years, the cooperative received a non-reimbursable seed fund and technical assistance from a Swiss group that organized the cooperative. Cuatro Pinos has benefited from institutional support and soft investment loans. It buys imported seeds from a local company and sells them directly to members.
The results. The cooperative has generated more than 250 jobs and has contributed to a 400 percent increase in income per family, leading to improvement in the health and nutrition of the population. There are also a number of non-tangible benefits, such as improved relations among community residents, greater knowledge and more cultural activities.
Lessons and distinct features. The cooperative has been strengthened by the commitment of its members, good leadership, an assured market and the rise in non-traditional exports in Guatemala. Limiting factors include the lack of documentation regarding the initial objectives of the cooperative project.
Source: "Alternatives to improve negotiation and market access capabilities of small-scale rural entrepreneurs in Latin America" by P. Santacoloma and H. Riveros AGSF Working Document No. 4 (FAO, 2004)
GUATEMALA
El Limón Cooperative, Moragán
The producers. El Limón R.L. Cooperative, located in Marajuma village, Moragán, produces sun-dried dehydrated creole lemons, which are used in teas and jams thanks to their high pectin and citric acid content. Each member has a cultivated area ranging from 14 000 m2 to 35 000 m2. Production is also obtained from 115 producers who are not members. The cooperative provides technical assistance to producers, both members and non-members, in the establishment and management of plantations.
The markets. Buyers are usually large exporters who prefer the cooperative's product because of its quality. Dehydrated "jumbo" lemons are sold on international markets. The US market prefers lemons of an orange-brown colour, while the Asian, European and Middle East markets prefer dark brown or black dehydrated lemons.
The linkages. Member producers are required to deliver their entire harvest to the cooperative. Producers who are not members have no legal or verbal agreement but, if they agree to sell their produce to the cooperative, benefit from technical assistance, payment on delivery, good prices and fairness in determining weights. Although the region has five companies that dehydrate creole lemon, most producers prefer to sell their harvest to the cooperative. As a market expansion strategy, the cooperative has recently participated in commercial missions to other countries of the region and has joined the Association of Non-traditional Exporters of Guatemala (AGEXPRONT) in an effort to increase its marketing capacity and to obtain the necessary experience to export directly. To date, the cooperative has had only one unsuccessful experience with direct export, when it did not receive payment for the product until two months after delivery.
The results. The cooperative has had a major impact on the local market price of lemons. When it began its activities, the price was approximately US$0.07/kg; it has since risen to US$0.27/kg.
Lessons and distinct features. Part of the Cooperative's success is due to the stability of lemon prices in the region. This was made possible because members deliver their produce on consignment in exchange for a good price. Moreover, the cooperative has expanded its infrastructure and built cellars for storing lemons in two localities. A major limiting factor is the cooperative's lack of experience in direct export. In addition, the cooperative has been unable to market new products it has developed (iced tea ready for consumption and tea bags) because it still lacks a sound business or marketing strategy.
Source: "Alternatives to improve negotiation and market access capabilities of small-scale rural entrepreneurs in Latin America" by P. Santacoloma and H. Riveros- AGSF Working Document No. 4 (FAO, 2004)
HAITI
Fédération des Associations Caféières Natives
The farmers. Traditionally Haiti's leading export commodity, coffee is grown by hillside peasant farmers on small plots and provides income for more than 200,000 farm families. At least 90 percent of exports are "natural coffees", which are processed simply by drying and milling. Competition, mainly from Brazil and Viet Nam, led to a drop in Haiti's coffee exports from $25 million in 1998 to less than $4 million in 2002. Haitian producers had few options other than to move into the specialty coffee niche. But to enter that market, they had to address both quality issues and the fact that international consumers typically prefer washed coffee (involving mechanical depulping, partial fermentation and cleansing in fresh water). This led Haiti's Fédération des Associations Caféières Natives (FACN) to create a new brand of premium washed coffee, Haitian Bleu.
The markets. Currently, nine roasters (in Denmark, France, Germany, Japan and the US) have contracts to buy Haitian Bleu on a multi-year basis at a fixed price (now roughly three times the current open market average price).
The linkages. In the early 1990s, USAID helped organize peasant associations to manage and operate new wet processing stations, and assisted them in forming the FACN, which mills, blends and exports coffee produced by each individual association. FACN's Haitian Bleu initiative aimed at selling coffee directly to end-use specialty roasters without going through a broker, and offering a unique brand of coffee that would command a high price. FACN commits not to sell Haitian Bleu to other roasters in the geographic territory of each exclusive distributor, and roasters agree not to resell unroasted green Haitian Bleu. This prevents the development of a secondary market in Haitian Bleu, with the attendant dangers of adulteration and counterfeiting. The farmgate price FACN farmers receive from their local association varies from association to association, depending on factors such as the ratio of exportable to non-exportable coffee produced by the association, the percentage of its exportable coffee that qualifies as Haitian Bleu, and expenses incurred at the wet processing stations. However, the farmers whose associations produce the best coffee receive prices extremely high by world - and astronomical by Haitian - standards. For example, farmers who sell most or all of their output as Haitian Bleu can make almost $1.02/lb. at the farm level, at a time when the average New York Board of Trade "C" contracts price for finished green coffee was less than $0.60/lb.
Training and support services. The Federation's wet processing infrastructure was funded by the Inter-American Development Bank, USAID and other donors. In 2001, the Hillside Agricultural Program (HAP), became the third USAID project to work with FACN and helped the federation address institutional blockages and its incentive structure. HAP instituted a grant system that rewarded farmers for high-quality product, and sponsored cupping training to develop FACN's internal quality control capacity. FACN staff now screen and blend coffee without sending samples overseas, and even sell cupping services to other producers and exporters. HAP also assisted FACN in developing a new financial accounting system, reorganizing its internal structure, and tapping commercial sources of working capital.
The results. Between 1996 and 2001, FACN export volumes averaged less than 50 tonnes a year. Following structural reforms in 2001, volumes increased to 180 tonnes in 2003/04, and value from $160,000 to $600,000. Thanks largely to Haitian Bleu, FACN is the driving force behind the only positive trend in Haitian coffee: in 2002, FACN accounted for more than 12 percent of total Haitian coffee export values.
Lessons and distinct features. Initially, the Haitian Bleu program faced some internal institutional and financial issues stemming from confusion between the organization's origin as a subsidized development project and the need for its role to be that of a going concern. In addition, FACN's financial structure did not encourage quality control or efficient cost management - until 2001/02, farmers perceived no link between coffee quality and financial reward. In 2001 FACN revised its internal financial structure to have the Federation charge member associations a fixed rate per volume of coffee processed and exported, and to devolve all sales revenues directly to the member associations. In this way, quality problems have a direct impact on that association's bottom line.
Source: "Haitian Bleu: A Rare Taste of Success for Haiti's Coffee Farmers", Development Alternatives, Inc. |
