Greetings from Georgetown, Guyana!
Ms. Omosa makes a lively point that social relations facilitate access to food through loans, bartering and gifting among families and tribes. As our colleagues in University of Guyana Agricultural Economics Research Group 1 hinted, however, the degree of altruism upon which the food trade, the type of which the Graduate Research student experienced during her childhood in Kenya, is predicated exists in very few places.
This is not to say that social relations have no role in facilitating food security, though. Food security is not obtained solely by making food directly accessible and available but, as we indicated in the discussion thread preceding this one, by promoting income growth and strengthening economic security. A community-oriented construct that facilitates economic empowerment and that is more driven by mutualism, trust and a sense of business purpose than altruism is the cooperative.
As much of the bastions of the developed world, Europe and North America (yes, inclusive of the United States of America), have demonstrated over the past two hundred years or so, cooperatives were formed: to strengthen bargaining power; maintain access to competitive markets; capitalize on new market opportunities; obtain needed products and services on a competitive basis; improve income opportunities; reduce costs; and manage risk. Perhaps surprising for a stalwart of capitalism, so significant are agricultural cooperatives in the United States that in 2002, they were estimated to control US$ 111,553 million in gross business. (Ortmann and King)
Our group’s thesis is premised on the notion that food security could be strengthened through fostering linkages between farmers and value-added processors. Cooperatives, made up of communities of farmers, can and do play a role in fostering this linkage, either by seeking out processors to buy farmers’ produce or by processing it themselves.
When dealing with processors (buyers), farmers often face high transaction costs – which encapsulate the costs involved in searching for and obtaining information on these buyers; bargaining and decision costs as they (farmers) may have to hire lawyers and advisors, and policing and enforcement costs which, for instance, are incurred when farmers have to take to court buyers who default on their payments. These transaction expenses are susceptible to economies of scale so, for instance, if a group of, say, cocoa farmers hire a lawyer to bargain with a processor on their behalf, they will incur lower legal costs on average than if they were to each retain counsel separately.
However, even when farmers do find buyers to purchase and process their produce, these processors often leverage their quasi-monopsonistic position to obtain rents by paying unfairly low prices to farmers for their produce. To ensure fairer returns on their produce, farmers can form themselves into cooperatives and move up the value chain themselves, as is done in the United States where dairy farmers form themselves into dairy cooperatives that engage in milk bottling, drying and cheese manufacturing.
Our country, Guyana, has had a lengthy ideological love affair with cooperatives, which perhaps peaked in the 1970s when the country was officially renamed the Cooperative Republic of Guyana and an ambitious economic development model of cooperative socialism was embraced. The experience with cooperatives has been mixed, to say the least. Alongside a few notable successes, there have been many failures. However, it would be disingenuous for the country to take the instances of weaknesses as justification for not re-embarking on a drive to revive cooperatives in the rural agriculture sector.
Rather than toss the baby out with the bath water, we should look to countries that have successfully deployed this uniquely democratic and community based way of organizing business and take their experiences as lessons which we may inculcate in our own bid to revive cooperatives.
Bibliography
Ortmann, Gerald F and Robert P. King. Small-scale farmers in South Africa: Can agricultural cooperatives facilitate access to input and product markets? Staff Paper Series. St. Paul : Department of Applied Economics, University of Minnesota , 2006.
UG Agricultural Economics Focus 2014