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Re: Enabling rural cooperatives and producer organizations to thrive as sustainable business enterprises

FSN Forum Team Afghanistan
09.08.2012
FSN Forum

Posted on behalf of Emile N. Houngbo, University of Abomey-Calavi, Benin

Agricultural cooperatives are a priori a credible alternative to address agricultural development problem facing Africa. Cooperatives are useful to face the problems of excessive land fragmentation and precariousness in which farmers live. The farmers, who have individually some very small portions of land, would find relief by putting together their production factors: land, labor and capital. This pooling within cooperatives must enable cooperators for example:

i) To adopt land conservation farming practices and modern production techniques that could not be applied under conditions of scarcity of land. Cooperatives are then able to create the conditions for introduction of improved fallow technologies (Mucuna pruriens, Aechynomene histrix, Acacia auriculiformis, Gliricidia sepium, Senna siamea, etc) and natural fallow in order to control land degradation. With the production factors available to cooperatives, the use of tractors for example and such the farming systems diversification must also be facilitated.

ii) To achieve economies of scale through the optimal use of production factors and reduced unit cost of the productions. This would allow cooperatives to improve their profit margins and thus to reduce poverty of the cooperators.

Cooperatives are then for the producers, a relevant way to address the agricultural risks which are: farming risks (yields falling), economic risks (prices falling, poor sales…), biological risks (plant and animal diseases, pests,) and climatic risks (drought, flooding, inadequate exposure,). In fact, the problem of agricultural development in Africa is mainly linked to risk management, especially if we take into account the fact that agriculture still dominantly rainfed in this region of the world.

However, we must recognize that cooperation does not systematically deal with all risks. It is a way to face the first two types of risks: the farming risks and the economic ones. This means that agricultural cooperatives formation is not a panacea.

Indeed, all these virtues recognized to cooperatives cannot be achieved without a judicious intervention of the State. The role of the State remains important because the biological risks and the climatic ones do not find systematically their solution through the cooperatives formation. Even at the level of economic risks, the role of the State remains also crucial. The State must be able to get involved in supporting cooperatives by the definition of good agricultural policy, such as supply chain organization. It is this policy which would allow producers to better profit of the advantages mentioned above, and thus, the State also could make back revenue through taxes that may be collected on the productions.

A second kind of intervention also returns to the State, the supervision of cooperatives. The Government must insure capacity building to the cooperatives. These are the actions to be taken so that the cooperatives can recognize the importance and develop mutual trust, efficient organization of the activities and active participation of all the cooperators in the work. Experiences show that these qualities are not always present in the cooperatives without external support. The Cooperatives of Rural Development (CAR) initiated in Benin in the '60s for especially the palm oil sector development are almost all blocked some decades ago, operationally speaking. But we must recognize here that the initiative of the CARs creation came from the State; what raises the question of the necessity of a spontaneous and voluntary cooperatives constitution by the co-operators themselves, and the free choice of the crops they could judge useful and appropriate to their conditions. The CARs were created in Benin by the law 61-27 of August 10, 1961 on the Statute for Agricultural Cooperation; law that received minor amendments, especially the Order 60/PR/MDRC of December 28, 1966 and the amendment of 1969.

In short, cooperatives are important to meet the challenge of declining production resources in Africa and to support family farming which remains primarily a way of life for the farmers before being a business. But, it still requires a good agricultural policy of the State. Two critical levels of action are concerned: the necessary support to cooperatives to enable them to face climatic and biological hazards, and the necessary support to facilitate the creation of a good climate of trust between the cooperators, the efficient organization of the activities and the active participation of all of the cooperators. But, moreover, a voluntary association of cooperative members should be preferred Agricultural cooperative promotion in Africa, and then agriculture development, depends largely on the macroeconomic policies and strategies of the different States.