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Re: With Technology and Elite capture - Are Cooperatives Relevant today?

05.12.2012
Final Year Economics Students (group 6)

In addition to what "Final Year Economics Students (group 2) University of Guyana " we also see the need for the existence for the agriculture cooperatives .Small farms are not economically efficient because of relatively high input costs compared to profits. Small farmers in developing countries such as Uganda are unable to take advantage of economies of scale and often lack the financial resources such as credits and loans to make their farms profitable. Establishing cooperatives, farms in areas of developing countries where small farms are prevalent will allow farmers to share capital and reduce input costs thereby increasing production and income.
There are many advantages to establishing small farm cooperatives. According to Motiram and Vakulabharanam, farmers in cooperatives have more bargaining power, lower transaction costs in getting loans, and better access to information about its members and their resources compared to “outsiders” such as moneylenders and contractors, benefits which strengthen the cooperative’s power (Motiram & Vakulabharanam, p. 4). Farmers have more individual power and control over production, including inputs and land use, than they do through contract farming, and thus food security is less vulnerable under a cooperative model (Motiram & Vakulabharanam, 2007).