Member profile
John Rouse
Country:
Italy
Former senior officer in FAO Cooperatives and Rural Organizations Group, author and co-author of a wide range of publications, practical resource books and guidelines on farmer group and cooperative business development and played an active role in development of FAO Plan of Action on People's Participation in Rural Development, approved by the FAO Conference in 1991.
He now is joint owner/operator of 15 acre olive farm and grape vineyard and, since retiring, he supported NGO projects in Peru (SID Peru and Chijnaya) and independently financed three other micro projects there. Holds an Ms in Agricultural Economics from University of Wisconsin, Madison, USA.
John Rouse
The majority of contributions to this final week of discussions seemed to have focused on two main themes: (1) extension and training methodologies aimed at strengthening the profitability and self-reliance of rural producer cooperative businesses and organizations, and (2) new approaches in the use of ICT to promote cooperative business self-reliance and growth.
Extension and training methodologies.
Reema Nanavaty (India) highlighted the case of women agricultural workers in Gujarat, who after years of effort and partnering with SEWA and professionals from the Research Station of Gujarat Agriculture University finally succeeded in establishing a successful and profitable tree growers business cooperative
Danilo Beloglavec (Retired FAO Officer) in his contribution emphasized the importance of the human element in cooperative business success, arguing that cooperative trainers need to not only focus on strengthening the individual business management capacities of members but also educate them in how to identify and select leaders and managers based on their business and collective decision-making skills and motivation, and ensure they are adequately compensated for their performance.
Olivia Muza (Zimbabwe) added that cooperatives trainers and extensionists need to adopt a complete “value chain” approach to building cooperative business self-reliance but with a strong emphasis on promoting rural member savings.
Lisa Kitinoja (USA) provided the most comprehensive case study of the use of a value chain business approach to strengthening rural producer organization self-reliance. She did so by highlighting the successful USAID-CARE funded Agricultural Export for Rural Income (AERI) Project in Egypt. According to the report she attached, the aim of this multi-million dollar pilot project has been to enable research and extension staff, partnering with private sector firms and farmer associations, to assist small farmers in supplying on a profitable basis key markets in the European Union. According to the author of one report, several factors led to the capacity building project’s success:
• Research and extension first focused on identifying high-value export crop market niches in European Union countries, including the food quality standards, input requirements, processing, storage and transport standards for each of those niches
• Farmer training concentrated providing farmer association members and leaders with a comprehensive understanding of the roles and responsibilities of all players at each level of the international supply chain and then comparing alternative supply chains for supplying specific markets with different products.
• The introduction of contractual instruments that allow the selected farmer associations (FAs) to contract with one or more exporters, and in turn to contract with each of its members.
Food for the Cities multi-disciplinary initiative Secretariat (FAO, Italy) emphasizes that capacity building efforts should not just focus on rural cooperatives and producer organizations, but also build the capacities of urban and peri-urban agricultural producers, many of them women, who are engaged in the production of high-value perishable agricultural products for the domestic and international markets.
The use of new information and communications technologies to improve coop and farmer access to market information, to facilitate social capital building and to improve coop business info systems.
Michael Riggs (FAO Italy) provides convincing case study information on a wide range of successful initiatives focusing on use of new Information and Communication Technologies (ICT) to improve rural cooperative business profitability and governance. Especially worth examining is the World Bank’s “ICT in Agriculture Sourcebook” that Riggs attaches to his contribution. The sourcebook provides a mass of new case studies on how appropriate ICT technologies can improve cooperative and rural producer organization business performance and self-reliance. Interestingly included in the sourcebook is mention given to an FAO funded project in Kenya implemented in collaboration with the Department of Cooperatives that resulted in the successful computerization of the Tulaga Dairy Cooperative and provided the basis for the development of an FAO guidelines manual on cooperative computerization. Also worth mentioning is the successful introduction of the FrontierSMS system in El Salvador, China and Indonesia which involves the establishment of computer-mobile phone networks in farmer associations. These networks help link farmer association members together and provide them with up-to-date SMS-based information on market prices, product shipment and delivery dates, meetings dates, etc.
Closing participant comment on the online discussion
Edwin Tamasese (Samoa) who happens to work out a brilliant closing comment for this online discussion on enabling rural cooperative and producer organization and self-reliance. Tamasese argues that the most important feature of successful and self-reliant cooperatives is that they are formed from the outset to address a common member business need. We two facilitators completely agree with him on this point. Much too often cooperatives get formed from the top-down and for political reasons rather than common economic need reasons. Yes, pooling resources together is an effective method for ensuring financial self-reliance independence and sustainability, but the key factor according to him is creating a group vision where the individual member identifies his or her personal business benefits in a forum that creates group business benefits. Tamasese says that he is currently doing this with several groups in Samoa. We wish him good luck in his work and thank him.
Facilitators closing comments
The over 50 interventions made during the three week duration of the online discussion on enabling the development of more self-reliant cooperative businesses and producer organizations highlighted a number of important sub-themes, namely:
• The promotion of increased rural savings and cooperative capital. Several participants mentioned the importance of strengthening the internal savings capacities of individual rural cooperative members and encouraging them to collectively invest more in their cooperative business. It is the view of the two facilitators that more case studies of successful methods of member rural savings and cooperative capital formation need to be conducted to better understand which methods and mechanisms are the most productive.
• Almost all participants highlighted the need to further strengthen cooperative member business and cooperative business management capacities aimed at improving business profits and sustainability. The underlying principle that should guide the capacity building process is that cooperatives are businesses and their sustainability and operational autonomy depend on the ability to earn a profit and invest part of it to finance business growth.
• There was considerable discussion on how to efficiently deliver cooperative business management training and skill development services to cooperative members and managers. Three skill areas that should receive greater emphasis in cooperative business training programs include: improved strategies for mobilizing member capital to finance cooperative business growth; the advantages and disadvantages of using new ICT technologies to collect and monitor business cooperative performance.
• The pros and cons of vertical integration of cooperative business structures within or alongside existing agricultural product value chains was also discussed. However, there was consensus that most successful vertically integrated cooperative businesses were built slowly from the bottom up and not from the top down.
• Virtually all participants seemed to favor the introduction of new laws and policies that give value to and encourage the mobilization of cooperative member capital and savings to strengthen cooperative self-reliance. One participant suggested that one of the best ways to ensure greater rural cooperatives self-reliance would be to require both donor and governments providing aid to cooperatives to monitor recipient cooperative progress towards technical and financial self-reliance.
• Participants presented a number of useful case studies on allegedly successful cooperative business development. However, no clear verifiable evidence was presented on the degree to which these cooperatives had achieved technical and financial self-sufficiency.
• Another popular topic discussed was the potential role that ICT technologies could play in strengthening rural cooperative business self-reliance. Of particular interest was the presentation of the World Bank guidelines manual on ICT in Agriculture and its specific mention of two cases: one involving the development of a PC-based mobile phone-network for collecting and quickly disseminating market price and supply price. The other involving an FAO-supported pilot project that succeeded in computerizing a Kenyan dairy cooperative in Tulaga. The Facilitators might add that the experience gained from the implementation of this latter pilot project served as an important input in the development of FAO’s own guidelines manual on cooperative computerization.
In closing we would like to thank all of the participants for their useful comments on topic of how to promote increased rural cooperative and producer organization self-reliance and hope that you have found our facilitation of the discussions stimulating. One thing for sure is that it has generated a number of questions and recommendations regarding follow-up to the conference that we would like FAO and its member governments to consider:
A list of questions
Do cooperatives deserve special taxation treatment (e.g. tax exemption, capital injections) by the state/government or should they be treated as ordinarily?
Should coop principles to be strictly observed or can some flexibility contribute to business efficiency? In this respect, we should emphasize that in addition to formal cooperatives we consider all forms of member owned and controlled self-help rural economic organizations “cooperatives” in a broader sense.
Rural cooperative businesses suffer from a range of problems hindering business efficiency and sustainability as pointed out in the discussions: poor organization and management capabilities, problems in accessing national and international markets, dependence on donors (the typical “when the project is closed the cooperative also disappears), isolation in own communities, lack of capital, lack of consistence product quality and supply, lack of entrepreneurial thinking and capacities of farmers, too small size of cooperatives and lack of integration into larger associations/secondary cooperatives. How can these broad issues affecting cooperative self-reliance be more effectively addressed by outsiders without creating more dependence on external support?
How can the new ICT technologies be used to strengthen member access to agricultural and other information, to improve cooperative business accounting systems and to forge working links with other rural and urban organizations and private sector agencies active in rural areas?
Our final recommendations
To member governments:
There are many more successful cases of self-reliant and sustainable rural cooperative business enterprises in developing countries that meet the eye. More objective case studies of these cooperatives need to be done so that government, donors and NGO agencies promoting cooperatives gain a better understanding of the key internal (member capitalization, business management and member governance) and external (legal, policy, financial and extension and training) conditions that have influenced that success.
Financial and technical aid to cooperatives and rural producer organizations should be tied to the assisted cooperative’s achievement of well-defined, measurable self-sufficiency indicators.
ICT can help bridge communication gaps. Appropriate ICT is the answer.
Proposals for FAO:
Given the need to provide technical advice and field assistance to FAO member countries on how to create a more vibrant, self-reliant and sustainable network of independent farmer organizations to support more equitable and sustainable rural development, FAO should give serious consideration to establishing a special technical unit on cooperative and producer organization development staffed with experienced personnel in the field of cooperative business and producer organization development. To that end, FAO should urgently re-establish one or two full-time positions for officers in charge of cooperative development and reorganize some kind of cooperative unit/team.
FAO should devote resources (capital and human) to become once again an authority in agricultural/rural cooperative development.
FAO’s approach should be down-to-earth, realistic and practical. The organization should not enter into high-level academic discussions on principles and definitions, it should focus on the selection and promotion of tangible, efficient and sustainable business solutions for and training cooperatives and other rural self-help organizations.
To start with, FAO should carry out a stocktaking action on what it had done in the past and what it has to build upon in terms of ideas, programmes, projects, guides, training materials, etc.
Based on the above a draft - at least medium-term – cooperative development programme/work plan/road map should be prepared for discussion, revision and approval at an international workshop with the participation of all potential collaborating partners, counterparts, cooperative practitioners and experts.
John Rouse and Janos Juhasz
John Rouse
Financial self-reliance versus technical self-reliance:
Much of the discussion so far has been on how to promote better cooperative financial self-reliance. Not much has been said on how best to promote more cooperative technical self-reliance. For example, how do you help cooperative members and leaders become successfully manage the cooperative business without the need for continued external assistance. In the past governments have tended to address this problem by temporarily assigning trained officers to help manage the cooperative business, but this approach hasn't worked very well. It has only created more cooperative dependency on outside support. Some governments feel uneasy about promoting greater cooperative independence from their support. How do you think this problem should be addressed?
John Rouse
Facilitators' feedback - John Rouse and Janos Juhasz
This past week's conference discussions have highlighted a number of important points regarding the topic of cooperative self-reliance and sustainability.
Encouraging farmers to save more.
Agnes Luo Laima (Zambia) argues that governments should create conditions and incentives that encourage farmers to accumulate more savings. We agree that this is critical. It is well known that rural rates of cash savings and investment are too low in many developing countries to support sustainable rural development. Furthermore, evidence shows that farmers with cash savings are more likely to be self-reliant than those without. The same is true with cooperatives. Cooperatives that succeed in accumulating surpluses and attracting member capital to invest in the cooperative business also tend to be more self-reliant and sustainable. Joseph Musuyu points out, rural SACCOs (cooperative credit and savings cooperatives) in Kenya have been relatively successful in mobilizing farmer savings, and the government is now encouraging more SACCOs to be organized alongside existing coffee cooperatives in the hope that this will encourage more sustainable coffee cooperative growth.
Is continuous business turnover a factor in cooperative success?
Joseph Musuya (Kenya) seems to think so He says it's a factor explaining the success of rural SACCOs in achieving self-reliance in his country. Interestingly, dairy cooperatives (which generate more daily transactions per member than other cooperatives engaged in marketing seasonal crops)in many developing countries have also done relatively well. What do you think about this? How might this help in achieving cooperative self-reliance?
Cooperatives are businesses
Christian Chileshe (Zambia) states in his otherwise excellent contribution that "cooperatives are substantially social institutions that have the potential to produce economic and political benefits". We have to disagree with Christian on the over-emphasis that he gives to the social function of cooperatives. Cooperatives are primarily economic organizations that seek to satisfy the economic needs of their members. They may also address other social and other needs of their members, but their primary function and purpose is an economic one. Joseph Musuya (Kenya) further adds that farmers need to run cooperatives as a business, not as an end in itself. We would have to fully agree with Joseph on that point, because if cooperatives are not managed as a business, they will surely fail.
The pros and cons of vertical integration
Several participants (Igbine-Nigeria; Luo Laima-Zambia; and Steele-Italy) have raised the question of where cooperatives should position themselves within the marketing chain. It's well known that profit margins per unit sold are highest near the top of the marketing chain rather than near the bottom. That would seem to be a powerful argument favoring the vertical integration of cooperative marketing structures to capture these margins. However, it's important to realize that not all vertically integrated cooperative structures are self-reliant and sustainable and the ones that are are built upon a sound foundation of self-reliant primary cooperatives at local level who help capitalize the structure and to protect their member equity stake in the enterprise, ensure that higher level management of the structure is responsive to their member needs. Unfortunately, many of the federated cooperative union structures one finds in Africa have changed little since colonial times and remain top-down structures, heavily controlled and financed by the government rather than by base members and, as a result, are neither democratically run nor self-reliant .
An interesting case study
Peter Steele mentions the case of smallholder potato producers in Nyabyumba, Uganda, where a 120 member marketing association of potato producers was formed from six smaller Farmer Field School groups. The case would seem to be a good example of a bottom-up approach to self-reliant cooperative and rural producer organization development. However, the case study lacks data on that one important point. The association earns a profit but it's not clear on the extent to which the organization has reached technical and financial self-reliance. is such information available?
Laws and policies that encourage self-reliant cooperatives
Lizzy Nneka Igbine (Nigeria) recommends that the promotion of self-reliant and sustainable cooperatives be made a government priority and presumably set down in legislation or formal government policy. We think that formalizing this as an objective of government might help. It certainly wouldn't hurt.
Areas of cooperative action
In her contribution Ms Igbine, Nigeria complains that “high prices of food…go to sharp practices of middlemen”. This raises the issue of the potential areas for cooperatives activities. Experience shows that in agriculture, in addition to primary production, cooperatives have great potential and are most needed in the up-stream and the down-stream sectors, i.e. in the supply of farm inputs and in the processing and marketing of farm products. These are the two sectors of the product chain take the overwhelming share of the consumer dollar spent on food and this is the money farmers should aim to get access to through cooperation.
Financial partnering with rural producer organizations and cooperatives.
Fabrice Larue (France) mentions in an interesting contribution that progressive financial institutions need to think more seriously about business partnering with some of the more mature rural producer organizations where sound investment opportunities exist, but to do so, they will have to improve their understanding of how these organizations work and analyze their investment risk. We couldn't agree more. But at the same time, cooperatives and other producer organizations also need to better understand how these financial institutions analyze investment risk and what are the expected costs and benefits of risk sharing between the two.
We forgot to remind you of one thing
We would like to remind all participants that a whole list of useful publications and manuals is available for downloading on the conference's main page in the rightmost column. Take a look! You might find something useful.
We look forward to your response to our comments.
John Rouse and Janos Juhasz
John Rouse
A question that begs answering.
Why do rural credit and savings cooperatives seem to be more successful at achieving sustainable business self reliance than other types of rural cooperatives? What methods and incentives do they use to attract member savings and capital to invest in the cooperative business? Can some of these methods be adapted for use in other types of cooperatives? What do you think?
John Rouse
The case study mentioned by Lisa Kitinoja "Linking Smallholder Horticultural Farmers with Lucrative Export Markets" raises several other issues not yet touched in the discussions, namely:
1) governments and donors need to understand that the promotion of sustainable cooperative businesses is a long-term educational/training process that requires technical assistance over alonger period than the typicalm2-3 year development project allows. I would also add to this point the one raised earlier by Nishadi Somaratne that such assistance should be linked to the assisted cooperative's achievement certain well-defined business performance and self-sufficiency targets.
2) such assistance should primarily focus on trading to enhance member business skills, not just cooperative managers business skills and farmer members should be treated as "agri-business people" rather than just as farmers.
3) the primary aiims of the training should focus on increasing the profitability of the cooperative business, investing in business growth and increasing member benefits
4) another important lesson learned from the study is the usefulness of small informal group approaches in business skill training, especially in larger cooperatives where the gap between members and cooperative leaders is greatest.
5) evidence demonstrates that rural women are better savers and accumulators and often have better micro-business management skills than men. That being the case, the increased participation of women in cooperatives and at middle and higher levels of management should be encouraged.
John Rouse
Thinking Big or Thinking Different?
My colleague Janos' response on Peter Steele's provocative comment was right on-target. Successful self-reliant cooperatives businesses are built from the bottom-up, not the top-down-- and that takes time. It's a step-by-step group learning process in which rural producers, often with little or no experience in doing business together, learn how to cooperate and run a group business, accumulate capital and make it grow. "Thinking Big" can sometimes be part of the problem, not part of the solution. One has only to look at the dismal performance of many of the large federated cooperative structures set up in many African and Asian countries during the early post-independence period to understand this. They thought "big" but not "different"--to steal a phrase coined by Apple co-dofounder Steve Jobs.
John Rouse
Rome Italy
John Rouse
PART TWO If participants know of individual cases of cooperative success in achieving self-reliance and sustainability and the key factors that led to their success I am sure the rest of us would be interested in learning more about these cases. In addition to collecting more analytical data on individual cooperative success in achieving financial and technical self-sufficiency, Somaratne goes one step further and suggests that both governments and donors should link their assistance to recipient achievement of specific self-sufficiency targets or milestones which could be used to monitor progress in this direction. do you think this would be a good idea? Several participants ( Mulindra, Bazongo and Yakasai) mentioned member illiteracy, the geographic isolation of manynrural coops and coop masnagers lack of computer skills and business skills as major constraints to developing cooperative self-reliance. Could the new information technologies including the more widespread use of mobile telephones be useful in bridging this gap? Here are some other questions to ponder: Should cooperatives be granted special taxation exoneration privileges or subsidies to encourage their development, or would this discourage them from achieving full self-sufficiency? Are cooperatives organized to get donations? Bazongo mentions what he calls "project cooperatives" I.e. coops that are organized only for the durations of a project. Once the project ends so does the cooperative. whatbdomyounthink? Are cooperative principles to be strictly observed or can some flexibility contribute to more business efficiency? (Millns, Steele) We look forward to your response to the above points or any other points raised in the discussions to date John and Janos
John Rouse
First of all Janos and I want to thank all of you for your very useful initial comments on this important topic. In order to keep our discussions ass focused as possible we think it is critical that we all are clear on what we mean by the term "rural cooperative and producer organization". By this we mean: any independent, member-controlled, primarily member-financed business enterprise whose profits are either reinvested to increase the business's capital base or redistributed to members according to their use of the group business' services. As Millns rightly points out in his first intervention, the definition is sufficiently broad to include a wide range of informal as well as formal group enterprises serving their rural producer members. We notice that many of the comments so far have centered on the problems that governments orndonors have encountered in promoting these types of organizations in rural areas. these include: Over-dependence on government support and excessive government or political interference in the running of the cooperative (Bazongo, Somaratne, and Yakas) Problems in mobilizing internal capital (Millns and Yakouza) And Weak business profitability and financial self sufficiency (Somaratne and Steele) Others have commented highlighting government successes in promoting cooperatives and producer organizations in India, Bangladesh, Nigeria, Burkina Faso and Sierra Leone (Mehta, Mahmud, Yakas, Bazongo and de Oliveira); however, what seems to be lacking in these presentations of successes so far is a more detailed analysis of the extent to which these organizations have achieved authentic self-reliance and sustainability--which as you know is the main topic of this debate. Yakouza and Mehta have both mentioned the need to collect more analytical data on individual cooperatives that have achieved financial and technical self-sufficiency in order to identify some of the enabling conditions (business activity focus, management, capitalization policies, etc) as well as external conditions that have influenced this success. END OF PART ONE (To be continued)
John Rouse
Hello participants,
Janos and I will do our best to make these discussions on sustainable and self reliant rural cooperatives and producers organizations both lively and useful to all.