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Updated November 1999

E-mail conference
24 September-11 November 1998
Small farmer group associations: Bringing the poor together

FAO experience: Organization growth and sustainability


Proceedings Conference documents

Question 23. How do inter-group networks grow? Is there a common growth pattern or are they all different and location specific?

FAO experience

Our research seems to suggest that the typical shape of SFGA development would follow an "S" shaped curve pattern, beginning with a "slow learning phase" with little SFGA service activity during which SFGA objectives are identified, structures developed and technical and management skills mastered, followed by a "rapid growth" phase during which activities are developed at a rapid rate, followed by a "crisis and retrenchment phase" when over-expansion leads to management crisis and the need for reform.

Of course, the shape of the curve will depend on the main activity focus of the SFGA, its main source of financing, skill factors, etc. The development path of credit supply-driven SFGAs, as in Nepal and Indonesia, would probably have a much steeper "S" curve shape than an SFGA that largely generates its income from internally mobilized sources, and the crisis phase would depend more on any interruptions in the continued availability of externally provided concessional credit funds.

A detailed study of SFGA growth paths, however, would be worth doing, especially because the findings from such a study could provide us with more accurate knowledge on how these organizations grow and evolve. This is important, because if we are to suggest methodologies which aim at increasing the long-term self-reliance and sustainability of SFGAs, then we have to better understand the SFGA growth process and its dynamics.

  • What has been your experience? Or what is your opinion on this matter?

    Question 24. Should the natural logic and tendency to create multi-tiered networks of SFGAs be encouraged or discouraged? When and under what conditions?

    FAO experience

    The argument for building larger and larger horizontal and vertical structures to further improve the economies of scale and collective bargaining power of small farmers is compelling to small farmers, governments, development agencies and donors alike. The latter three are particularly fond of proposing the development of multi-tiered group structures to deal with development problems at various levels. Bigger is viewed as better, and we are often eager to provide financing or assistance to encourage this.

    One of the main problems in SFGA development is that there is frequently a temptation by all the above stakeholders to create these structures long before lower organizational levels have gained sufficient organizational and technical experience to properly govern and control these higher-level structures. Often we are left with the creation of beautiful multi-tiered superstructures which look great on paper but show low levels of base member participation in decision-making, weak base member control of higher management, and poor performance in practice.

    Our experience argues more in favour of a "go slowly approach," investing training efforts first in building the base capacities of lower levels and in teaching members and leaders the principles of good governance, member accountability and the obligations of both higher-level leadership to serve the needs of its lower-level members, and lower-level members to ensure that their higher level leaders do so, before proceeding to build the next-higher level.

    There are a number of institutional devices - voting and election procedures, meeting and decision-making/clearance procedures, use of member-controlled decentralized decision-making bodies within the structure - which can reinforce bottom-up accountability in such multi-tiered structures, but none are perfect.

    Clearly, one effective way to "enforce" such accountability is in the way these structures are financed. If higher level structures are more dependent on still higher levels, or outside sources for financial support, then bottom-up accountability is likely to remain weak. If, in contrast, base members have a larger financial and equity stake in financing the activities of higher levels, bottom-up accountability is likely to be much greater.

  • What has been your experience? Or what is your opinion on this matter?

    Question 25. Why should SFGA self-reliance and sustainability be our principle concern? How can we measure progress towards these objectives? Should SFGAs be "forever" or "only as long as they are useful to members"?

    FAO experience

    In our view, a "successful" SFGA is one that can sustain its operations and activities with little need of outside support. Some will argue that in an "inter-dependent world," no organization can afford to be completely self-reliant; nonetheless, in most developing countries, where socio-economic systems are in a constant state of flux and business and political alliances are constantly changing, being somewhat self-reliant would seem to be an advantage. Indeed, our research in the four countries seems to bear that out. The more financially self-reliant the small farmer group or SFGA and the higher the level of financial resources mobilized internally, then the more sustainable it appeared to be.

    Most easily forgotten is that SFGA cooperation involves costs as well as benefits. Only when the difference is positive will cooperation occur and it will only be sustained if the SFGA can generate enough cash income or in-kind contributions to cover its running costs in the short run and have enough left over to invest in growth.

    But while having a "positive cash flow" may be enough for an SFGA to "stay in business" it is not enough to guarantee its sustainability. That requires reaching some degree of operational and financial autonomy or self-reliance.

    One very good measure of success potential is the level of member financial and labour-time contributions (including attendance at meetings) to the organization, since they represent "votes" in favour of the organization. When a group makes a financial contribution to the organization or attends a meeting, it has already made a crude cost-benefit calculation.

    Another measure relates to the level of member participation in SFGA meetings and decision-making or the use of SFGA services. Where participation rates are consistently high, it usually indicates that the SFGA is meeting member group needs and enjoys some level of member group support.

    But there are many other measures as well, including SFGA business viability, SFGA management technical competence and ability to carry on activities in the absence of a group promoter or group organizer, etc.

    Should "sustainability also be interpreted to mean "permanence?" Our view would be to answer "no." We see the process of self-help institution-building as being a dynamic one, involving a wide variety of organizational forms. The SFGA is just one of those forms which may be useful at a particular stage of development, given local conditions. No organization should be "forever" and should and will exist only as long as the net benefits members derive form working through it exceed the net costs.

  • What has been your experience? Or what is your opinion on this matter?

    Question 26. How can modern computer and communications technologies assist inter-group associations to develop? Under what conditions?

    FAO experience

    A lot of excitement these days has been generated regarding the new advances in modern computer and communications technology which show some potential for improving isolated rural peoples' ability to communicate with each other and access important information and services. An interesting example of this has been the Grameen Bank's initiative in promoting the use of mobile phones by Grameen Bank groups. FAO has also been a major promoter of "rural community-controlled radio" systems and "telecentres" in rural areas which also could be used by SFGAs to improve inter-group communication and cooperation. Whether such technologies can be used by SFGA networks in computer and electricity "poor" regions is another question.

    Yet there are some new experiences in using "mixed technologies," i.e., a combination of high-level (PC-, telephone-, and Internet-based) technologies and lower-level technologies (radio communications, low-cost printing technologies, etc.) to help bridge that gap.

    FAO experience is very meagre here and there is a great need for further research and field testing.

  • What has been your experience? Or what is your opinion on this matter?

    Question 27. Should SFGAs seek legal recognition? What are the advantages and disadvantages of legal recognition?

    FAO experience

    Our experience leads us to say "no" unless there are very concrete economic advantages to be gained from such recognition and such recognition does not ultimately compromise the self-reliance and operational autonomy of the SFGA involved.

    Legal recognition does help "legitimize" the SFGA in the eyes of the government and may provide the organization with easier access to grants, credit and other technical assistance services, yet it has also frequently meant more government or political interference and control, which can undermine SFGA efforts to achieve a minimum degree of self-reliance, operational autonomy and sustainability.

    SFGA leadership and members should therefore carefully examine the pros and cons and benefits and costs of formal association before proceeding.

  • What has been your experience? Or what is your opinion on this matter?

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