Updated November 1999

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

Selected viewpoints

Introduction Proceedings Executive summary, summary report Summary of proceedings, Part 1 and Part 2 Conference documents Background Discussion paper Key questions FAO experience: Institutional environment SFGA formation Organization & management Service issues Growth & sustainability Viewpoints

THE FOLLOWING are extracts from contributions made by subscribers to the FAO e-mail conference on Small farmer group associations.

From Sudath de Abrew
formerly Coordinator
People's Participation Programme, Sri Lanka

Who should initiate SFGAs?
The SFGAs in Sri Lanka were promoted by the Ministry of Agriculture, although the National Project Director was from the Agricultural Extension Division. In Indonesia, it was the Agricultural Extension Agency that promoted the SFGAs. In Sri Lanka, initial attempts at SFGA formation were by "insiders". When two representatives from each mature small farmer group (SFG) came for the first residential training programme, the leader representatives discussed the need for a SFGA, decided on the structure, and elected the office holders for the SFGA. Only afterwards did they return to their base groups to obtain SFG member support for the SFGA formation. The initial objective was to permit inter-group collective action. However, subsequent systematic restructuring of the SFGAs was an effort by outsiders [of the Peoples Participation Programme (PPP)].
      In the second phase, initial attempts at SFGA formation were again by outsiders (PPP). The initial aims of the SFGAs were to exchange SFG experiences and to seek relief from legal (land ownership) and administrative problems at higher levels of administration. Once the SFGAs were formed, the potentials for obtaining greater economies of scale, gaining access to services, intergroup collective action, etc., were noted and realized. At a latter stage, SFGAs monitored SFG progress and took appropriate action to strengthen weak base groups.
      In the case of Indonesia, SFGA formation was initiated by outsiders and the objectives were primarily to achieve economies of scale in securing inputs and in reaching markets. However, it appeared that the Group Organizers were not well trained in SFGA formation and in providing guidance on SDGA management.
      While this is true in general, Sri Lankan experience has been that spontaneous SFGA formation, without adequate discussion and training, has led to misunderstanding and early disintegration. The Group Organizer seems to have a crucial role in providing guidance during the pre-SFGA formation stage.

How does one promote SFGAs in conditions where government policy or traditional power holders may discourage them?
I agree that SFGA development implies a change in the status quo. The strength and credibility of the sponsoring organization determines to a large extent the degree of opposition by vested interests. By the time the SFGs are about two years old, vested interests would have tried to weaken the SFGs and SFGs would have devised tactics to face the anticipated opposition. In Sri Lanka, it was important to keep the powerful local politicians abreast of the SFG developments, so that the interpretation to these politicians by their cronies would not have a negative effect on the growth of SFGAs. Social and political issues are tackled by the SFGAs only at a latter stage, by which time they should have grown strong. However, it is very important that all concerned know in advance this impending threat (of political sabotage) and take precautions. In Nepal, the second-level organizations did not play an important role as such to assist the members economically. SFGAs came into play at a very late stage, by which time the programme was well established. Being a government programme, P4K in Indonesia never faced this problem.
      Although the SFGAs are informal organizations, the government may wish to see that they also come under the umbrella of the formal farmer organizations (FFOs) promoted by the state. For this reason the State may announce special subsidies and benefits for FFOs. This could lead to frustration. In Sri Lanka, the Small Farmer Group Development Unit is promoting, on a pilot scale, formation of SFGs within these FFO geographical areas, so that small farmer interests can be adequately represented. The degree of success has yet to be assessed. In Nepal, the SFGAs are formal, whereas in Indonesia, SFGAs are very informal.
      The small farmers will have to design ingenious ways to exclude the large farmers from the SFGs. If non-SFG members are permitted to be SFGA members, then extra precautions need to be taken to minimize subsidies. Technical assistance by line agencies were discontinued after the termination of the project in Sri Lanka. In Nepal, the Agricultural Development Bank of Nepal (ADBN) had to develop its own technical staff to service the small farmer organizations, because line agency support was not forthcoming.
      Economic and non-economic benefits, unless they keep increasing every year, are easily forgotten, and under normal circumstances no efforts are made to compare costs and total benefits (economic and non-economic). In Sri Lanka and Nepal, there is clearl evidence of small farmer empowerment, which may not be appreciated.

How does one incorporate SFGAs into existing institutional environments?
A good example are the state-sponsored Farmer Organizations in Sri Lanka. Although these are supposed to be bottom-up institutions, they are in practise top-down and political and are designed to channel government services, and are not responsive to small farmer needs. However, the Ministry-of-Agriculture-based SFGDU is attempting on a pilot scale to form small farmer organizations within these farmer organizations. Even in Indonesia, where there was a large number of efficient Village Cooperative Units (KUD), special programmes like the Small Farmer Development Programme and P4K programmes had to be designed in order to reach the small farmers.
      But at a latter stage these could be brought under a formal umbrella organizational structure, like the SFCLs in Nepal. Only then will the Small farmerssmall farmers realize the right to their legitimate share of the state and NGO programmes and services. Only then could the present system be changed in favour of the small farmers, while correcting the present anomalies. Else, in developing countries, there is no way to involve the Small farmerssmall farmers in the decision-making process concerning their own development. Since WCARRD and FAO sponsored SFDO and PPP, there came in to being a large number of exclusively small-farmer-oriented programmes in many sectors, such as credit, forestry, fishery, etc., operated by both Group Organizers and NGOs. There is acceptance generally of the right of the Small farmerssmall farmers to organize. What is needed is a formal structure to encompass the SFGAs and other networks. The international organizations will have to support the completion of the WCARRD mandate given to the FAO, since this involves a basic human right of the poor. We cannot watch social forces play havoc against small farmer human rights.
      As economies of Asia crumble, the poverty situation is bound to worsen and it is necessary to give small farmer development a formal status.

From Christine Kahanda
Executive Director, Peoples Participation Service*
Zambia

Who initiates SFGA formation and why?
SFGAs in Western Province, Zambia, have been formed by group members mainly to mediate between group members on disputes which the group is unable to solve, such as misuse of group funds and personal conflicts between members that affect cooperation within the group.
       However, there are now instances where SFGAs have been formed to accelerate management of a credit facility, such as hammer-mills and rice polishers, and oxcarts or work oxen, which can be difficult to obtain as individual groups (as an SFGA they have access to bigger loans). SFGAs in Zambia have not been very helpful in terms of gaining access to markets or input supply, due to the history of the second republic, which ended in 1991, that supported cooperatives with subsidies and a monopoly of agricultural input supply and marketing, but the need for such a service is recognized by both group members and promoters.
       The SFGAs have also acted as the steering agents for development activities, like organizing agricultural and commercial shows, which are both an economic and a social function, where both marketing and learning and interaction take place. Usually there has to be some outside facilitation for SFGA formation, from either a promoter of an NGO like the Peoples Participation Service (PPS) or from Agricultural Extension Staff.

Why SFGAs?
SFGAs provide for easy delivery of services and products by many actors in development. In Zambia, the Department of Local Government, who are promoting decentralization at sub-district level, the Agricultural Extension Service and other service providers find it easier to use the SFGAs as entry points to formation of community development committees, because they focus mainly on development issues of the group members and have a cooperating spirit and organizational skills cultivated at group level. Besides, there are very few organizations who have the time to facilitate the organization of such grass-roots organizations: they would rather come with whatever kind of service it is they have for the communities. It requires time and patience to organize the SFGAs, so it may appear less progressive or a double job and cost for the service provider, who may be more interested in delivery of his service only.

Concerning SFGA formation
The economic reasons for farmers forming SFGAs, according to the Zambia experience, are:

1. SFGAs have started in a small way, engaging in the input supply and marketing. Thus two SFGAs multiplied groundnut seed, stored it and distributed it at planting time for their community; four SFGAs have been involved in the marketing of members' maize and vegetables. The introduction of a free market in Zambia has led to the collapse of the cooperatives that had a monopoly on crop marketing and input supply subsidized by Government. The private sector is hesitant to go to the rural areas due to the bad roads. Therefore the SFGAs themselves have had to take the initiative to alleviate the problem of poor distribution of inputs and lack of buyers for their produce.
2. The second economic reason (which may not be of great importance to SFGAs, but it is to the service provider) is that the cost of delivering services and information to SFGs and farmers is lower through SFGAs.
3. SFGAs have developed a sense of responsibility and confidence that they can also demand services; this enables them to demand services tailored to their felt needs and those more likely to be a success economically, rather than some delivered service which may come as a result of political campaigns. Such dumped projects or services have been misused as they are not owned by the people.

Should SFGAs be launched to address single issues or multiple issues?
The needs of groups are dynamic and therefore it follows that the issues to be tackled by the SFGAs should not be specific. For example, an SFGA which was meant in the first place to assist groups in settling disputes, when done with the disputes there will be cooperation in the groups, and a need to tackle issues of marketing and information exchange could easily arise.

Regarding steps for SFGA formation
When small farmer groups are mature and are taking up activities that require a more complex organization to manage, they can form an SFGA. All the group members should be made aware of the need or purpose for their SFGA. It is also important that a minimum of 5 or more form the basis to be linked into an SFGA. In areas where population density is low and scattered, as in many areas in Western Zambia, distances will limit the number of groups or the size of the SFGAs to those who can easily be serviced by their SFGAs.
       A group is considered a member of an SFGA and is represented by two elected members of the group, who are elected based on their commitment to the cause of the groups or the SFGA. The representatives to the SFGAs in Zambia are elected annually: therefore they have to account for the period they are in office. In Zambia, the chair person and the Secretary are normally the representatives of their group in the SFGA, and they are also elected annually in their group.

The role of the Group Promoter in the formation of the SFGA should be that of making the groups aware of their need to form an SFGA, and explaining the advantages that SFGA formation could be to their groups. The Group Promoter can facilitate at the meetings for the formation of the SFGAs.

From Eric Koper
FAO Extension & Communication Officer
Caribbean Amblyomma Programme

As a former counterpart FAO Associate Professional Officer of Ms Christine Kahanda, during the transition of a government-implemented PPP project to an independent non-profit service organization, I would like to contribute a little to this important paper. I currently operate in Hurricane-George-stricken St. Kitts and apologize for my limited contribution and participation due to other pressing issues.
       One of the most important aspects of the Zambian PPP groups is that they transformed from a 'reactive' attitude to a 'pro-active' attitude with the important help from locally trained people (mostly women) that act as group promoters. Rather than waiting for assistance in all kinds of forms, especially credit, we stimulated them to identify what they can achieve themselves, i.e., take control of their own situation. Initially this is much more a social than an economic process and definitely depends on the social development of a society as a whole and the incorporation of socio-economic disadvantaged people in particular. Therefore, focus was initially on female-headed households, who -- especially in the Western Province of Zambia -- were marginalized.
       With the adoption of a more pro-active attitude, groups and their individual members became more independent and built more confidence. This enabled them to be more vocal partners in the development process, which actually accelerated their further development. The formation of inter-group associations is the logical result where the independent groups have grown to recognize that they could benefit from interdependence and larger economies of scale. Like Christine mentioned in her paper, we tried to adopt a more holistic approach towards their self-development based on more fundamental social paradigms, hence did not focus on one particular problem but on group development in a variety of sectors. The major binding factors deal with social aspects rather than economic, which in the case of PPP in Western Province has proven to build a stronger foundation.
       As also mentioned by Christine, this is a slow and long process, but so far has proven to be very rewarding. The role of group promoters should not be underestimated, especially if they live in the same area as the potential group members. They serve for about two years as an important catalyst in the transformation process and direct the originally fully dependent people to independence and self-reliance. If people themselves are capable of identifying their problems and also identify what they can do themselves about them, then they can also provide better guidance to potential 'aid' organizations, who would be more effective and efficient in delivering their assistance necessary to bring about development at a faster rate.
       The strength of a service organization like the Peoples Participation Service is that they can afford to focus on building this capacity without being distracted to the delivery of goods and inputs, and thus are complementary to the other organizations. A major role lies in the linking of these groups with potential assistance providers, depending on self-identified needs. As you could read from the erratum to Christine's paper, the PPS has undergone tremendous growth during the last two years: more groups, more intergroup associations and a strong savings base relative to the low cash income typical of Western Province, which actually still is largely a barter society. I hope the contributions and experience of PPP/PPS will be strongly incorporated in the final document resulting from this conference, as it might be one of the many keys to achieve sustainable development. It is difficult to measure in quantitative terms, but one thing I am sure of is that the investment in a specific service organization is very low compared to the output.

From Ted Weihe
Executive Director
U.S. Overseas Cooperative Development Council

I just want to mention my experience with small farmer groups in Eastern Europe and Russia. U.S. cooperatives and other implementers have been trying to create and strengthen small farmer associations since 1989 in Poland and the shift to more market economies in other countries. Early efforts to form cooperatives almost always failed because of lack of trust and misunderstanding of Western-style bottom up cooperatives. Lot of donor resources were placed on creating cooperatives because small farmers "should" need them and it is Western pattern. In general, these efforts failed.
       After 1989. we thought it might be possible to convert old state structures to cooperatives. Only in Poland has there been positive experiences in converting "state" cooperatives to member-directed cooperatives. Each example is a special case. Through the World Council of Credit Unions and Solidarity, they converted about 500 employee savings clubs into credit unions. Agricultural Cooperative Development International helped convert rural banks that formerly were despository organizations of the state bank into real rural banks with their own regional banks. Land O'Lakes succeeded in converting some dairy cooperatives into more Western practices. The National Telephone Cooperative Association created two new and highly successful rural telephone cooperatives in southern Poland.
       Experience in other Eastern European countries has been mixed at best. There are some old cooperatives (i.e., pensioners housing cooperative in Timisoara, Romania) that have been converted to member-owned cooperatives. There are also examples of extended family cooperatives in places as diverse as Bulgaria and Russia. As one project manager said in Russia, it will take 10 years to build the trust among farmers that they will be willing to really cooperate.
       On the other hand, there has been rapid development of farmers associations in Eastern Europe, but little in Russia or Ukraine. There were break-through sectors such as dairy, meat processing, bakeries, that privatized rapidly and small producers and processes formed associations. The initial purposes of the associations were to deal with adverse government regulations and to try to collect from state enterprises for sales of inputs, etc. Only a few of these associations are fully sustainable from their own resources. Implementers have put too much emphasis on dues and fundraising from donor sources and not sufficient attention to revenue generation.
       In some cases, the early associations have disappeared or reverted to state or donor domination usually because of funding dependence. For example, there were many small farmers associations formed after the break up of state collectives in Albania. Nearly all of these have disappeared and donors were unsuccessful in converting them to successful associations or cooperatives. They were really formed to deal with labor and farm planting since land plots were so small - basically they were voluntary production collectives without sufficient financial ability to carry out processing or marketing (essential for sustainability). In the case of Russia, ACCOR was a national, top down structure for private farmers. It held great promise initially and was essentially used for highly subsidized loans. When the loans dried up and communist regained strengthen in rural areas, ACCOR chapters lost their members and reverted to state instruments. Many associations in Russia have died as the private farmers movement slowed down and in some regions died out. On the other hand, closed agribusiness systems have emerged where entrepreneurs developed markets for their production and then back linkages in processing (e.g. assembly land through rental arrangements, open a store or restaurant, begin processing of grains, bakery and other activities within the corporation).
       Here are some of my conclusions: (1) large scale conversion of state cooperatives to Western style cooperatives generally failed except in a few cases in Poland, (2) early associations were often parts of the old state system and few of these survived, (3) associations based on linkages between production and processing such as dairy associations linked to dairy companies have succeeded based on mutual needs (daily milk collection - quality and assured supplied), (4) many associations have been created, often with donor help. Many of these are still donor dependent and mostly provide advocacy, training and limited services, and (5) few new cooperatives have been created and they usually came about because of special conditions or leadership.
       These views are based on about 20 evaluations that I have carried out since 1989. They do not necessarily reflect the views of U.S. cooperatives.

From John Rouse
Coordinator, FAO People's Participation Programme

I read the comments on farmer organization development experience in Eastern Europe with interest. FAO experience in promoting co-ops and small farmer groups in Africa and Asia leads to similar conclusions, though the successes may be fewer. The point that: "Lots of donor resources were placed on creating cooperatives because small farmers 'should' need them and it is the Western pattern" is a valid one, I think. We "westerners" are all too often guilty of promoting approaches to social-economic organization which may not be completly compatible with existing institutional environments and 'ways of doing business.' Getting the right socio-cultural fit may be more important than we think.
       "Where money comes from", and the terms under which it is provided, certainly have a big influence on the process of organizational development, member-user accountability and long-term organizational sustainablity.
      Using "other people's money" to finance growth made a lot of sense under past inflationary conditions, but times are changing and the world seems to me to be moving into a deflationary period where "other people's money" ("Outsider" money) is scarce and more expensive than "Insider" money. A penny saved is -- more so today than yesterday -- a penny earned.

From Peter Oakley
INTRAC-International NGO Training and Research Centre

We can descibe the functioning of the SFGAs and we can detail their evolution in several countries, but, after all the effort and energy that has gone into promoting them, the key questions are [growth and sustainability]. In Asia in particular there is no shortage of details on SAFGAs or other small farmers development or credit groups, usually accompanied by copious manuals on how they should function, etc. Clearly the evidence is considerable that external support can provide, and even pour, resources into these groups and they will 'take off' in the sense of assume some form of structure and begin to pass the resources onto their members.
      But all too often our understanding of the evolution,strengthening and 'empowering' of these groups is reduced to adding up figures or 'educated guesses' of external experts. The M&E of phenomena like SFGAs has all too often been dominated by numbers which, of course, are of course an important dimension of organisational growth and range of activities. But it is the 'insertion' of such groups into the network of competitive relationships that control access to and the distribution of resourtces which will ultimately show whether they can have a 'life' after the external inputs dry up.
      Are there any examples, therefore, of effective M&E of the organisational growth and developing political strength of SFGAs? Has anybody set up a system to monitor both the economic (quantitaive) and 'political' (qualitiative) growth of an SFGA and have they monitored consistently over a period of time and are thus able to show the growing strength of the SFGA? If so, this evidence would be a more useful resource not just for those who work with SFGAs, but also more widely for all community-based movements of 'empowerment'.
      I am particularly interested in this issue, not just from a SFGA perspective, but more generally from the perpsective of the qualitative evaluation of community-based development processes. Is there anybody out there working on this issue in relation to groups of resource-poor farmers?