Jos Bijman, Roldan Muradian, Jur Schuurman (eds.): Cooperatives, economic democratization and rural development
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In September 2015, the United Nations adopted 17 sustainable development goals, which included the ending of poverty (UN General Assembly 2015). Amongst the goals pertinent to that objective are: quality education; gender equality; decent work and economic growth, industrial innovation and infrastructure; reduced inequalities; responsible consumption and production; and peace, justice and strong institutions. The central theme of this book relates to many of these goals. It shows that, by taking collective action, farmers can increase the economic and related benefits that accrue directly to themselves, but also promote the indirect benefits of reducing both poverty and inequality in the wider community.
The book comprises a series of chapters by different authors who are predominantly economists and specialists in the establishment and analysis of local, national or international farmer organisations. Their chapters are made up of case and comparative studies and overview analyses. The book is arranged in four parts and includes introductory and concluding chapters. The first part describes producer organisations in the context of rural development, general trends and dilemmas. The second deals with issues of democracy within collective organisations, inclusiveness and the accumulation of social capital. The governance of farmer organisations, and membership commitment, is discussed in part three, and the concluding, part four, synthesises the preceding chapters into an agenda for further research.
This work presents a most useful source of information that is likely to be of value to both scholars and policymakers, as well as those who are actively involved in constructing farmer organisations. It includes very detailed studies of organisations for small-scale farmers, with a particular focus on Africa and Asia. These case studies provide an insight into the successes, failures and complexity of these organisations, and lessons that can be learned by similar groups. In addition, they also give valuable direction on the methods and analyses that may be used for examining the functioning of farmer organisations in general.
The opening chapter clarifies the scope of the farming organisations to be dealt with in the book. The title of the book includes the word ‘cooperatives’, but the term ‘Producer Organisation’ (PO) is now used more widely by governments, since it increases the scope of governance mechanisms. Thus, the book is mainly concerned with POs that look outside their own organisation and mediate between their members and suppliers and buyers, and between communities and political and institutional actors outside farming. The authors wish it to be understood that the nature of POs in emerging economies is in the process of transformation. The book is therefore timely in providing information on the basis of this transformation, and guidance for the future.
The authors state that the literature on agricultural development has the prominent themes of market access, the global need for food security by increasing productivity and total production, climate change, and sustainability of process and product. However, the major challenges to small businesses include the external factors of the rise of supermarkets, changing product and process standards and emerging vertical coordination in value chains. A business also has internal problems of acquiring adequate capital, skills and information and in maintaining its bargaining power. These issues are just as relevant to small holder farmers in any country, whether with large or small GDP, as they are to the case studies in this book.
The challenges of these themes may be countered in part by the formation of POs. The case study for West Africa by Peshe and Losch showed that rural POs have, in the last two decades, influenced three types of public policy: policies for agricultural products, transversal policies such as for land or rural finance, and policies which encompass major development choices.
There is commonality amongst many of the POs examined in that they exhibit six main functions to varying extents, depending upon the complexity and expertise of the organisation: economic (through marketing); financial advice to their members; provision or arrangement of credit; management of equipment and other resources); social welfare (access to health and education); and political functions representing and defending the interests of members. For example, a PO can reduce transaction costs by conveying generic information, mediating supply chain transactions for its members and shortening marketing chains. It can also be an advocate in property rights and contracts, and manage the degree of competition between members by identifying synergies and making product recommendations. There is some evidence of farmers getting higher prices in a group rather than individually, although there may be increased delays in payment which will affect cash flow for cash restricted farmers. In addition, one of the problems for small-scale farmers is compliance with product standards for high value markets, including those in food safety and fair trade products. Organised producers often standardise production practices to comply with food safety.
The authors stress the important outcome of rural POs alleviating poverty. In his chapter, Hanisch examines the role of cooperatives in poverty alleviation, which may be linked to promoting basic needs and the social services, facilitating empowerment and enhancing security. Pro-poor transformation includes changing low productivity agriculture into commercial enterprises. This needs the adoption of improved technology and the empowerment of farmers in the economy and politics. Hanisch gives a model with the three phases of establishing basic systems such as: i. extension and infrastructure; ii. kick-starting the markets by supporting the POs and then reducing central support; and iii. devolving control to the private sector. Pascucci and Duncan see the enabling conditions as including provision of basic services, education, health and security. The needs also have to be recognised of providing access to productive land and to equitable value chains as well as promoting those fiscal policies and fair trade that enable the participation of small-scale farmers in wide, and even international, markets. The concept of social capital is used throughout the book in the sense of it being a structural feature of a social organisation that facilitates collective action and co-operation for mutual benefit.
The use of POs has many benefits, but these organisations face challenges too. Peshe and Losche have highlighted challenges for POs in meeting the expectations of their members and in placing the development of family farming with regional pressures in the context of a globalised economy. Shiferaw et al. agree that globalisation and increased competition through external market forces (including supermarkets, transnational companies and distant subsidised producers) present difficulties for the POs. They comment that biophysical and sociocultural factors and national and regional policies may either limit or enhance the viability of a PO. These authors go on to describe key challenges through the complexity of needs and the conflicting nature of stakeholder interests. Of particular significance is their recognition that there is lower participation in POs from wealthy larger-scale farmers and from the resource poor. Involvement by these groups would benefit the finances and aims of the PO. Indeed, Wedig states that POs should mandate themselves to strengthen the bargaining power of disadvantaged groups and to address inequality through pooling resources and building capacity. Singh notes that the collective action of farmers in a PO still has problems of transaction costs that arise within the PO, along with: maintaining a working capital; free riding by some businesses inside and outside the organisation, who derive benefits without sufficiently contributing financially or in kind to the PO; and other membership problems and disagreements. Blokland and Schuurman remark that corruption, authoritarian practices, segregation and conflicts are not uncommon in POs.
A very useful case study is presented by Pascucci and Duncan, who deal with pastoralists in India. Here they describe clearly the interactions within formal and informal POs and the variables that affect them. They demonstrate, for dairy, how the move from informal to formal actions through the formation of POs is changing farming practice. These changes, however, may be risking the pastoralist way of life by creating unanticipated alterations in social structures and local economies for which the outcomes are not yet known. This stresses the importance of looking beyond the economic benefits to PO members when supporting farming collective action.
Ensuring that members are adequately involved in decision-making, are fairly treated and derive benefits from membership in an inclusive PO are crucial to its viability and survival. Singh, in presenting case studies of small-scale farmers and POs in India and Sri Lanka, gives an example of using shares in the PO, which can then be traded between members. The number of shares each member may hold is limited so that no member can take too dominant a role. Many POs operate through membership payments as an alternative. In their studies of cooperatives in China, Jia et al. describe governance structures that encompass decision rights and income rights, though decisions may be delegated.
Shiferaw et al. emphasise that members’ production efficiencies benefit from access to agricultural technologies, such as improved crop varieties. Being a member of a PO increases the likelihood of uptake through interaction with other farmers who are using such technologies. They also highlight the importance of trust among members and suggest that interventions which enhance trust contribute to successful operations. These interventions can include providing rules on member interactions and on organisational democracy. Kormelink et al. show that a high level of trust, both Institutional and interpersonal, reduces opportunistic behaviour among members. The high-performance of cooperatives appears to be linked to higher social capital of which trust is a part.
The key features of membership of a PO are summarised by Bijman et al. in that being a member requires investment in time and effort and depends on loyalty. Members must be prepared for situations where collective decision-making may lead to lost opportunities, where members may be exposed to opportunistic competitors, and when any costs of mismanagement are borne by all the members. Not all farmers benefit equally; there is empirical evidence that medium-scale farmers benefit the most, with small scale-farmers having difficulties in complying with standards. O’Brien and Cook pose a key question, which is to what extent PO members benefit in ways not open to their neighbours who choose not to join. Reasons are given, but the answer depends upon the organisation and the priorities of different countries and is not unequivocal.
Scattered throughout the book are conclusions on the nature and functioning of POs. Good practices for POs include identifying market opportunity, designing exclusive benefits for members with targeted financial and technical support, and having rules of participation. The best practice PO should build trust and provide policy advocacy. Management should be professional as a PO may be limited by its internal expertise. There is still much to understand about the functioning of farmer organisations and Bijman et al. stress the importance of further research on the influence of state policy and state agencies, the effectiveness of POs, the relationship between function and position in the food chain, and inclusivity.
The book provides a useful contribution to both the study of, and the development of, food security through the increase of production efficiency and well-being of farmers. It concentrates on small- scale farmers with a number of the case studies focusing on emerging economies. However, the lessons learned on the formation of POs could be applied more widely to farmers across all countries. The book does provide descriptions of a range of production systems including horticulture and dairy and gives evidence of the importance of POs, and the supporting international agri-agencies, in engaging in national policy debate. It recognises that, so far, it is difficult to evaluate the impact of these POs on national trade or how their proliferation has influenced international trade negotiations. Because of the wide variety of PO structures there is much circumstantial evidence, but not yet an overarching proof that these membership organisations have a significant role in development. However, Blokland and Schuurman conclude that the presence of POs in a country is good for democratic and egalitarian development as well as directly benefiting members.
The book also recognises the many variables in the operation of a PO. This makes it difficult to analyse reliably and to draw conclusions, particularly across countries and regions. However some general principles are evident in the lessons that can be learned about the successful operation of cooperatives.
In conclusion, this book provides a useful, evidential, starting point for the study and analysis of cooperatives. However, its wider value can be found in its demonstration of a way forward, beyond its agricultural context, for poverty alleviation and the increase in health, education and wellbeing of rural communities. This progress will arise from the benefits of producer organisations that pool resources for their members and act as advocates for their communities, as well as markets, towards government and policymakers. It should be given a readership beyond the PO actors.
- UN General Assembly (2015). Transforming our world : the 2030 Agenda for Sustainable Development, 21 October 2015, A/RES/70/1, available at: http://www.refworld.org/docid/57b6e3e44.html. Accessed 30 April 2018.