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Markus Hanisch

Concepts of agricultural transformation promote market liberalization and commercialization of small farms as strategies for growth and poverty reduction. But small-farmer participation in globalizing agricultural markets is risky. In OECD countries, farmer collective action has managed to reduce some of the risks of participating in the market by forming powerful vertically integrated cooperative organizations. This chapter discusses key issues in the discussion on pro-poor agricultural development and identifies the position and functions of rural cooperatives for a concept of pro-poor agricultural transformation. Differentiating between types of farmer-based organizations, concepts of rural transformation, determinants for successful collective action and dimensions of poverty, the chapter seeks to conceptually contribute towards explaining why cooperatives are often presented as tools for poverty alleviation although the results of analysing their effectiveness in alleviating poverty are rather mixed. The chapter draws conclusions for future research on the subject and for drafting group-based development policies.
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Kees Blokland and Jur Schuurman

This contribution differs from most other chapters. First, the authors are practitioners in a development cooperation. Their organization, Agriterra, is a Dutch agency working with membership-based rural organizations: cooperatives and farmers’ organizations. In their chapter they state that the presence and strength of such organizations has a positive influence beyond their own membership. The authors claim that it is also the general development process (growth, democratization, increasing equality) that benefits from the presence and actions of membership organizations, since they contribute to the checks and balances that are indispensable for social and economic progress in any society. This is explained by certain mechanisms inherent to these organizations, in addition to their general nature as ‘schools of democracy’ in the Tocquevillian sense. Some evidence of this more general impact is provided but remains anecdotal; hence, the authors call for ambitious research to pinpoint with more precision the way this relationship works.
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Stefano Pascucci and Jessica Duncan

In this chapter we aim to better understand and conceptualize the effect of formalization on informal mechanisms of collective actions, with a focus on pastoralists in Gujarat, India. More specifically, we look at participation in milking activities of both pastoralists and dairy farmers as related to a number of conditions and attributes of the different communities and rules, as well as participant-related features. Through the analysis of the case study, this chapter highlights ways that pastoralists are being organized (formally and informally) within the dairy chain context. Particularly we analyse how intervention in the ordering of Indian dairy markets has produced tensions between formal and informal collective action, and examine the potential impacts on informal collective action of pastoralists. We conclude with a call for development practitioners and policy makers to reflect on the relationships between formal and informal collective action to support more inclusive policies and programmes.
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Bekele Shiferaw, Jon Hellin and Geoffrey Muricho

During the pre-structural adjustment era, many governments from developing countries supported agricultural producer organizations (POs). These organizations, however, often failed to provide desired services to members due to political interference, internal governance and managerial problems. Nevertheless, government withdrawal following market liberalization reforms left an institutional void. Drawing from experiences in Africa and other regions, this chapter reviews the roles that POs play and challenges that they currently face in improving members’ access to markets and agricultural technologies for enhanced food security and poverty reduction. Empirical evidence indicates non-exclusion of the poor from POs in many cases and such participation in POs has the potential to enhance members’ access to markets and technologies. However, POs face challenges of overlapping demands of social inclusiveness, empowerment and external competition. We conclude that democratic governance, homogeneous and optimal group size, transparency and market-orientation, can enhance POs’ performance. Donors and governments can stimulate the emergence and sustainable development of POs by investing in complementary infrastructure, capacity building, financial access and enabling regulatory and legal frameworks.
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Denis Pesche and Bruno Losch

In West Africa, how to conceive a model of agricultural development – and, more widely, rural development – consistent with the structural realities of the region and the sub-continent, namely a workforce that continues to grow, with limited non-agricultural economic alternatives, in a context where the pressure on resources remains high and rural poverty is pervasive? In the West African agricultural sector, there is a growing array of organizations representing farmers and rural inhabitants. These rural producer organizations (RPOs) play an increasing role in the development of agriculture and rural policy, in conjunction with the private sector, NGOs and other stakeholders. How to better understand this increasing institutional complexity? How to strengthen RPOs in these processes? This challenge has both an academic and a practical dimension. After a brief historical overview of the emergence of RPOs, this chapter deals with these issues by presenting a comprehensive framework of the dynamics of RPOs and their networks, with concluding remarks on capacity-building strategies.
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David J. O’Brien and Michael L. Cook

This chapter reports findings of a study of five East African Cooperatives (in Kenya and Uganda) that seeks to identify the macro-, meso- and micro-level factors that facilitate and/or block the development of smallholder farmers from gaining greater access to growing milk markets. Methods include in-depth interviews of cooperative boards and management as well as sample surveys of cooperative members. Macro-level economic development factors account for differences between Kenyan and Ugandan cooperatives. Meso-level characteristics of regional milk markets within countries explain additional variance between cooperatives. The most important source of cooperative performance, however, is the quality of cooperative leadership. This highlights the importance of developing cooperative governance experience, technical and accounting skills, leadership training, large organization comprehension, member benefit orientation and principal–agent professional relationship discipline – all attributes necessary for principal-oriented governance and leadership. These issues should be addressed prior to investing resources in development assistance programmes.
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Sukhpal Singh

Farmer collectives are viewed as an important element in linking smallholders with modern markets as they provide many benefits for this interface. This chapter examines the experience of a unique set of farmer collectives. Farmer companies (FCs) in Sri Lanka and producer companies (PCs) in India have been in existence for the last 18 and 10 years respectively in law and in practice. The chapter compares and contrasts the rationale, legal provisions, processes of setting up such FCs/PCs and role of promoters, especially the state. It examines the differential performance of these companies within each country and across the two countries and analyses the factors affecting their performance, based on case studies of such companies in Sri Lanka and India. It draws lessons, based on theory and practice, for better organization, promotion, management and performance of such producer agencies for more market-oriented performance for improving livelihoods of small producers.
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Annemarie Groot Kormelinck, Christine Plaisier, Roldan Muradian and Ruerd Ruben

Given the increasing importance that is attributed to social capital in cooperative-type organizations, we test the hypothesis that members of high-performance cooperatives exhibit higher levels of social capital (as measured by interpersonal and institutional trust) compared to members of low-performance cooperatives. A field survey and three behavioural games were undertaken amongst members of two high- and two low-performance primary marketing coffee cooperatives in the Sidama region in Ethiopia. We find evidence supporting our hypothesis, with members of high-performance cooperatives exhibiting significant higher levels of institutional trust (stated trust and cooperativeness), and interpersonal trust (behavioural trust and trustworthiness) than members in low-performance cooperatives. Furthermore, gender comparisons show that female members have a higher propensity to adopt pro-social behaviour than their male counterparts, in experimental settings. Since the income of members of high-performance cooperatives is considerably higher than the income of their peers in low-performance cooperatives, we conceptualize a relation between social capital, cooperative performance and members’ income as a loop, with feedbacks occurring between these components.
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Karin Wedig

The revival of agricultural cooperatives in sub-Saharan Africa led to a renewed interest in the potential contribution of Producer Organizations (POs) to inclusive rural development. This chapter presents survey and qualitative data from Uganda’s coffee sector to illuminate the organizational responses of cooperatives to small farmers’ economic constraints in the region’s liberalized agricultural markets. Some organizations are able to grow while simultaneously advancing the equitable distribution of benefits among members based on more democratic organizational structures. These POs achieve reduced defection rates and expanded membership numbers by maintaining secondary organizational structures, which allow disadvantaged members, including women and particularly poor farmers, to better represent their interests against local elite capture of resources. The results from Uganda indicate that although high levels of social capital in community-based organizations may support the establishment of economically viable POs, extensive control by local elites of core governance structures tends to weaken equitable organizational development.
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Jos Bijman, Roldan Muradian and Jur Schuurman

This synthesis chapter discusses the issues that are at the core of the academic discourse on the transformation of cooperatives in developing countries. The first is about inclusion or exclusion of particular groups of farmers. This issue has gained significance because cooperatives-as-businesses are more likely to be selective in allowing farmers to become members. The second issue relates to the inherent tensions in cooperatives and how these are affected by the transformation process. For instance, the classical trade-off between equity and efficiency seems to become more pronounced when cooperatives focus on economic functions and entrepreneurial activities. The third issue is about the institutional environment of the cooperative and what conditions determine the type and extent of support from governments, NGOs and other facilitating organizations. The chapter ends with suggestions for further research on cooperatives and POs in developing countries.