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Cooperatives - A purpose beyond the profit

Posted by Beate Stalsett Tuesday, February 28, 2012

It’s the last hours of the last day of the 4th global meeting of the Farmers’ Forum, and you would think that the energy of the participants would be running low. I am happy to tell you that this was not the case of the side event on the International Year of Cooperatives (IYC). The meeting room was full of chatter and energy, and simultaneous translations were being done in every corner. We were there to discuss cooperative enterprises, and their role in transforming smallholder agriculture into profitable business. Most importantly we were there to listen to and learn from the experiences of three representatives from cooperatives in Armenia, Cambodia and Kenya:
  • Mr. Vardan Hambardzumyan, President of Federation of Agricultural Associations (FAA), Armenia
  • Mr. Pan Sopheap, Executive Director of Farmer and Nature Net (FNN), Cambodia
  • Mr. Philip Kiriro, President Eastern Africa Farmers Federation (EAFF), Kenya
Why cooperatives, why now?
The United Nations (UN) has declared 2012, as the International year of Cooperatives (IYC). Nora Ourabah Haddad from the Food and Agriculture Organization of the United Nations (FAO) opened the conversation and told us that the IYC has been one of the most popular UN years with a support from over 90 countries. The Rome based UN-agencies have joined forces to promote agricultural cooperatives throughout the IYC and beyond. Nora started her presentation by underlining the definition of a cooperative:

“A cooperative is an autonomous association of women and men, united voluntarily to meet their common economic, social and cultural needs and aspirations through a jointly owned and democratically controlled enterprise.” (International labour organization recommendation 193)

It is important to stress the definition, since the terminology might not be familiar to everyone, and cooperatives may have different meanings in different contexts. An agricultural cooperative is an important platform for rural development because of its financial and social dimensions. The panellists were asked to elaborate on two important aspects of cooperatives: What makes cooperatives viable? And how do you build ownership of the cooperative among its members?

What makes cooperatives viable?
Mr Hambardzumyan said that services offered by cooperatives to their members is one of the main factors of making cooperatives viable. The services need to be targeted and benefiting the members. He said: “The cooperative is a tool in our hand to solve our problems”. Financial turnover is another factor that is of key importance to make a cooperative viable.

Mr Sopheap continued on the same note and said that empowering members to help themselves is one important aspect. He then went on to say that making a profit is also essential, and to allocate a collective fund so that the cooperative can sustain itself. Additionally Mr Kiriro emphasized the importance of having the right policy framework and support to make cooperatives become strategic business partners. Leadership at political level is another relevant and important factor.

In other words, empowerment, policies and profit are key elements in making the cooperatives self-sufficient and viable.

How do you build ownership of a cooperative?
This leads us to the next question that was posed to the panellists, how do you make the members feel real ownership of the cooperative? Building ownership of a cooperative is important. If a cooperative is to live up to its definition it needs to: Be supported by its members and embrace voluntary membership paradigm. It also needs to have grassroots support and to be democratically governed.

Mr Sopheap suggested three key elements to make sure cooperatives and their members are in sync: First of all, introduce the cooperative’s principles to members, make sure everyone knows and understands them. Second, build the members’ trust. The members need to trust that they will benefit from the cooperative. Last but not the least, create an institutional collective fund.

The need for training and resources
The need for capacity building was something that came up several times in the discussion. Training is needed for members of cooperatives and for stakeholders. A representative from the International Labour Organization (ILO) presented the My.coop training package. This package is freely available online and has many learning programmes. My.coop is designed for managers and members of cooperatives, as well as organisations and individuals that train agricultural cooperatives. Its objective is to enable people to address challenges specific to cooperatives in market oriented agricultural development. Try it out!

What came out loud and clear from listening to the experience of the participants was the power and potential of cooperatives in rural development. Cooperatives can help people help themselves and give a voice to poor rural people. During the event new connections were made, and experiences and challenges shared. A conversation with multiple stakeholders started that hopefully will carry on throughout the IYC and beyond.

Read more about how IFAD work with rural institutions and cooperatives: