#fafo12 – Institutional development and professionalism key to financial sustainability of farmers’ organizations

By Monica Romano

The richness, passion and variety that emerged from the discussion at the Farmers’ Forum working group on institutional development and financial sustainability of farmers’ organizations (FOs) were striking. It will be challenging to capture all the valid points raised and to minimize the risk of missing something good.

Financial sustainability of FOs is not a new subject. It has been debated for long time. The tension between political autonomy and reliance on financial resources from Governments and the donor community emerged several times during the discussion, and participants did not always have the same views. There were supporters of financial autonomy who strongly believe that by asking for financial support, FOs de facto hand over their autonomy. Others tended to distinguish between political independence and financial reliance.

It was therefore enlightening, at least for me, when a young farmer from Cambodia referred to “inter-dependence” (that is, neither independence nor dependence) as the way out of the dilemma. ”Interdependence,” he said, characterizes the dynamic relationship between FOs and various actors in development – particularly Governments and public entities, international organizations and the donor community.

Certainly, challenges involving the financial sustainability of FOs are still there, and farmer representatives are aware of them. For example, can members’ fees generate sufficient income for FOs to engage in all the activities in their mandates – such as providing services to, and advocating on behalf of, smallholder farmers and producers? And how can FOs deal with their non-profit status, which, in a number of contexts, may end up inhibiting their capacity to generate resources on their own? What about exploring further opportunities for FOs to access credit services?

Some participants pointed out that it is of utmost importance to invest in strengthening the technical, managerial and organizational capacity of FOs, as well as their governance mechanisms and leadership skills. IFAD and other development organizations are playing a role in this area. One participant emphasised the need for FOs to become really professional entities that can compete at the same level as other professional service providers.

Various concrete solutions have been proposed as a way forward for FOs, in many cases by drawing on successful experiences that have potential for replication. It was suggested that IFAD and other development institutions provide a combination of loans and grants to financially support FOs. This could build their capacity while making FOs more responsible as owners of their own path towards sustainability. Others in the group felt that bigger does not necessarily mean better. For FOs – especially those not large in size or just starting out – they believe small grants are the most appropriate instrument of support.

We will soon see which of these suggestions IFAD will follow up on, and how, to enhance our joint action with FOs for the benefit of smallholder farmers and poor rural people.

To me, the key point in the end is that institutionally strengthening of FOs is crucial to provide demand-driven, appropriate, quality services for their members. It is also important for enabling smallholder farmers and their leaders to influence policies and negotiate with Governments and the private sector. As an audience member widely noted, institutional development of FOs could lead “if not fully, at least to some form of financial self-sufficiency.”