Posted by D Bailey on November 30, 20072 CommentsPrinter Friendly
A Cooperative model appears to assist the majority of organic producers in developed and emerging economies. Advantages of establishing a legal producer’s cooperative include the improvement of supply and an enhanced capability to negotiate with wholesale agents. Cooperatives are ideal for smaller organic producers who can benefit from distributing some of the expense involved in hiring staff, training, equipment, marketing and promotion.
Every now and then, I encounter lending agents who continue to distrust proposals associated with an ‘organic cooperative’. The seventies were, unfortunately, a decade of badly conceived agricultural ventures. While most participants were well meaning and earnest in pursuit of their philosophy, the vast majority failed the business test.
With a stronger representation of successful organisations to model themselves against, contemporary organic producers are less likely to become snared in the errors of the past. The first and most basic lesson is to establish each cooperative within a legitimate legal and financial framework. This will help to identify and secure member’s rights and responsibilities. It seems to have the additional effect of removing false preconceptions about the organic industry as a whole. People are generally misguided when they approach organic production believing that everyone involved will be generous, relaxed, and accommodating to the best strains of shared humanity. While there are many individuals with precisely these qualities, the reality of business within the organic sector is generally one of competition with limited margins between success and failure. If a solicitor cannot convince you of this, then hopefully your accountant will.
Working within a cooperative can provide an ideal safety net for the inexperienced producer. One of the most challenging goals is to determine the level of consumer demand for a particular product. Of course for most farm products, demand is relatively inconsistent and subject to seasonal fluctuations. By working effectively together, members of a rural cooperative can work to meet regional demand and limit their individual exposure to market uncertainty. At the same time a cooperative is usually in a superior position to negotiate with wholesale purchasers of their particular commodity.
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The cooperative model has been successful with coffee in latin america. Countries like Guatemala. The most successful is the EZLN cooperatives. Some of their cooperatives consist of 600 families and 26 communities.
Let’s not forget that a co-operative is only as good as the commitment of its member growers. I can give you a list of co-ops that haven’t worked (sometimes in spectacular ways) because the growers that ultimately seek out management positions lack the requisite skill sets to grow the business. To the extent that organic growers vote to permit external (and professionally capable) management to steer the ship, then the co-op model can also provide good outcomes.
It’s all about creating value, whether that’s at the farm gate or further down the chain, maximizing relationships within the chain for the best advanatage of the co-op and members. Organic growers need to remember that profit (and more importantly growing profit) isn’t always a bad thing. That isn’t always easy for some of them to accept. That’s where it tends to fall down.