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Dear Dick, Please allow me to join the discussion since I've worked in the agri-development field and recently with the University of Exeter running a project on 'Joint Venturing in dairy farming'. I agree with your comments regarding agricultural co-operatives. Farmers can often co-operate with one or two other farmers who they know well, hence the fact that joint ventures have a record of being established successfully whereas co-ops tend to too cumbersome. I looked at JVs because there is a need for them in the dairy sector whre economies of scale are so important to make a living. The problem is the 'legal infrastructure' to unite farmers hitherto has not been well known. Farmers need to keep their independence (although they must be prepared to be interdependent), they need to gain economies of scale, use other peoples know-how and reap greater profits than working alone. We found two legal infrastructures, namely the 'service company' and a form of 'share farming agreement' that allows farmers to do all of these things. The principle is applicable to smallholders whether they own or rent land and in the developed as well as in developing contexts. What is required is for Government Aid institutions and NGOs to examine the concept closely and pilot some projects in different circumstances. I would be very pleased to supply more information (a technical paper) about our project should anyone be interested. John Hambly Senior Research Fellow ----- Original Message ----- From: Dick Tinsley To: <address removed> Sent: Sunday, April 25, 2004 9:14 PM Subject: Re: Necessary conditions for pro-poor agricultural growth? My last commentary for a Sunday afternoon is on Cooperatives and other Farmer Organizations As you might have guessed from my previous comments I am not a support of them. My basic concern is that we have got them institutionalized into our development effort far more then their ability to provide sustainable support to smallholder that will extend beyond donor assistance. This is well noted by the individual acknowledging that the farmers really were not interested in being organized. However, what we have done is institutionalized a means rather then the objective. The real ultimate objective is to provide the smallholders with the most cost effective support system available. As an agronomist I would support this as the most effective means of stimulating smallholder development. The question is "are farmer cooperatives or other organization the most effective means in the administrative environment of developing countries?" Are there others that are more cost effective? My contention is that the overhead cost of managing a farmer organization will exceed the profit margins of the competing private enterprises. The reasons are: First a smallholders are basically individual entrepreneurs, and imposing a farmer organization on them forces them toward being communal farmers which they are not! Second when trying to make collective purchases of input or marking produce on consignment you are introducing a major administrative overhead cost most in terms of extensive accounting. I also introduces a substantial inconvenience in obtaining inputs or getting paid for your goods. And finally a tremendous amount of trust in an administrative environment where trust is limiting. For this reason in pre conflict Iraq even with the 80% subsidizes on inputs, farmers still relied on private dealers for at least 30% of their inputs. The alternative that I have repeatedly seen as the most effective are the private dealers sometime called pirates or coyotes (the latter term in Spanish I understand means thief which effectively links the wild dogs of western North American, the people smugglers, and private traders). They can respond to the changes in opportunity. The most noticeable was the pick-up truck load of fresh tomato seeds originating from France and Holland I saw in post-conflict Iraq prior to the reestablishment of the banking system. "How were these imports financed"? Can our correspondent from the CPA south find out. I think no matter what we attempt these private family village enterprises will be the most sustainable and cost effective means of providing the support services needed by the smallholders. Ok for now, somehow I am fairly certain I will come back to this topic. It is the most important for promoting smallholder development and poverty alleviation. Dick Tinsley ============================================================= To send a reply to this message that goes to all list members, make sure that you send your reply to <address removed> To unsubscribe from this list, send an email to "<address removed>", with the message body: unsubscribe economic-opportunity <your-email-address>
Please visit dfid-agriculture-consultation.nri.org.