Growth and Poverty Mailing List Archive

["Dick Tinsley" <<address removed>>]

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