Growth and Poverty Mailing List Archive

["John Hambly" <<address removed>>]

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