1. Capacity Building for Producer Organisations
in Value Chain Developement
Chiang Mai, 19-21 October, 2011
Cooperatives, Collective action and
Alliances
1
Pier Paolo Ficarelli, GIZ India, ILRI-CGIAR

2. What is the Topic
How agro-producers got organised and have co-operated till today?
• Collective action and farmer pro-social behaviours in agriculture is
entrenched in the oldest rural traditions to cope with resource scarcity
rural poverty and climatic adversities the world over
• Informal smallholder co-operation today is most in the form of self-help
groups to access credit or CBOs managing common pool resources
(irrigation, watershed and forest areas) and producer groups
• From the beginning of the last century informal co-operation has been
institutionalised in different forms, the oldest being the cooperative
movement (England 1800,1904 in India)
• The process industrialisation of agriculture and the increased vertical
integration of Value Chain actors has given rise to new forms of producer
co-operation with retailers and the food industry, e.g. contract farming
Who will be the agro-producers of tomorrow, how will they co-operate?
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3. What it is still the dominant picture today?
Market Asymmetries
Unequal land distribution
Excessive land fragmentation
Dominance of smallholdings
Unequal access to production resources
Industrial Failure of public extension services
& retail Unequal access to agricultural markets
buyers Over-exploitation of natural resources
Misuse of agro-inputs
Farmer Farmer Consequences
Farmer
Farmer Small famers as end looser
Farmer Farmer
Farmer Vulnerability and farmer suicide
Agro- businesses as top winners
Social inequality
Environmentally unsustainable growth
Food insecurity
Input suppliers
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4. Producer Co-operation in Agriculture (I)
“Bottom –up” co-operation
Type Local level Meso-macro level
Self-Help Groups (SHGs)
Micro-credit CBOs umbrella organisations
Interest groups (FIGs) SHG federations
INFORMAL
Farmer Clubs (FCs) Informal association, JLGs
CBOs National movements
Producer groups (PGs)
Regional, National Federations
Associations
National Farmers Unions
FORMAL Co-operatives
Business membership org.
Alliances
Professional Associations
Market- oriented
Value Chains
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5. What are the Challenges (I)
“Bottom –up” Producer co-operation
Type Local level Meso-macro level
Local Governance Advocacy vs. Service focus
Focus on loans for consumption Scarce visibility and policy influence
Capacity of public extension services Financial sustainability
INFORMAL Linkages with service providers Provision of technical and facilitation
Facilitation competency and capacity services to affiliated groups
Access to crop and life insurance
Scaling out/scaling up
Leadership/Internal governance Good governance
Promotion mechanisms & incentives Political parties interference
Ownership & trust Local Politics
Financial accountability Poor links and feedback mechanisms
FORMAL
Input procurement efficiency and with the base
economic viability Management & OD
Training in technical and quality Links with buyers & marketing skills
aspects
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6. Producer Co-operation in Agriculture (II)
“Top–down” co-operation
Relationship established by buyers with sellers
Type Local level Meso-macro
level
Informal contracts
LOW Alliances with organic producers
INTENSITY Regular sub-contracting of Representation
registered farmers based on
organiastional
Contracting Co-operative and structure of
HIGH Associations buyers (retailers
INTENSITY Outgrower schemes or industry)
Contract farming
Industry and market-linked
Value chains
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7. Challenges (II)
“Top–down” co-operation
Based on the relationship established by buyers with sellers
Type Local level Meso-Macro
Quality and quantity assurance
Market price control by Gvt. Limited buyers’
LOW
Risk mitigation measures presence in rural
INTENSITY
Access to financial services areas
Access to inputs
Targeted mainly to better-off farmers Poor farmer
Value Chain Governance issues representation and
HIGH
Public sector regulatory framework consultation in
INTENSITY
Ensuring farmer fair deals and income buyers’
Insurance services organisational
Role of public sector as a facilitator structures
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8. What are the (mega)-challenges?
1. How to speed up the process of producers organisational development to
ensure positive transition of the majority of smallholder from agriculture in
joining the service and industrial economy?
2. How to build on the strength of established producer organisations to
increase their economic efficiency, increase benefits to their members and
ensure sustainable food production?
3. How can SHG, co-op, and association federations that works scale out their
memberships and support local level organisations capacity in linking with
markets?
4. Can alliances in contemporary agricultural value chain and “top- down” direct
linkages with buyers be the trigger for famer organisational development?
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9. Opportunities
Direct or indirect incentives for strengthening producer organisations
and participation in agricultural and food value chains:
• Increasing demand of food and processed food due to urbanisation
• Business models promoting Small & Micro-Enterprises(SMEs) for value
addition, seed, floriculture, dairy etc.
• Business models for service delivery
• Readiness of private sector to co-operate with public sector
• Stronger rural-urban linkages
• Increased consumer interest in food production and quality
• ICTs and increased rural connectivity (e-services and m-services)
• Agribusiness CSR initiatives
• Biomass production for the energy industry
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10. Lesson learnt
Organisation and producer co-operation is a pre-condition for ensuring
participation of small producers in formal markets
Small producer organisational development is a painstakingly change process
with a high rate of failure, requiring lot of hard work of highly motivated field
workers and support organisations
Common platforms and PPP as key funding mechanism to involve agri-
business in public sector interest in strengthening small producer
organisations
Industry driven value chains can (re)-focus “traditional” FOs on to high value
markets and income and provide incentives for their professionalization
New business models for production and buyer- producer relationships are
required for linking with high value markets and may be not on traditional
smallholder-based FOs
ICT can speed up access to information and services to formal and informal
FOs
Low –carbon and green economies are new incentive frameworks for
collective action and participation of small producers in alternative markets
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11. Conditions for sustainable small producer organisations
Genuine producer collective actions are shaped by the local social and political
environmental context and not necessarily aligned with the need of modern
agricultural markets.
They work generally only when certain conditions are met, such as Elinor
Ostrom’ s universal principles for people-led organisations:
1. The group and its purpose must be clearly defined;
2. Costs and benefits must be equally shared;
3. Decision-making must be by consensus;
4. Misconduct should be monitored;
5. Sanctions should start out mild and escalate only as needed;
6. Conflict resolution should be fast and fair;
7. The group must have the authority to manage its affairs;
11 8. The relationship of the group with others must be appropriately structured.