Rural employment through agriculturalrural cooperative development: Lessons learned from FAO experie

1
Rural employment through agricultural/rural
cooperative developmentLessons learned from FAO
experience in Asia

• Wim Polman
• Rural Development Officer
• FAO Regional Office for Asia and the Pacific
• Bangkok, Thailand
• http//www.fao.org/world/regional/rap/susdev_rural
  _devt.asp
• Expert Group Meeting
• Cooperatives and Employment
• 15-19 May 2006
• Shanghai, China

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Rural employment through agricultural/rural
cooperative development Lessons learned from FAO
experience in Asia

• CASE FOR RURAL EMPLOYMENT
• More than a half a billion people in Asia and the
  Pacific region live on less than one US dollar
  day. Hunger and poverty are largely concentrated
  in Asian rural areas which are home to
  three-fourths of the worlds farm households. The
  majority of them are small and marginal farmers
  with an average holding of less than 2 hectares
  of land.
• Rural landless, marginal rural producers,
  indigenous people and persons with disabilities,
  especially women among these groups, are the
  poorest of the poor and should be the focus of
  national/international efforts towards achieving
  the UN Millennium Development Goals (MDGs) in the
  region. There is direct and intrinsic
  relationship between FAOs mandate and most MDGs,
  in particular MDGs 1, 3, 7 and 8.
• The growing rural population and limited access
  to natural resources are forcing small farmers
  and landless out of agriculture. Inadequate
  non-farm rural income/livelihood opportunities
  drive them as immigrants to urban areas and
  beyond.
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Rural employment through agricultural/rural
cooperative development Lessons learned from FAO
experience in Asia

• India example
• This is most obvious in the case of India with 70
  percent of its one billion plus people living in
  rural areas where the land availability per
  person has halved to in the past decade. The
  growing livestock population is competing for
  natural resources and food with the human
  population. A recent government survey in India
  found that 40 percent of small farmers would move
  out of the agriculture sector if given a choice.
• A major cause of rural poverty among small rural
  producers is their dependence on rain-fed
  agriculture. To overcome this poverty trap for
  marginal land owners, tenants and landless
  workers, major rural investments are needed in
  irrigation, water and soil conservation, land
  improvement and introduction of low-input farming
  systems as well as non-farm rural enterprise
  development in which the cooperative sector plays
  a key role.
• India recently adopted an innovative approach to
  poverty alleviation. A landmark rural employment
  guarantee law enacted in 2005 has for the first
  time a built-in guarantee of 100 days wage
  employment or equivalent in cash, for at least
  one member of every below-poverty line rural
  household.
• Agricultural cooperatives have played a major
  role in Indias Green and White (dairy)
  Revolutions, providing income and employment for
  tens of millions of rural poor. There are over
  150,000 primary agricultural and credit
  cooperatives serving over 157 million
  agricultural/rural producers. 2

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Rural employment through agricultural/rural
cooperative development Lessons learned from FAO
experience in Asia

• WTO impact on small farmers/rural producers
• Agricultural producers in Asia face unfair
  competition from the dumping of food and farm
  products from developed countries which are
  heavily subsidized.
• Increasingly, non-tariff trade barriers are
  being raised in export markets including new food
  safety, product quality, environmental and labour
  standards. In addition, food retail enterprises
  dominating the markets are demanding individual,
  variable food product standards. Governments and
  agricultural sector representatives of developing
  countries are in general, ill-prepared to
  negotiate at par on these issues.
• The participation of developing countries in
  trade liberalization covers not only
  agricultural, but non-agricultural sectors
  supportive of food and agricultural production.
  For e.g. the farm machinery industry and rural
  finance institutions.
• The use of international patent laws by
  international agro-business and research
  institutions is weakening traditional
  intellectual property rights over food and other
  essential biological resources. In this sense,
  trade liberalization and weak WTO negotiating
  positions have a negative cascading effect on
  rural/urban employment, particularly in countries
  with a large population dependent on the
  agriculture sector.
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Rural employment through agricultural/rural
cooperative development Lessons learned from FAO
experience in Asia

• MILLENNIUM FRAMEWORK FOR AGRICULTURAL COOPERATIVE
  DEVELOPMENT
• The importance of cooperatives in rural poverty
  alleviation has been recognized in the UN
  Secretary Generals report to the General
  Assembly in July 2005 urging member states to
  promote the greater participation of cooperatives
  in poverty reduction.
• The November 1996 World Food Summit (WFS) Plan of
  Action, (FAO, Rome, 1996) gives important to
  small-scale farmers', fishers' and foresters'
  cooperatives for achieving food and livelihood
  security. This has been reiterated in the FAO
  Reform Programme adopted in 2005 by member
  countries which highlights capacity building
  for cooperatives and farmers organizations in
  areas of food production, processing,
  distribution and marketing.
• The March 2006 International Conference for
  Agrarian Reform and Rural Development (ICARRD) in
  Brazil, emphasized the importance of institution
  building for participatory planning and
  development for empowerment of rural poor.
• The UN MDGs are all of highest importance to the
  FAO and UN General Assembly commitments to
  cooperative development. FAO member states have
  made the point that without enabling policies and
  programmes in support of cooperative development
  by rural poor it will be nearly impossible to
  secure food and livelihood security (MDG1) and
  other MDGs, in particular MDGs 3 7.
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Rural employment through agricultural/rural
cooperative development Lessons learned from FAO
experience in Asia

• WHAT MAKES AGRICULTURAL COOPERATIVES AND
  NETWORKING KEY TO ACHIEVING MDGs
• Empowerment
• Agricultural cooperatives as democratic member
  organizations are based upon the principles of
  social cohesion, self-help and equity. In many
  cases, they provide effective village-level
  channels for formal and informal education for
  small/marginal farmers, landless, women,
  indigenous people and other vulnerable rural
  poor, empowering them for effective participation
  in local-level decision-making and leadership
  roles in their communities.
• Rural enterprise development
• Agricultural cooperatives are also rural
  enterprises of a special kind where profit making
  and share holder ownership do not dominate
  membership participation in business activities.
  Cooperative members share high risk in
  agricultural activities due to adverse climatic
  and market conditions they also share costs of
  inputs/raw materials, and engage in collective
  marketing efforts and in seeking improved access
  to rural services.
• Value addition
• Agricultural cooperatives facilitate primary
  producers in diversifying agriculture and food
  production, reducing production and marketing
  risks, improve access to production and rural
  services. In several commodity sectors such as
  dairy, fruit production/processing, cooperatives
  have enabled integration of hundreds of thousands
  of small-scale rural producers into large-scale
  rural enterprises able to export a broad variety
  of products.
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Rural employment through agricultural/rural
cooperative development Lessons learned from FAO
experience in Asia

• Marketing channels
• Agricultural cooperatives, by eliminating
  middlemen help reduce transaction costs and
  provide a better market price for small
  producers they play an increasingly important
  role in providing access to rural finance to
  small-scale farm/non-farm rural producers who
  often due to lack of adequate collateral and
  education are unable to access normal channels of
  institutional credit.
• Providers of rural services
• In several Asian countries, agricultural
  cooperative networks provide linkages to other
  cooperative networks in rural finance, education,
  health, housing. Several cooperative networks
  collaborate with rural universities, specialized
  government training centres in technical and
  business skills development for capacity building
  of different member categories (women, board
  members and managers).
• Information networks
• What is needed is more systematic networking
  between agricultural cooperatives and specialized
  government and NGO partners for information
  exchange and capacity building on sustainable
  farming systems, food/product safety standards,
  innovative marketing strategies, fair trade,
  information technologies (IT) to enhance their
  business opportunities.
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Rural employment through agricultural/rural
cooperative development Lessons learned from FAO
experience in Asia

• FAO ACTIVITIES IN SUPPORT OF AGRICULTURAL
  COOPERATIVES IN ASIA
• FAOs support to agricultural cooperatives in the
  region is part of FAO Rural Development
  Divisions provision of normative guidance to
  member countries and technical support for
  strengthening self-help business competitiveness
  and sustainability capacities of a broad range of
  formal/informal producer associations and
  self-help groups serving small farmers.
• FAOs rural producer group development programme
  is aimed at strengthening the business capacity
  of agricultural co-operatives, producer
  associations and self-help groups to be
  competitive in the new liberalized markets.
• This includes policy advice on cooperative and
  farmer/producer group enterprise development,
  human resource development and strengthening
  capacities of cooperative development
  institutions support to national rural producer
  federations and apex bodies strengthening
  institutional capacity in policy formulation and
  promotion of farmer concerns support to
  strengthening partnership and networks of
  producer organizations at national, regional and
  global level.
• Preparation of technical issue papers/normative
  guidelines/training manuals on cooperative
  development for use in direct technical support
  services to FAO field projects.
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Rural employment through agricultural/rural
cooperative development Lessons learned from FAO
experience in Asia

• In the Asia and Pacific region, the FAO Rural
  Development Section activities in support of
  agricultural cooperative development include
• FAO technical cooperation
• Policy/legal advice and technical capacity
  building through technical cooperation projects,
  for e.g. In Viet Nam, Thailand and Cambodia.
• Integration of institutional capacity
  building for cooperative development within
  FAO- supported projects in member countries in
  the agriculture, forestry, fisheries and
  livestock sectors.
• For e.g. development of training materials for
  technical skills development on improved
  production and processing, natural resource
  management as part of cooperative business
  development by small farmers, women, indigenous
  people and persons with disabilities.
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Rural employment through agricultural/rural
cooperative development Lessons learned from FAO
experience in Asia

• FAO collaboration with UN agencies
• FAO support to MDGs through promoting integration
  of institutional capacity building for
  cooperative development in UN country development
  planning. For e.g. with UNDP, UNICEF, UNIDO, ILO,
  UNIFEM and UNESCO.
• FAO collaboration with the International Labour
  Organisation (ILO) in cooperative development and
  promotion of the ILO Convention on cooperatives.
  For e.g. collaboration in training programmes at
  international and country level. FAO, ILO
  cooperation has been instutionalized through
  demand-driven consultations between technical
  units, enhanced operational interaction and
  flagship publications.
• FAO collaboration with UN Economic and Social
  Commission for Asia and the Pacific (UNESCAP) in
  activities on poverty and development,
  environment and sustainable development, urban
  and rural development and emerging social issues.
  
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Rural employment through agricultural/rural
cooperative development Lessons learned from FAO
experience in Asia

• FAO collaboration with civil society
  organizations
• FAO-ICA partnership
• The International Cooperative Alliance (ICA)
  represents more than half a billion cooperative
  members in 21 countries in Asia and the Pacific.
• FAO-ICA collaboration on policy/legislative
  advice on cooperative development as independent,
  membership-based business organizations.
• Participation in ICA regional conferences and
  meetings of its agricultural and women
  development committees to share information about
  FAOs relevant policies and programmes, and to
  provide technical expertise on agricultural
  cooperative development joint project
  formulation missions and development of strategic
  alliance in promoting food security.
• FAO partnership with AWCF/ACCU
• Support to women leadership and technical skills
  development in Asian countries as part of
  programme activities of the Asian Women in
  Co-operative Development Forum (AWCF)
  representing women-led cooperatives in 8 Asian
  countries project in north Thailand in support
  of non-farm employment for hill tribe women by
  linking with women enterprise development centre
  of Credit Union League of Thailand (CULT)
• Collaboration on capacity building of rural youth
  and village savings and credit cooperatives in
  the field of rural enterprise development with
  the Asian Confederation of Credit Unions (ACCU)
  representing over 12 million members in 23
  countries.
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Rural employment through agricultural/rural
cooperative development Lessons learned from FAO
experience in Asia

• FAO-NEDAC partnership
• NEDAC, the only regional network for agricultural
  cooperatives in the world, is a member-funded
  platform for policy dialogue, sharing of country
  experiences/information on capacity building of
  agricultural cooperatives as genuine,
  membership-based and economically viable rural
  enterprises. Members include cooperative
  development agencies (ministries of agriculture,
  rural development, labour and social welfare,
  etc) and cooperative associations.
• NEDAC activities reach out to about 3 million
  farmer cooperatives in 11 Asian countries -
  Bangladesh, China, India, Indonesia, Malaysia,
  Mongolia, Nepal, Philippines, Republic of Korea,
  Sri Lanka and Thailand.
• NEDAC enables FAO to work cost-effectively in
  promoting country-level agricultural cooperative
  enterprise development by facilitating
  development of enabling policy frameworks,
  cooperative legislation and human/financial
  resources for institutional capacity building of
  small farmers and rural poor as rural
  entrpreneurs.
• FAO-NEDAC activities give high priority to
  improving membership participation, developing
  technical and management skills, and networking
  for improved access to support services/markets
  for food/agricultural producers as well as
  empowerment of marginal rural poor.
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Rural employment through agricultural/rural
cooperative development Lessons learned from FAO
experience in Asia

• NEDAC and FAO activities include country visits
  and sharing of cooperative expertise with
  relevant cooperative development agencies, and
  provide linkages with activities of regional
  cooperative promotion networks including ICA and
  relevant UN agencies.
• Examples of FAO-NEDAC activities
• Regional technical consultations
• Computerization to promote agricultural
  cooperative enterprise development. Chiang Mai,
  Thailand, April 2004. Participants from 8 Asian
  countries stressed the importance of IT for
  improved business efficiency of agricultural
  cooperatives and recommended a range of measures
  at social, national and FAO/NEDAC level to
  promote this objective.
• Promotion of agricultural cooperative enterprise
  development and business planning. New Delhi,
  2003. Participants from seven Asian countries
  highlighted the need for conducive policies,
  legislation and a supportive environment to be
  created by government, cooperative leaders,
  financing institutions, development partners.
  This would involve training on skills
  development, business planning, joint ventures
  and IT use.
• Roundtable on the impact of globalization/liberali
  zation on agriculture in general and agricultural
  cooperatives in particular. Bangkok, 2001.
  Participants from 12 Asian countries recommended
  capacity building for cooperative officers on
  business management and entrepreneurship
  development, use of IT for improved cooperative
  management, networking with NGOs and the private
  sector and reform in existing laws on
  cooperatives.
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Rural employment through agricultural/rural
cooperative development Lessons learned from FAO
experience in Asia

• Regional roundtable on capacity building of
  agricultural cooperatives to meet market and
  human resources development requirements.
  Beijing, 2001. Cooperative leaders, experts,
  policy makers from 14 member organizations in 9
  countries recommended, inter alia, a conducive
  policy and legal environment for cooperatives to
  be able to face the challenge of globalization
  and liberalization.
• Regional workshop on financial viability of
  agricultural cooperatives. Comilla, Bangladesh,
  1998. Participants from Bangladesh, China,
  India, Philippines and Thailand recommended,
  inter alia, phasing out of government control of
  cooperative management, legislative reform for
  promoting self-help in financial management and
  capital formation by agricultural cooperatives,
  developmental links with private sector financial
  organizations and integration of existing
  informal savings/credit self-help groups in
  agricultural cooperative development.
• Regional workshop on the strengthening the
  management and development of agricultural
  cooperatives. Manila, Philippines, April 1997.
  Participants from 11 countries discussed training
  approaches for agricultural cooperative managers,
  improving cooperative data.
• Third session of Network for Development of
  Agricultural Cooperatives in Asia and the
  Pacific, New Delhi, India, November 1997.
  Participant from 10 countries and cooperative
  development experts discussed strategies for
  agricultural cooperative enterprise development,
  coalition building between agricultural
  cooperatives and governments, among others.
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Rural employment through agricultural/rural
cooperative development Lessons learned from FAO
experience in Asia

• Other activities
• Study of cooperative legislation in the region
  documented in A study of cooperative legislations
  in selected Asian and Pacific countries, 1998.
• Exchange visits to Bangladesh, India, Malaysia
  and Thailand.
• Issue papers on role of agricultural
  cooperatives for sustainable agriculture and
  rural development in a market-oriented economy
  gender issues and peoples participation in
  agricultural cooperatives development of market
  information systems in agricultural cooperatives
  status and trends of agricultural cooperative
  development in the light of new social and
  economic changes.
• Adoption of a joint format for information on
  agricultural cooperative development for IT-based
  data collection by NEDAC member organizations,
  2004.
• An emerging area of collaboration is the
  exploration and development of fair trade market
  linkages between agricultural/rural cooperative
  producers and overseas urban consumers by NGOs in
  collaboration with farmers associations to
  ensure market outlets for an increasing variety
  of food and non-food commodities at a fair price
  benefiting both cooperative producers and
  consumers.
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Rural employment through agricultural/rural
cooperative development Lessons learned from FAO
experience in Asia

• MAJOR CONSTRAINTS TO AGRICULTURAL COOPERATIVE
  DEVELOPMENT
• Most agricultural cooperatives represent
  small-scale rural producers lacking institutional
  capacities of scale due to limited access to
  production resources, markets and services, in
  many cases, operating under adverse
  agro-ecological conditions (rain-fed
  agriculture).
• Government investment in the agriculture sector
  has declined over the last 20 years while, in
  most cases, agriculture research and extension,
  technology development has neglected the specific
  constraints of small-scale rural and agricultural
  producers. Food policies are also often biased
  against them with more emphasis to subsidised
  food imports in response to urban consumer
  demand. International trade liberalization in the
  agriculture and food sector is exacerbating this
  situation.
• Government cooperative policies and programmes
  have failed to mitigate adverse conditions faced
  by small rural producers because (1)
  responsibility for cooperative development has
  been scattered across a number of government
  departments within and outside the agriculture
  sector human and financial resources have also
  been reduced and, overall, lack of
  decentralization and decision-making is still
  more top-down than a farmer demand-driven process
  bypassing the needs of small farmers, landless,
  women, indigenous groups and other vulnerable
  rural poor.
• Cooperative legislation is often outdated and
  does not cover all cooperative sectors and not
  always giving due recognition to cooperatives as
  membership-based self-reliant organizations, and
  their specific needs as rural small-scale SMEs.
• Cooperative training colleges are, often, not yet
  adapted to the specific capacity building needs
  of small-scale rural producers within the context
  of trade liberalization and globalization. In
  many cases, there are inadequate training
  materials/programmes for business development
  planning for small-scale farmer cooperatives,
  women and other groups.
  
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Rural employment through agricultural/rural
cooperative development Lessons learned from FAO
experience in Asia

• The cooperative movement in itself is often
  divided across too many sectors and economic
  activities, lacking the leadership to respond
  adequately to government intervention and to
  adverse impact of market liberalization. Strong
  cooperative sectors represent mostly
  non-agricultural activities, for e.g. housing,
  consumers, credit.
• The weaknesses of the agricultural cooperatives
  within the wider cooperative movement is also
  reflected in their relative neglect by
  cooperative development agencies.
• FAO as the UN food and agriculture development
  agency has recently reemphasized the importance
  of capacity building of agricultural
  cooperatives. Yet, drastically declining
  resources have actually led to a substantial
  weakening of its capacity to respond effectively
  to the needs of member countries and the
  agricultural cooperative movement at large.
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Rural employment through agricultural/rural
cooperative development Lessons learned from FAO
experience in Asia

• ROADMAP TO SUCCESSCUL AGRICULTURAL COOPERATIVE
  DEVELOPMENT
• In view of these development constraints of small
  farmer cooperatives, reviewing of priorities set
  by governments, cooperative movements and
  cooperative development agencies.
• Building of strategic partnership between UN
  agencies and ICA to mobilize support from
  international and bilateral donors for enhanced
  capacity building of small-scale farmer
  cooperatives as rural enterprises where according
  to MDG 1 and others, high priority should be
  given to most vulnerable rural poor landless,
  women, indigenous and disabled.
• The NGO community offers a huge potential for
  enhancing capacity building of agricultural
  cooperatives. Yet, only a limited number of
  international NGOs are focused on small farmer
  cooperative development, for e.g. Agriterra in
  the Netherlands. Awareness and strategic
  coalition building between ICA, UN agencies and
  international NGOs for development of
  membership-based, viable, small farmer
  cooperative enterprises.
• In view of the specific agro-ecological
  constraints for small farmers in rain-fed areas
  and the potential of low-input farming
  systems/organic farming/fair trade networking,
  national coalition building and collaboration
  between the cooperative movement, agricultural
  cooperatives and specialized universities/NGOs on
  these topics.
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Rural employment through agricultural/rural
cooperative development Lessons learned from FAO
experience in Asia

• ROADMAP (2)
• Development of cooperative-managed knowledge
  centres focused on innovative approaches to
  enhance productivity and sustainability of local
  farming systems providing employment/income for
  small and marginal farmers formulation of
  win-win cooperative development strategies to
  ensure indigenous people access to natural
  resources for maintaining traditional
  lifestyles/decent livelihoods/biodiversity
  conservation and stop natural resource
  degradation.
• Institutional capacity building for agricultural
  cooperatives on decentralized, integrated,
  sectoral planning for improved delivery of
  production services for diversified/value-added
  agricultural development non-farm rural
  employment strategies suited to small-scale rural
  producers through strategic alliance building
  between agricultural cooperatives, local
  governments, specialized NGOs and private sector
  and universities.
• Development of innovative credit schemes for
  rural poor without collateral provision of
  appropriate technology/training for rural women
  entrepreneurs.
• Clustering and integration of complementarities
  of agricultural cooperatives in different sectors
  to enabling up-scaling of cooperative business
  activities, enhancing competitiveness in national
  and international markets by providing high
  quality food/non-food agricultural products and
  services.
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Rural employment through agricultural/rural
cooperative development Lessons learned from FAO
experience in Asia

• ROADMAP (3)
• Long-term national political commitment for
  enhanced investment in agricultural cooperative
  enterprise development. Adoption of a
  multi-dimensional and inter-sectoral SME
  development concept by governments, which is
  inclusive of agricultural cooperatives as rural
  enterprises facilitation of cooperative
  participation in policy formulation/legislation
  review on rural enterprise development
  government support to networking on trade
  liberalization and fair trade capacity building
  among agricultural cooperatives at all levels.
• Giving a voice to small rural producers in
  national negotiations on international trade
  liberalization, in particular on intellectual
  property rights related to food and other
  agricultural produce.
• Collective efforts by agricultural cooperatives
  to develop strategies and action programmes in
  support of agricultural cooperative enterprise
  development innovative approaches to address
  agro-ecological/production constraints, tapping
  of new market opportunities, development of
  negotiation, business and managerial skills and
  IT capacities strategic alliances with
  specialized NGOs, universities/ training centres.
  
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Rural employment through agricultural/rural
cooperative development Lessons learned from FAO
experience in Asia

• ROADMAP (4)
• Promotion of effective cooperative member
  participation in cooperative business activities
  and breaking down the control of vested interest
  groups which block percolation of benefits to all
  members establishment by agricultural
  cooperatives of viable unions and federations
  capacity building on improved market information
  and ruralurban marketing networks
  controlled/managed by small-scale farmers/rural
  producers.
• Formation of a Cooperative MDG Working Group at
  national level composed of ICA, ILO, FAO, UNDP,
  World Bank, IFAP and agricultural sector-specific
  cooperative networks like NEDAC, ACCU and AWCF
  such a working group should first address the
  ideological backlash against cooperatives as
  effective poverty reduction vehicles in the
  context of MDG 1 assist in formulation of
  national priorities and action plans for
  institutional capacity building,
  design/implementation of investment programmes in
  education, training, market information and
  facilities, product quality-related, non-farm
  employment generating activities.
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Rural employment through agricultural/rural
cooperative development Lessons learned from FAO
experience in Asia

• ROADMAP (5)
• Such activities to take in consideration lessons
  learned from successful agricultural cooperative
  enterprise development providing viable
  livelihoods and incomes to small farmers in Asian
  countries.
• For e.g. Indias Amul dairy cooperative
  development, IFFCO (fertilizer production/distribu
  tion) Thailands, Surapi, a successful longan
  fruit production and export cooperative exporting
  in large quantities to China.
• Cooperative societies account for about 15 of
  Sri Lankas coconut export . In Nepal, women and
  rural cooperatives are exporting cane and organic
  tea to markets in Europe. Cooperatives in the
  Philippines specialize in fish-based organic
  fertilizer in keeping with emerging developed
  world markets for organic products
• These success cases can provide resource persons
  as well as adequate capacity building materials
  which should be integrated in Cooperative MDG
  Working Group activities.
• THANK YOU
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