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Title: 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

2
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.
  • 1

3
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

4
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.
  • 3

5
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.
  • 4

6
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.
  • 5

7
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.
  • 6

8
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.
  • 7

9
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.
  • 8

10
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.
  • 9

11
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.

  • 10

12
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.
  • 11

13
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.
  • 12

14
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.
  • 13

15
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.
  • 14

16
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.
  • 15

17
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.
  • 16

18
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.
  • 17

19
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.
  • 18

20
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.
  • 19

21
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.
  • 20

22
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
    21
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