Description

Agricultural cooperatives are member organisations. The farmers provide capital through shares and control the cooperative through its bodies. Every cooperative is autonomous and dedicated only to its members’ concerns. The entrepreneurial activities of the cooperative revolve around its mission, which is to promote its members’ interests and cater to their economic needs. The cooperative links its members with the market, such as by investing in machinery and buildings, etc., by buying inputs and advice, and by marketing or processing the produce (purchasing and sales cooperatives). A particularly successful aspect of cooperatives and associations is their multi-level nature so that local cooperatives receive support from their head offices when purchasing and selling material and financing investments. This gives their members the power to secure fair market prices for their produce when dealing with the private agri-food sector. The concept of the cooperative not only respects the tradition of the village community but also strengthens the feeling of self-worth within society and therefore contributes to the development of the entire rural community.

Requirements

• A properly functioning country-wide administration and monitoring system with access to the relevant information and sufficient technical and human capacities for its design, implementation and monitoring
• Clear and coherent political strategy and targets for policy-makers and public authorities
• Legal frameworks (laws on cooperatives, taxation, competition and voluntary associations) that support farmers’ self-help organisations and do not discriminate against other entrepreneurial joint ventures (level playing field)
• Open-access to all farms, regardless of size and location
• Private sector initiative
• Properly functioning external audit structures (e.g. via regional or national auditing associations)
• Regulated and legally protected payment structures
• Skilled / specialised personnel to man the respective institutions / provide the respective services

Possible Negative Effects

• Poorly functioning audit structures could result in members losing trust in their organisation
• Farmers’ influence in their cooperative could be diminished
• Supply chain dictates prices to agricultural producers
• Farmers could find it hard to market their own products directly