Boosting African agribusiness with a new generation of cooperatives

onJune 23, 2017

For the International Day of Cooperatives to be celebrated on 1 July, the Linking Farmers to Markets team of CIAT and the Enhancing Development through Cooperatives (EDC) initiative of the Technical Centre for Agricultural and Rural Cooperation (CTA) just published a new policy brief that underlines the need of a new generation of farmer cooperatives to promote and facilitate the development of local and inclusive agribusiness in Africa.

The policy brief addresses the problem of “side-selling” affecting the commercial performance and income-generating role of agricultural cooperatives and farmer organizations (FOs) in Africa. Farmers prefer to side-sell their agricultural output through itinerant middlemen and spot markets, rather than through their cooperatives and FOs. Side-selling disrupts collective marketing, which occurs when cooperatives and FOs procure farmers’ output and sell it through value chain contracts. Because of widespread side-selling, most cooperatives and FOs fail to add value to farmers’ production.

A New Generation of Cooperatives for Africa

The policy brief suggests that a cooperative in Africa is more likely to mobilize and sustain collective marketing when it pursues the following strategy:

To procure as much produce as possible from each and every member-farmer, rather than strive to increase collective sales through membership expansion.
To ensure that the amount and quality supplied by member-farmers are as homogeneous as possible, so as to avoid internal frictions and inefficiencies.
To offer price incentives and quick (or on-the-spot) payments to member-farmers, and enforce sanctions against side-sellers.

To professionalize its leadership, through the hiring of university-educated and ICT-skilled managers.

African cooperatives that succeed in mobilizing and sustaining collective marketing are also more likely to adopt the six principles described in the policy brief, which are derived from the universal cooperative principles of the ICA (International Cooperative Alliance). In summary:

In past blogs by CIAT and on the EDC website by CTA, the author (Dr. Nicola Francesconi) wrote about three Cooperative Leadership Events (CLEs) held in Uganda, Malawi, and Madagascar over the past year. Three more CLEs will be organized in Africa by CIAT and CTA over the next 12 months, in collaboration with OCDC, OXFAM, NCBA-CLUSA, FAO, GIZ, ACE Ltd., AMEA, and other public and private partners. Each CLE involves 100 leaders and managers of national farmer cooperatives, as well as 50 among their trainers, regulators, service providers, donors, and investors. Each event engages the participants for five days in data collection, training and coaching, knowledge exchange, and networking sessions. These events produce detailed and multi-country data to assess the level of professionalism of FOs and cooperatives, as well as to strengthen their organizational, leadership, and management capacity. They have also kick-started new efforts to reform policy and legal frameworks and established new public-private partnerships to optimize and scale up the impact of cooperative development interventions.