The Emerging Role of Cooperatives in African Agriculture
In Africa, where the vast majority of farmers are smallholders (on average cultivating about 5 acres according to a 2018 estimate by the OECD), it makes sense for such farmers to combine their forces by joining agricultural cooperatives, to create countervailing market power to wield against middlemen with an interest in low-balling their purchase prices. However, the history of such efforts in the continent has not always taken a smooth path. I drew heavily on a paper by Frederic Wanyama, of Maseno University in Kenya, for the portion of my blog describing this history.
In much of the region, agricultural cooperatives were part of the European colonial governance structure that was carried over into the governmental framework adopted when those nations achieved independence, primarily in the 1950’s and 1960’s. These entities controlled access to markets and government-provided credit, so it made economic sense for farmers to join them. Donor entities, particularly cooperative organizations from developed countries such as the United States and Denmark, also preferred to fund cooperative efforts through national governments, which gave their leadership additional resources to control.
However, these organizations often became a source of patronage jobs for the political parties in power in a given country, excluding farmers who were actual cooperative members from leadership positions. These actions reduced local farmers’ influence and their sense of “buy-in” over how the organizations were operated. In addition, many cooperatives were constrained by government-imposed food price controls, negating one of the main motivating factors for farmers to not only join but enthusiastically support the cooperatives, since there was no latitude to use their combined market power to induce lower input prices from their suppliers and higher output prices from their buyers.
In the mid-1990’s, in the spirit of reform, many of those agricultural cooperatives were made explicitly independent of government control and no longer held monopoly positions in commodity markets. However, without direct government oversight, the ethical standards of cooperative management grew more lax, allowing corrupt behavior and conflicts of interest among cooperative staff to run rampant in some countries. Overall, cooperative membership across the continent dropped, and by the mid-2000’s, many of these entities had fallen by the wayside due to loss of revenue. In some parts of Africa, the very word “cooperative” fell into disrepute as a result of these destructive behaviors, and new entities in those countries that wanted to engage farmers in collaborative agricultural marketing activities at the local level had to scramble to find ways to characterize them without using that phrase.
Over the last few decades, the cooperatives have been adopting new structural frameworks and new sets of activities in order to flourish financially. In many countries (Kenya, Nigeria, Niger, Rwanda, Cape Verde) saving and credit cooperatives (SACCOs) are becoming the largest cooperative sector, while in some countries they are financially the strongest.
While cooperatives are quite common--it seems like every other village in Africa has one--their share of total commodities marketed is quite low. A 2017 policy brief published by the International Center for Tropical Agriculture (CIAT) estimated that less than five percent of the marketable surplus in Africa is sold through cooperatives. The widespread problem is that many farmer members are prone to sell at least some of their products through outlets other than their cooperatives in order to realize a quick return, a practice known as “side-selling” which undermines individual cooperative’s effectiveness.
There are many examples of successful cooperatives in Africa, many of them specializing in high-value, niche commodities such as tea or coffee. In 2001, Ethiopia’s national government opened its lucrative coffee sector to participation by cooperatives. This move benefited smallholder coffee producers, who account for more than 90 percent of coffee production in the country. Some of these cooperatives have focused on production and marketing of branded coffee products internationally, whose farmers use either organic or sustainable practices in order to qualify for fair trade labels which draw premium prices. The number of dairy cooperatives has also expanded, as farmers recognize the need to band together to be able to afford the equipment needed to safely store and process a perishable product such as milk. In particular, dairy farmers in Kenya, Tanzania, Ethiopia, Zambia and Zimbabwe have generated improved income from their cooperative memberships in recent years.
In May of 2018, representatives of cooperatives from a large number of African countries met in Maputo, Mozambique to establish the Alliance Africa Agricultural Co-operative Organization (AAACO), aimed at “renewing the impetus for African agricultural co-operatives to work together”. This effort, co-funded by the European Union, adopted a five-year Action Plan with the goal of improving governance and the sustainability of agricultural practices used by their farmer members. About 80 percent of African countries were represented in these initial efforts.
In August 2018, one of the farmers in Farm Journal Foundation’s Farmer Ambassador program, Rick Fruth from Ohio, traveled to rural Tanzania as part of a Farmer to Farmer project sponsored by ACDI-VOCA. His assignment was to teach officers of the local and regional farmers associations how to undertake double-entry book-keeping practices to track their associations’ financial status. These associations represent small-holder farmers in central Tanzania (about a ten-hour drive from the capital Dar es Salaam), who primarily double-crop rice and maize (corn) on their farms. Benefits from association membership include the use of equipment purchased by the association to allow farmers to mechanically pad their rice, saving on labor and reducing food waste. ACDI-VOCA estimates that 140,000 farmers in the region are active in these organizations.
