Recognizing the Potential of Agricultural Cooperatives to Combat Hunger and Poverty

By Marissa Dwyer

The United Nations has declared 2012 as the “International Year of Cooperatives.” Co-operatives are business enterprises that are owned and controlled by the members they serve. The UN declaration aims to direct attention to the potential for co-operatives to contribute to socio-economic development. This is particularly significant for farmers because agricultural co-operatives are among the most common around the world. According to a recent report for Worldwatch’s Vital Signs Online on co-operatives, 29 percent of the largest 300 co-operatives in the world are agricultural. Co-operatives are also important for the world’s poor because they can enhance food production and lower prices for consumers.

Agricultural co-operatives can be especially beneficial in countries where agriculture makes up most of the economy, such as Ethiopia. (Image credit: United Nations Department of Economic and Social Affairs)

High food prices and food price volatility are likely to continue over the long term and will likely have critical negative implications for both poor consumers and smallholder farmers because food is such a large share of their budgets and incomes. Food price volatility can exacerbate food security problems in the long term as well, because small-scale farmers are less likely to invest in ways to try to increase their productivity if food prices, which determine their incomes, are unpredictable.

But co-operatives can help minimize these risks. The International Fund for Agricultural Development (IFAD) explains that agricultural co-operatives are important because they enable small-scale producers to take better advantage of opportunities offered in the market place and to make better use of natural resources. By improving access to technology and training, co-operatives can create new opportunities for individual farmers. IFAD points out that co-operatives can help farmers in developing countries to be more competitive in the global market.

In countries where agriculture makes up most of the economy, such as Ethiopia, agricultural co-operatives can be especially beneficial. Eighty to 90 percent of Ethiopians farm for a living. But the country will require US$122.3 million in the first half of 2012 for food aid alone. By creating and strengthening co-operatives, food production can be increased and farmers can improve their annual incomes.

Agricultural Cooperative Development International/Volunteers in Overseas Cooperative Assistance (ACDI/VOCA), a non-profit based in Washington, D.C., launched the Agricultural Cooperatives in Ethiopia (ACE) project alongside USAID in 1999. The ACE project trained members from 285 co-operatives in Ethiopia to strengthen their operations. Market linkages were a key improvement from the ACE program, helping farmers both find a market for their products while getting higher prices. The program facilitated co-operatives to obtain lower input prices and access to loans, which resulted in farmers who were members of ACE-assisted co-operatives earning higher incomes than non-members.

Support for co-operatives goes hand-in-hand with current goals in the international development community. IFAD President Kanayo F. Nwanze recently announced a commitment to pull 90 million people out of poverty. He said that farmers need to be recognized as “small entrepreneurs,” who are important for our future, particularly as the world population is expected to exceed 9 billion by the middle of the century. Nwanze pledged to strengthen smallholder farmers’ business capabilities and to promote partnerships with the private sector.

Agricultural co-operatives can play an integral role in pursuing these accomplishments. By connecting farmers at a local level and giving them access to tools and bargaining rights, co-operatives can greatly enhance food production and poverty alleviation around the world.

Marissa Dwyer is a research intern with the Nourishing the Planet project.

Do you know of any co-opeartives that are helping farmers improve their livelihoods? Let us know in the comments section!

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