Cooperative enterprises: losing relevance or still responsive to the challenges of dynamic markets?

 

 

Nerlita M Manalili,^1* Dindo M Campilan² and Primo G Garcia³

¹Vredeseilanden, Leuven, Belgium

²International Potato Center, New Delhi, India

³University of the Philippines Open University, Los Baños, Laguna, the Philippines

 

 

Abstract

Purpose of review: This paper reviews the present day relevance of cooperatives in sustainable agricultural development. In the context of global agribusiness, we explore the conditions under which cooperatives work best and the factors that shape their capacity to operate in dynamic value chains.

Findings: Despite the criticisms raised against them, cooperatives remain a viable conduit to channel resources to poor communities and provide potential leverage for smallholder farmers vis-a-vis larger chain participants. Inherent organisational weaknesses may limit cooperatives’ capacity to respond to market requirements, speed and innovation wise, owing to the added burden of coordinating horizontal relationships between members and vertical linkages with buyers. New generation cooperatives (NGCs) have emerged in response to these market dynamics. In whatever organisational form they may operate, smallholder producers need to add value or enhance their influence to strengthen their position in the chain. Despite the importance placed on trust and commitment, examples have shown that opportunism and power asymmetry still operate in value chains. Multi-sector alliances are necessary to enhance chain coordination (from producers to retail/end users) and empower smallholders to make informed decisions in responding to market dynamics on consumer demands/preferences and increasingly stringent quality standards. Cooperatives, agribusiness corporations, and development organisations all have a role to play in forging such alliances. Cooperation among farmers is not limited to formal cooperatives as farmers have a range of alternatives to cooperate. The challenge lies in unpacking the advantages and disadvantages of various forms of collective approaches for smallholders and other chain participants.

Direction for future research: In-depth analyses of NGCs as emerging institutional innovation to exploit their full potentials in linking smallholder farmers to dynamic markets.

 

Keywords: chain actors; cooperatives; coordination; dynamic markets; new generation cooperatives; NGCs; smallholder farmers; SAD; sustainable agricultural development; trust; value chain

 

Stewart Postharvest Review 2008, 5:3

Published online 01 October 2008

doi: 10.2212/spr.2008.5.3