July 2000
This issue paper is the first in a series of reports prepared by the Secretariat of the ACC Network on Rural Development and Food Security on current issues related to rural development and food security. It is written by FAO consultant, Michael Cracknell, in an informal and provocative style to stimulate discussion and information sharing among ACC Network partners and within Thematic Groups established at the country level. The opinions and views expressed in this paper are those of the author and do not necessarily represent the views of the sponsoring organization. A summary of the issue paper follows.
In the past two decades, governments, donors, NGOs and development assistance agencies alike have become increasingly interested in the use of small informal group approaches to mobilize the self-help potential of small rural producers and the poor. As many contend, formal large group approaches, such as state-led cooperatives promoted and financed by governments, have not succeeded in raising the living conditions and food security of small rural producers and the poor. Small informal group approaches (involving the promotion of groups of between 5-20 persons, organized around a common production activity) have been promoted as a solution to this dilemma and have shown considerable promise.
Some agencies see the formation of secondary-level associations of such groups as a way to further increase the economies-of-scale and the negotiating and marketing power of the rural poor. These associations of small farmer groups, or small farmer group associations (SFGAs), have been in operation in some countries since the early 1980s, but until recently have not been studied. In 1998, FAO held a global e-mail conference, "Small farmer group associations: bringing the poor together" (8 September-31 October 1998), to review experience on the topic: an event that drew more than 400 participants from around the world. This present paper has been prepared by FAO consultant, Michael Cracknell (former Executive Secretary of the International Federation of Agricultural Producers - IFAP and currently Co-Director of an environmental NGO based in Tunisia (Enda Inter-Arabe environnement et developpement dans le monde arabe), and draws on the outcome of the e-mail conference. The paper raises a number of questions regarding the promotion of SFGAs - as well as other types of rural organizations - that merit some discussion.
Some 2.7 billion individuals live in rural areas in the developing world and a majority of the world's 828 million chronically malnourished are rural, although the share of urban malnourished is growing rapidly.
Improving rural living conditions will not only help resolve this problem but will also contribute to solving another major problem: rural exodus. Throughout the South, the population of cities is exploding: many of the former rural poor, transformed into the new urban poor with no skills adapted to their new environment, are unable to find employment, or feed, house or clothe themselves decently. The economic and social problems generated by this situation are daunting.
Helping the rural poor improve their food security and income is an important objective of the World Food Summit Plan of Action adopted at the World Food Summit (FAO, Rome, November 1996), i.e. solving world hunger. But many argue that helping the rural poor individually is expensive and that large group approaches have not worked. Consequently, they propose using small self-help group approaches to be more cost-effective.
Of course, most developing countries have national-level farmer organizations, especially co-operatives. Yet the latter have tended to be government creations sprung onto the rural population or controlled by large farmers. Small farmers' participation has been traditionally low and their capital contribution to the cooperatives to which they belong has been minimal. Today, market liberalization is making these weaknesses even more evident.
Small group approaches have been promoted as one solution to this problem, and since the early 1980s they have been increasingly used with considerable success, not only by various development operators, but also by national or foreign NGOs. The logical next step-up from small group formation has been the development of informal associations or cooperation networks of these groups, called small farmer group associations (SFGAs). What has been the experienc of SFGAs? Are these second-level associations better than small groups? How should they be promoted?
This paper highlights some of the findings and conclusions of the FAO e-mail conference, 'Small farmer group associations: bringing the poor together'(8 September-31 October 1998) , and proposes additional issues for debate on this very topical theme.
Before proceeding further on the topic of small farmer group associations, it is useful to define three key concepts used during the e-mail conference and in this issue paper:
Let us now look at some of the concepts involved here, and especially the attitudes of those concerned.
This discussion is mainly concerned with the economic role of small farmers' groupings. Yet, the social dimension of group solidarity that a SFGA provides may be at least as important for its members as its economic role. A group as small as 5 to 15 persons would have precious little economic power. But as close neighbours, or relations, they would engage in mutual assistance activities, such as harvesting, primary processing or organizing festivities.
While economists feel compelled to devise formulae to attribute a monetary value to almost any activity, those actually involved in small farmer groups probably attach as much, if not more, importance to their social connotations (togetherness, mutual support, singing during work). To take the example of Ladakhi society in northern India, the paspuns are a form of inter-household group composed of four to twelve households, i.e. it is a fairly typical SFGA, collaborating in economic activities, but also in organizing family occasions related for instance to birth, marriage and death.
As for the concept of poverty, the poor do not necessarily perceive their condition in the same way as they are perceived by the more privileged or wealthier segments of society. Thus, it is important to note that poverty is a relative, as well as an absolute, concept and has social, political as well as economic dimensions. One may be considered poor because one is socially excluded or of lower social status, politically less powerful or have less material or financial wealth. But whatever the poverty situation, most agree that group approaches can help the poor improve their conditions by increasing their collective self-help capacities, and their negotiating and market power.
Although most government officials may recognize that improving the lot of the rural poor is in the overall national interest and that promoting their collective self-help action makes good economic sense, some may also worry about the potential political consequences of such actions. In countries where the rural sector is large and makes up 60 per cent or more of the population, autonomous organized farmer groups could make a strong case for more equitable treatment and begin claiming a larger slice of the national "cake" to which they contribute so much. Some may not want this situation.
Certain aspects of donor and national development agency attitudes should be mentioned. First, they often seem to look for quick results, in the name of "efficient delivery", while it is well-known that change comes slowly in rural settings: forced change very often fails. Second, many seem to prefer sectoral solutions to specific problems (e.g. fertilizer and hybrid seed to raise crop productivity), rather than more comprehensive ones. Local populations reason rather in terms of a mix of social, economic and cultural factors. As an example, a major failure of the much-acclaimed short-stemmed hybrid rice programme in Asia during the 1970s and 1980s was that it took no account of the farmers' need for rice straw, which has almost as much importance to them as the rice itself; the researchers' focussed only on the rice grain. Third, many donor and international development agencies often ignore the institutional and organizational dimensions of development, i.e. how to create the right kind of social capital to get things moving at local level.
Small farmer groups. A small farmer group can successfully perform mutual social assistance activities for as long as they are needed. But its members are willing to tackle larger problems - especially in economic sphere - they will only gain some market power if they link up with similar groups in their area, in order to achieve economies of scale, increase their market power, and gain access to other government, NGO or private sector services.
Can a SFG envisage forming such alliances at any time? This would seem imprudent until it has reached a sufficient degree of maturity and internal cohesion. How long will it take to reach maturity? Can a minimum period be prescribed? Will homogeneity of its membership, i.e. members having similar social or economic background or needs, be an important factor? Will the SFG members' capacity to work together and develop group activities constitute important factors? Much will depend on circumstances in each particular situation; experience suggests that alliance building takes time and cannot be rushed. Firstly, small farmers working through small groups must acquire skills in collective decision-making and problem-solving, as well as notions of management and democracy: experience has shown that it is best for them to acquire those skills prior to joining up with other groups.
Unfortunately, there are often pressures from the outside, to 'scale up' and to do so quickly. While building such institutions can be accelerated with grants and subsidized credits, it is far more difficult to make those created institutions sustainable. This requires certain qualities which are not always found in the right combination, namely: leadership, the appropriate systems of member finance and governance, and member participation.
Box 1
More Haste, Less Speed
Certain conditions seem necessary for the emergence of viable farmers' organizations:
Adapted from: S. Rabemanantsa and J. Razafiarijaona: Le Rôle et l'organisation des ministères de l'agriculture et des ressources naturelles - Cas du Madagascar (Document produced for FAO), April 1999
The importance of group savings. The accumulation of savings has also been shown to be a another criterion for forming a SFGA. Small farmer group members' willingness to pool their savings provides a good measure of the members' confidence in one another, as well as of their willingness and ability to finance certain joint activities. By mobilizing their savings within the small farmer group, members create an equity stake which generates a solid base for future collaboration among themselves and with an SFGA, and for self-reliance. Some go even further by stating that the mobilization of member savings is an essential first step in setting up a SFGA.
Joining or forming an association. There is no pre-determined time for groups launching into horizontal or vertical collaboration: each group must decide when the time is ripe. The decision to join a wider grouping must be carefully made. If members are convinced of the benefits of joining a SFGA and are willing to invest in that, they will probably be more willing to defend it than if the decision has been forced upon them by an external actor. But there are also costs to consider; therefore, the final decision will depend on whether the perceived and real benefits - both economic and social - outweigh the perceived and real costs.
What are the main reasons for a small farmer group to join or form a SFGA? When all the details have been stripped away, the reasons can be divided into two main categories: (i) increasing the economic base (or market 'clout'); and (ii) confronting a common external threat.
Increasing the economic base essentially means one of two things: either grouping together to purchase supplies in larger quantities (the term "bulk purchases" is hardly appropriate given the total needs of a relatively limited group of small farmers), and thus being able to negotiate more favourable purchase terms; or, on the sales side, grouping together to market larger amounts of product, and thus being able to negotiate a better sales price.
Examples of facing external threats (bad treatment, oppression and injustice) are provided by two examples in India:
These two examples show that the social motivation (group solidarity) over-rides the strictly economic one.
Should a SFGA only be formed if its activities will be complementary to those proposed by existing organizations, as is sometimes suggested? This appears difficult to argue since a common motivation for forming is often to by-pass an existing organization, especially if it has a monopoly, is providing services poorly, is discriminating against the rural poor, or is ridden with political overtones.
While a small farmer group may content itself with social and limited income-generation activities at the SFGA stage, members will be expecting expanded economic activities (e.g. group purchase of inputs, communal grain storage, co-ordinated planting and harvesting) and greater financial returns, as already noted. The small farmer group may rely for all its activities on the volunteer spirit of its members; however, the larger scope of SFGA activities will mean that it will quickly need operating funds. Considerations on the financing of SFGAs come later.
Survival and sustainability of a SFGA, and any higher-tier organizations, will depend as much on the solidarity and loyalty of the membership as on economic factors. Member solidarity is essential for the group to get through the economic downturns they will inevitably encounter. Member loyalty will be generated if the SFGA aims to:
But how far should a SFGA grow and who should decide on the growth path? This question must be carefully weighed by the members. The SFGA must reach a critical mass which will provide it with the power to operate effectively. But the larger the group becomes, the more remote it will become - both geographically and humanly - from its members, and it will therefore be less sensitive to their needs and interests.
There are several options for SFGAs to move upwards, and several paths from informality to formality: the co-operative, the credit union, the farmers' association, amongst others. Some tend to assume every economically oriented farmers' grouping will inevitably eventually evolve into a co-operative. While the co-operative is a perfectly valid option, it must be recognized that co-operatives have not always come up to expectations. In particular:
In cases where legislation on co-operatives creates a constraining rather than an enabling environment, other forms of organization, as mentioned, can be adopted that will provide greater flexibility and scope for private enterprise.
What should be the role of the SFGA? How can it deliver quality services to its members at competitive prices? In its early days, a SFGA will probably be fragile and should avoid the temptation of trying to satisfy all of the members' possibly conflicting demands. This will disperse energies, over-stretch management capacities and be difficult to fund, thus weakening the young institution. The accent should be placed rather on handling a few services that are essential to the majority of the SFGA members.
Expanding the range of activities should be undertaken only with prudence and realism and, to avoid getting hopelessly into debt, when the necessary finance has been set aside. It is preferable to concentrate on improving production activities, for example, before launching into an ambitious processing or marketing plan. Prudent expansion must be a primary concern and the first questions must be whether there is a market for the planned activity and, if so, whether it can be launched with available resources. But choices will be difficult. Accumulating capital from operating profits, while at the same time keeping prices for services competitive, has caused headaches for more than one SFGA Board.
On the other hand, when expansion has taken place, the time may come when changes in the SFGA's internal structure may need to be reviewed. Specialization may become a valid choice: specialized SFGAs could be set up for each service or group of services, with small farmer groups joining whichever SFGA is providing the services they require. If operated effectively, such a policy could lead to greater efficiency, better control of activities, more accountability and improved overall performance. Services which are unused or underused, are too expensive to run, or which have outlived their usefulness, will be abandoned and others introduced in response to the evolving needs of members.
Box 2
In the early 1990s, the members of the village associations (associations villageoises), in the Koutiala region of southern Mali had an issue to sort out with the Malian Textile Company (Compagnie Malienne des Textiles). A rumour was circula ting that the Company planned to increase the pay of its field staff (i.e. their share of the profit from cotton), without raising the price paid to producers.
The producers' response was to create the Coordinating Committee for Village Associations and Tons of Koutiala, composed of farmers trained in literacy courses, plus a few representatives from a new sector of the population: graduates of secondary or post-secondary education who had returned to their home communities to start their own farms.
A series of meetings and local hearings led the committee to draw up an official list of claims and grievances. The group delegated the most highly educated of its members, a graduate of a post-secondary agricultural institute, to speak to members of the village associations, calm their fears, and present their claims and questions to the Company.
But the management refused any negotiation with the peasant movement. As a consequence, the committee called for a strike by cotton producers. For two months, the associations refused to deliver their cotton, until the Minister of Rural Development came to Koutiala in person to mediate the conflict. The outcome of the negotiations was that the Company accepted the principle of collective bargaining by a non-governmental organization representing the producers, and agreed as well to its participation in the National Agricultural Pricing Board.
In this way, the Union of Cotton and Food Crop Producers was born.
Representatives of these local associations or their federation are now fully responsible for weighing the crop, paying the producers, stocking the products, transporting them to the processing centres, and reselling them to processors, as well as for the necessary organizational and accounting tasks. This was made possible in large part thanks to literacy and non-formal educational programmes.
The final outcome is that the cotton companies have saved billions of CFA francs, a sizeable portion of the proceeds being returned to the producer organizations to be apportioned by them, partly as individual rebates to farmers and partly as collective investment funds. The latter, in turn, have stimulated a whole series of investments such as the establishment of credit and savings unions, the purchase of more sophisticated agricultural equipment, the drilling of new wells, and the construction of community clinics and schools.
Adapted from Bingen, R. James, 'Cotton, Democracy and Development in Mali', Journal of Modern African Studies, 362 (1998) pp. 265-285. Cambridge University Press, United Kingdom, 1998.
However, for many SFGAs with a membership composed of fairly limited numbers of poor rural dwellers, some types of service may not be viably run when using only the resources of the members.
With respect to inputs, demand may be inadequate for the purchase of inputs and supplies in sufficient bulk to offer perceptibly lower prices, while generating a surplus. Then, there are the problems of storage and transport: where will the members find enough capital for investments in storage and transport capacity? Is the option of renting and hiring in the early stages a valid one? Are appropriate rentable premises available in most rural areas? Failure to solve these problems are other major reasons for the lack of success of SFGAs in the field of group purchases.
Poor roads and long distances - factors over which the SFGA can have no influence - are likely to further increase the cost of input delivery and supply. Unless the SFGA can do this at lower prices than local private suppliers, members will be tempted to desert their organization and risk falling victim to unscrupulous traders. How far would the latter be willing to undersell this new competition until it drops out of the market? To what extent are members, or suitably qualified locals, willing to give their time voluntarily in order to help the SFGA on the road to viability? Will the SFGA manage to assure better quality than typical traders?
Similar considerations apply to marketing. Organizing the marketing of small quantities of products of uneven quality will remain an insurmountable problem so long as the members involved are no more than a handful. Successful marketing requires knowledge of demand, sufficient storage and transport facilities, and capital. The necessary technical and managerial capacities are unlikely to be available on a continuing basis, even if they may be provided free for a time by an outside support agency.
Even if all the above obstacles can be overcome, achieving the necessary levels of efficiency will eventually require broader groupings through networking, regulated collaboration or mergers. But there are other options; one could establish links with established operators and negotiate better conditions for the members than they could obtain individually.
Yet SFGAs may be useful in other ways. Lack of access to resources and services, and to an organizational base, is often what maintains the poor in their condition: a SFGA provides them with these. Certainly, a SFGA is better placed than a SFG to negotiate on behalf of its members when administrative matters, such as land ownership or legal restrictions on access to line agency subsidies or credit, are dealt with at district or higher levels. And even a small SFGA can assist members to face up to certain difficulties, such as sub-standard inputs or dishonesty among merchants, by denouncing such practices and endeavouring to obtain redress.
Finally, mention should be made of political action such as lobbying and advocacy at local or national level for improved conditions for small farmers. Is this a valid function of a SFGA, or should it be reserved for professional representative organizations or political parties?
The main socio-cultural obstacles to SFGAs usually come from the privileged and powerful who may see the new institution as a threat, especially when its aim is to strengthen the negotiating position of the poor. Typically in such categories of the privileged and powerful are large land-owners, money-lenders and merchants. As the SFGA itself becomes bigger and gains potential for political action, opposition by local interests is likely to grow.
Even traditional institutions can pose problems. Where there is a tradition of community action, as in certain parts of Indonesia, this may be supportive of self-help groups. But the co-existence of traditional institutions (the biraderi in Pakistan, for example) can also be an obstacle, especially when the SFGA cuts across traditional groupings. If they feel threatened by a nascent SFGA, traditional leaders may oppose it, thus depriving the poor of the services that the SFGA was planning to offer, without proposing any alternative.
Other social parameters also come into play, including ethnic considerations, religion, class and caste, and education. On the positive side, these considerations make certain groupings easier, for example where there are shared feelings of oppression or injustice and even physical threats (as in the examples from India above). Alternatively, they can facilitate alliances to oppose a SFGA and make them difficult or impossible to set up.
The ability of the privileged, especially land-owners, to circumvent the best-meaning land-reform legislation or divert it in their favour in countries as distant from one another as the Philippines, Morocco and Brazil (these are well-documented by ILO and FAO), illustrates the need for politically active groupings of small farmers, but also highlights the difficulties they face in existing real political clout in many countries. Indeed, the local under-privileged may, out of fear of physical reprisals or due to social constraints, prefer to keep a low profile rather than disturb the social order, and thus renounce setting up a SFGA.
What can be done by small farmers to overcome these obstacles?
There are those who believe there is a solution to be found through negotiations and demonstrating that an increase in the general well-being can be a "win-win" game. This sounds rather like the "trickle-down" theory of development which failed to produce the expected shared benefits. While it cannot be assumed that the privileged are necessarily "bad", history does show us that they are rarely enlightened enough to put their privileges at risk by giving "win-win" a chance.
In the face of such opposition, small farmers will need great determination and must be ready to make sacrifices today for greater strength tomorrow. Since they are by definition poor and already deprived, it is difficult to see how much more they can concede, even in defence of their own interests. Wisely applied outside assistance, with a built-in phase-out plan, can provide a solution.
Another strategy is to build links with others facing similar difficulties, or to obtain support from enlightened sponsors who have no stake in the opponents' agenda. These might be politicians, independent local leaders, or national and foreign NGOs able to exert pressure for constructive change.
In any event, setting up, and especially strengthening, SFGAs in the face of strong local opposition by the privileged will nearly always and nearly everywhere be problematic, though finding a modus vivendi is sometimes possible.
Savings and credit institutions are an important category of SFGA. Poor rural people often manage to save even considerable amounts compared to their economic situation and they also need access to loans. Ironically, formal rural savings institutions, such as banks, have often channelled rural savings to urban uses, for want of appropriate loan mechanisms in rural areas. In contrast, informal rural credit and savings institutions, which may begin as small farmer groups or SFGAs, can fulfil an essential role in providing a secure place to hold savings and to gain access to loans on reasonable terms with a minimum of bureaucracy. A SFG that has accumulated some savings, but not enough to satisfy member needs for loans, may feel stimulated to join a SFGA in order to enlarge access to loan money.
Rotating savings and credit associations are perhaps the oldest type of informal savings and credit institutions: each group (SFG) contributes an equal amount at regular intervals to the SFGA and the resulting fund is distributed to participating SFGs in turn by rotation. Setting up accumulative savings and credit associations (ASCAs) is another form; an ASCA is a form of inter-group Rotating Savings and Credit Association (ROSCA). Village banking is a more modern technique for providing a savings and credit service to rural areas and shows some promise (Box 3). Some of these techniques, in particular village banking, are forms of micro-credit. Micro-credit was started over 20 years ago in parts of rural Asia and has since spread worldwide, including in Europe and North America, and is applied in urban as well as rural situations, usually with a savings component
.Box 3
Village banking is a financial services model that enables poor communities to establish their own credit and savings' associations, or village banks. The terms of the model are designed to attract participation from the poorest of the productive poor, who are predominantly women. The sponsoring or implementing agency makes one loan to the village bank which then makes individual loans to its members. The bank guarantees these loans and relies on peer pressure and peer support among members to ensure repayment. The small, working capital loans are repaid every four to six months. To maintain a focus on the poorest, borrowers start with a very small loan and work their way up to an established loan ceiling. Credit is linked to savings and, in most cases, loan sizes are pegged to the amount each borrower has saved. Members' savings are held by the village bank and constitute additional capital that the bank can lend or otherwise invest to increase its own resource base. Commercial standards are applied to interest rates and fees.
Village banking is notable for the opportunity it provides for the poor to accumulate and manage assets. It creates autonomous community institutions - village bank members choose their own investments, disburse and collect all loans, manage their own savings, elect their leadership and determine their by-laws - and enables the efficient delivery of credit on a large scale to those most difficult to reach. Its successful targeting and serving of poor women on four continents demonstrates that the explicit social objectives of poverty lending can be compatible with the rigorous management required to provide sustainable financial services.
In some situations, loans can be made with or without interest. But experience shows that savings and credit associations, or rural micro-credit institutions, should have financial profitability and self-reliance as their main objectives: this means charging interest rates on loans which ensure this objective will be attained within a set time-frame. The micro-credit option does not necessarily require prior savings by small farmers as donors may be willing to give seed money for the loan fund. What is essential is to adhere to strict rules and procedures on loan applications mobilizing local savings and obtaining high levels of loan repayment, in order to maintain and expand the fund.
The advantage of such systems is that they can operate outside formal financial institutions, using simple methods. Once the system functions efficiently and can prove its viability, it can expand by leveraging funds from other sources.
Human Resource Development. The success of a SFGA will depend greatly on the human resources at its disposal and much will hinge in the early stages on suitably qualified volunteers from among the membership. Training members, or recruiting the right people, is the best way to set an SFGA on the road to self-reliance. Achieving the required levels of qualification calls for appropriate training, adapted to the members' likely illiteracy and the absence of experience in managing an organization. There is need for training at two levels: the members of the SFG and of the SFGA, and the group promoters.
Member training. Managerial capacity among the poor will usually be rare until the members have been trained, or the SFGA has grown large enough, to employ someone. All members should acquire minimum skills in order to understand how their SFG/SFGA works. Without this, there will be a risk of domination by one person (for instance the only literate and numerate member, if there is one) or one group. In this regard, FAO has produced several popular field manuals dealing with small group development topics which may be of use (Bibliography).
Literacy courses for members taught in the local language (if it has a written form) and later in the international language most commonly used in the country, are also desirable. Literacy and numeracy are basic tools for negotiating with traders, understanding notices and legal documents, and for controlling the activities of the SFG/SFGA. Indeed, it has been noted that general training and education, as well as health and other community topics, are often in greater demand than training that is directly related, for example, to production techniques. Such demand is inversely related to the governments' ability to deliver on the promise of education for all.
No SFGA can be expected to replace the State in its duty to provide general education and health care. But they can, in the interests of their members, supplement them in a cost-effective way to some degree. Training in simple management techniques, book-keeping and in literacy are areas where outside assistance can validly be applied, since they are costly for a young SFGA to provide. Yet the impact of such training is sustainable: early trainees can train others in their community.
Where the SFGA provides services such as input supply, marketing, or credit, the managers will need to develop additional technical skills: for example, how to develop a business plan, where to purchase in bulk, how to develop a marketing strategy. They may also wish to provide members with technical training related to production techniques or crop marketing which has a direct impact on their income-earning capacity.
There appears to be a growing trend for young people from rural communities, who have studied nationally or abroad and have not found satisfactory employment, to return to their villages to use their skills there. Do these young people not constitute a formidable resource to be tapped, and would they therefore not be typical candidates for training as managers, and as trainers, in SFGAs?
Group promoter training. The training of group promoters should emphasize participatory approaches and aim at overcoming the tendency to use heavy-handed, directive approaches that in all likelihood will result in the failure of the SFGA. All too often, group promoters do not receive such training, partly because properly-trained trainers are very rare, especially those with experience in SFGA formation. The production of easy-to-understand field manuals and guidelines adaptable to most situations should therefore be encouraged.
Although the term "participatory" has doubtless been overworked by the development community, it does have some practical value and group promoters should be taught simple techniques for applying participatory development. The first requirement in this area is to learn to listen and to respect the grassroots' farmers and the SFG and SFGA leaders they are dealing with.
Sooner or later, the SFGA members will be confronted with a difficult decision: whether to become a formal body. Undoubtedly, remaining informal has advantages; in particular, the flexibility of operations. But being formal is generally and legitimately a condition for gaining access to certain services provided by the Government. The negative side of this is that it will usually entail more control and government intervention. The pros and cons should be carefully weighed and much will depend on the legislative environment governing various types of association.
Depending on its activities, the SFGA will or will not have a choice. If it collects savings, or engages in commercial activities, it will have to conform to normal legal requirements. As activities become more complex, some type of formal internal rules and procedures will be inevitable. Should the rules be based on well-tried Western models? To what degree can local customs and values be integrated into the models? Outside assistance could provide guidance for the initial set of rules and procedures.
After benefiting from literacy courses, members will of course be able to read written rules as well as reports and records. Will this be enough? While a SFGA's rules will doubtless be adapted over time, the lessons of George Orwell's novel, Animal Farm, should be recalled: slowly, the rules written up on the barn wall were changed, with the leaders finally being totally exempted from obeying them. Unbiased help may also be required when adapting the rules.
What are the major issues in ensuring the viability of a SFGA? Aside from astute management, it is essential for members to be convinced that they are getting a fair deal from their association; this strengthens member loyalty which is a key ingredient of SFGA success. But members must also have a personal financial stake in the success of the association; this promotes a sense of financial ownership and commitment. And just as important, they must be willing to invest time in controls, in particular through regular attendance at meetings. Some of the issues involved are described below.
Transparency. A SFGA must never forget it belongs to its members and is accountable to them. Its base membership, e.g. the individual members of its affiliated small farmer groups, will be all the more inclined to exercise such controls when they have a financial or resource stake in the success of the higher-level unit and have something at-risk if it fails, and they feel that they are the owners. The information required for them to perform their control functions must be provided and measures taken to ensure all the members have access to them. Written rules can be expressed through songs or poems, or repeated regularly at the start of meetings in order to help illiterate members remember them. Oral presentations, pictures and diagrams will also contribute to transparency. The board and management should build checks and balances into the system and encourage a mix of collective and individual self-interest.
A basic tenet for a successful SFGA is the members' trust in the management. Generally speaking, the members are likely to be illiterate and innumerate and certainly not used to complex accounting and managerial procedures. Nonetheless, accounting, reporting and information systems, that are tailored to each circumstance are essential tools for the transparency, good management, member participation, and accountability of the leadership. If the members lose confidence in their self-created association, they will lose interest: the duty of a SFGA is to be different from the 'top-down' institutions typical in many countries, in which conforming with decisions from above is the norm. This militates strongly against Government donating civil servants as managers.
Monitoring and evaluation are also important tools for maintaining SFGA transparency and accountability: the necessary reports and accounts must be produced and distributed, and related meetings must be held regularly. All too often monitoring and evaluation are seen merely as a means for the donor to ensure that money is being efficiently applied in conformity with the project guidelines. In fact, it is even more important for the members, as it allows them to ensure that their organization is being run properly and their money used according to agreed activities. Monitoring and evaluation systems must be conceived first as a tool in the service of group members, rather than as a means of mainly satisfying the donor.
Three FAO publications, "The Group Promoters' Resource Book", "The Group Enterprise Resource Book" and "The Evaluation of PPP and Inter-Group Performance" address the question of internal assessment of rural institutions but they require up-dating in the light of recent experience. A list of other relevant publications is included in the Bibliography.
Communications. When villages are distant and communications relatively difficult, local rural radio stations can be used to conduct SFGA business: call meetings, announce results of elections, circulate information and even provide training. Further down the road, can computers and e-mail be envisaged (solar electricity generation is often possible, and so telephones can be installed)? Will the cost not be prohibitive in cases where there is only a handful of members? Can service companies provide solutions? Technologically advanced solutions should not be rejected out-of-hand: the Grameen Bank has introduced mobile phone services (as micro-enterprises) to link more isolated villages in Bangladesh. Locally-run rural radio constitutes an inexpensive means of communication in isolated rural areas, providing legislation allows it, and can be community-based. The "wind-up" radio makes it possible to overcome the problem both of electricity supply and battery cost.
Leadership and elections. At SFG level, shared or rotating leadership systems, with leadership changing hands by regular and fairly rapid rotation, provide an opportunity for each member to "learn the ropes" and thus be in a better position to exercise control over the SFG/SFGA. In the early stages of the institution's operations - say, for the first year - this facilitates the identification of skilled and capable leaders. But if it lasts more than a year or so, how will it be possible to maintain particularly skilled persons in the service of the institution?
As the SFGA becomes bigger, it is increasingly likely that some of the candidates at elections, and their capacities as leaders will be unknown to some members. In this case, should SFGA office-holders be elected by a college of SFG office-holders only? The reply will depend on each situation. So long as membership is confined to 200 grassroots' members, all decisions (including elections) should be able to be taken by all the members.
It is preferable that candidates should be motivated by service to the community, rather than personal prestige or privilege. But this occurs in any civil institution, wherever its location, and it is doubtless Utopian to expect things to be different in a SFGA. Also, rules are needed to avoid cliques denying access to leadership roles to newcomers, for instance leaders of a newly-adhering SFG. Finally, it is essential to keep party politics out of bona fide rural institutions.
Women. The place of women in a SFG, and especially ensuring that they have a say in its operation when they join, often remains problematic in many settings, particularly where there are deep-seated cultural obstacles. Wherever women's participation is possible, it must be promoted and if possible positive discrimination be practised. Where there are strong obstacles, a more effective approach is to promote separate female SFG/SFGAs. Once they have proved their abilities, female institutions will have far less difficulty getting their views across and acceding to larger groupings (where the issue of equitable access to elected positions, free from gender bias, will doubtless again arise). As institutions grow larger and more powerful, greater numbers of men will probably take an interest in being involved in decision-making bodies and compete for positions, making it even harder for women to gain access.
Beyond the question of access to elected positions, the very concept of elections may be foreign to many rural communities. Where traditional institutions exist and can be seen to be fair, traditional means of designating leaders, usually by consensus, should be woven into the rules of the SFG/SFGA.
In the final analysis, what is needed is a system that strikes a balance between rotation and continuity, gender balance and traditional values, while being appropriate for local customs and circumstances. This is perhaps a very great task/demand, but it is worth striving for.
The organizational and functional development of SFGAs has been little studied and merits more attention since it constitutes a major weakness in SFGA development and sustainability.
Voluntary work will play an essential role in the initial stages of a SFG/SFGA. But few institutions can operate successfully for long on voluntary work alone. Nor can economic activities be conducted without capital or incurring operating costs. A SFGA will only be sustainable if it covers these costs from its own resources.
There are several ways of financing a SFGA; these include:
There are also various methods for charging fees: there can be a global fee which gives the right to all the services on offer, whether or not the member uses the service, or a fee for each service used: the latter appears fairer, the former should stimulate member loyalty.
Savings are the best means of developing internal resources, preferably through the SFG. But should contributions to the savings fund be equal? If membership is homogeneous, this will be easier and will avoid conflicts and dissatisfaction among the higher contributors. The question will also be posed at SFGA level: should each member of the SFG contribute in equal amounts? Should a SFG/SFGA deprive itself of funds if one or more members wish to contribute more than the agreed common amount?
As already mentioned, it is essential to develop a strategy and mechanisms for full internal funding from the very beginning. As there is little documentation of successful strategies of this type experienced by SFGAs, it would be useful to endeavour to gather and analyse case studies of successful sustainability strategies for use by other SFGAs. Are there examples of SFGAs successfully negotiating this difficult transition?
While it is preferable for the potential members to decide for themselves to join or set up a SFG/SFGA, the initiative often comes from outside. Support from external sources can be useful or harmful. What is the right mix of member and outside funding at a given stage of the SFGA's development? How should outside funding be provided?
Too frequently, governments and donors alike have promoted organizations for achieving national development and other objectives that governments themselves define rather than the members of these organizations. This attitude can lead to a desire to intervene in, or control, the affairs of farmer organizations. The consequence is usually negative, and translates into a drop in member participation and member services, and in the absence of continued subsidies, a collapse of the organization.
Group promoters. In such cases, "group promoters", under one guise or another, may be vested with the task of promoting SFGs and SFGAs. Whether the promoters' influence is positive or negative will depend on the latter's attitude and on the incentive system they work under. The need for training them in appropriate techniques has been raised above.
As field experience has shown all too often, where the promoter is over-zealous, for instance if she or he has a quota to fill or seeks to impress the management, the "beneficiaries" risk being herded into SFGs and SFGAs, irrespective of the need for self-selection or group cohesion. Such heavy-handed methods will usually lead to failure.
But group promoters can have a positive influence if they take on the role of facilitator rather than instigator, seek a dialogue with the prospective members, provide them with information and advice so they can make reasoned decisions, listen to their views, and adapt the message to take account of their concerns. The promoter should also aim to build up a sense of ownership among the members of the SFGA: a sense of ownership develops responsibility and solidarity.
The group promoter can also assist the SFGA by negotiating with the local "opposition" or with local authorities to create a favourable environment, by managing power struggles, by assisting in conflict management, generally guiding the new institution in its early stages, and promoting inter-SFG contacts.
If promoters can be selected from among the community concerned, this is preferable. Local promoters know their community and are more likely to be trusted than outsiders.
Other external interventions. Other external interventions usually come from donors and NGOs. The major problem here is that they are always in a hurry to meet project deadlines and will even resort to coercive methods to achieve this. It is often not appreciated that participatory development takes time: this should be factored in to project schedules.
Furthermore, the agendas of external entities - be they government agencies, foreign official development agencies, or NGOs - rarely correspond to the agendas of the project beneficiaries. If the outsider seeks to sell its agenda to the poor, they may accept it in order to gain the benefits of the project, such as access to credit. The resulting group or association will be artificial. If discussion is encouraged, a quite different institution may emerge whose objectives are far removed from what the originator had in mind. When that happens, will the promoter be willing to adapt the original project? In other words, for whose benefit is the SFGA being promoted?
Development agency interventions, if handed properly, can be beneficial. Examples include outside assistance in areas such as training in technical, business and organizational skills, start-up loans, and facilitating information exchange before or after the SFGA has been created. The costs involved are small for the donor but the benefits for the SFGA are considerable.
But well-intentioned interventions can also fail. For instance, although loans are preferable to grants since they force the members to feel responsible for their business even at the initial stages, there are enough failed credit programmes around the world to convince most reasonable people that credit-driven approaches that ignore the savings side and the borrowers repayment and risk-coping capacities can do more harm than good. Matching loans' approaches, which are linked to members ability to mobilize funds, preferably on a one-to-one basis, to do much better. Unfortunately, loans available from development agencies often represent several times the members' contribution, crushing the SFGA under debt and leading to collapse. Such over-generosity can induce over-spending and often sends the SFGA along an unsustainable investment path.
In other words, too much outside funding can stifle member effort and commitment. Moreover, so long as an organization is dependent on outsiders, it will be beholden to them for many of its decisions and may be unable to satisfy members' expectations, and have to give priority to its sponsors' agenda.
A particular danger of donor assistance is when their programmes in the same area are competing and/or impose different methodologies: for example, when one donor believes in demanding interest on credit and another opposes it.
Finally, it is worth pointing out that service providers, in their desperate search for delivery structures that work, often overwhelm successful initiatives (SFGAs) and can actually undermine self-reliant development instead of reinforcing it.
What is essential is to respect the SFGA's autonomy and need for self-sufficiency, and to avoid pushing them along faster than they can manage.
The final question that can be posed is: Are subsidies a valid means of overcoming these difficulties for a period of time? Is it idealistic to believe subsidies can be linked to a clear plan to set the SFGA on the path to management efficiency and economic self-sufficiency? What if this is far from the goals of the SFGA by that time: will the supporting agency simply allow the SFGA to fold? What monitoring measures and sanctions can be devised to prepare it for the inevitable deadline? Experience has shown, the world over, that subsidies very often lead to failure of institutions. Subsidies provide an easy cushion for poor management, and management is indeed often incapable of getting on without them. This is not to say subsidies should be banned; they can be a useful instrument for 'starting up action', but they must be carefully planned and applied and the beneficiaries must be fully aware that these subsidies are not indefinite.
Subsidies create dependence. As mentioned elsewhere in this document, self-reliance, created by member contributions, which in turn make for member interest and control and transparent management, is the best means of ensuring the sustainability of a SFGA.
In the context of liberalization and down-sizing previous all-invasive public institutions dealing with the agriculture sector, alternative actors will have to take control. Small farmers - defined here as the rural poor and under-privileged in general - are likely to lose out if they are not organized and if their organizations are unable to defend their interests effectively.
Promoting associations of small farmer organizations is something donors and NGOs can do, provided they do so carefully and do not seek quick results. The essential point is for farmer organizations - even if their members are poor - to develop into autonomous, self-supporting structures. This will happen if they have the full support of their members and do not receive excessive support
.But forming small farmer associations, and making them viable, is no easy matter. Internal forces and external opposition pose a permanent threat.