“The UN system Network needs to highlight the important role that farmer organizations play in rural development. The more the Network can generate discussion and debate, the better.”
– John Rouse.

“The Network can support and promote cooperatives and farmer organizations by involving them in the activities of their Thematic Groups at country level.” – Janos Juhasz.

In this interview John Rouse, Senior Rural Institutions and Participation Officer, SDAR, FAO and Janos Juhasz, Cooperatives and Rural Organizations Officer, SDAR, FAO give the Network an insight on the reality of Farmer organizations and their role in promoting sustainable development and food security.

Why are Farmer organizations important for rural development?

John Rouse: One of the benefits of Farmer organizations is that they provide people who share some common interest with significant economies-of-scale in accessing services and in taking collective action aimed at improving their socio-economic conditions. In rural areas where producers are dispersed and scattered and communications are not optimal, the importance of these organizations is even greater.

Janos Juhasz: Apart from benefiting producers in rural areas, who are dispersed and scattered, Farmer organizations are also an important way for poor people to have an impact and to become stronger in financial terms.

What is the current situation of Farmer organizations?

JJ: Many of the farmer organization structures found throughout the developing world were established during the colonial period and later promoted by post independence governments primarily as instruments to achieve nation building objectives rather than objectives identified by farmers themselves. They were financially supported by government and government officials frequently played an important role in managing or controlling these organizations. More recently, government financial support to these structures has started to dry up. Thus, many farmer organizations are facing financial collapse since they have never learned how to become financially self reliant.

JR: Farmer organizations have gone through a decline for the past 10 to 15 years due to a decline in development assistance which has considerably weakened governments' ability and capacity to guide these organizations. Farmer organizations have been instruments of government policies, rather than vehicles for farmer empowerment. This is now changing with the liberalization of markets, global competition, and the collapse of many of those organizations that largely depended on external governments or donor support. In many developing countries people are going back to the basic principles of cooperative action and to a better understanding of the importance of self financed activities and farmer controlled organizations.

Another positive aspect is that donors and international-agencies promoting cooperative development are beginning to realize that they have been part of the problem rather than part of the solution. Consequently, their whole approach to providing assistance to strengthen these organizations is beginning to change. The new World Bank development strategy is evidence of that metamorphosis. Now there is more emphasis on building autonomous people's organizations that are more independent of government. Donors are also giving more attention to the economics of building more sustainable farmer organizations or and rural enterprises with the capacity to survive in privatized globalized markets.

What about Farmer organizations networks?

JJ: There is a global network of cooperatives and farmer organizations, called COPAC (Committee of the Promotion and Advancement of Cooperatives)., COPAC was created in the early 70s, when networks were not that high on the agenda of most international development agencies. There are also several international and regional farmer organizations alliances, not necessarily networks. The main one is the International Co-operative Alliance (ICA) within which the International Cooperative Agricultural Organization (ICAO) is specializing in agriculture.

In Europe, various networks and federations work in the respective areas of agricultural supply and marketing cooperatives, financial cooperatives, consumer cooperatives, etc. At regional level, there are also emerging networks, such as the agricultural cooperative network known as NEDAC (Regional Network for the Development of Agricultural Cooperatives in Asia and the Pacific), which is supported by FAO.

JRe: Modern information technologies also have had a very positive impact on the growth of farmer organization networks. Many farmer organization and cooperative networks now have e-mail links to their affiliated member organizations and have established their own websites to facilitate the exchange of business and other information. The most popular electronic network today appears to be the Cobus (Cooperative-Bus Discussion Group) which is an electronic correspondence network run by the University of Wisconsin, providing a lot of information regarding farmer cooperatives and promoting a theoretical and political debate on related topics.

What are the main obstacles farmer organizations face in various countries?

JR: Certainly one of the more important obstacles agricultural cooperative organizations face today is how to mobilize enough capital to finance the cooperative's business. This is due to the decline in development assistance to cooperatives during the past decade and to the liberalization of market conditions for agricultural products. Before, cooperatives operated under protective markets. Now those markets are not protected anymore. Consequently, competition between cooperatives and the private sector has increased and cooperatives are now finding it difficult to satisfy their member demands for service. Many cooperative movements are now suffering from a mass exodus of members because they are not able to deliver the services that members want.

The capital issue is also important because it brings into question whether the cooperative should be a capital-oriented or people-oriented institution. Many cooperative supporters claim that cooperatives should be people-oriented organizations, not capital-based ones; however, a growing number now argue that they are also businesses and have to mobilize capital to finance their member services, and to grow. These differences of opinions within the cooperative movement often lead to heated debates, though much deserved because this principle needs to be examined closely in light of the new market conditions.

Another obstacle that has to be overcome is government intervention in cooperatives. Historically this has been a major problem in developing countries where governments have regarded cooperatives largely as instruments they can use to achieve certain nation building objectives which are not necessarily aimed at addressing farmer member needs. In fact, in a number of countries farmer cooperative members have actually been exploited to achieve these national objectives, forced to market their produce through the government controlled cooperative at below-market prices not allowed to exercise independence in decision making that they should have been allowed to exercise.

This is partly linked to a broader issue that relates to the process of democratization and the broadening of the whole concept of citizenship within a country. Many developing countries are unitary states with very hierarchical, top-down decision and policy-making structures, very insecure about their national identity, obsessed with the issue of defending the integrity of the nation-state and discouraging any kind of local decision making autonomy.

It is also aggravated by the fact that the national elites that have risen to lead these governments have a strong urban bias and limited understanding of agricultural and rural development issues. In most cases the policy making processes of these countries do not actively encourage and sometimes even exclude the participation of farmers as a result they tend to favour the interests of consumer groups and those of the better organized urban worker classes that if left unsatisfied would create discontent that would pose definite threats to the nation-state. However, the continued exclusion of broad rural participation in policy processes is usually not in the long-term national interest of most LDCs, since in the long run, it serves as an obstacle to the expansion of domestic markets and more balanced and sustainable economic growth and to the development of more democratic and representative governments.

What are the priority issues that farmers' organisations and FAO focus on?

JR: FAO and Farmer organizations focus on four main topics: Business survival: Farmer organizations and cooperatives are in the business of delivering valued member services. If they are to survive, they must be able to compete effectively in the marketplace with other private service providers. Capital Mobilization: This is an issue of particular concern for agricultural cooperatives, which are currently going through a very difficult capital shortage crisis. New more effective methods for mobilizing member capital need to be introduced in many LDCs. FAO has been actively promoting the introduction of new approaches to member capitalization since 1995 through the commissioning of country case studies on experiences in mobilizing cooperative capital in LDCs and developed countries, through the preparation and circulation of discussion papers on the subject and the holding of international and regional workshops Modernization This has to do with computerization, new technologies, e-business allowing to access global and regional markets. Farmer organizations and agricultural cooperatives can benefit greatly from the use of these new information technologies to reduce information processing costs, to improve the quality of member services and to compete more effectively in national, regional and global markets. FAO will be placing increased emphasis on addressing such technology issues in the years to come. Training to increase farmers' capacity in technology, e-business, etc. and how FAO can provide this training.

Our basic training focus is targeted towards serving two user audiences: one is interested in the promotion of informal self-help group structures. The other is interested in promoting more formal structures, for example formally recognized farmer organizations or producers' associations. With regard to training materials developed for the first audience, we produced a set of four simply written and well-illustrated resource books for fieldworkers on small group approaches: The group promoter's resource book, The group enterprise resource book, The inter-group resource book and The group savings resource book (The last publication will soon be available on "SD Dimensions" - the web site of the Sustainable Development Department, FAO).

To address the training resource needs those engaged in promoting more formal self-help organizations, such as cooperatives, we also have produced guidelines on capital formation for agricultural cooperatives and a very extensive training manual on management training with a number of modules in several key areas of agricultural cooperative management training and we are now embarking on this new area which is the use of information technology to improve the business efficiency particularly of cooperative organizations.

JJ: FAO also tries to give priority to the introduction of participatory approaches. Membership relations are also a "hot issue": how farmers can benefit from their membership and, at the same time, contribute to the cooperative as a business and as an institution.

What role can farmer organizations play in terms of poverty alleviation?

JR: One of the unfortunate realities of rural poverty is that most of the rural poor possess very little or no land. This leaves most of the rural poor with only option, that is to focus on generating income from agricultural-related activities that require very little land or get involved in non-agricultural activities. Studies on rural livelihoods have confirmed that the poor are very diverse economic actors and are often involved in numerous activities of a non agricultural nature. Therefore by promoting improved capacities for generating income in non-agricultural areas, you are making a major contribution towards reducing rural poverty.

So I think there is a lot of opportunity there that needs to be exploited. As a food and agriculture organization, FAO has a natural bias towards improving food and agricultural production capacities but perhaps should give more emphasis to also improving "upstream"" and "downstream" activities that are agriculturally-linked but are of a non-farm nature. It can be small business development micro-enterprises or setting up micro-savings activities - all the activities that are on the fringes of agricultural production activities.

JJ: Yes, but farmer organizations and cooperatives are there for value-added production. This is what makes the whole farmer organizations issue so important. To give you an example: according to an FAO estimate, in a medium country in terms of development, if you take the consumer dollar spent on food, you will find that 15 cents of the consumer dollar will go to the primary producer, 20 cents to the upstream sector and the rest, 65 cents, to the downstream sector. So if you really want to help producers and farmers, you will have to get that latter part of the cake to the farmers. The ideal institutions to do this are farmer organizations.

Does FAO cooperate with other UN agencies in the promotion of farmers' organizations?

JJ: Yes, we collaborate, on a bilateral basis with other UN organizations that are interested in farmer organizations development, particularly with the ILO but also with the UN Secretariat. We are ready to cooperate with anybody who shows any interest. However, we also cooperate in a more organized way, mainly within the framework of COPAC (Committee of the Promotion and Advancement of Cooperatives).

How can the UN System Network support and promote farmer organizations?

JR: I think the UN system Network needs to highlight the important role that farmer organizations play in rural development. The more the Network can generate discussion and debate, the better. The Network could emphasize the cost and benefits of governments ignoring rural development issues. Governments and donors are now beginning to see as that they have ignored the rural sector. Now the "chickens are coming home to roost" and problems are developing. OECD member countries dedicate roughly 350 billion dollars a year to subsidizing their rural sectors and only around 8 billion dollars is channelled into development assistance for the rural sectors of developing countries. There is an imbalance that is creating problems and needs to be changed.

JJ: I see this as a two-way process. The Network and the farmer organizations should collaborate in promoting sustainable agricultural and rural development and poverty alleviation. In this process the Network can support and promote cooperatives and farmer organizations by involving them in the activities of their Thematic Groups at country level. In return, farmer organizations can also promote the Network's poverty alleviation rural development efforts.

JR: The Network can also play a critical role in the area of PRSP processes (Poverty Reduction Strategy Paper) that are under way in many countries. Farmer organizations are generally not involved in these processes, and if the Network could help draw-in more farmer participation and participation of their organizations in these PRSP processes, that could have a tremendous positive impact on rural development.

What role do participatory approaches play in the formation of farmer organizations?

JJ: We are dealing with two types of farmer organizations: the informal groups and the formal ones, such as cooperatives. The informal groups act without any formalized structure or registration. The formalized farmer organizations have internal rules and statutes and are registered. We are trying to promote the transition from an informal group, passing through the phases of inter-group associations to reach the straight forward genuine registered and formalized cooperative. Of course, this is not necessarily the case with every group. It depends on each situation.

JR: There are benefits and costs to participation and if the costs of participation outweigh the benefits, members do not come and participation grinds to a halt. They are not going to participate if it is not in their interest to participate and that is the way it should be. I think it is also important to keep in mind that while participation is nice, but if it does not lead to improved performance or delivery of member services, then maybe you should do away with it.

With regard to participatory approaches, what are the concrete steps recommended by FAO in the creation of farmer organizations?

JR: I would say:

1. Start building farmer organizations from the bottom up rather than from the top down and base this approach on addressing farmer needs instead of government needs.
2. Focus on business efficiency and member service effectiveness.
3. Keep out politics.

What should governments do for farmer organizations?

JR: Right now transaction costs in the rural sector are very high. Governments should contribute to reducing them by creating favourable, political and legal environment that helps rural people to develop themselves at a lower transaction cost. Then, FAO could focus on the technical issues, trying to look for ways in which rural citizens can play a more active role. FAO should largely try to keep politics out of there.

JJ: The minimum requirement from the government is to create a favourable environment for the establishment of farmer organizations. Then we can discuss different government roles beyond this. In developing countries, for instance, governments can go further and provide farmer organizations initial support, even some kind of financial support.