One hundred million people around the world are employed by cooperatives, while 800 million cooperative members. Many of these are farming co-ops, businesses run by and for their members. At Olam, of the 4 million smallholders in our global supply chain, we buy one-quarter of our products directly through cooperatives and farmer groups in the developing world.
The economic benefits are well recognized — better access to markets, collective bargaining power and distribution of profits. But what else?
Just as important as their economic benefits is the role co-ops play in driving equality, innovation and behavior change for rural development in emerging markets.
In Nigeria, I know that women are among the best cocoa farmers we work with. They are hardworking, innovative and open to new ways of doing things, yet their full participation in cooperative management is hindered by cultural norms of their society.
Cooperatives are a mirror of the society in which they operate. So targeting women’s participation and supporting women members with agricultural, literacy, financial and leadership training can be a strong force for empowerment and development. We work with co-ops to create their own gender action plan and encourage more responsibilities to women on the board or at different management positions, from accountants to managing internal monitoring teams. For Olam, this sometimes means persuading husbands or male leaders — who may be concerned that an educated wife may become disloyal — of the benefits of female participation, as well as broader education on gender equality in training sessions for all members of the cooperative.
Innovation and adopting new practices can also face cultural hurdles in co-ops. Older members often influence decision making, which can limit the adoption of innovation and improved practices and technology. There is a real need to empower not only women, but also rural youth to reduce migration to urban areas and see agriculture as a positive career choice instead.
Co-ops offer a “hub” for investment in resource centers, model farms and training in good agricultural practices. For many smallholders, this training is the first formal education they have received. It’s important to make the sessions as relevant and applicable to their own farms as possible, and present information in a visual and interactive way to demonstrate the impact new practices can have on increasing production and income.
No matter how good the training is, however, translating those lessons to changing behaviors in the field is still a significant challenge. Take the somewhat counterintuitive practice of pruning back trees to increase yields. We rely on model farms and demo plots to show farmers, as they see for themselves that the trees start to flourish. Identifying motivated farmers who embrace the training and supporting them to be leaders then provides other farmers with role models and confidence in the new methods.
The help of partners
In several countries, co-ops are triggering rural development by initiating and conducting community needs assessments. Others are identifying opportunities and approaching partners to help make it happen — such was the story of Madame Constantine’s co-op in Djekanou, Côte d’Ivoire, whose members approached Olam to help set up a cashew shelling and peeling factory in their village, which now employs over 300 workers, 80 percent of whom are women.
Partnerships with third parties also open new opportunities. Here co-ops offer the benefit of only having to deal with a single counterpart in terms of payments, legal processes and support infrastructure. This means that companies such as Olam, governments and other organizations can be more ambitious in providing support and innovative solutions for smallholders and rural development.
One example is the GRAINE Project in the Republic of Gabon, which is spurring economic growth through land tenure. The project identifies 30 to 50 hectare parcels of land that are environmentally and socially suitable for plantation development. Then through the formal structure of co-operatives, allocates and transfers the rights to the land to Gabonese citizens. These smallholders are trained to grow and manage small-scale palm oil and cash crops plantations alongside nutritionally balanced food crops for food security and income diversification, such as cassava, banana, tomatoes and pepper.
Almost 15,700 members of 800 cooperatives have already been approved to receive their land titles, and we expect that number to rise to 20,000 members in the coming months. This joint venture between the government of Gabon and Olam is offering individuals security and land rights in a country where unemployment stands at 23 percent, thanks to cooperative structures.
Access to finance — one of the biggest obstacles that I see smallholders facing — can also be improved through a well-run co-op that can vouch for individual’s credit history and facilitate repayments. This can help provide zero interest short-term loans and other finance to farmers. As well as direct financing, co-ops can also help farmer groups build their credit ratings by helping them to legally register with relevant government departments, providing training on business management, conducting financial audits and maintaining records that the groups can present when applying for bank loans.
Some challenges can only be overcome with the help of third parties. But co-ops offer the formal structure to facilitate effective partnerships and — most importantly — galvanize sustainable rural development from within.
Learn more about Olam’s work with co-ops in the Olam Livelihood Charter’s fifth year results and new Corporate Responsibility and Sustainability report.
Join the Devex community and access more in-depth analysis, breaking news and business advice — and a host of other services — on international development, humanitarian aid and global health.