Working together to reduce poverty

A loan enabled Abebow to build his own feed processing plant in Ethiopia. Cooperatives in the country has allowed growers to access more market opportunities. Photo by: USAID / CC BY-NC

This post is part of a series produced by the NGO alliance InterAction and Devex around the International Day for the Eradication of Poverty.

I had a nice surprise two years ago when my organization started implementing a new USAID Feed the Future project in Ethiopia. I traveled to Addis Ababa to help our team on the ground assess the capacity of farmer groups that could be viable Feed the Future partners. This project applies a comprehensive market system approach to priority value chains, improving agriculture to drive poverty reduction and build food security. Local partnerships are key to sustainable results.

Once in country, the team and I got out of Addis to meet with potential agricultural partner institutions. One of the first groups we met with came recommended, a large cooperative called Becho Weliso.

As we sat in their offices to get acquainted, the manager turned to me and said, “We know you — 11 years ago, ACDI/VOCA got us started.”

Since we had worked with them through a USAID project developing co-ops in Ethiopia in the ’90s, Becho Weliso has prospered. They now have a remarkable 62,000 members and facilities including a factory that employs 200 people making sturdy agricultural bags much in demand in their farming community. They’ve held on to some old pieces of the past in their office, including a computer and motorbike, bought with original ACDI/VOCA program funds.

We partnered with them in the new Feed the Future program and the meeting reminded me of how far Ethiopian farmer groups have come. It also reaffirmed a cooperative approach to agricultural development and economic empowerment. The new USAID program builds on the co-ops organized during the earlier program.

Around the world, development programs are working and building on such institutional gains. Poverty is an unacceptable problem — but not an intractable one.

Extending reach through partners

Now that the financial crunch is affecting every bottom line, programs need to do more with less and leverage new resources. Working with local institutions is necessary to extend development programs and reach scale.

For agriculture, the prime institutional candidates are member-owned and run co-ops and associations. When organized in these groups, self-interested farmers have an incentive to work together. They mobilize capital, pool knowledge, achieve economies of scale and foster vertical integration. They create leverage in the marketplace and policy arena, attract business service providers and more efficiently link to urban and export markets.

A properly organized and run cooperative satisfies one of the two prerequisites for a market-driven solution. The other is a reachable market opportunity. In Ethiopia’s case this turned out to be the global demand for specialty coffee.

Developing existing institutions

In the early 1990s in Ethiopia, cooperatives and associations were in disarray. They needed restructuring and retraining to become farmer-owned, democratic, transparent and ultimately self-sustaining.

This was the on-the-ground context when our USAID-supported ACE [Agricultural Cooperatives in Ethiopia] program started in 1999 to promote cooperative unions, apex groups made up of local cooperatives, so that growers could reach even larger market opportunities through collective economies of scale.

Lessons learned

The ACE project reached 5 million people. It used a holistic approach, including training at all levels of the cooperative community, from farm owners, cooperative directors and managers to government and union management staff. It took seven years, and eventually the strong local cooperatives merited a union superstructure to help them market internationally. Building the unions’ capacity opened doors to financing. Improved financial management brought new services to members, such as buying and storing grain, or plowing or hauling services. Quality was rewarded. Incentives became clearer.

We saw remarkable changes at the household level as a result of the program. Eighty-four percent of farmers involved with the project said it allowed them to further their children’s education, 67 percent said they improved their home, another 64 percent said they were able to improve household diet.

Expand and repeat

The current Feed the Future program ACDI/VOCA implements in Ethiopia, Agricultural Growth Program-Agribusiness and Market Development, stands on the shoulders of past programs, using networks of rural farmers developed by ACE and other development programs. The program targets honey, maize, coffee, chickpeas, sesame and wheat value chains, stimulating innovation and private sector investment.

In its first year, the project surveyed 52 groups in various value chains examining money, membership and management data. The findings were remarkable. In a relatively broken Horn of Africa country, cooperatives are collecting dues, and making sales. They audit books, turn profits and return dividends to members. And the 52 surveyed co-ops and unions represent nearly 1.5 million rural farmers. Cooperatives are a significant part of the Ethiopian economy.

Consecutive development programs that build on previous successes are central to imprinting long-term sustainability. They help former project beneficiaries become program partners and industry leaders — which is not to say progress is automatic, because we’re still finding some of the same problems and many new ones in Ethiopia, but we’ve seen marked development.

Cooperatives have shed whatever stigmas they once had and are now professionally run businesses. In the coffee sector, the work has been transformative: The cooperative structure has enabled small holders to directly link to high-value markets including international roasters and buyers. Ethiopian coffee went from an undifferentiated bulk commodity to a specialty crop prized by coffee connoisseurs. And because the cooperatives are member-owned, the proceeds go back to the grower-members.

When we talk about capacity building, we need to think beyond a finite set of skills and behaviors. Investing in cooperatives builds agricultural capacity, but also, in a profound way, strengthens rural communities. Such groups not only catalyze local economic growth, but often also serve as the “glue” for social initiative and effective, equitable community planning. Schools are built. Communities demand accountability in governance. Farmers change their behavior because of the economic incentives that they now see within their reach. 

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