Farmers, stop begging for donations

Thirty years ago, I published an article in the Dutch national newspaper Trouw on the new export item of Nicaragua: showing delegations around and getting donations. I reported on how government officials influenced donors with stories on hardship and war, to obtain funding for their projects. Last month, I went back to Nicaragua. This time with a business advisor of the Spanish agri-agency ACODEA (see Rafael Lesmes on photo talking with a coffee producer). This agri-agency led by cooperatives and farmers organizations from Spain, advises cooperative development, promoting cooperative processing and trade facilities.

Financed with donations

If one only looks at the figures of 12 cooperatives reviewed by ACODEA, one finds that 87% of their aggregated assets stems from donations. The contributions of members for social capital constitute only 27%. That the sum of both balance items is even higher than the aggregated assets, is due to accumulated losses that in some cases, like the cooperative “20 Abril 2013” with negative assets.

In these 12 cases, the cooperatives received on average three times more donations than member contributions. In quite a few cases this ratio is much higher, going up to 30 and in one case even 460 times. This latter happens in the coffee and cacao cooperative Sopexcca. Their social capital is practical nothing compared to their total assets. The donations at first sight only represent 12%, being a bigger share retained positive results. But another item “revaloración” on the balance indicated that their donations have been received some time ago and at current prices represent about 37% of the assets. In three cases, the total assets are lower than the donations on the balance, implying that the cooperatives were not capable of maintaining positive result, despite all donations. In another 5 cases, donations constitute more than two thirds of the assets.

Quiet revolution

Rafael and I had a hard time explaining that only with hard work and investments of farmers, real progress can be made. Accounts from India and Bangladesh gathered by Thomas Reardon from Michigan State University, show that in fact in more countries farmers are taking the rural industrialization in their own hands. He calls it a quiet revolution, that is taking place under the radar of government, donors and banks.

We urged the cooperatives to stop begging and go for internal capitalization. We showed on video the flour mill and pasta factory of the cooperative unions Uta-Wayu and Raya Wakena in Ethiopia. This factory was financed by poor farmers and provides employment to 200 persons from the villages. Internal capitalization has become a nationwide programme in Ethiopia, after the Dutch agri-agency Agriterra introduced it succesfully with the cooperative unions in that African country.

Shortly, Sopexcca and two more Nicaraguan cooperatives go and visit the coffee cooperative Sol & Café in Peru that has increased on a big scale its internal capital and financed investments in warehouses with it. ACODEA hopes this to be the beginning of a turnaround in the thinking of co-operators in Nicaragua.