Some Tips on Agricultural Cooperatives
#WorldVision #Farmercooperatives #Audit #Burundi
Agricultural Cooperatives can be complex businesses that operate around commodities which all members are selling such as grain or inputs that all members are buying like fertilizer. There is usually a strong financial incentive to being a member in a cooperative. The financial incentive includes either making more income via bulk selling to lucrative markets, or to a lesser extent saving money with bulk purchases of inputs. Banning together to form a cooperative also gives farmers political voice especially if they are all producing the same crop.
Cooperatives can benefit by selling higher volumes at higher values. While money and financial benefits are the glue that holds the cooperative together, mistrust is the thing that tears cooperatives apart. It takes years to build the trust of members of the farmer cooperative. It may only take a few weeks to tear a cooperative apart with mistrust.
Thrusting farmers from different backgrounds and different ethnic groups together to make a cooperative is sometimes a bad idea. I have tried to do this. Being able to meet together face to face makes a big difference to the level of trust between members. Members who live too far away to be able to attend meetings can feel alienated and distrustful of decisions made.
Good rules also make good cooperatives. But leadership must abide by the rules. Unless it is audited regularly, cooperative leadership may ignore the rules. When I was in Mozambique I heard that the president of one cooperative had a girlfriend. I also heard that the treasurer was expanding his lifestyle and had bought a car. Both the president and treasurer of that particular cooperative were in collusion and subverted rules to take money for themselves. Trust sunk to rock bottom and this killed the cooperative. No audits were done and members did not demand a strict accounting. Instead members grumbled and slowly left the cooperative.
Here is a photo outside of the warehouse of one cooperative that I met in Burundi. They had no written by-laws. However, they had a woman president and a woman treasurer. In Africa women are regarded as being more honest than men. This particular cooperative gave women the key “money” positions in the cooperative in an effort to maintain trust. This was working, and I credit them for their wisdom, but formal bylaws and audit reports are needed for long term sustainability.
One thing that cooperatives are doing in Burundi is producing seed. This is a very effective and lucrative activity in a country with no seed companies. Seed can obtain prices that are 50-100% higher than for grain (depending on government controls) so it can be a high value activity. Having a central place to store produce and a warehouse manager are also key activities. Picking the right commodity to sell is as essential as having good rules and abiding by them.
The point at which good rules are tested is the audit. Cooperatives with sloppy accounting and poor financial controls will fear an audit. However advanced cooperatives have published audit results. A government cooperative expert in Kenya recently told me “Published audits will not deter membership but actually increase membership as people gain trust in the cooperative and see that the cooperative is serious about its financial controls.” Newer cooperatives can also be mentored in financial controls and have pre-audits to be able to correct issues before the formal audit. So, when encouraging the formation of a cooperative, think about the rules and think about audits.