I was reminded of this topic by the excellent BusinessMirror report written by Michael M. Alunan “Why poverty prevails despite robust growth.” His analysis is important: “If farmers produce volume and more variety, it means cheaper prices and more choices for consumers. Unless farmers are empowered and organized complete with all logistical support of his own, the middleman-trader will always meddle with the imperfections of the market.”
In August I wrote about the need to create more cooperatives, being firmly of the opinion that competitive farming, mechanization of farms, applying the latest technologies, focusing on high-value crops, excluding the middleman by creating effective supply-chains, etc., can only happen if farmers are getting together, developing a social form of business that relies on a sense of community.
Over 20 million people in Germany are members of cooperatives, organizations that work according to the motto: “What one person cannot accomplish alone can be accomplished by many.” This enables them to establish enterprises they would not be able to finance alone.
I firmly believe that cooperatives are the key to success in agriculture in the Philippines. The Philippines has a long history in creating cooperatives, but only a few cooperatives are successful. What are the reasons early cooperatives failed?
- Incompetent management;
- Lack of proper understanding of the principles, practices and true aims and purposes of cooperatives;
- Improper use of credits by the borrowers who, instead of using the money for production, spent it on nonessentials;
- Defective securities;
- Inadequate character and moral responsibility in handling the other fellows’ money; and
- Lack of adequate safeguards against unscrupulous officers who took advantage of their position to benefit themselves.
As I said in my previous columns: “Heavy public and private investments into agriculture will allow the consolidation of farmland as farm consolidation is of great importance. The best models of Philippine cooperatives should be copies and cascaded. The adoption of advanced farming technologies can only be achieved by management systems that can focus on competitive land sizes, good research and development, in coordination with existing research institutes in the country, supported by increased extension service to be provided by the government.”
If cooperatives are the key for the future of agriculture and having examples of very successful cooperatives, isn’t it high time that the government and the private sector got together to jointly find solutions to cascade the successful cooperatives throughout the country? There are many options for cooperatives, from farming to food production, from finance to marketing and sales. Cooperatives can be main players in creating and driving agri-food supply and value chains.
Allow me to finish with the last paragraph of Alunan’s BusinessMirror report: “We cannot simply leave the imperfect market to the machinations of Adam Smith’s ‘invisible hand,’ which could legitimately be pickpocketing the wallets of the helpless farmers and, thus, also contribute to why farmers remain shackled in poverty.”
Cooperatives will not allow the pickpocketing of the wallets of the farmers, if we see to it that they are managed by people with experience and integrity.
Comments are welcome; contact me via e-mail Schumacher@mcasia.org.