At the start of September 2014, LEI participated in the seminar ‘Enhancing Development Effectiveness through Cooperative Agrobusiness’ which was held in Addis Ababa, Ethiopia. The aim of the seminar was to gain a clearer idea of how much research on the life cycles of cooperatives had contributed to strengthening the strategic management of cooperative organisations.
The starting point was the cooperative life cycle shown in Figure 1: From time to time, fundamental changes need to be made to the internal organisation and management of cooperative enterprises in order to achieve the desired results (in terms of higher income, increased profits, more jobs and mutual trust).
When cooperatives start investing in further product processing or want to enter new market segments, it is sensible to create space for re-thinking the best form of business management. The management structure comes under pressure. This is because more attention needs to be paid to external stakeholders, such as banks (which co-finance depth-investments) and customers (who want guarantees for the quality of production).
Cooperatives thrive when markets fail
The seminar opened with lectures by Professor Ruerd Ruben (LEI Wageningen UR) and Professor Michael Cook (Graduate Institute of Cooperative Leadership). Many cooperatives have been set up in East Africa in recent decades, often with strong government influence initially. Cooperatives thrive when markets fail; farmers can then collectively buy cheaper inputs, negotiate better prices and bring more production to the market. Cooperatives also facilitate the transfer of knowledge and strengthen the negotiating position of the farmers.
Collectively share prospects for the future
The cooperatives in East Africa are faced with new market conditions and are in need of adaptations. These conditions may arise from the need for further specialisation or quality improvements in the production process or the need to step up the processing of products. More commitment is required from the members, and the internal management will probably need to professionalise further. During this process it is vitally important that the cooperative members reconstruct their history and are willing to say honestly how they see the prospects for the future. This may lead to a new institutional structure, or some members may decide to continue alone or in a different business configuration.
Talks have been held with the Dutch Embassy, the Ford Foundation and the IFPRI on a follow-up to the seminar. The partnership between the Graduate Institute of Cooperative Leadership (located in Missouri) and LEI is presenting opportunities that will enable the East African cooperative movement to make use of the experience gained in both the North American and European traditions of agricultural cooperatives. The knowledge derived from earlier studies on agricultural cooperatives in Europe can be used in Wageningen.