Agricultural Marketing Cooperatives

This book explores the evolution of agricultural marketing cooperatives within the framework of competitive strategy analysis. It also explores issues of horizontal and vertical integration and product differentiation by discussing new strategic directions that cooperatives might pursue.

Rural producer organizations (RPOs), such as farmers' organizations or rural cooperatives, offer a means for smallholder farmers in developing countries to sell their crops commercially. RPOs hold particular promise for Sub-Saharan Africa, where small-scale farming is the primary livelihood but commercialization of food crops is very limited. Using the experience of smallholders in Ethiopia as a case study, this research monograph identifies the benefits of RPOs for small farmers, as well as the conditions under which such organizations most successfully promote smallholder commercialization. The evidence from Ethiopia indicates that RPOs do increase farmers' profits from crop sales, but that the beneficiaries do not tend to be the poorest smallholders. Moreover, an RPO's marketing effectiveness is precarious: it can easily diminish if the number or diversity of its members increases or if it provides more non-marketing services. The authors conclude that RPOs have a role to play in the agricultural development of Sub-Saharan Africa, but that role should be complemented by other programs that directly target the poorest farmers. Further, the effectiveness of RPOs should be preserved by allowing them to follow their own agendas rather than being encouraged to take on non-marketing activities. The assessment of RPOs presented in this monograph should be a valuable resource for policymakers and researchers concerned with economic development and poverty reduction in Sub-Saharan Africa.

Originally published in 1993, this is a study of agricultural co-operatives. The farming structure in transition countries has shifted from dominance of large corporate farms to family smallholdings. Smallholders everywhere experience difficulties with access to market services, including sale of products, purchase of inputs, and acquisition of machinery; they suffer from credit shortages and have limited access to information and advisory services. The barriers to market access prevent smallholders from fully exploiting their inherent productivity advantages. Best-practice world experience highlights farmers' service cooperatives, created by grassroots users, as the most effective way of improving the market access of small farmers. Service cooperatives also help smallholders overcome market failures, when private business entrepreneurs are unwilling to provide services in areas that they judge unprofitable or unfairly exploit users through monopolistic practices. These difficulties and market failures are prominent in transition countries and scholars accordingly expected rapid development of agricultural service cooperatives in response to smallholder needs. The present volume explores gaps between expectations and reality.

First Published in 2004. The market economy has changed profoundly over the past two centuries. In the nineteenth century, business enterprises were largely single-product ventures, managed directly by the owners and rooted within national economies. In the twentieth century, firms employed managers who were not owners. Firms also evolved into multiproduct, multiunit entities that could employ thousands of workers. In the twenty-first century, many firms operate on a global scale, taking advantage of free trade policies and rapidly evolving computer and telecommunications technologies. Given this potential, it is crucial that producers, consumers, economic developers, and researchers realize how co-ops can promote local economic and community development. Hence, this book includes the perceptions of experts on a variety of cooperative issues, including the challenges involved in starting a co-op and in understanding its impact on surrounding communities. This book can be especially useful because it provides the theoretical foundations and practical applications of cooperative behavior.