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Malagasy cooperatives to play a new role in agricultural and rural development

March 20, 2017

About 100 members of agricultural cooperatives from 16 regions of Madagascar, in addition to 100 representatives of the government, the private sector and international NGOs, gathered at the Cooperative Leadership Forum in Antananarivo at the end of February 2017. The event was jointly organised by CTA and NCBA-CLUSA (National Cooperative Business Association, Cooperative League of the United States of America) and supported by the Ministry of Industry and Private Sector Development (MIDSP).

Forum des coopératives à Madagascar

National and international agroindustries regard cooperatives as a vital link to procure from farmers, as they help limit food imports and strengthen and structure value chains. Coops can compete with middlemen and traders who currently capture most of the value of final products. Unlike middlemen and traders, cooperatives tend to to redistribute added value among farmers.  

NCBA-CLUSA representative Gabriel Sarasin believes that “There is huge untapped potential in Madagascar. Promoting and mobilizing cooperatives will help us move forward more quickly.”

Unveiling the model for a new generation of cooperatives

Jour1Farmers and cooperative leaders attending the Cooperative Leadership Forum spent the first three days learning about so-called ‘new generation’ cooperatives. The training was intended to familiarize participants with concepts that will enable them to move from a community or associative model to one where cooperatives operate as businesses that are fully integrated into their value chains.

Dr. Nicola Francesconi, senior technical advisor at CTA, said that this training was designed to mark a break with the old model of community-based cooperatives.  

“Most of the cooperatives in Madagascar, as well as in other African countries, were originally led by colonial officials and then by the State. The word ‘cooperative’ still has negative connotations for many people, especially farmers. We want to change the image of co-ops in Africa and introduce participants to the idea that they can build successful businesses that create jobs while still honouring the underlying principles of cooperation. Producers will always be the principal owners and decision-makers in co-ops.”  

The farmers’ voice 

Co-op members also had the opportunity to share their concerns, discuss possible solutions to their problems and articulate how they expect the MIDSP, international donors, private investors, service providers and researchers to help develop cooperatives in Madagascar.  

The spokespersons elected by members of participating co-ops, Tovo Aina Andriamampionona and Nirina Razafimanantsoa, reported that their main problem is still a lack of access to markets due to private and informal collectors who compete with cooperatives in procuring farmers’ agri-commodities. They suggested that this could be resolved by organising agricultural fairs that are value chain specific and Business-to-Business sessions for connecting co-ops with buyers through B-2-B. They also called for the creation of platforms for the actors involved in each value chain, and more up-to-date market information, especially on foreign markets.  

Nirina Razafimanantsoa stated that “What we are advocating is the creation of a favourable environment that enables every co-op to get established in their supply chain and respond to market demands.” Tovo Aina Andriamampionona also highlighted concerns about the current tax system for cooperatives: “… there’s a risk with double taxation, because co-ops can be taxed on their revenues and producers also have to pay tax on what they earn, which means that members of cooperatives risk to be taxed twice over.”

Ministerial deliberations   

After two days of discussions and debates between MIDSP officials, members of co-ops, development agencies and donors, ministry officials promised to prepare a new national policy and legal framework to develop cooperatives, in order to help them transform into inclusive and viable businesses with greater capacity for vertical integration into different value chains.  

The Secretary General of MIDSP told participants that “Cooperatives can generate employment. Their activities are often limited to production but they could do a lot more with a little extra help. Therefore, the ministry plans to include co-ops in projects to industrialize agri-food value chains, and to facilitate coops’ access to credit.”

… and experts’ opinions

The organisers of the event presented their final recommendations, which were based on research undertaken in Madagascar in parallel with the event, and in three other African countries in the context of the project Enhancing Development through Cooperatives (EDC). The group of experts and researchers emphasized that developing a new generation of cooperatives should generate opportunities for rural employment, especially for young people and women, who find it particularly difficult to gain access to arable land and see no future for themselves in farming.  
These experts anticipate that the vertical integration of cooperatives will require more binding contracts between co-ops and their members and between co-ops and their buyers. Francesconi also believes that “co-ops will have more chance of obtaining credit if they are better integrated into value chains, as the tightening of contractual arrangements will reassure financial institutions and persuade them to offer affordable credit to cooperatives.”  
Francesconi also believes that injecting new blood into the senior management of cooperatives could open up other opportunities. “One of the main limitations of traditional co-ops is that they are nearly always managed by older male farmers, who often have no formal education and are mainly elected because of their position as community chiefs or customary leaders. Most participants at this Cooperative Leadership Event belong to this category.” There is room for more women and young people in the leadership of cooperatives; people with an education, an entrepreneurial mindset and the ability to seize the opportunities offered by new information and communication technologies. “Incentivizing and training these new co-op managers, not to replace but to help traditional leaders, would enable coops to professionalize and become more competitive in the marketplace.”  
Over the coming months, CTA and NCBA-CLUSA will set up a unit of service providers or management consultants, to advise and support cooperatives that supply key value chains in Madagascar. The objective of this unit will be to convince target co-ops to gradually take over from CTA and NCBA-CLUSA in paying for service provision and management consulting.  
CTA and NCBA will monitor and evaluate the impact of this unit and make their findings available to an inter-ministerial committee that will be also set up to review the national strategy and legislation. Developing a strategy based on the needs of value chains and introducing more flexible laws should enable cooperatives to incorporate management consultants and business development services into their structure and their staff.

Resources

For further information

New Generation Cooperatives - Special Dossier, Spore March 2017

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