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Farmer Groups: Why We Love Them, Why We Do Them and Why They Fail

From the ISET Economist news (http://www.iset.ge/news/?p=3056)
By Tim Stewart

As Georgia embarks on an ambitious program to develop farmer organizations, it is worth considering both the positive and negative lessons from the experience of similar initiatives, both in Georgia and elsewhere in the developing/transition context. The piece by Tim Stewart, originally published on www.springfieldcentre.com, identifies some of the main reasons for the failure of start-up farmer organizations. The challenge for Georgia is to learn from these mistakes in planning and implementation, and ensure improved coordination among the many cooks involved (the newly created Agency for the Development of Agricultural Cooperatives, the Ministry of Agriculture, international donors, NGOs, and farmer associations).  

A village in the Zestafoni area. It is a picturesque landscape, but the farms are not operating very efficiently. (Photo: Nikoloz Pkhakadze)

Someone once told me that I couldn’t be a real agriculturalist until I had at least one failed chicken project under my belt, illustrating both their ubiquity and propensity to flop. The same can be said of projects that seek to establish farmer groups (farmer organisations, cooperatives etc.) and for much the same reasons – although I believe we should learn from failure, not repeat patterns that lead to it.

Conventional programmes working in agricultural markets often include a component of forming and supporting farmer groups in their various guises. Their justification for this is the perceived benefits to small farmers that can accrue from economies of scale of production (assets, labour and inputs), marketing (reduced transaction costs and bigger volumes) and voice (representation to government etc.). My concern is that farmer group formation and support is frequently a waste of effort and money because they overwhelmingly fail, and there is little honest recognition of, let alone learning from, that awkward reality.

Literature drawn mainly from projects supports farmer group formation and strengthening as a panacea for agricultural advancement, and often backs up the case for intense external resourcing. It suggests that farmers in groups are more likely to adopt technologies than those who aren’t, or are more likely to grow project-supported crops. Proponents also highlight their significance to the supply of inputs into food production and of food to the market. Indeed, the FAO estimates that nearly 40% of Brazil’s agricultural GDP is produced through cooperatives while in Europe, 60% of agricultural produce and 50% of inputs are marketed through one.

However a glance at the 2012 “Exploring the Cooperative Economy” report from the World Cooperative Monitor, reveals an almost total cooperative vacuum in Africa and, to a lesser degree, Asia. More directly, in my work I am frequently confronted with the reality of failed farmer groups that evaporate once the project ends, with unused equipment rusting in the corner of a field, an image, which has become a cliché of dysfunctional development in the popular press. And for many people engaged in development, farmer groups are a byword for failure.

Yet as far as I can establish (and I have searched), there have been few honest and objective ex-post reviews of farmer group formation components of projects to look at failure and the reasons for failure. (If I’m wrong and there are real data on groups’ success and sustainability, please send it to me!) Failures, if reported, are attributed to external “unforeseen challenges” and written up as “lessons learned”. Farmers groups have become a prime example of the development industry’s “emperor’s new clothes syndrome”, where official views are positive and glowing and formal research and evidence are at odds with what we know to be common (naked!) reality. So, in that context, I would argue that farmer group formation is a poor way to improve the lot of farmers positively and sustainably. How much more money needs to be spent; how many more pet Farmer Field School projects do we need to implement; how many more constitutions do we need to write; how many MOUs do we need to sign or how many ‘Farming as a Business’ trainings do we need to subject farmers to, before we understand that this form of development is not working?

The factors leading to the failure of farmer groups (rapid decline post-project) are numerous, but broadly they fail because they were formed for the wrong reasons, by the wrong people and/or in the wrong way.

THE WRONG REASONS TO FORM FARMER GROUPS

Agencies often form farmer groups because it helps them – the agency – achieve economies of scale of delivering services, assets or grants to them. In addition some may feel more comfortable ethically with the transfer of expensive assets or technical assistance to a group rather than an individual. The ethos of communal ownership to cosiness of the collective is pervasive in certain quarters of the development industry, even in the face of the common observation of poorly managed group-owned assets. Farmer group membership is also too often a pre-condition for farmers to receive giveaways from agencies. Groups therefore become entities built on artificial incentives created by agencies wanting an easy repository for their resources and buying short-term transitory impact.

Clearly then, ill-conceived or self-serving reasons are the wrong ones for forming farmer groups.

THE WRONG PEOPLE TO FORM FARMER GROUPS

Agribusinesses often face problems interfacing with small farmers because of high transaction costs, small transaction sizes, poor organisation and communications and a general lack of understanding of them. Farmers are often observed to face challenges finding markets for their products or face poor terms of trade. The absence of institutions (like groups) and services which would help them overcome these challenges (supporting group formation) is often justification enough for agencies to intervene impulsively by stepping in on behalf of small farmers – telling and selling the narrative of the “farmer being exploited by the middleman”.

The problem here is not only do agencies avoid addressing the root causes of the problem that lies beyond the farmer-trader interface, but in stepping into this space by performing “farmer group services” they undermine the possibility that it will ever be solved. Rather than solutions cemented firmly and sustainably in the market system, emerging “farmer group services” are seen as a development agency space. Thus it becomes a self-fulfilling prophecy: farmers are disadvantaged in markets because of weak vertical and horizontal linkages and there are no services to address this market failure: justification enough for agencies to step in and undermine the market further…

Development agencies are also the wrong people to offer farmer group services because, typically, they are poor at business:

-  They are not market based, they are subsidised and non-commercial and their success/failure isn’t dependent on a viable offer but on continued support from their donor.

-  Their incentives are therefore aligned to the agendas of the donor and their own HQ, not the market.

-  They are not cost-effective, indeed they are prohibitively expensive if the true cost of delivery is taken into account (drivers, cooks, HQ fund-raising etc.).

Development agencies are therefore the wrong people to form farmer groups because they are not long-term players in the market, undermine legitimate market players if they attempt to do so, and, put simply, are usually bad at business.

THE WRONG WAY TO FORM FARMER GROUPS

Agencies form farmer groups on the basis of an abstract, theoretical notion of potential benefits, or experience in distant contexts of limited relevance. Seldom do they ask the more grounded starting question: if groups are such an obviously “good thing”, why aren’t farmers forming groups already? Understanding the answer to this question would lead to understanding and addressing systemic problems in the market, or simply not wasting resources by attempting to do something that would be unsuccessful. The reasons that farmers don’t form groups are many, but often related to a lack of incentives or capacity.

Incentives: It may be that additional income does not accrue by aggregation, or that which is created may not be sufficient to overcome other issues such as distrust of others in financial matters. Other actors may be able to provide incentives that induce group formation such as a commodity buyer that provides inputs on credit. There may also be disincentives related to the wider political economy such as additional tax or administrative burdens to formal groups.

Capacity: There may be other obstacles to forming groups such as inefficient business registration procedures, weak advisory services, or a lack of adequately available information that would allow farmers to make an informed decision to form a group. This shouldn’t be seen as an open justification for agency intervention to address these directly for example through business services and setting up one-stop-shops for business registration etc. Rather it should lead to enquiry into who could and should be delivering these and why they are not.

The wrong way to form farmer groups is therefore to do it without understanding the central market failures that prevent farmers from forming them.

WHAT TO DO ABOUT IT

The problem for an agriculturalist and development practitioner like myself, is that working with farmers is fun and endlessly fascinating: it’s one of the things I got into the business for! However instead of being drawn to act impulsively on behalf of the small farmer, I think agencies would serve them better by doing more of the following three things.

Firstly, go in with their eyes and minds open, conducting ex-ante market analysis rather than making unsubstantiated assumptions about what farmers need. Don’t arrive with a farmer group solution pre-prepared and engineer an analysis to justify this. Establish the reasons that farmers are not cohesive, what incentives are shaping their behaviour and what capacities may be lacking. Get a valid answer to the key question: why isn’t the market system working?

Secondly, build and don’t undermine. Guided by the above analysis, work with relevant, long-term market players (private and public) to address the issues underlying farmers’ poor performance and low incomes.

Thirdly, be honest about and learn from failure. This is not especially difficult or time consuming to do, but I suspect is a place where many fear to tread.

My argument is not that farmer groups cannot be beneficial to farmers. Rather, by adopting a systemic approach aimed at fostering the conditions for self-organisation among market players, agencies have a far better chance of supporting small farmers – which may or may not involve farmer groups.

OTHER NEWS
12/07/2021
Jara Teaching Ready to Go

Eleven Vet colleges with beekeeping programmes have already received Jara equipment from the Georgian Beekeepers Union (GBU) and Jara Beekeepers Association (JBA). These eleven colleges are ready to integrate the Jara materials into their beekeeping programmes some from September this year and others in the spring semester next year.  The Deputy Minister of Education of Georgia, the Minister of Education of Ajara, and the Mayor of Keda visited the Keda VET College and expressed their support to Jara teaching.

‘We received the package of equipment for Jara teaching. The beekeeper students, enrolled last year, are looking forward to getting lessons related to Jara producing; officially, we are starting teaching from a new semester’ – Ilia Kharazishvili, the head of the beekeeping programme at Kachreti College.

The handover of Jara equipment is a follow-up activity of the Training of Trainers in Jara Honey Production for VET Colleges, which was held on May 18th-19th  hosted by the Georgian Beekeepers Union (GBU) and the Jara Beekeepers Association (JBA) in Keda, Medzibna Village. The National Center for Educational Quality Enhancement and sectoral skills organization Agro Duo are supporting the GBU and JBA with Jara teaching integration in the VET colleges.

We started cooperating with the Georgian Beekeepers Union and Jara Beekeepers Association for integrating Jara into our beekeeping programme, however, we are going to involve them in updating the whole beekeeping programme. We need their consultancy to share with us all standards to improve the programme’ - Bela Avalishvili, the head of Opizari VET College in Akhaltsikhe.

These colleges are  VET College at Batumi Shota Rustaveli State University; Black Sea Keda VET College; Black Sea Shuakhevi VET College; VET College Opizari in Akhaltsikhe; VET College Gantiadi in Gori; VET College Aisi in Kachreti; Training Center Farmers' House in Sagarejo, a brunch of Public College Aisi; VET college Iberia in Bagdati; VET College at Shota Meskhia Zugdidi State Teaching University; VET College at Georgian Technical University - Didi Jikhaishi in Imereti; and VET College Horizonti in Guria. 

Last year Akhali Talga VET College in Kobuleti and Khulo integrated the Jara materials into their one-year beekeeping programme, which is attended by twenty-eight beekeeper students. The GBU and JBA also delivered the Jara equipment to these colleges in 2020.

09/07/2021
Georgian Milk Day

On Friday, July 9th, from 10 am until 2 pm, the Business Institute of Georgia (BIG) who manages the Georgian Milk Mark, and the Georgian Milk Federation held a Georgian Milk Day. 

The Georgian Milk Mark which started in 2019 now has twenty one dairies currently using the mark. This B2B (Business to Business) event was to bring together the twenty one dairies who presented their products for show and tasting with invited hospitality and retail sector guests. COVID-19 has taken a toll on both sectors and it is hoped that bringing them together will be advantage to them both, in terms of sales for the dairies and supplying quality Georgian products for the HoReCa and retail sectors.

The Minister of Environmental Protection and Agriculture of Georgia, the Head of the Agrarian Committee of the Parliament, First Deputy Head of Environmental Protection and Natural Resources Committee of the Parliament gave a speech at the opening of the event. The National Food Agency, the State Laboratory of Agriculture, the Rural Development Agency and the Georgian National Tourism Administration participated in the event.  From June 1st 2021 a new regulation requires HoReCa sector actors to become HACCP certified. The NFA had an information desk at the event to answer questions and provide information.Everyone visited the GMM dairies and viewed and tasted their products.

 The event was supported by Alliances Caucasus Programme (ALCP) which is co-financed by the Swiss Agency for Development and Cooperation (SDC) and the Austrian Development Cooperation (ADA) implemented by Mercy Corps Georgia.

Here you can see photos of the event Gallery .

You can see here media reports:

https://bm.ge;

https://www.interpressnews.ge;

https://www.palitranews.ge;

https://mepa.gov.ge;

MEPAGeorgia

https://formula.ge

Businesspartner

07/07/2021
Georgian Honey Export Expands

Georgian Honey under Nena brand has successfully entered the Hong Kong market with a repeat order received soon after the first one. Hong Kong is the new market for Nena honey following USA, Canada, Japan and UAE.

28/06/2021
Georgian Honey Success in London

Three Georgian honey producers received Silver Quality Award in the quality category at the London International Honey Awards. These companies were supported by the Embassy of Georgia to the UK and the Georgian Beekeepers Union (GBU) to participate in this prestigious competition in London for the first time among 290 honeys from 20 countries.

The purpose of the LONDON HONEY AWARDScompetitions is to inform honey-growers, honey producers, beekeepers, processors, and retailers, who distribute their standardized products legally, to preserve and to ameliorate the quality of their branded product by promoting high-quality honey products in every aspect of the spectrum of its use and consumption.

The awarded Georgian honey producers are Nena Chestnut Honey / KTW, Nena Jara Bio Honey / KTW, Ninotsminda Honey (Alpine) / Cooperative KODY and Chestnut Honey / Rukhi Queen

 You can see here the post of the embassy on Facebook.

30/05/2021
Continuous Teaching from the GBU

On May 27th-28th, more than two thousand beekeepers in all regions of Georgia attended a training on bee treatment practices as a response to the massive bee colonies collapse this year. The Georgian Beekeepers Union (GBU) initiated and advocated the first nationwide trainings with the Rural Development Agency (RDA) based on the online research data gathered. The GBU developed a trainer’s handbook and Varroa Treatment guideline, which was translated and available for Azerbaijani and Armenian beekeepers; and delivered a Training of Trainers for eighty-five beekeepers. 

‘Beekeepers received important information about new methodology how to treat Varroa. This was the first training organized in coordination with the GBU, which is the main actor in the beekeeping sector and our collaboration will continue.’ – Lasha Shalamberidze, the Head of the Regional Relations Department at the RDA.

‘I think, a key outcome of these trainings is that our Union expanded its team across Georgia. We now have the representatives in each municipality and we will continue teaching and delivering important information to the beekeepers.’Aleko Papava, the Head of the GBU.

26/05/2021
A New Veterinary Surveillance Point in Mtskheta-Mtianeti Region

A seventh Veterinary Surveillance Point (VSP) of the National Food Agency (NFA) opened recently in Dusheti municipality to serve nomadic farmers migrating on the north part of the Animal Movement Route of Georgia. This is the first and the only VSP in Mtskheta-Mtianeti region, where disinfection of sheep and cattle against ecto-parasites is provided by the State. Up to 100,000 head of sheep will be dipped there during every transhumance season, free of charge.

The point was constructed by the NFA following the petition of shepherds from the region at the ALCP’s 11th Advisory Committee meeting and was approved by the Minister of Environmental Protection & Agriculture – Levan Davitashvili in March 2019, based on the positive benefits of the existing points.

In 2015 the VSP model was created by the ALCP commissioned British livestock expert Edward Hamer and an MOU was signed between the Ministry of Agriculture, the NFA and the ALCP to construct six VSPs, two of them were financed by the programme and four by the State. In 2016-2018 all six points were finalized and opened. This year additional water points were also opened on the route. The VSP’s record and monitor the nomadic sheep and cattle population and underpin Georgia’s credibility in livestock export markets.

LATEST NEWS
Jara Teaching Ready to Go
12/07/2021
Eleven Vet colleges with beekeeping programmes have already received Jara equipment from the Georgian Beekeepers Union (GBU) and Jara Beekeepers Association (JBA). These eleven colleges are ready to integrate the Jara materials into their beekeeping programmes some from September this year and others in the spring semester next year.  The Deputy Minister of Education of Georgia, the Minister of Education of Ajara, and the Mayor of Keda visited the Keda VET College and expressed their support to Jara teaching. ‘We received the package of equipment for Jara teaching. The beekeeper students, enrolled last year, are looking forward to getting lessons related to Jara producing; officially, we are starting teaching from a new semester’ – Ilia Kharazishvili, the head of the beekeeping programme at Kachreti College. The handover of Jara equipment is a follow-up activity of the Training of Trainers in Jara Honey Production for VET Colleges, which was held on May 18th-19th  hosted by the Georgian Beekeepers Union (GBU) and the Jara Beekeepers Association (JBA) in Keda, Medzibna Village. The National Center for Educational Quality Enhancement and sectoral skills organization Agro Duo are supporting the GBU and JBA with Jara teaching integration in the VET colleges. ‘We started cooperating with the Georgian Beekeepers Union and Jara Beekeepers Association for integrating Jara into our beekeeping programme, however, we are going to involve them in updating the whole beekeeping programme. We need their consultancy to share with us all standards to improve the programme’ - Bela Avalishvili, the head of Opizari VET College in Akhaltsikhe. These colleges are  VET College at Batumi Shota Rustaveli State University; Black Sea Keda VET College; Black Sea Shuakhevi VET College; VET College Opizari in Akhaltsikhe; VET College Gantiadi in Gori; VET College Aisi in Kachreti; Training Center Farmers' House in Sagarejo, a brunch of Public College Aisi; VET college Iberia in Bagdati; VET College at Shota Meskhia Zugdidi State Teaching University; VET College at Georgian Technical University - Didi Jikhaishi in Imereti; and VET College Horizonti in Guria.  Last year Akhali Talga VET College in Kobuleti and Khulo integrated the Jara materials into their one-year beekeeping programme, which is attended by twenty-eight beekeeper students. The GBU and JBA also delivered the Jara equipment to these colleges in 2020.
Georgian Milk Day
09/07/2021
On Friday, July 9th, from 10 am until 2 pm, the Business Institute of Georgia (BIG) who manages the Georgian Milk Mark, and the Georgian Milk Federation held a Georgian Milk Day.  The Georgian Milk Mark which started in 2019 now has twenty one dairies currently using the mark. This B2B (Business to Business) event was to bring together the twenty one dairies who presented their products for show and tasting with invited hospitality and retail sector guests. COVID-19 has taken a toll on both sectors and it is hoped that bringing them together will be advantage to them both, in terms of sales for the dairies and supplying quality Georgian products for the HoReCa and retail sectors. The Minister of Environmental Protection and Agriculture of Georgia, the Head of the Agrarian Committee of the Parliament, First Deputy Head of Environmental Protection and Natural Resources Committee of the Parliament gave a speech at the opening of the event. The National Food Agency, the State Laboratory of Agriculture, the Rural Development Agency and the Georgian National Tourism Administration participated in the event.  From June 1st 2021 a new regulation requires HoReCa sector actors to become HACCP certified. The NFA had an information desk at the event to answer questions and provide information.Everyone visited the GMM dairies and viewed and tasted their products.  The event was supported by Alliances Caucasus Programme (ALCP) which is co-financed by the Swiss Agency for Development and Cooperation (SDC) and the Austrian Development Cooperation (ADA) implemented by Mercy Corps Georgia. Here you can see photos of the event Gallery . You can see here media reports: https://bm.ge; https://www.interpressnews.ge; https://www.palitranews.ge; https://mepa.gov.ge; MEPAGeorgia https://formula.ge Businesspartner
Georgian Honey Export Expands
07/07/2021
Georgian Honey under Nena brand has successfully entered the Hong Kong market with a repeat order received soon after the first one. Hong Kong is the new market for Nena honey following USA, Canada, Japan and UAE.
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