COOPERATIVES & CHAINS: Linking Smallholder Organisation to Agricultural Markets

Increasing integration of agricultural production in (inter)national supply chains poses new challenges to the bargaining position of smallholders in developing countries. Local coopera¬tive orga¬nisa¬¬tions - traditionally confined to service provision and member¬ship representation ? become more engaged in entrepreneu¬rial functions. Newly emerging organisational strategies need to balance the needs for value chain upgrading and rent and risk distribution amongst stakeholders. Dynamic competitive advantages are realized if farmers cooperatives are able to tailor their internal governance structure to meet the delivery conditions of downstream agents. This research program compares different alternative pathways for smallholders? producer cooperation in response to specific supply chain challenges. Main attention is given to options for improving economies of scale and scope, forward and backward integration, quality upgrading and price volatility manage¬ment. Institutional choice is considered endogenous, with smallholder organisations dynamically adapting to particular supply chain configurations (within the boundaries of the existing market and legal environ¬ment). The emergence and evolution of institutional regimes is addressed at the interface of internal and external conditions that give rise to specific cooperative arrangements. The research perceives the integration between supply chain agribusiness models with collective action approaches, relying on experimental and participatory methods for understanding agency-structure interactions. A comparative framework is used for evaluating the implications for smallholder welfare, cooperative enterprise viability and performance, and inter-agency trust. The structural (enabling or limiting) conditioning for particular pathways of cooperative integration will be assessed through a cross-country analysis regarding the determinants of performance differences. Program integration is based on the comparison of the particular supply chain-cooperation interfaces that give rise to a set of local performance indicators (derived from the case studies) against the benchmark of aggregate cooperative sector performance conditions. The research program is structured around the comparative analysis of four typical supply chain-cooperative interface of perishable commodities (dairy, potatoes, fruit and horticulture) that require high agency coordination to maintain quality and value added potential. Differences are made between the type of market outlet and the degree of up/downstream integration. Driving forces at behavioural level include risk and trust attitudes that could give rise to institutional change. Structural implications of particular institutional arrangements are assessed looking at the income and decision rights between stakeholders. Results will be used for training to cooperative sector leaders (through ICA and Agriterra), focussing on profiling, exchange of best practices and analysis of critical success factors.