For the estimated three-quarters of the global impoverished residing in rural environments, agriculture is the primary source of income. Any aspirations of poverty eradication are existentially dependent on the development of these communities. Cooperatives are associations of people who come together to achieve common economic, social and cultural goals. The long-standing tradition of agriculture cooperatives in impoverished communities, where small farms pool resources, is a potential component of an efficient policy to offset the ravages of endemic poverty in agrarian economies.

A Moment in the Sun

Designated by three branches of the United Nations, 2012 was the International Year of Cooperatives. One of its primary ambitions was to highlight the financial disadvantages of small farms and the potential for inter-community economic unions to fight poverty. Agricultural cooperatives, having an impact that “cannot be overstated,” figured heavily into U.N. recommendations and initiatives. Creating 20% more employment opportunities than multinational ventures, agriculture cooperatives in impoverished communities provide a long-term potential for sustainable job creation, which is paramount to poverty eradication.

Harvesting Prosperity, a 2020 World Bank report, concluded that funding agricultural productivity is twice as effective at reducing extreme poverty as alternative methods. Crucially, the exhaustive report details the belief that industrial farms are the gold standard of high-yield agriculture. Contrarily, current research on “the inverse relationship hypothesis” questions the correlation between scale and productivity. Because impoverished rural communities are overwhelmingly populated with small-scale subsistence farms, one cannot overstate the essentiality of agriculture cooperatives in impoverished communities.

Being unique entities based on democratic principles, each cooperative has distinct requirements that defy a universal approach. The economic complexities of members serving as both suppliers and owners create multifaceted organizations with financial and social obligations, as opposed to a corporate performance that is based solely on finance and profitability. The dualistic nature of cooperatives as inherently business and community actors gives these organizations a great deal of leverage to impact the well-being of their communities.

Portuguese Traditions in the Age of Globalism

Over the long history of wine-making cooperatives in Portugal, these unions have consistently allowed members to garner higher prices and greater market share while simultaneously improving value chains and decreasing transaction expenses. Additionally, Portugal has garnered attention as cooperative bylaws are enshrined in the constitution, making them integral to the national economy.

With 39,506 vineyards in the Douro wine-growing region alone, the long-term economic future of an essential component of Portuguese national character requires the implementation of structural reform. Cooperatives represent 46% of regional production in Douro and Port. With most farms under one hectare, individual producers must combine resources to vinify grapes. But, after several failed governmental attempts at modernization in response to globalism, agricultural cooperatives have been stymied by encroaching foreign markets.

Upon Portugal’s entry into the EU in 1986, a direct-to-consumer model that sustained wine cooperatives became untenable as cheap imports via larger wine-producing nations like France and Italy brought competition. Furthermore, environmental and geographic factors prevented Portuguese vineyards from countering increasing imports through higher production. Often inefficient bureaucracies, a slow transition, accompanied by foreign investment allowed Quintas — independent for-profit producers — to flourish. Many Portuguese wine agriculture cooperatives in impoverished communities did not survive the opening salvos of globalism.

Think Local, Act Global

The culling of slow-responding cooperatives has forced researchers and policymakers to develop a framework for adaptability. Several organizations, native and foreign, contribute to shaping and communicating the strategies for agriculture cooperatives in impoverished communities.

• CASES: As previously noted, cooperatives must satisfy social obligations in addition to economic concerns. At Cooperativa Antonio Sergio para a Economia Social (CASES), an NGO focusing on the interrelatedness of finance and society, an alliance of Portuguese Creditors finances various cooperatives throughout the economy. A €12.5 million endeavor, Social Investe enabled several wine cooperatives to fund various projects and improvements.
• PDR2020: The active involvement of governmental agencies is crucial to structural reform. Wine industry infrastructure is notoriously expensive and beyond the resources of independent producers. A federal initiative, Programa de Desenvolvimento Rural de Portugal (PDR 2020), funds agricultural purchases that are particularly crucial for Portuguese vineyards. These grants, amounting to €37.5 million in 2020 alone, also help farmers adapt to increasingly frequent climatic abnormalities that disrupt production.
• Fenadegas: In order to affect the regulatory environment, wine cooperatives actively lobby for policy reform. Difficult at the individual level, Adegas Cooperativas de Portugal (ACP) is a coalition of 41 members and represents a unified agenda for addressing distinct exigencies of the industry. Additionally, the organization provides a global marketing platform, helping one cooperative survive the COVID-19 pandemic by increasing exports by 18% in 2020.
• SALSA: The dual requirements of integrating with the local economy and tailoring production while simultaneously developing global strategies present major challenges. With the intergovernmental organization Small Farms, Small Food Businesses and Sustainable Food Security (SALSA), Alentejo regional farmers created the “Km0 Evora” label that certifies local provenance within 50km. Efficient value chains are a traditional strength of cooperatives, but pressures of globalism have disrupted local economies, making community initiatives and branding more relevant. Mimicking Km0’s success, several European agricultural cooperatives have introduced similar measures.
• Adega de Borba: Maximization of member profit and temporary gain often leave cooperatives under-invested. Despite initial struggles, Adega Cooperativa de Borba (ACB), which began in 1955, successfully transitioned to the global marketplace and produces 15 million bottles annually. A €12 million-member investment to build a state-of-the-art production facility has allowed 300 small farmers to compete internationally by diversifying product offerings.

Restoring Profitability to Agriculture

As rural communities face increasing pressure from foreign influence, these already-disenfranchised populations will struggle to have others hear them amid the cacophony of global interests. Portuguese winemakers, that the rapidly-changing economy overwhelmed, suffered immense emigration as farming no longer provided sufficient income. Restoring profitability to agriculture is a powerful mechanism by which endemic poverty can disappear. Organizations at numerous levels will be instrumental in this effort, but progress must begin with collaboration in agrarian rural communities.

– Kit Krajeski
Photo: Flickr