Agriculture Cooperatives in Impoverished CommunitiesFor 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 Prosperitya 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

 Female Weaving Co-op in Mexico
Female weaving co-ops began to proliferate in Mexico in the late 20th century, especially in the country’s most impoverished areas. Indigenous Mexican women living in these areas found it imperative to collectivize to navigate an oppressive socio-political landscape. Vida Nueva is one example of a co-op that grew out of this context. This female weaving co-op promotes gender equality in Mexico in ways that people never before imagined.

How This Female Weaving Co-op Promotes Gender Equality in Mexico

Oaxaca is the second-poorest state in Mexico, with historically low GDP growth relative to the national average. In Oaxaca, 28 percent of the population lives in extreme poverty, a statistic due mainly to income disparities between rural and urban centers and the region’s low manufacturing capacity. In the small township of Teotitlán del Valle, Zapotec women feel social and economic marginalization the hardest, because they must contend with a communal infrastructure that favors men and limits their participation in municipal government. Until the 1990s, women could not pursue education or obtain a drivers’ license.

Today, many Zapotec women are still illiterate and bound to male intermediaries so they may engage meaningfully with the economy. This is especially the case regarding the textile industry, their principal export. Under these conditions, even their own reproductive health can present a source of ignorance.

Weaving Cooperatives as a Means of Social Change

The establishment of weaving cooperatives has benefitted Zapotec communities like Teotitlán in confronting the onset of globalization and neoliberal economics in Mexico. This phenomenon has proven to be damning to rural indigenous communities throughout the country. However, the biggest impact changes in textile production have been in improving gender relations in otherwise patriarchal contexts.

Since Zapotec women began weaving, their stake in local politics has increased, as well as their lobbying ability. Exposure to new markets through access to technology and travel has led to instances of financial and ideological independence. They have placed new importance on education and female empowerment, reshaping social norms to value female labor and domestic contributions at home.

Vida Nueva

Vida Nueva (New Life in Spanish) is an all-female weaving cooperative changing the social geography for women in Teotitlán for the better. The group comprises of solteras or unmarried women, widows and the wives of migrants, who banded together in an attempt to circumvent merchant control over their products. When starting, the women struggled to sell their rugs independently due to a language barrier (most do not speak any Spanish), stigmas against indigenous Mexicans in the city, exploitative bureaucracy and male backlash within their community.

A chance encounter with Flor Cervantes, a social justice promoter in Oaxaca with over eight years of self-esteem workshops under her guidance, gave Vida Nueva the architecture to develop into what it is now. Under Cervantes’ guidance, the women learned about their bodies, their business potential and how best to advocate for themselves. With this knowledge, Vida Nueva began to expand. It eventually gained recognition from the United Nations and the licensure to sell its goods worldwide. Through education and cooperative production, Vida Nueva regained control over the production and sale of its work.

While Vida Nueva’s biggest impact on gender equality in Mexico is qualitative, concrete change also exists. By 2004, nearly 15 percent of households in Teotitlán participated in textile cooperatives. This is a considerable increase since Vida Nueva’s inception in 1996.

According to the New York Times’ measure last year, the textile industry involves almost all of Teotitlán’s 5,500 residents in some way. Since the early 2000s, higher volumes of female co-op members received invitations to attend community assemblies. Now, it is commonplace for whole collectives to receive written invitations. This serves as evidence that a once-rigis, patriarchal local government is finding women to be more valued assets.

Giving Back

At no point in becoming independent artisans did the women of Vida Nueva compromise their practice. They continue to use the natural dyes (made from pomegranate, marigolds, pulverized insects, etc.) and the arduous weaving techniques that predated colonization. Vida Nueva is a community-driven project with a localized vision. Every year, the collective sponsors a new initiative to improve the quality of life in Teotitlán for all residents. Since starting, the group has championed recycling and forestation efforts, senior care services and feminism.

Elena Robidoux
Photo: Taken by Elena Robidoux

7 Reasons Why Cooperatives Are Important To Poverty Reduction
Cooperatives are critical to reducing poverty. All cooperatives, social or economic, are mechanisms that ensure the growth and prosperity of communities. In developing and transitioning countries that lack access to capital, education, and training, cooperative structures allow communities to pool together their resources to solve problems, identify common goals and target the causes and symptoms of poverty.

What Are Cooperatives?

Cooperatives, or co-ops, are organizations of all types that address a wide range of issues — from food producers and consumers in sub-Saharan Africa, to credit and hybrid cooperatives all around the globe.

Anytime people have common concerns, face similar struggles or are looking for solutions bigger than they alone can accomplish, cooperatives offer an answer via strength in numbers. This is why cooperatives are important to poverty reduction.

When Did Cooperatives Begin?

Co-ops date back to the 1840s when the Rochdale Society of Equitable Partners came together after losing their jobs to industrialization. This group decided to band its resources together and open a store that provided goods they all needed, but couldn’t afford on their own.

Out of their individual experiences, we were left with the Rochdale Principles — a set of operations still in use today that helped the pioneering group manage the realities of poverty in an organized and productive manner.

What Are Cooperatives Core Principles?

The success of co-ops depends upon seven core principles of cooperative development:

  • Voluntary and open membership
  • Democratic member control
  • Member economic participation
  • Autonomy and independence
  • Education, training and information
  • Cooperation among cooperative
  • Concern for community

More than 760 million people around the world are a part of the cooperative movement. Here are seven reasons why cooperatives are important to successful poverty reduction.

7 Reasons Cooperatives are Important to Poverty Reduction

  1. Co-ops directly answer community needs, adjusted to local concerns. They are anchors that distribute, recycle and multiply local expertise, resources and capital. Autonomous cooperatives reach the poorest people in the community, offering upward mobility and basic infrastructure ignored by large businesses. Consumer Cooperatives, like Rochdale play a vital role in distributing food and basic resources in poor and rural areas. Profits and benefits also circulate within the same community.
  1. Co-ops help build peaceful societies. In the process of transforming poverty-ridden communities into vibrant economies, cooperatives contribute to skill-development and education. They bolster gender equality and improve the health and living standards of an entire community. Cooperatives have been instrumental in meeting the Millenium Development Goals, as nations are more likely to stay peaceful by escaping the poverty trap.
  1. Co-ops enable farmers to obtain higher returns. Agricultural and fishing cooperatives support its members by providing training, credit and resources. Rural cooperatives, dependant on agriculture, don’t have to look to international companies to grow. In impoverished communities with low inputs, it is unlikely they can produce the quality and quantity desired to make profitable margins. Combining supply purchases, sales and other expenses can help cooperatives operate at lower cost-per-unit than their individual farmer counterparts. This can allow for an entire community to re-market their product at a higher price.
  1. Worker co-ops promote collaborative entrepreneurship and economic growth. Cooperatives reduce individual risk in much-needed business ventures and create a culture of shared productivity, decision-making and creative problem-solving. Only 10 percent of co-ops fail while 60 to 80 percent of businesses fail; in fact, cooperatives can revive communities by allocating funds to rising workers with vested interests. Credit co-ops also supply money to start a new business or repair current ones. Profits from sales can then support larger community projects that help each member and the community as a whole to survive.
  1. Co-ops create competition within local markets. Since services come at a cost to members, pricing adjustments occur to benefit members and impact other organizations in order to compete at the same efficiency. Purchasing cooperatives, in particular, help businesses compete with large, national retailers. Co-ops not only provide positive outcomes for its members, but also excite local markets as a whole.
  1. Multi-purpose and credit co-ops provide small loans to their members. These loans go to self-employment, offering an opportunity for better wages through retail shopkeeping, farming or livestock. This allocation of funds can go towards building needed community infrastructure projects and financing small businesses that help local economies grow.
  1. Industrial and craft co-ops help members produce marketable products. In addition to training, shared facilities allow members to access raw materials and technical machinery otherwise unavailable in rural areas. These cooperatives can provide an additional source of income for families and allow them to grow in their communities, rather than travel to urban centers at a high cost.

Empowerment and Collaboration

Co-ops organize all over the world because they can help in almost every circumstance. Both developing and developed countries depend on cooperatives because they are an empowering model that promotes collaborative social change.

While foreign aid and investments drastically help impoverished communities, external remedies are only half the battle. Co-ops provide a grassroots initiative and social structure to address all symptoms of poverty.

Cooperatives also make aid and assistance all the more powerful. With strong communities and the right foreign assistance, eradication of extreme poverty becomes all the more feasible.

– Joseph Ventura
Photo: Flickr

Camp Hope
Nepal’s Camp Hope is a privately and publicly funded safe haven for displaced families from the Sindhupalchowk district north of Kathmandu, Nepal. Camp Hope spans one square kilometer and is made up of a series of large tents. The tents, which were provided by the U.S. Agency for International Development (USAID), have enough strength to withstand the annual monsoon season in Nepal. USAID assisted Nepal providing shelter and protection for 310,000 Nepalese people displaced by earthquakes.

Nepal’s Camp Hope was made possible thanks to the combined efforts of USAID and Sangeeta Shrestha. Shrestha is the camp founder and runs a world-class boutique heritage hotel called Dwarika. Shrestha had a great deal of trouble finding a location for Camp Hope because the local government would not relinquish any land to the cause. Thankfully, Shrestha says, “a local youth club came offering their football ground, so here we are.”

In order to make Nepal’s Camp Hope possible, Shrestha has enlisted numerous volunteers and specific members of her hotel staff. Certain volunteers are in charge of checking and registering every individual before they are permitted access to the camp. The engineers and technicians who work in hotel Dwarika are responsible for building the many tent structures that make up Nepal’s Camp Hope.

Shrestha and her hotel supply Camp Hope with food. Camp Hope is striving to meet the emotional and social needs of the thousands of displaced individuals. In order to accomplish this feat, Camp Hope provides spaces for prayer, tents for creating crafts and has built a local school with 83 students currently enrolled. All of these programs help Camp Hope residents slowly recover from the tragic earthquake that changed their lives.

A devastating earthquake ripped through the Sindhupalchowk district on April 25, 2015. Fortunately, 500,000 families managed to survive despite the fact that their villages had been reduced to rubble. Those 500,000 families equated to approximately 88 percent of the dwellings in that district.

The earthquake was the worst natural disaster in Nepal in the last 80 years. Unfortunately, Nepal would suffer a second earthquake only 17 days later, followed by a series of aftershocks. Both of the earthquakes combined resulted in 6,200 deaths in Nepal alone, over 14,000 injuries across the country, and massive landslides that engulfed over 130,000 homes. According to the U.N., 8 million people were said to have been affected.

This is why Nepal’s Camp Hope is viewed as such a pivotal sanctuary for everyone who is a part of it. The overall atmosphere and environment is filled with laughter, conversation, activities and interaction between the residents.

The residents give vitality to Camp Hope, which truly feels like a unified community within a village. Although Camp Hope is a wondrous place for displaced individuals, the main mission is to rebuild the villages that were destroyed by the earthquakes. The U.S. and Nepal’s governments are working together to help rebuild the communities that were affected.

It was decided at the International Conference on Nepal’s Reconstruction that U.S. funding for emergency relief and recovery efforts would be raised to $130 million.

Part of that funding will help establish 1,000 temporary educational centers for misplaced children. Not enough can be said about the valiant efforts put forth by the Nepalese government, the U.S. and Camp Hope. Millions of people have been positively affected and stronger communities will be built in the future.

Terry J. Halloran

Photo: Flickr

Mondragon Cooperatives: An Alternative to Spain's Economic Struggle
Cooperatives are being used as an alternative to the usual corporate hierarchical business model. These are businesses created by people uniting voluntarily in a democratic manner, aiming to improve their economic and social needs.

Economists recognize the crucial role they play in improving Spain’s economic struggle. The largest worker cooperative in the world, Mondragon Corporation based in the Basque region of Spain, best exemplifies this claim. Once known as one of the poorest regions in Spain, the Basque region is now the richest, prospering due to a strong sense of self-determination, grassroots participation and non-governmental intervention.

In the 1940s, the young priest Don Jose Maria Arizmendiarrieta made it a goal to reduce the poverty rate at the time. The repressive policies of Franco’s regime were leading to economic restraints causing more Spaniards to emigrate from the country. Arizmendiarrieta wanted to counteract this by creating humanistic cooperative businesses that looked out for workers’ needs. Arizmendiarrieta and others created a technical school. He then established a cooperative bank, the Caja Laboral, leading to the first industrial cooperative in 1956.

Today, Mondragon is one of the most successful Spanish firms with global sales of $15 billion, employing close to 75,000 individuals in a total of 260 cooperatives. The people of Basque no longer experience the poverty they once did, “In Mondragon, I saw no poverty, I saw no signs of extreme wealth, I saw people looking out for each other,” said Sociology Professor Barbara J. Peters. “It is a caring form of capitalism.”

The Mondragon cooperatives are based on 10 principles: democratic organization, open admission, subordinate and instrumental nature of capital, value and importance of labor, participation in management decisions, fair payment, social transformation, cooperation, education and the university.

Workers in Mondragon have full control over their firm. Once a year members of each cooperative meet in a general assembly and elect who they want in charge; this board of directors is chosen to lead the cooperative in making important decisions and deciding the company’s strategy.

Moreover, the cooperatives are not accountable to shareholder’s needs; outsiders cannot buy any control, which allows management to invest solely on their cooperative with the long-term interest of the community in mind. Instead, the workers of Mondragon receive a share of the annual profits or losses based on a formula that tries to reflect the relative productive contribution of each worker.

Using this formula, most of the profits are reinvested, in turn creating new cooperatives and jobs as well as spurring the long-continued growth of Mondragon. Funds are also put aside for social welfare, providing care for retirement, widowhood and disability. Additionally, top CEOs at Mondragon are not earning exceptionally more than starting employees, somewhere between three to nine times more, which is significantly lower than most corporations.

Due to Mondragon’s investment methods, they barely felt the loss of the 2008 recession, which deepened Spain’s economic struggle. Not a single employee was fired, remaining steady at around 84,000 worldwide, one-sixth of them Spaniards. Instead of firing workers, their employees’ average salaries dropped by around 5%, and those who were left without work found jobs at another co-op; all the co-ops back each other up, making sure they prioritize their profits, investing in the co-ops which are economically declining.

Since 1990, Mondragon has expanded its businesses to international markets. Today, they have 125 different businesses in different countries; however, these businesses are not all cooperatives. In 2006, Mondragon began working with Mexico, Brazil and Poland to educate trade unions on how to properly run a co-op.

The 2008 economic recession set the project back. Nevertheless, in 2009 Mondragon partnered with the United Steel Workers (USW) to lay the groundwork for the formation of Mondragon Union Cooperatives in the U.S.

Marcelo Guadiana

Photo: Flickr