Agricultural Cooperatives Sector

Development Strategy 2012-2016

The stat of affairs

Focus of the presentation

Enhanced Capacity Building (Ardaita as Center of Excellency

Improve Marketing infrastructure

Improve the structure, capacity and accountability of public

regulators

Design a comprehensive cooperative development policy and

Guidelines

Experiences from the study to the Netherlands

Role of cooperatives

Increase market price (7-8%)

Collective voice to advocate for their needs (In Thailand,

Korea, Netherlands)

World Development Report 2008 reviewed the evidence

and concluded that “Producer organizations are essential to

achieve competitiveness for small-scale producers”.

Cooperatives in Ethiopia (FCA 2010)

40,000 Coops (now more than 45,000) 4

Agricultural Coops 10,000

Single purpose 3,000

Multi purpose 7,000

6.7 million members

70% members of Agricultural Cooperatives

1.5. SWOT analysis of the Agric Coop Sector in Ethiopia

Strength

Input Delivery (90-95%)

Output marketing (coffee, sesame and others)

7-9% price increase

Number of members are increased

Reduce interference

Good rules and regulation

Weakness

Do not sufficiently help members improve their yields and incomes

(World Food Program in 2010)

Financially unsustainable (do not work at cost)

Do not attract substantial membership

Quality of coops’ service provision at all cooperative tiers is not keeping

pace

Leaders have low capacity

Low role clarity and capacity stakeholders to implement and enforce

policies/regulations

Opportunities

Strong government commitment to support and promote

Existence of government oversight/regulation structures

from federal down to woreda level

Several Ethiopian universities offer robust curricula for

students training to be cooperative auditors or managers

Good working relationships between the Government and

development partners

Demand agricultural products from agricultural cooperatives

Treats

the absence of a comprehensive cooperative development

policy

limited access to high-quality services

capacity building modules are often out-of-date, impractical,

redundant, and not sufficiently comprehensive or available

Prohibitive bank policies

Mission new Cooperative strategy

Mission:

A well-functioning agricultural cooperative sector that helps many

smallholder farmers increase their yields and incomes through a)

autonomous and efficient cooperatives at all tiers that provide

effective and sustainable services to members, and b) a robust

enabling environment of policy and regulatory oversight as well as

capable and reliable service providers that ensure that

cooperatives have the necessary support to succeed.

Good international practice (1)

Focus on single product (at earlier stage)

Extend to focus on multiple product

Able to link input – marketing – credit (finance)

provide four core services to members

focus on increasing farmers productivity and income

provide services systematically

generate surpluses in serving members, so that their service

provision is self-sustaining

Good international practice (2)

provide services systematically

Benefit members more than non-members

marketing service

better price

non economic services

members decide the modalities and beneficiaries of services

offered by the cooperative, through a General Assembly

provide services that benefit both men and women farmers

1. Current state input procurement and distribution

AC distribute fertilizer and seed /obtain

Plan by DA and BOA

Allocated to Coops By BOA

Credit by CBE

The margin is Determined by BOA (not this year)

Lower the 2% of the total price

Other countries greater than 5%

credit sometimes sits on the cooperatives’ books, and

undermines their economic viability

Long-term strategic direction

strengthen the financial viability of cooperatives

margin should be incentive for the coops

farmers need additional tools and strategies in order to

afford inputs, especially seeds and fertilizer

Farmer savings groups

Credit guarantee schemes

Output markets linked input financing:

Weather insurance: Coop should not be asked to take on

additional risk, particularly credit provision for serving non-

members

2. Output marketing

Collection of farmers product (known price)

Quality Control

Storage (to get better price)

Value addition

Prepayment

Current state in Ethiopia: Cooperative Marketing

20% of smallholder grain output that is marketed each year

Limitation of the current cooperative output market

Limited value addition

Not increase farmers income

Long-term strategic direction

Implementation of two marketing activities

Marketing information

Sells farmers produce on the behalf of the farmers

Improve linkages of primary and secondary Cooperatives

Ownership of the product

Commission

Larger buyers

Quality production service

Value addition

Central service

3. Roles and responsibilities of federal and regional government

Kebele (CDA) to Federal Government Structure

Promotion support

Oversight and regulation roles

Current state in Ethiopia

FCA

RCPA

Types of Cooperatives

Problems on oversight and promotion support

Organizational Accountability (FCA and RCPA)

Long-term strategic direction

Develop inspection and cooperative legal support framework

Correct accountability of FCA and RCPA

Give attention to non-agricultural cooperative

Consider National development strategy

Formulate cooperative law

Accountability of FCA and RCPA

III. Enabling Environments

1) policy and regulation

2) cooperative Finance

3) cooperative capacity Building

4) Cooperative audit and legal service

5) Cooperative Promotion

Policy framework

Agricultural and Rural Development Policies, Strategies and Systems

Proclamation 147/1998, 204/2004, Regulation 106/2004, Organization rules

and Regional Coop Proclamations

These Policies and Regulations are not sufficient because the following

points are not included comprehensively

Roles of women and youth

Relation with stakeholders

Cooperative training

Implement and enforcement of the laws

Inconsistent interpretations of the law (regions and federal)

Long term strategic Directions

Develop Comprehensive policy (with the participation)

Translate any policy change to related laws, regulation and

bylaws as relevant

Aware and build members and leaders on the policy

Build oversight officials’ capacity to enforce the policy, rules and

regulations at all levels

Institute performance reviews of government cooperative

offices

Capacity Building for Cooperatives

Consists two element capacity building content (what) the institutions and process by which the content is

delivered (who and how)

Cooperative capacity Building Providers Government University Ardaita college Private NGO Cooperative Movement

Persistent problems of Existing Coop Capacity Building

Programs

Not based on the current situations

Not practical

Redundant

Not need based

Due to these Cooperative Boards are Bottleneck

Knowledge

Lack skill

Long term strategic Direction

Contents should have four primary features

Tailored

Result oriented

Quality Controlled

Demand Driven

Content should be three type

Strengthen Ardaita institute’s mandate to begin developing into world

class college

Prerequisite content

College – Ardaita

Branches of Ardaita Training institutions

AAC

Geographic focus – AGP (High potential Woreda)

Commodity Based

Previous and expected performance

Individual and Cooperative Training (as incentive)

Thank You For All