With technology - are cooperatives relevant?

Oct 24, 2012

With over 10.4 million citizens connected to mobile phones (according to International Communication Union), over five million browsing internet daily and millions tuning into more than 228 fm radio stations broadcasting in local languages – Do we still need the kind of cooperatives that operated i

By Morrison Rwakakamba

With over 10.4 million citizens connected to mobile phones (according to International Communication Union), over five million browsing internet daily and millions tuning into more than 228 fm radio stations broadcasting in local languages – Do we still need the kind of cooperatives that operated in 1970s and 1980s to connect farmers and small businesses to markets?

Calls for revival of cooperatives are a hot and rehearsed issue, amongst, especially opposition politicians and operatives. Possibly bending to a bit to pressure, the Government rebranded the Ministry to Trade, Tourism and Industry to Ministry of Trade and Cooperatives. Alas! This cooperative narrative needs to be re-imagined in current Uganda.

We need to be talking about new ways of organising and governing markets. If old cooperatives do not change, what is left of them will soon disappear.

Ugandans started organising themselves into co-operatives in 1913. Co-operatives operated informally until 1946, when the first cooperative ordinance was enacted and this marked the birth of the cooperative department and the present cooperative movement. 

By the end of 1946, there were 75 organisations of a cooperative nature. Fifty of these were agriculture marketing societies, eight were shop keepers (supply) societies, six were consumer stores and the remainder were miscellaneous societies such as fishermen (mainly for supply of nets), cattle and dairy societies and one thrift society. 

The period between 1946 and 1970 saw a significant growth of the cooperative movement, especially in the cotton and coffee sectors. In 1951, cooperatives handled 14,300 tons of cotton and coffee. 

Following the acquisition of two coffee curing works and ten ginneries in 1956, the total tonnage rose to 89,308 tons by 1960. In 1965, out of 437,923 bales of cotton produced in the country, co-operatives handled 267,420 bales (61%), while they also handled 40% of the Robusta coffee. 

At the centre of this progress, were producers/farmers and owners of small businesses themselves making decisions. The period of the 1970s saw a new crop of elites capture cooperatives and greatly mismanaged, interfered with, and alienated decision-making from membership. 

Annual general meetings lost meaning and interests of farmers were largely relegated.

It is still the same story today. Look at the wars for supremacy and influence in Bugisu, Banyankore Kweterana and Nyakatozi cooperatives – elites and politicians are fighting to take charge and make quick gains – both material and political at the expense of membership. Now old cooperatives are moribund and farmers do not trust them anymore. 

Dealing with old cooperatives mean increase in transaction costs that cut into profits of farmers. Most farmers are quitting old cooperatives and seeking new ways of organising.

For example, in Kasenda subcounty, Kabalore district, smallscale farmers have institutionalised informal collective marketing arrangements to increase their profits. 

When matooke is  ready for harvest, farmers call relatives in Kampala and Fort Portal on their mobile phones, to check market prices. Trusted community informants circulate the information, and survey households’ expected harvest. Then they negotiate favourable large volumes and prices with buyers.

The farmers bring their matooke to collection centres on designated days, where community representatives finalise negotiations and collect and distribute payments.

This informal way of connecting means farmers in Kasende do not have to pay bulking and marketing fees to the cooperative – they in the end get full market prices. Cooperatives that want to survive must understand such new realities.

Politicians and other leaders calling for revival, restoration etc of cooperatives must pause and reflect. Such narratives are stale and outdated. We should support old cooperatives if they are willing to re-invent themselves to new realities or rather support emerging new ways of organizing.

The Food and Agriculture Organisation (FAO) seems to get the point. They now define ‘cooperatives’ very broadly: ‘any member-owned enterprise run on democratic principles…which can take other names and forms: producer organisations, self-help groups, unions and federations of producers and (even) chambers of agriculture …and ‘contract farming”. 

Are Bugisu, Banyankole Kweterana, Nyakatozi, et cetera in this new mode of thinking? My fried Ethel Del Pozo of Vergnes of International Institute for Environment and Environment (IIED) argues that “understanding and improving the conditions under which small-scale farmers make markets work for themselves, whether in formal or informal organisations, is what lets them play their role as economic actors...

It is time to understand where farmers really are rather than where we want them to be.” I agree with her. Let us keep this debate leaping skyward. 

The writer is the Chief Executive Officer, Agency for Transformation

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