From the ISET Economist news (http://www.iset.ge/news/?p=3056)
By Tim Stewart
As Georgia embarks on an ambitious program to develop farmer organizations, it is worth considering both the positive and negative lessons from the experience of similar initiatives, both in Georgia and elsewhere in the developing/transition context. The piece by Tim Stewart, originally published on www.springfieldcentre.com, identifies some of the main reasons for the failure of start-up farmer organizations. The challenge for Georgia is to learn from these mistakes in planning and implementation, and ensure improved coordination among the many cooks involved (the newly created Agency for the Development of Agricultural Cooperatives, the Ministry of Agriculture, international donors, NGOs, and farmer associations).
A village in the Zestafoni area. It is a picturesque landscape, but the farms are not operating very efficiently. (Photo: Nikoloz Pkhakadze)
Someone once told me that I couldn’t be a real agriculturalist until I had at least one failed chicken project under my belt, illustrating both their ubiquity and propensity to flop. The same can be said of projects that seek to establish farmer groups (farmer organisations, cooperatives etc.) and for much the same reasons – although I believe we should learn from failure, not repeat patterns that lead to it.
Conventional programmes working in agricultural markets often include a component of forming and supporting farmer groups in their various guises. Their justification for this is the perceived benefits to small farmers that can accrue from economies of scale of production (assets, labour and inputs), marketing (reduced transaction costs and bigger volumes) and voice (representation to government etc.). My concern is that farmer group formation and support is frequently a waste of effort and money because they overwhelmingly fail, and there is little honest recognition of, let alone learning from, that awkward reality.
Literature drawn mainly from projects supports farmer group formation and strengthening as a panacea for agricultural advancement, and often backs up the case for intense external resourcing. It suggests that farmers in groups are more likely to adopt technologies than those who aren’t, or are more likely to grow project-supported crops. Proponents also highlight their significance to the supply of inputs into food production and of food to the market. Indeed, the FAO estimates that nearly 40% of Brazil’s agricultural GDP is produced through cooperatives while in Europe, 60% of agricultural produce and 50% of inputs are marketed through one.
However a glance at the 2012 “Exploring the Cooperative Economy” report from the World Cooperative Monitor, reveals an almost total cooperative vacuum in Africa and, to a lesser degree, Asia. More directly, in my work I am frequently confronted with the reality of failed farmer groups that evaporate once the project ends, with unused equipment rusting in the corner of a field, an image, which has become a cliché of dysfunctional development in the popular press. And for many people engaged in development, farmer groups are a byword for failure.
Yet as far as I can establish (and I have searched), there have been few honest and objective ex-post reviews of farmer group formation components of projects to look at failure and the reasons for failure. (If I’m wrong and there are real data on groups’ success and sustainability, please send it to me!) Failures, if reported, are attributed to external “unforeseen challenges” and written up as “lessons learned”. Farmers groups have become a prime example of the development industry’s “emperor’s new clothes syndrome”, where official views are positive and glowing and formal research and evidence are at odds with what we know to be common (naked!) reality. So, in that context, I would argue that farmer group formation is a poor way to improve the lot of farmers positively and sustainably. How much more money needs to be spent; how many more pet Farmer Field School projects do we need to implement; how many more constitutions do we need to write; how many MOUs do we need to sign or how many ‘Farming as a Business’ trainings do we need to subject farmers to, before we understand that this form of development is not working?
The factors leading to the failure of farmer groups (rapid decline post-project) are numerous, but broadly they fail because they were formed for the wrong reasons, by the wrong people and/or in the wrong way.
THE WRONG REASONS TO FORM FARMER GROUPS
Agencies often form farmer groups because it helps them – the agency – achieve economies of scale of delivering services, assets or grants to them. In addition some may feel more comfortable ethically with the transfer of expensive assets or technical assistance to a group rather than an individual. The ethos of communal ownership to cosiness of the collective is pervasive in certain quarters of the development industry, even in the face of the common observation of poorly managed group-owned assets. Farmer group membership is also too often a pre-condition for farmers to receive giveaways from agencies. Groups therefore become entities built on artificial incentives created by agencies wanting an easy repository for their resources and buying short-term transitory impact.
Clearly then, ill-conceived or self-serving reasons are the wrong ones for forming farmer groups.
THE WRONG PEOPLE TO FORM FARMER GROUPS
Agribusinesses often face problems interfacing with small farmers because of high transaction costs, small transaction sizes, poor organisation and communications and a general lack of understanding of them. Farmers are often observed to face challenges finding markets for their products or face poor terms of trade. The absence of institutions (like groups) and services which would help them overcome these challenges (supporting group formation) is often justification enough for agencies to intervene impulsively by stepping in on behalf of small farmers – telling and selling the narrative of the “farmer being exploited by the middleman”.
The problem here is not only do agencies avoid addressing the root causes of the problem that lies beyond the farmer-trader interface, but in stepping into this space by performing “farmer group services” they undermine the possibility that it will ever be solved. Rather than solutions cemented firmly and sustainably in the market system, emerging “farmer group services” are seen as a development agency space. Thus it becomes a self-fulfilling prophecy: farmers are disadvantaged in markets because of weak vertical and horizontal linkages and there are no services to address this market failure: justification enough for agencies to step in and undermine the market further…
Development agencies are also the wrong people to offer farmer group services because, typically, they are poor at business:
- They are not market based, they are subsidised and non-commercial and their success/failure isn’t dependent on a viable offer but on continued support from their donor.
- Their incentives are therefore aligned to the agendas of the donor and their own HQ, not the market.
- They are not cost-effective, indeed they are prohibitively expensive if the true cost of delivery is taken into account (drivers, cooks, HQ fund-raising etc.).
Development agencies are therefore the wrong people to form farmer groups because they are not long-term players in the market, undermine legitimate market players if they attempt to do so, and, put simply, are usually bad at business.
THE WRONG WAY TO FORM FARMER GROUPS
Agencies form farmer groups on the basis of an abstract, theoretical notion of potential benefits, or experience in distant contexts of limited relevance. Seldom do they ask the more grounded starting question: if groups are such an obviously “good thing”, why aren’t farmers forming groups already? Understanding the answer to this question would lead to understanding and addressing systemic problems in the market, or simply not wasting resources by attempting to do something that would be unsuccessful. The reasons that farmers don’t form groups are many, but often related to a lack of incentives or capacity.
Incentives: It may be that additional income does not accrue by aggregation, or that which is created may not be sufficient to overcome other issues such as distrust of others in financial matters. Other actors may be able to provide incentives that induce group formation such as a commodity buyer that provides inputs on credit. There may also be disincentives related to the wider political economy such as additional tax or administrative burdens to formal groups.
Capacity: There may be other obstacles to forming groups such as inefficient business registration procedures, weak advisory services, or a lack of adequately available information that would allow farmers to make an informed decision to form a group. This shouldn’t be seen as an open justification for agency intervention to address these directly for example through business services and setting up one-stop-shops for business registration etc. Rather it should lead to enquiry into who could and should be delivering these and why they are not.
The wrong way to form farmer groups is therefore to do it without understanding the central market failures that prevent farmers from forming them.
WHAT TO DO ABOUT IT
The problem for an agriculturalist and development practitioner like myself, is that working with farmers is fun and endlessly fascinating: it’s one of the things I got into the business for! However instead of being drawn to act impulsively on behalf of the small farmer, I think agencies would serve them better by doing more of the following three things.
Firstly, go in with their eyes and minds open, conducting ex-ante market analysis rather than making unsubstantiated assumptions about what farmers need. Don’t arrive with a farmer group solution pre-prepared and engineer an analysis to justify this. Establish the reasons that farmers are not cohesive, what incentives are shaping their behaviour and what capacities may be lacking. Get a valid answer to the key question: why isn’t the market system working?
Secondly, build and don’t undermine. Guided by the above analysis, work with relevant, long-term market players (private and public) to address the issues underlying farmers’ poor performance and low incomes.
Thirdly, be honest about and learn from failure. This is not especially difficult or time consuming to do, but I suspect is a place where many fear to tread.
My argument is not that farmer groups cannot be beneficial to farmers. Rather, by adopting a systemic approach aimed at fostering the conditions for self-organisation among market players, agencies have a far better chance of supporting small farmers – which may or may not involve farmer groups.
Referred to as Liquid Gold, for its color and perceived health benefits, Erbo the Georgian word for melted butter is a well-kept secret in Georgia. Traditionally made at home Erbo is much used in local traditional cuisines. Butter is an important fat in Georgia, very common in Azeri cuisine and in mountainous regions where both the harsh winter climates and distance from markets increased the importance of butter which can be stored, in communities dependent on dairy farming.
Now thanks to Milkeni Ltd who have started to produce and sell Erbo as part of their products made under the Georgian Milk Mark, quality assured Erbo is now available commercially for the first time in Georgia in Madagoni and Libre supermarkets chains. Interest and demand is growing rapidly.
Of all regions, perhaps Ajara is most famous for its use of Erbo. Most traditional Ajarian dishes contain Erbo. Borano is a dish of melted butter containing traditional Chechili cheese, a dish which been awarded the status of Intangible Cultural Heritage and Khavitsi a sauce made with flour and Erbo.
So what is special about Erbo? People believe that it is a healthy fat, processed differently and beneficially in the body and is well absorbed in the human body; it does not contain lactose and casein, so it is recommended for those with lactose intolerance. Mountain people believe Erbo boosts metabolism and energy, improving brain function, memory and their immune system.
In summer 2019, ten new Jara hives were placed in the Goderdzi Alpine Garden (GAG), Jara Beekeeping area, an area which aims to publicize Jara beekeeping and teach people interested in taking it up. With the help of the Jara Beekeepers Association (JBA) they were moved for wintering to Paksadzeebi Village in Khulo last autumn. Last week, all the hives were checked and fortunately, all the bee colonies are alive and working productively.
This Jara apiary is currently undergoing the Bio certification process and is due to obtain certification in July this year. It will be moved back to the GAG (Goderdzi Pass, 2000m above sea level) in May and be the focal point of Jara beekeeping workshops for school students and garden visitors.
The Goderdzi Alpine Garden is a tourist and environmental hub in the rural part of Ajara, Western Georgia. It involves and develops a sense of ownership for rural inhabitants in the field of biodiversity and environment, showcases the beauty and ecological assets of rural Ajara and generates added value from rural tourism for locals.
The Government of Georgia declared a curfew on March 30th, 2020 to restrict the spread of the COVID-19 virus which imposes restrictions on the movement of transport from 9:00 PM to 06:00 AM. However, producers and distributors of key commodities may apply to the Ministry of Environmental Protection and Agriculture (MEPA) for a permit to continue distribution. The Business Institute of Georgia (BIG) is currently helping GMM dairies to apply for this permission.
To gain permission follow these instructions:
- A producer/distributor should contact the MEPA on the hotline number - 247 01 01 or 1501 - and provide information about their activities and the need for permission.
- The MEPA will send the applicant an email address and an application form to send to this address. The application form requires information about the distribution driver (ID number, name, surname, date of birth, phone number, workplace and title) and distribution car (registration number of vehicle, brand, model, type, ID number of a company who is the owner of a vehicle, a type of business).
- The MEPA will respond to the company about issuing permission.
- After that, the company should call the Emergency Number 112 and check whether the information about the distribution car and driver is listed in the Ministry of Internal Affairs database.
Amidst the negative news and stories of unthinking behaviour, some stories have emerged globally of people and business who have responded to the crisis with kindness and generosity. These stories fill all of us with a sense of hope and comfort in our ability to work together. So we are delighted to be able to share the stories of some of the ALCP clients who have been contributing to the common good over the past week:
Roki Ltd, the largest veterinary input supplier and producer in Georgia, has started the production of a new hand sanitizer Septer as a response to increased demand. Supplies sold out in a day to banks, the Ministry of Education and clinics and there is a new order for four tonnes of Septer from the government. The company closely cooperated with the government in developing the product trying to use its resources for the benefit of all;
A GMM cheese distributor has organized the collection of cheese from eleven Georgian Milk Mark dairies: Milkeni, Tsintskaro +, Cheese Hut, Shuamta, Tvisis Kveli, Tsifora –Samtkhe, Tsezari, Coop. Khiza, Coop. Disveli, Teleti Ltd, I.E. Hakob Hambaryan and distributed it to theInfectious Diseases and AIDS Center in Tbilisi to support medical staff during the outbreak;
GMM dairy Tsipora Ltd in Samtkhe-Javakheti has supplied cheese to the Abastumani Lung Center.
Tsivis Kveli Ltd Kakheti brought cheese to the hotel Chateau Mere in Kakheti - for those under quarantine;
The Georgian Beekeepers Union initiated the collection of honey from local beekeepers across the country to supply people in vulnerable groups.
The KTW group offered the government the use of their forty-one rooms hotel-complex Akhasheni Wine Resort &Spa, for arranging a quarantine zone in Kakheti region.
In a country first, eighteen Jara beekeepers in Ajara have received Bio certification. Jara honey was not even commercially harvested and branded until 2018, however the market for the honey has proved its strength so successfully that the beekeepers saw the opportunity to further promote their product through bio certification.
The conversion was relatively simple and certainly achievable as Jara honey is based on the capture of wild swarms and is relatively hands off. Since November 2018, the Jara Beekeepers Association (JBA) has been facilitating training and on-site recommendations; it also provides treatment of hives with a Bio vet medicine and special equipment for the mentioned Jara beekeepers. The beekeepers now follow the bio requirements; including keeping records, better husbandry, use of bio vet medicine. This allowed for smooth journey through the minimum one-year conversion period for certification.
Caucascert, the only organic certification company in Georgia issued the internationally recognized Bio certificates after laboratory results and field checks, which did not show any incompliance.
‘I am very proud that I was able to get Bio certification. It was challenging, as I did not have any kind of information before, but support from the JBA was crucial. I can already see the outcomes, because the process already contributed to minimizing disease risk and increase productivity of a Jara hive by thirty percent’ – Bio certified Jara beekeeper from Keda municipality.
Six more Jara beekeepers, including the Jara apiary in the Goderdzi Alpine Garden, are currently undergoing the certification process and might obtain certification by the end of this year.
The Jara honey mark was registered in February, 2020 and both its production and the market for it, including export is growing. More details on Jara honey to be found on www.jarahoney.com.
As part of the agreement which allows Georgian Honey to be exported to the EU, the government annually carries out a Residue Monitoring survey. Worryingly high residues of prohibited antibiotics were found in previous years (see infographic below). 2019 however saw national information campaign carried by the Georgian Beekeepers Union, who developed and disseminated Do’s and Don’ts Antibiotic Use Infographic and facilitated breakthrough legislation adopted by the Government of Georgia, which prohibits registration of the beekeeping vet medicines containing restricted antibiotics, among others. As a result, this year, only eight percent of honey samples tested positive for prohibited substances, compared to fifty-four percent of the last year, according to the Residue Monitoring Plan results, made by the National Food Agency in the BIOR laboratory in Riga, Latvia.
It is a significant achievement for Georgian honey export opportunities and expanding markets.
