Co-operatives can enable farmers across the world to achieve a higher share of consumer price through collective action, according to research by Oxfam.
The report, Ripe for Change, explains how co-ops help to build the bargaining power of small-scale farmers and workers.
The research was commissioned by Oxfam and undertaken by the Bureau for the Appraisal of Social Impacts for Citizen Information. It suggests small-scale farmers benefit from much higher shares of the end consumer price − around 26% − where they are organised in co-operatives.
According to the research, co-ops can achieve economies of scale up to the point of export. Farmers who are not organised in co-ops retain only around 4% of the end consumer price.
The study analysed the value chains of 12 common products sourced by supermarkets around the world, from a range of producing countries spanning the Asian, African and Latin American continents.
It features examples of producer co-operatives adding value by enabling farmers to aggregate their produce, support marketing, share risks, and have a stronger bargaining power with buyers. One example given is the Alaznistavi Cheese Cooperative in Georgia, which has allowed members to gain a higher share of the end consumer price through niche production of high quality handmade cheese for distribution through supermarkets in the capital, Tbilisi.
Another case study mentioned is Divine Chocolate in the UK, which is 44% owned by a cocoa co-op in Ghana.
“Consumer-facing companies such as Divine Chocolate and Cafédirect – which are both jointly owned by producers in developing countries – each have a turnover of $15m per annum,” reads the report.
Sophi Tranchell, chief executive of Divine Chocolate, said: “As the leader of a Fairtrade company 44% owned by a cooperative of cocoa farmers in Ghana, I am very aware of the human cost of this, where the women and men who grow the products we enjoy every day still don’t have access to many of the things we take for granted, like clean water and electricity, or the ability to invest in their farms and communities.”
A member of the Tuzamurane Cooperative in Rwanda said: “When I joined the co-operative, we were trained, we learned and I felt relieved that I would have a good life one day… What makes me proud in life is when I buy clothes or food when my children need it.”
However, the study finds that women in some co-ops do not feel on an equal level with men. It points out that while women in large and often mixed gender co-operatives often gain access to agricultural inputs and services, they enjoy only a limited role in decision-making. “By contrast, small, more informal women-only groups typically allow women to build confidence, leadership, skills and savings,” added the report.
The report argues that these business models do not have to be niche – and could be taken to scale. Producer-led Kaira District Cooperative Milk Producers Chain in India, also known as Amul, is jointly owned by 3.6 million milk producers in Gujurat, with a sales turnover of $736m in 2016.
The report is also encouraging supermarkets to place a focus on sourcing from business structures that aim to share value with farmers and workers, such as co-operative groups or women’s collective enterprise, and use prominent shelf positioning to promote these products.