Co-operating for a Fairer World

Why does aid ignore co-operatives, asks Paul Hazen

As the co-operative decade began Paul Hazen, chief executive of the US Overseas Cooperative Development Council, called for a new approach to international aid.
Addressing the Co-operating for a Fairer World conference on Friday November 2, Mr Hazen said the key to development was trade, not aid. The best way to achieve that, he said, was to invest in co-operatives.

‘Co-operatives improve the lives of smallholder farmers,’ he said. ‘The co-operative is a business model which makes Fairtrade successful. It’s easy to conclude that we need more cooperatives.’

The problem, he said, was that aid donors did not invest in co-operatives, and when they did it was top down. The focus was often on short term gain, or developing infrastructure.
‘Most aid is supplied directly to national governments,’ he said. ‘It fails to give smallholder farmers the tools to access markets.

‘They use co-operatives as conduits, for example for free fertilizer or free seeds, but they’re not investing in improving their situation.’

Top down aid strategies encouraged rent seeking behaviour and dependency, he said, and made it less likely that co-operatives would emerge.

He called for a long term development strategy which employed aid to encourage farmers to organise and develop ways to cut costs and access markets.
‘Co-operatives must be controlled by the beneficiaries and free from government interference,’ he said.

Phil Bloomer, campaigns and policy director at Oxfam agreed, but stressed that aid was still important. ‘Aid to agriculture has been declining massively,’ he said. ‘Some of that shortfall must come from public funding.

‘The private sector and big business isn’t going to go in and make the kind of investment that’s needed. Co-operatives aren’t going to thrive without funding from governments. If we don’t see aid I’m worried about what will happen to agriculture, but it has to be the right kind of aid.’

Delegates from Nigeria and South Sudan echoed concerns that aid was not getting to co-operatives at the grass roots. Michael Tongun Martin, minister for co-operatives and rural development for South Sudan said: ‘What can we do to make sure aid goes to co-operatives? We have to build the institutions of the state but we also have to make sure money’s getting down to grassroots and local entrepreneurs. We believe co-operatives will help improve people’s livelihoods and conditions.’