By Sylvain Roy, President and Chief Executive Officer, Cultivating New Frontiers in Agriculture (CNFA)
Today millions of smallholder farmers in sub-Saharan Africa face a range of ongoing threats to their nutritional and economic security. West African farmers for instance—whose livelihood typically depends on staple crops such as maize, millet, or sorghum often produced on about five acres of marginal land—operate on a small scale and have limited access to markets.
With their socio-economic power already restricted by low literacy, lack of transportation options, and limited access to credit, these farmers also face low productivity because of soil degradation, difficulty in accessing high-quality inputs, and lack of mechanization.
To make matters worse, these smallholders’ fortunes continue to suffer in the post-harvest period, when their grain stocks may be depleted by as much as 40 percent because of pest invasion, lack of proper storage facilities, and poor quality control throughout the production and storage process.
These challenges contribute to smallholders’ little-to-no leverage when it comes time to go to market. As individual sellers, they are more likely to accept lower prices, seeking to capture any available return on their agricultural products. Limited, viable post-harvest storage preclude smallholders from holding out for better prices as the risk of losing more, or all of their crops’ value, is simply too high. And because buyers have many individual sellers to choose from, this results in an additional competitive disadvantage for the farmer.
Farmer Based Organizations – A Tried and True Solution
At first glance, finding a way to increase the food and economic security of millions of small subsistence farmers may seem to be a monumental task. But farmers in the United States have faced the same laundry list of risks, and have banded together to create Farmer Based Organizations (FBOs) that have allowed them to leverage their collective power to moderate or overcome those threats.
FBOs are nothing new in the United States, where these entities typically operate as marketing cooperatives—businesses which are owned by and benefit their members.
When FBO members use a cooperative or other types of associations to aggregate and manage their supply collectively, they gain the opportunity to develop and use a common marketing strategy that allows them to enter ongoing commercial relationships with buyers.
And when dozens, hundreds, or thousands of farmers group together, they also gain the advantage of volume—and with it, bargaining power to negotiate prices of their products. As a group they become “price setters” rather than “price takers” as individuals.
Such marketing cooperatives have been common in the United States for more than a century. There now are more 3,000 such U.S. agricultural cooperatives and a majority of our nation’s two million farmers and ranchers are members. One such U.S. cooperative, for example—Dairy Farmers of America—represents nearly 14,000 dairy producers in 48 states. Members include producers with 50 cows and those with 3,000. But all of them gain access to the collective resources of the FBO—from manufacturing, sales and purchasing programs to risk insurance and financing.
How Do We Encourage the Creation of Sustainable FBOs in Africa?
The good news is that the cooperative model has been used successfully to support common services and marketing strategies for FBOs in a number of African countries. An interesting example is the Faso Jigi organization, one of Mali’s largest and most effective. With approximately 5,000 smallholder farmer members, Faso Jigi, which means “people hope” in the Bambara language, stores its members’ grains at the harvesting period when prices are usually at its lowest. Later, when market conditions are more favorable during the “hungry period,” Faso Jigi facilitates selling of the collective supply at a higher value. This approach, resulting in more stable relationships with buyers and better returns, also enables the group to secure loans for members at negotiated interest and term rates, improve grain quality by practicing proper post-harvest handling and storage, and attain economy of scale alongside lowered transaction costs. Overall, Faso Jigi’s members benefit from a more reliable income and increased food security. When it comes time to sow next season’s crops, Faso Jigi purchases agricultural inputs such as seed and fertilizer at wholesale on behalf of its members; enabling individual farmers to access better quality and prices and increasing their return on investment.
FBOs in such emerging economies require significant ongoing effort and guidance. An FBO succeeds only if members remain dedicated to the group and only if the group is conscientiously tended to and governed.
But with proper training and mentoring—both at the board and community levels—smallholders progressively come to understand the importance of a combined effort, especially in terms of marketing. And when these groups succeed, they provide a range of new opportunities for smallholders who are otherwise disadvantaged by social, economic, and environmental constraints.
By consolidating members’ selling and buying power, FBOs can offer smallholders access to financial services, collective purchasing of agricultural inputs, grain storage and quality control, access to appropriately scaled machinery and implements, and larger volume marketing of their products.
And that is a game-changer in Sub-Saharan Africa.
The lesson is this: As entities from more developed nations continue to do their part to help smallholder farmers in less-advantaged countries gain nutritional and economic security, they must remember that change truly does come from within. And the most important thing we can do is to help them realize that the power to change is right within their grasp—by joining hands in unified action.