Dossier

New generation cooperatives

In an increasingly market-driven world, agribusiness cooperatives are strengthening vertical and horizontal links along the value chain to be more reliable and profitable.

Madagascar’s cocoa is ranked among the best in the world. © Menakao Madagascar Chocolate
Madagascar’s cocoa is ranked among the best in the world. © Menakao Madagascar Chocolate

Thursday, 16 March 2017

Exporting cocoa – long the preserve of large commercial cocoa producers – is now within the reach of smallholders in Madagascar via agricultural cooperatives. A cooperative union in northern Madagascar brings together some 400 cocoa growers who sell high quality ‘fine’ cocoa through the organic food market. Motivation, unity and quality are the keys to their success.

Overseeing grand cru cocoa farms in Haut Sambirano in northern Madagascar, Nesth Voavy closely monitors the plantations of members of the local Union de Coopératives Lazan'ny Sambirano (UCLS) farmers’ cooperative, based on specifications provided by cooperative technicians. As a farmer-controller, his job is to detect irregularities, especially the possible presence of chemical substances in the plantations (often as a result of discarded batteries, insecticide-treated mosquito netting, and plastic bags) to ensure the high quality of ‘fine’ cocoa produced by member farmers. Voavy also checks that the cocoa fermentation and drying operations are running properly by recording and checking the drying, fermentation and crop ripening times. He promptly applies the Dina – an internal law that sets out the production rules to which members must comply – once he notices an irregularity.

A new-generation cooperative

The main focus of UCLS is to promote exports and it now has sufficient resources to achieve this goal, including plantations, harvesting and transport equipment, quality control devices, and vitally, customers, and technical and financial partners. UCLS is the only exporter of certified organic fair trade dried cocoa in the region. UCLS, with some 400 members, produces around 500 t of cocoa a year on 600 ha of land, which represents a tenth of Madagascar’s production. The Union has a general assembly and a board of directors consisting mainly of farmers, along with an executive secretariat run by technicians. “We have been able to reach new markets with our new structure,” says Georgette Zafianaka, member of the cooperative board. Cocoa growers’ income has also sharply increased. “UCLS buys our products at a two to threefold higher price than elsewhere, i.e. MGA9,000/kg (€2.5) compared to MGA3,500 (€1) on the regular market, in addition to the organic and fair trade premiums paid by Ethiquable,” Zafianaka says (organic premium MGA400/kg [€0.12]; fair trade premium MGA420/kg [€0.13]). “That’s the end of collector-middlemen who have fattened their wallets at our expense!”

UCLS is a new-generation cooperative focused on generating profits for farmers, in sharp contrast with cooperatives that were set up during colonial times, at independence or during the socialist regime in the 1980s, when farmers were left behind and corruption was rampant at all levels (politicians, civil servants, technicians, farmers’ leaders) in the sector. Antoine Roger, an old cocoa grower in Ambalavelona, bitterly remembers the lean years of the socialist era, “we never profited from our production,” he says. Niasy Ramarojaona, constituency head for the Ministry of Agriculture, remembers the role of, “collector-middlemen who forced cocoa growers to accept ridiculous prices and cheated on the cocoa weights, thus driving them into a spiralling cycle of debt.” Now each cooperative member can follow the selling process. “Nobody can infiltrate or take advantage of the cocoa growers, who make mutual decisions through the UCLS general assembly,” says Tesla Ratsirinony, adviser for Agriculteurs Français et Développement International (AFDI), a French farmers’ association involved in development cooperation, which is supporting the cooperative.

A market-oriented vision

UCLS has gradually become self-sufficient. In the 2000s, growers were aware that they were being unfairly treated and decided to form small cooperatives to collaborate with local exporters. The cooperative status authorised them to market their products, which individual cocoa growers were not legally allowed to do. By 2009, 23 cooperatives grouped together to create UCLS and take advantage of their joint experience. Then their first customer, the French cooperative enterprise Ethiquable, showed up with an order for 125 t of organic fair trade cocoa. That windfall strengthened their independence.

UCLS is now rubbing shoulders alongside major cocoa operators, despite the slump in world cocoa prices, thanks to several assets. First, the grassroots unity within the cooperative, as reflected in the work of the well-trained farmer-controllers who have focused on overseeing product quality. “This is a real boon, as the farmers are able to understand and readily adjust in a straightforward and objective way,” says Samuel Ramamonjisoa, a UCLS technician. “Everyone is contributing to producing high quality competitive products with a market-oriented scope,” says a local operator. Secondly, their unity is consolidated by the effectiveness of the Dina laws, whereby defaulting cocoa growers are punished. “No irregularities are accepted. Requisite exchanges between farmers generate specific dynamics within the union and a strong sense of belonging. There is a form of positive competition, which creates a culture focused on quality,” says Zafianaka.

Three factors have strengthened the cooperative: an organic fair trade cocoa market generated by Ethiquable and the Dutch company Cocoa Nect, AFDI’s support, and pre-funding provided by the financial institution, International Solidarity for Development and Investment. Ethiquable and Cocoa Nect have helped enhance production quality through demanding specifications. AFDI has supplied organisational and technical support for the cooperative, including training, staff coaching and equipment provisions. But UCLS has still not been immune to turmoil, as breaches of trust have recently been committed by some executive members. The board of directors has nevertheless played its role, resulting in the dismissal of the cooperative director, who has been temporarily replaced by an acting director.

Malagasy cocoa has wind in its sails

There is reason to be hopeful for the promotion of Malagasy cooperatives, especially those involved in the cocoa sector. A CTA-supported Cooperative Leadership Forum, held in Madagascar in February 2017, resulted in a firm government commitment to strengthen and support cooperatives. The Malagasy cocoa sector is also supported by the Integrated Growth Poles Project, funded by the World Bank. Cocoa trees that are almost 100 years old are currently being replaced as part of a collaboration between the Regional Development Committee and the Centre National de la Recherche Appliquée au Développement Rural, Madagascar’s national agricultural research centre. Built to block sunlight and heat, the largest shade house in Africa (4,000 m2), where 500,000 new cocoa plants will be propagated by cuttings, has been set up in Ambanja, in order to preserve the high quality of Malagasy cocoa.

Mamy Andriatiana

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Madagascar’s cocoa is ranked among the best in the world. © Menakao Madagascar Chocolate

SOURCE: Cooperative Leaderships Events in Malawi and Uganda, 2016

The Technical Centre for Agricultural and Rural Cooperation (CTA) is a joint international institution of the African, Caribbean and Pacific (ACP) Group of States and the European Union (EU). CTA operates under the framework of the Cotonou Agreement and is funded by the EU.