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.

Kristen Schach Moller is the Chief Executive Officer of the Agricultural Commodity Exchange in Malawi. © A Gumulira
Kristen Schach Moller is the Chief Executive Officer of the Agricultural Commodity Exchange in Malawi. © A Gumulira

Thursday, 16 March 2017

Kristen Schach Moller describes the progress farmer-based organisations have achieved with support from the Agricultural Commodity Exchange (ACE) and explains the challenges which still need to be overcome.

The transition from farmer-based organisations to consumer driven organisations is challenging. What is ACE doing to support this process? 

ACE believes that farmer groups can be integrated into structured trade, by promoting and assisting farmer groups’ ownership and operation of storage facilities in rural areas. Access to finance and structured markets is improved when a farmer organisation offers storage, handling and aggregation. The ACE model for the development of rural warehouse infrastructure is designed to achieve this. The vision is to develop professionally operated and well utilised warehouses for rurally located farmer groups. This is an economically sustainable model as the farmer groups are able to collect a fee for the aggregation and storage services that they provide. 

Finance is a key limitation for cooperatives. How is this being addressed in Malawi? 

The ACE warehouse receipt system is a mechanism to unlock finance using the deposited commodity as collateral. An ACE certified warehouse is recognised for quality and adherence to high standards of collateral management, thus the banks are confident of the stock management and are willing to provide collateral finance to the commodity owner. 

In Malawi the type of collateral finance that cooperatives can access is limited and ACE is developing modalities that will increase the value of finance available. There is no doubt that finance is crucial to the development of the rural economy. Finance provides cooperatives with the choice: to sell now or wait for seasonality changes in the market price.  

A CTA cooperative leadership event in 2016 concluded with a number of recommendations to improve cooperatives. To what extent have these been acted upon by policymakers? 

The major recommendations from the event focused on the establishment of cooperative banks and the development of education for cooperatives. ACE is confident that both these recommendations have been taken on board by Malawi’s Ministry of Industry and Trade. 

What more should public-private organisations be doing to support the evolution of agri-business oriented farmer-based organisations? 

It is crucial to build sustainable structures that will support the evolution of cooperatives; without an enabling environment they will struggle to develop. Of course, commodity exchanges and warehouse receipt systems are examples of such institutions, but there are many others that need to be developed.   

Is there one farmer-based organisation in Malawi that you would identify as a good role model to others and why? 

We have seen Mwandama Cooperative Union in Zomba, which is a construct from the UN Millennium Challenge project. They have a large, well-operated warehouse, which supports several community activities including the warehouse receipt system. Over the years, they have won many contracts to supply maize and pulses to the World Food Programme. The structure and management of the cooperative seems to be the driving force behind its success.

Charles Mkoka

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Facts and Figures

Kristen Schach Moller is the Chief Executive Officer of the Agricultural Commodity Exchange in Malawi. © A Gumulira

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.