COOPERATIVES IN THE SUPPLY CHAINS: Endogenous organizational responses to global markets

by Ruerd Ruben, Centre for International Development Issues Nijmegen (CIDIN).

Paper presented at conference "ADDING VALUE TO THE AGRO-FOOD SUPPLY CHAIN IN THE FUTURE EUROMEDITERRANEAN SPACE" Barcelona, 23-25 April, 2007

Abstract

Increasing integration of agricultural production in (inter)national supply chains poses new challenges for the bargaining position of smallholders in developing countries. Local cooperative organisations - traditionally confined to service provision and membership representation - become more engaged in entrepreneurial functions. Dynamic competitive advantages can be realized if farmers cooperatives are better able to tailor their internal governance structure to meet the delivery conditions of downstream agents. Newly emerging organisational strategies need to balance the needs for value chain upgrading and rent and risk distribution amongst stakeholders.

This paper compares different alternative pathways for smallholders' producer cooperation in response to specific supply chain challenges. Main attention is given to options for improving economies of scale, quality upgrading, delivery reliability and continuity, and price volatility management. Institutional choice is considered  endogenous, with smallholder organisations dynamically adapting to particular supply chain configurations (within the boundaries of the existing market and legal environment). The emergence and evolution of institutional regimes is addressed at the interface of internal and external conditions that give rise to specific cooperative arrangements.

We perceive different forms of integration between supply chain agribusiness with collective action approaches, indicating that agency-structure interactions can give rise to various governance regimes. The structural (enabling or limiting) conditioning for particular pathways of cooperative integration will be assessed through a comparative analysis of the determinants of performance differences. . Comparative case studies are required for evaluating implications for smallholder welfare, cooperative performance and trust amongst heterogeneous agents.

Available at http://www.medcon.creda.es/documentacio/Plenary/Keynote%20Paper%20EAAE%20Barcelona%20_1_.pdf