This booklet is a revised version of a 1997 publication on capital formation in agricultural cooperatives in developing and transitional countries, for which research began in 1992. The United Nations Food and Agriculture Organization (FAO) provided the main financing for the activity; however, other members of the Committee for the Promotion and Advancement of Cooperatives (COPAC), including the International Cooperative Alliance (ICA), the International Labour Organization (ILO), the International Federation of Agricultural Producers (IFAP), the International Union of Food, Agricultural, Hotel, Restaurant, Tobacco and Allied Workers’ Associations (IUF), the United Nations (UN) and the World Council of Credit Unions (WOCCU) provided important in-kind contributions.
The activity was based on a research design developed by John Rouse, FAO Senior Cooperatives Officer, in collaboration with J.D. Von Pischke, at the time a World Bank financial analyst, and on field research conducted in Guatemala, Hungary, India, Kenya, Poland and Slovakia. All members of COPAC participated in these studies, along with other institutions including the Institute of Rural Management in Anand, India (IRMA), the Kenya National Federation of Cooperatives (KNFC), the Finnish Cooperative Centre (FCC) and the University of Missouri, USA. COPAC Open Forums were also held on the topic in Rome (March 1993) and in Geneva (October, 1993). A final International Technical Meeting on Capital Formation in Agricultural Cooperatives was held at FAO Headquarters in 1995 to discuss the findings and draw conclusions from the global research effort.
Preparation of a simply written booklet was one of the main recommendations of this meeting. The original edition of this booklet represented, to a large extent, the collective thinking on this topic of the members of that group, to whom we are extremely grateful.
Since the 1995 meeting, the cooperative landscape has changed greatly, partly because of dynamic responses to competitive conditions and partly because of failures to respond. A central element of both successes and failures has been the quantity and quality of cooperative capital. As cooperatives struggle to compete under these changing market conditions, innovation is taking place. New approaches to obtaining funds have become commonplace in many countries with competitive cooperative structures; nevertheless, controversy has also occurred as cooperative leaders attempt to harmonize new approaches to capitalization with the unique cooperative identity.
In response to member country and cooperative movement demands for more guidance in this area, FAO asked the authors of the 1997 booklet to revise and update their work. This revision provides: a) guidelines or rules of thumb that agricultural service cooperatives in developing countries should consider in formulating strategies aimed at mobilizing additional capital in different institutional and policy settings; and b) examples that illustrate how this can be done.
All illustrations are by Rustam Vania and the layout is by bc consultants.
