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Incentive Structures in Collective Marketing

Collective marketing has appeared as an issue in nearly all countries. Smallholder farmers are (per definition) scattered and need to bulk their products in order to have access to (urban) markets. Bulking can be done through different value chain and agents, like agents and traders, processing companies, state marketing boards or collective marketing arrangements. These different modalities of sourcing compete in offering their services to farmers. In view of this competition, farmers’ organizations involved in collective marketing will faces challenges, related with 1) the logistic efficiency of providing these services; and 2) the organization and governance of the arrangement. Successful collective marketing experiences have resolved both challenges by organizing and fine-tuning their internal management and transaction modalities with members and non-members e.g. related with pricing, payments, and quantity or quality requirements. The research will focus on the incentive structures (e.g. internal rules, contract conditions, control systems) that have developed in their transaction with the farmers and that have proven effective and feasible in the prevailing market conditions. The comparative research will review existing studies, and select several successful experiences for more detailed case-study research. As these best practices are always context specific (e.g. type of commodities, supporting institutions, scale of the organization, etc.), a comparative framework will be used that make these conditions explicit.

An ESFIM-research Brief has been complied with ten ‘common tensions’ (agency dilemmas) in collective marketing (Annex IV). Based on these tensions, case-study evidence is collected to be used in an on-line tool to exchange experiences. The ESFIM brief has been translated in Spanish and forms the conceptual outline of the systemizing of experiences in Uruguay and Peru. It has also been used in an AGRIPROFOCUS activity to identify good practices in Uganda.

These tensions are: ‘Regulating Member Supply’, Quality Assurance Systems’, ‘Coping with Working Capital Constraints’, ‘Anticipating Side-Selling’, ‘Ways to Dispose of Profits’, ‘Free-riding on Member Investments’, ‘Different Risk Preferences and Time Horizons’, ‘Supervision of Professional Staff’, ‘Individual Liability for Group Actions’, and ‘Managing Political Aspirations’.

Currently by desk-research and the incorporation of student groups form Wageningen University, case-study documentation is collected. An on-line tool will facilitate the exchange of related internal regulations, contracts and other technical details. Currently, the architecture of such an on-line tool is being explored with the design bureau of the ESFIM web-site.

With ILO-CoopAfrica, this emphasis on agency dilemmas in collective marketing will be (partly) incorporated in the revised training material used by ILO-training centre and CoopAfrica, formerly known as MATCOM. KIT (subcontracted by ILO), WUR, Agriterra and ILO will discuss a revised version in January 2011. A new ILO-cooperative training site will link to the ESFIM web-site.

Case-studies on organisational intelligence of economic farmer organisations in Bolivia

In 2011, 38 economic farmer organisations have been studied to describe the rules and regulations that they implemented to resolve the tension between the interest of the group and the interest of the individual member when engaged in collective marketing. In 2013, 28 of these organisations could be visited again, and changes in their governance have been analysed. The research is published as Chapter 8 in the book:

  • Giel Ton (2015) Measuring Tension and Intensions: Mixing methods in the impact evaluation of development support to farmer organisations.

This chapter has been revised and shortened in the Journal of Development Effectiveness, DOI 10.1080/19439342.2016.1231702

  • Giel Ton (2016).  Contribution Analysis of a Bolivian innovation grant fund: Mixing methods to verify relevance, effictiveness.

The case summaries are available here as supplemental material – annex-supplementary-material


 

Crowd-sourcing organisational intelligence: capturing the rich experiences of farmers’ organisations

Muchas organizaciones han encontrado formas innovadoras para superar las amenazas a la cohesión del grupo.

 Smallholder farmers are, by definition, scattered, and so they generally need to bulk their produce in order to access urban markets or the processing industry. This bulking has a strong logistical component, and requires working capital (trade finance) and a cost-efficient organisation that can control transactions.Successful collective marketing has built organisational assets that make their life easier.  ESFIM is looking for examples of this organisational intelligence . Many practitioners who work with farmers’ organisations may already have such information at their disposal, as most project activities are internally documented. We ask you to share these stories with us.  All quality submissions will be included on the website www.collectivemarketing.org. The most relevant examples will be considered for inclusion in a planned hard-copy publication. read more »

Documents

ESFIM Research Brief no.4 – RESOLVING THE CHALLENGES OF COLLECTIVE MARKETING by Giel Ton, June 2010

download: ESFIM Research Brief n04 – collective marketing Smallholder farmers are -by definition- scattered and, therefore, generally there is a need to bulk their produce in order to access urban markets or the processing industry. Bulking can be done through different modalities and by different type of actors, like middle-men and traders, processing companies, state marketing boards or collective marketing arrangements. This bulking has a strong logistic component and a need for working capital (trade finance), and requires a cost-efficient way of organisation and control of transactions. The present research wants to improve the capacities of collective marketing arrangements, like cooperatives, producer associations, village enterprises, etc.  to resolve the challenges  of collective marketing in face of competition. The ESFIM Research Brief n04 – collective marketing lists ten areas where the tensions between members and the organisation tend to be located, and for which organisations have found (often quite innovative) solutions that may inspire other organisations to implement similar solutions in their specific conditions.

Nuevo estudio: La importancia de mecanismos organizacionales para mejorar la calidad en cuatro organizaciones en Caranavi, Bolivia

Download ESFIM – Comparative – Bolivia – Cafe Caranavi Final. Un nuevo estudio realizado por Asako Kawai de la Universidad de Wageningen (ESFIM – Comparative – Bolivia – Cafe Caranavi Final) indica que  buena calidad en la cadena del café se basa en arreglos organizacionales tranparantes y effectivas entre los socios. La autora estudia las diferencias en caldidad del café entregado en cuatro organizaciones económicas (cooperativas, asociaciones) y lo relaciona con las dinámicas organizativas al interno.

En la industria agro alimentaria, la calidad de los productos fluctúa debido entre otros factores a las condiciones del medio ambiente y los cambios fisiológicos en el cultivo. Con el objetivo de brindar productos de calidad el mercado moderno implementa estándares de calidad y sistemas de trazabilidad para reducir los riesgos de pérdida de calidad e inocuidad. Para los productores pequeños es difícil incursionar en dichos sistemas debido a la dificultad y costos asociados al cumplimiento de los requerimientos del mercado. Sin embargo, para muchos productores es posible alcanzar dichos mercados por medio de la comercialización colectiva. En otras palabras, formar la organización de los productores. Este estudio enfoca los mecanismos que mejoran la calidad del producto y los mecanismos para reducir tensiones entre la organización y sus miembros de tal manera que se logre mejorar la comercialización colectiva. Cuatro organizaciones de productores ecológicos (OPEs) de café se han elegido como estudio de los casos. Estos a su vez están involucrados en el estudio co-ejecutado por LEI en evaluación del impacto para FONDOECAS, pequeño fondo incentivo para los productores pequeños Bolivianos (contact: giel . ton @ wur . nl)