Cooperatives discover their role in innovation

Giel Ton and Henri Hocdé

ESFIM supports the Cooperativas Agrarias Federadas, CAF (Federation of Agricultural Cooperatives), which has a constituency of 33 organisations including approximately 12,500 family farms (Agriterra-CAF 2008). CAF is a second-tier cooperative. The member organisations are cooperatives or associations (sociedades de fomento rural) that are involved in collective marketing.

Some of the members of CAF, especially the dairy cooperative Cooperativa Nacional de Productores de Leche (CONAPROLE) and the wool cooperative Central Lanera Uruguaya (CLU), are among the strongest industries in Uruguay. A large part of the membership, however, consists of relatively small players in comparison to the very strong multinational companies that increasingly offer similar services. The strong cooperatives support CAF chiefly as an instrument to obtain favourable agricultural policies, whereas the smaller members also look to CAF for support on organisational issues.

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In the last decade, the cooperative sector in Uruguay has faced profound changes. Uruguay experienced an economic crisis in 1998-2002. This was mainly the result of the Argentine monetary policies, which had linked the exchange rate of the peso to the US dollar and, in 2001, forced by a sovereign debt crisis, decided to re-float the currency and introduce restrictions on monetary flow. This abrupt change in the monetary policy context affected the banking system and disrupted much economic activity, leading to declining purchasing power in Argentina and Uruguay. Household incomes decreased by 20 per cent in this period and poverty figures rose, although still remaining relatively low compared to other South American countries. The cooperative sector barely survived this crisis. Many cooperatives could only remain in business with the support of the government and the state development bank, Banco de la República Occidental de Uruguay (BROU). CAF played a key role in coordinating the sector’s negotiations with the government to obtain support post-crisis, such as in resolving debts. A major support measure took place in 2004, when the state enterprise that managed the national grain storage system transferred their facilities to the cooperative sector, thereby strengthening the patrimony of these cooperatives. In 2005, many of the cooperatives that started to manage these storage facilities became a part of COPAGRAN, a merger of eleven cooperatives. This organisation started out heavily indebted but has managed to become solvent again by offering its storage facilities to farmers profiting from booming soya prices and a solid growth in acreage.

From 2007 onwards, all agricultural commodity prices improved, not only soya, and this generated a boom in agricultural investments and economic activities. The market for cooperative services for agricultural inputs and seeds grew very quickly. Many transnational companies entered the market and competed with the cooperative sector but left enough room in the market for the latter to grow, attract loans for investment in infrastructure and extend their service provisioning. The dairy sector, with CONAPROLE as the leading company, has increased production and developed an impressively wide range of consumer goods.

Advocacy challenge

The success of its members backfired on CAF, which entered into an identity crisis because the cooperatives managed very well alone and needed little help from CAF. Furthermore, CAF’s funding needed to be reinvented. In the period between 2004 and 2009, approximately 50 per cent of CAF’s income was generated from membership contributions and another 50 per cent from international donors, especially Agriterra and the Swedish Cooperative Council (SCC) (Agriterra-CAF 2006). A large part of the technical team of CAF was hired with funding from development cooperation, to carry out activities on organisational reinforcement and to develop a youth programme. In 2010, the reduction of funding and the unwillingness of the cooperatives to pay for these ‘non-core’ services with member contributions, generated a reduction in personnel. The retirement of the director (gerente) after more than 25 years, caused a deterioration of the institutional memory as well as the contacts and networks within the government. Gaston Rico had been director of CAF from its foundation in 1984, and had been the central figure in CAF’s advocacy work. After his retirement, the board and the newly-appointed director had initial difficulties in replacing him. The new director appointed in August 2010, faced with necessary budget cuts, started a process to change the function of CAF as a ‘public good’ service-provider to an organisation that was more instrumental for the different advocacy activities of each of its members. However, paradoxically, this proved difficult due to the cooperatives’ reduced interest in collective action. The cooperatives no longer needed the active CAF lobby to get (emergency) government support. Another replacement of the executive director in August 2011 aggravated this process. The new, young director was left with a very limited support staff, few contacts within the government and fewer demands from the members, resulting in few possibilities for specific advocacy activities or organisational support. The institutional crisis in CAF ended in July-August 2012, when, partly as a result of ESFIM, the new staff at CAF managed to re-position CAF as a leading agricultural union with influence in government policy making.

Lessons learnt

  • Staff changes affect collaboration. The work in Uruguay proved that personal relationships are essential for fostering research partnerships. Initial teleconferences and face-to-face interaction during December 2008-March 2009 created a smooth working and communication channel that was followed by a sequence of high-quality research activities. The change of the CAF policy officer Lourdes Pose in January 2010, coupled with the lack of funding for collaborative research in the same year and affected by the retirement of the director in August 2010 changed this panorama. It took more than one year to get on track again with ESFIM research-plus-advocacy.
  • Advocacy moments provide the needed deadlines for consultants. The consultancy on innovation policy took a long time; much longer than planned. A relatively large part of the funding was dedicated to the external consultants and almost nothing for co-funding CAF-staff. As a result, a situation was created in which the supervision and pressure on the consultants to deliver actionable results was reduced. The setting of dates for high-level advocacy events made it necessary to generate research outputs. This revealed where the delays in the research were occurring, and made it clear that these had to be tackled by CAF in order to get actionable outputs.
  • Backstopping helped to keep up momentum. CAF liked the role played by both AGRINATURA researchers in backstopping the research. They were especially pleased with the field visits with Henri Hocdé, which helped them to see the benefits of the research, and the face-to-face meetings between Giel Ton and the researcher leaders to help shape and finalise the research assignment.
  • External perspectives triggered internal learning. AGRINATURA support was especially valued by CAF for making it possible to look at salient features and experiences common in the respective cooperatives, but that were novel for other cooperatives and other stakeholders involved in agricultural innovation. The technique of drawing a visual map of innovation processes in cooperatives after each case-study visit, proved effective in starting discussions with the CAF board and preparing presentations for external audiences. The interviews also provided the new director of CAF with an entry into the history and dynamics in a sector that he barely knew. It became clear that staff in national offices often have little opportunity to learn about the inner economic workings of their member organisations. Visits with outsiders can provide these insights, and can open doors to other stakeholders (government, etc.) that otherwise would have been kept closed to them.