Producer Organizations- some WorldFish experiences

Michael Phillips, Malcolm Beveridge and Wayne Rogers

Producer Organization workshop25th September 2012, Cairo, Egypt

Overview

• Background• Case studies• Lessons

• The presentation is based largely on Asian experiences

Definitions and characteristics

• Several definitions of producer organizations, but key characteristics

– Membership based organizations

– Provide services to members– Access to these services is a

key reason to become a member

• These characteristics distinguish producer organizations from NGOs and “traditional’ organizations

.. organizations may operate at different levels

• Local level– farmers clubs, self-help groups

• “Mid” level– farmers associations, federations

of farmer clubs• “Higher” level

– National or regional federations, unions, associations

.. the case for producer organizations

• collective/scale efficiencies for farmers an industry

• increased bargaining power• lower production costs• improved access to input and

services– e.g technical, credit, bulk

purchase/discounts; • empowerment of farmers,

particularly smaller producers

• increased voice and influence

.. but they also have costs and challenges

• takes time • needs trust• needs investment• transaction costs can be high• participation and benefit

sharing• free riders• sustainability (beyond projects)

Some experiences

Partnership • Excellence • Growth

India – crowded coastal aquaculture

Background

• India is a significant producer of aquaculture products– produces $10b of shrimp and fish– 70-80 % small-scale farms < 2 hectares

• Underforming in early 2000• Response from 2000 – onwards

• project investment in better farm management and society development

• govt invested “umbrella” society -NaCSA in 2007

Investments in small-scale farmers

• Better Management Practices (BMP):– pilot of 10 farms in 2002– extensive roll out post 2002

• Organizational improvements– societies and clusters in

common waterways

.. more activities

• improving field extension services– village based, with close

contact with farmers– communication and

education campaign

• improving connections to value chain players– hatchery operators, feed

manufacturers, lastly markets

Success relied on local farmer societies

• 20-30 people– common water supply

management– access to technical

services– credit (Bank)– bulk purchase of seed

and feed– synchronized shrimp

stocking

Outcomes – improved pond yields

• Kg/farmer increased by 376%• Total production increased from 37 tons p.a. to 870 tons p.a.

250

800

379 308

913

1,192

37 4 22 40

672870

147

558

130

736 730

-

200

400

600

800

1,000

1,200

1,400

Baseline (2001 survey) 2002 2003 2004 2005 2006

Total production p.a kg/farmer

Total production p.a. tons

Total number of farmers

Outcomes – improved farmer incomes

• Increase in net profit per farmer from $278 p.a. to $2,648 p.a.• Profit margins increased from 25% to 40%

1,113

3,556

2,107

1,368

5,072

6,621

278

889 843

342

2,029

2,648

250

800 379 308

913 1,192

-

1,000

2,000

3,000

4,000

5,000

6,000

7,000

Baseline (2001 survey)

2002 2003 2004 2005 2006

Revenue per farmer p.a.

Profit per farmer p.a.

Production kg/farmer

Outcomes – excellent project returns• Strong returns - $272k investment generated net

profits of $3.52m

163,542 17,778

122,222 177,778

3,733,333

4,833,333

40,886

4,444 48,889 44,444

1,493,333

1,933,333

8100028,000 43,000 39,000

50,000 31,000 -

300,000

600,000

900,000

1,200,000

1,500,000

1,800,000

2,100,000

2,400,000

2,700,000

3,000,000

3,300,000

3,600,000

3,900,000

4,200,000

4,500,000

4,800,000

5,100,000

Baseline (2001 survey)

2002 2003 2004 2005 2006

Revenue generated - total $8,884,444

Net profit generated - total $3,524,444

Investments - total $272,000

Indian societies - lessons learned

• There can be significant impacts for small-scale farmers, but:– it takes time for solid results

slow change in knowledge, attitude and practice among farmers

– good and reliable services at grass-root brings the real change

– “lead farmers” important– engage with stakeholders along value

chain– direct financial/in-kind support to

farmers brought negative results.

Farmer cooperative in Aceh, Indonesia

03

14

11

74

72

71

02

01

73

06

04

05

07

08

09 10

12

13

15

1617

Recent history

– Internal conflict – mid 90s till 2004

– Earthquake and tsunami in December 2004

– Responses Humanitarian Infrastructure

rehabilitation Improved management

and rebuilding farmer organizations

Investments in management and farmer organizations

• “Better management practices”

• Organization re-building Farmer groups Clusters Local services Moving towards a formal

membership-based cooperative

• Communications

Groups and cluster approach

• Village level groups • Watershed clusters Cluster: Petuah Neuheun

(5-10 Kelompok) -

Village: Kontak Petambak

Kelompok (10-20 Farmer/Group)

~2500 Farmers

Outcomes - participation

2008Cluster level

4 Clusters

34 Village

260 farmers

184 Ha

22 tonnes

2009Districts

84 Villages

1150 farmers

1027 Ha

105 ton shrimp

35 ton fish

2007Village level

11 villages

47 farmers

22 Ha

3 tonnes

47Post-Tsunami Rehabilit

ation

2010Districts

100 Villages

2656 farmers

2250 Ha

250 tonnes Shrimp

100 ton fish

2005-06Rehabilitation of Damaged farms and restart of farming

• Core farmer group increased from 47 in 2007, to 2,639 in 2010• Additional 19,500 farmers received indirect benefits

Economics provides a strong incentive for better management

Informal groups to a formal cooperative

• Farmer groups as members • “Technical team” merged into

and paid for by cooperative.• Cooperative services:

– Enterprise credit– Technical and market

services– Secures quality seed and

quality/cheaper feed inputs for members through bulk purchase and contracts

– Market access

.. the Aceh cooperative business model

• Financed through:– Membership fee– Microfinance

commission– Seed commission

(small)– Feed commission– Marketing and trade

– Trading provides the biggest return but is most demanding

Major lessons from Aceh• Simple technical improvements

deliver benefits. These are best delivered through local groups

• Investments in organizational development and local services pay off

• Takes time – “patient capital”• Partners of different skills• Market access can make a difference

long-term, but needs skills an time • Cooperative business model but best

income through vertical integration

FEAP - an example of an “apex” federation

• “FEAP is the united voice of the European aquaculture production industry, being the federation of national aquaculture associations that represent professional fish farming in Europe.”

http://www.feap.info/intro.asp

FEAP - activities

• Advisory role– to the European Commission and the

European Parliament as well as other aquaculture stakeholder organization

• Research and innovation investments• Annual award

– individuals who have made an outstanding contribution to excellence in European aquaculture

• Participation and promotion– actions and discussions on aquaculture

Lessons

• There are many examples globally where producer organizations have made importance contributions to the development of aquaculture

• What is success?• What are success factors?

What is a successful producer organization?

– achieves the objectives agreed upon by members

– retains or expands membership

– makes progress towards financial and managerial self-reliance and sustainability, inspiring members to maintain their participation in the organization

– improves self-esteem, and the economic and social well-being of members

Internal factors that influence success..

– Common and clearly agree objectives

– Technical and managerial capacity– Demand-driven and beneficial

service delivery– Sound governance and

management– Strong leadership– Group cohesion– Business model– This all takes time!

External factors that influence success

– External partnerships (govt, NGO’s, donors)

– Private sector relations

– Enabling institutional environment

M.Phillips@cgiar.org

WorldFish and CGIAR Research Program on Livestock and Fish

www.worldfishcenter.org

Acknowledgements – Swiss Agency for Development and Cooperation (SDC),

Resource Legacy Fund, GIZ and FAO/Allfish

WorldFish resources

VideosFarming Waters, Changing Lives: https://vimeo.com/40206928Investing in hope: Rusli's story:http://www.worldfishcenter.org/feature/fish-farms-help-post-tsunami-

acehnese-communities

PublicationsKasam et al (2010) - http://www.fao.org/docrep/014/i2275e/i2275e00.htm