EXPECTED growth in the agricultural sector has highlighted the need for cooperatives to step into the gap when the government and banks fail to supply credit.
Asian Farmers’ Association (AFA) Cooperative Development Program Director Cresente C. Paez noted that some savings and credit cooperatives are starting to expand their services to farmers.
Mr. Paez said in the Philippines savings and credit cooperatives are the “strongest,” while agricultural cooperatives continue to lag.
“What (savings and credit cooperatives) did is to shift to the agriculture sector and at the same time, put up business enterprises. They went here because most of their members are from the rural areas,” he added.
“Cooperatives can provide services, especially credit. Before, borrowers used to borrow money from usurers, but now they go to the cooperative because the interest rates are low.”
According to AFA, around $1,000 to $4,000 per hectare is needed to invest in mixed or diversified farming while an average of $500,000 is needed for working capital and processing facilities.
“The problem is that we cannot rely on the government when it comes to extension services because extension services have political strings attachment,” Mr. Paez said.
“That’s our experience and we thought that what we need [to do is] to help cooperatives build up their own extension services. Perhaps with a research or agricultural institute, maybe they could be more independent.”
AFA program manager and Oro Integrated Cooperative Chairperson Jose Romeo B. Ebron said that the organization was purely a savings and credit cooperative four years ago.
Oro has since branched out to serve the agriculture sector through its subsidiary, Golden Grains Cooperative.
Mr. Ebron added that financing farmers is “the biggest challenge we have in the whole agri-enterprise: the farmers are not in control of the whole value chain. They’re only up to the production level.”
“We have members that we finance and then we connect them to the market. We [also] provide extension services for farmers who are engaged in cacao production, covering around 100 hectares,” he added.
“We provide extension services like quality control and drying facilities, then we help connect them into the market.”
Regionally, Mr. Paez believes that cooperatives can help reduce poverty among farmers not only through credit but as well as knowledge-sharing.
Mr. Paez said AFA plans to increase its reach even further from current membership of 13 million farmers and 18,000 farmers’ organizations in Asia since 2002.
“In the Philippines, it’s really not about numbers. It’s more on how strong the cooperatives are. We are looking at 1,000 cooperatives in the Philippines out of 24,000 [in the next three to five years],” he added.
Mr. Paez said farmers need to be more involved in the value chain to improve the quality if their lives.
“The key here is the organizer. Cooperatives should engage and every cooperative should have an organizer,” he added.
“If the farmer should only be a producer of raw materials, but someone else handles the value chain, the farmer will be on the losing end.” — Anna Gabriela A. Mogato