Co-ops for Crops

There is a common perception in the West that developing countries just don’t know how to farm and that WE either need to help them grow more food or send them some of the excess food that our system produces.  Although there certainly is potential for increased agricultural productivity in developing countries, farmers in many of those countries actually produce quite a lot of food.  Some of the thorniest problems arise post-harvest, and this post will look at a way of dealing with one of the biggest of those problems.

The Problem

There’s quite a lot we could say about the problem of inadequate crop storage in the developing world.  Calculating post-harvest loss due to spoilage, varmints or other causes is inherently difficult, but the UN’s Food and Agriculture Organization says it could be anywhere between 15 and 50%.  That’s a very wide range, so let’s just assume that it’s in the middle — say 33%.  That is staggering to think that ONE THIRD of the food that is grown in the developing world might never make it to the table.  There are of course factors other than lack of storage that contribute to this (lack of markets for crops,

That basket-looking thing is their silo

insufficient infrastructure to transport crops to markets, etc.). Having seen, however, the standard grain storage mechanisms for farmers in Uganda (at right), and knowing that even less secure methods are used it’s easy to see how rats, insects, and microorganisms (to say nothing of excess heat or moisture) can ruin a bountiful harvestBetter storage facilities are needed.

Moreover, the inability to store crops for any significant length of time drives down the price that farmers can get.  Roger Thurow and Scott Kilman in the book Enough (2009, PublicAffairs) document how the tragic Ethiopian famine of 2003 came just one year after farmers in Ethiopia had one one of their best harvests ever.  But because all these farmers brought their crops to market at the same time, there was a glut which drove down prices and meant they weren’t able to recoup their costs.  The lower income meant that they had less to spend on inputs for the next season’s harvest and decided to plant less, contributing to the next year’s famine.  Being able to store crops in reserve allows farmers to respond to price signals and choose to bring their products to market when they can get a good price, rather than having to bring everything shortly after harvest.

The Idea

Scale is important.  And modern storage facilities capable of keeping out pests and the elements could be expensive, especially for smallholder farmers.  But I think the communal nature of many societies in the developing world makes it possible to envisage solutions that wouldn’t work in more individualistic societies.  So, the big idea here is to have cooperatively owned and operated crop storage centres.  It would take some financing for the initial building of the storage units (maybe through microloans, but probably a bigger credit facility), but hopefully the increased income for the farmers using the storage centres would help pay off the initial investment rather quickly.  The most sustainable model would be for each member of the co-op to contribute dues in order to be able to store their crops.  The fees would be used for maintenance and could also be used to expand and add storage capacity if the farmers start producing more.

Of course this is a micro-level solution and there are still macro issues that must be addressed to insure farmers in the developing world can access markets.  Creative business models aren’t a substitute for policy reforms, but they can complement, and perhaps even spur those necessary structural changes.


Thoughts?

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One response to “Co-ops for Crops

  1. Pingback: The Remittance Fund pt. 2 | Mind of Maus

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