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Farmer co-operatives in South Africa and Peru are set to improve their profitability, productivity, resilience and competitiveness in the marketplace as a result of a five-year, US$7,7 million grant from the United States Agency for International Development (USAID). This is the second project co-ordinated by the cattle genetics co-operative Genex, headquartered in Shawano, Wisconsin. It builds on a previous project that commenced in 2010 through similar grant-funded activities.
Genex is the programme partner for the USAID Cooperative Development Program (CDP), which focuses on building the capacity of co-operative businesses for self-reliance, local ownership and sustainability. As a co-operative itself, Genex believes unwaveringly in the value of living out the co-operative principle – something the Sotho maxim of ‘motho ke motho ka batho’ (a person is a person because of other people) embodies so perfectly.
Growth through support
Genex has been active in South Africa since 2010 to help build agricultural co-operative businesses. The goal is to elevate these developing businesses as suppliers to local and regional processors, sellers of value-added products, and buyers of inputs from local and regional companies. The strategy includes a business-driven approach to helping farmers run strong commercial-scale businesses.
In the previous round of funding, Genex CDP activities in South Africa have helped 25 co-operatives achieve substantial growth. In eight years, the co-operatives experienced a 713% growth in sales, 510% growth in profit and near-total growth in patronage dividends.
With this new round, which commenced in September 2018 with the new five-year, $7,7 million grant, the intention is to further support dairy and beef producers and their co-operatives. The overall goal is to improve these producers’ and co-operatives’ profitability, productivity, resilience and competitiveness in the marketplace.
Capacity building through Genex
“Capacity building,” says Genex CDP manager, Lieb Venter, “is the underlying drive of the new five-year programme, both in co-operative context and at farm level with individual co-operative members. We have 13 co-operatives in six provinces already participating in the programme.”
They focus on three levels of capacity building which they accomplish through training and technical assistance. The first is the co-operative level, including legal compliance, organisational structure, governance, co-operative culture, purpose and member focus.
The second is the farm level, including agriculture and animal husbandry, farm management, animal nutrition, improved genetics and soil analysis. The third is the business level, which includes operations such as accounting, procurement, business plans and credit, as well as engagement with buyers, input providers, lenders, retailers, distributors, wholesalers, processors and government authorities.
The role of mentors
A keystone of their approach, Lieb explains, is the role of mentors on the ground. A mentor normally serves several co-operatives and provides practical training to individual farmer members. This service includes, on a basic level, the selection of bulls, advice regarding health and vaccination programmes, feed supplements, breeding policies, recordkeeping, animal husbandry and veld management.
The aim is to improve the quality of their livestock as quickly as possible so that co-ordinated marketing opportunities can be pursued. One of their largest investments in the programme was in fact to appoint nine mentors in the various regions. This went a long way towards ensuring that inputs and finances were used correctly and wisely to facilitate profitability.
Initiatives such as Genex boost success
“It is important to understand that the co-operatives we work alongside with were established by groups of farmers with the specific aim to provide services to their members. This includes being able to procure inputs for members at the best possible prices. For this purpose, we established a buying group called FarmMark, representing the more or less 3 000 farmer members of the 13 co-operatives we serve. This process is well on its way.
“Another initiative is the creation of trade branches where members can access products they need on their farms. Hopefully most of the participating co-operatives will have depots or shops in a year or so,” Lieb points out.
The next step is to also assist in creating markets for the members’ cattle and milk. During lockdown last year they were able to play a key role in enabling farmers to continue marketing their cattle, even though there were no auctions.
“We see ourselves merely as the champions of the programme. It is essential to the long-term success of the programme that other role-players, such as producer organisations, commit themselves to it as well.
Development and financing
“Farm-level productivity is the starting point in building a sustainable agricultural business. Through mentoring, training, farm management technical assistance, peer-to-peer learning and more exchanges between the industry and role-players, farmers and co-operatives are being given training to improve farm-level productivity and effectively carry out co-operative activities and member services.”
Strengthening farmer co-operative competitiveness, he points out, depends mainly on three pillars. “When given access to affordable financing and inputs, as well as technical assistance and mentoring, producers and their co-operatives can improve their profitability, productivity, resilience and thus their competitiveness in the marketplace.
“Many individual black farmers are non-bankable. Finding a model through which they can get access to financing is a major challenge for us. We are conducting annual farm level surveys to gather credible information on the bankability of these farmers, as well as to what extent we are reaching our targets regarding the increased profitability of their businesses.” (The benchmarks they set include annual turnover, weaning percentages and quality of livestock.)
Development, says Lieb, is comparable to baking a cake. You take a variety of ingredients, mix them well and apply the appropriate heat to create a new entity consisting of all the separate ingredients, but that is something totally different and unique.
“Similarly, successful development requires various ingredients, such as access to finance, training, mentorship, structural support, access to affordable inputs and viable markets that have to be mixed together to create economically sustainable farming enterprises. These are the aspects we try and facilitate in the programme to get the members ‘market ready’.”
Reaching important milestones
By the end of the project in 2023, says Lieb, successful co-operatives can be expected to have achieved important milestones that include on-going business relationships with buyers, input providers, joint-venture partners and lenders.
It is anticipated that co-operatives will carry on their businesses in a professional manner, utilising the business relationships gained through the CDP to fill the role that donors previously filled. Based on its current record it is expected that co-operatives will operate as viable businesses, paying for inputs and services, and as reliable sellers of goods to buyers of commodities and value-added products.
Co-operatives will also provide relevant services and benefits to its members, which will ensure that members will contribute equity to the business and that activities will not culminate in the termination of the CDP. Co-operatives and farmers can expect to have access to debt financing, private equity, value chain financing and grants, which are currently not obtainable without capacity building.
Just recently interns were appointed at each of the 13 co-operatives to aid with the administration of the operations. It is hoped that some of these interns, concludes Lieb, would develop to such an extent that they could become managers of the co-operatives. – Izak Hofmeyer, Stockfarm
For more information, contact Lieb Venter on 082 452 9893.