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Producer Organizations
- some WorldFish experiences
Michael Phillips, Malcolm Beveridge and Wayne Rogers

Producer Organization workshop
25th 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
India – crowded coastal aquaculture




Partnership • Excellence • Growth
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
Producer Organizations - some WorldFish Experiences
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.
1,400

                                                             1,192
1,200


1,000                                                 913
                                 800
 800                                                         870
                                                      672            Total production p.a kg/farmer
                                                       736   730
 600                                                                 Total production p.a. tons
                                                                     Total number of farmers
                                        379
 400                                           308
                 250

 200              147
                                               130
                                        58
                                  5
   -              37              4
                                         22     40
        Baseline (2001 survey)   2002   2003   2004   2005   2006
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%
 7,000                                                    6,621


 6,000

                                                  5,072
 5,000


 4,000                    3,556
                                                                  Revenue per farmer p.a.
 3,000                                                    2,648   Profit per farmer p.a.
                                  2,107           2,029           Production kg/farmer
 2,000
                                          1,368
             1,113
                          889     843
 1,000
                                          342             1,192
              278                                 913
                          800
    -
              250                 379     308
         Baseline (2001   2002    2003    2004    2005    2006
            survey)
Outcomes – excellent project returns
            • Strong returns - $272k investment generated net
5,100,000
              profits of $3.52m                        4,833,333
4,800,000
4,500,000
4,200,000
3,900,000          Revenue generated - total $8,884,444                   3,733,333

3,600,000          Net profit generated - total $3,524,444
3,300,000          Investments - total $272,000
3,000,000
2,700,000
2,400,000
2,100,000                                                                             1,933,333

1,800,000
                                                                          1,493,333
1,500,000
1,200,000
 900,000
 600,000                                                        177,778
                                                      122,222
 300,000       163,542                                          44,444
                                    17,778            48,889
               81000               4,444                                  50,000       31,000
       -
                40,886             28,000             43,000    39,000
             Baseline (2001         2002               2003      2004       2005        2006
                survey)
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
                          72

                     71



                           08
                                                                        74

                                          09             10
                                                                             11

                                16
                                                                   17
                                                                                            05
                                                                                                      73

                                                              06
                                               07


                                                                                                 14
                                                    15

                                                                                  13


                                                              12




                                                                                            04



                                                                                       03




                                     01




                                                                                            02
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
   • Core farmer group increased from 47 in 2007, to 2,639 in 2010
   • Additional 19,500 farmers received indirect benefits




  Post-
                     47




Tsunami
Rehabilit
 ation




 2005-06           2007            2008             2009             2010
                  Village level   Cluster level      Districts       Districts
 Rehabilitation
  of Damaged      11 villages      4 Clusters       84 Villages    100 Villages
   farms and
                  47 farmers       34 Village     1150 farmers     2656 farmers
    restart of
     farming         22 Ha        260 farmers        1027 Ha         2250 Ha

                   3 tonnes         184 Ha        105 ton shrimp   250 tonnes
                                                                     Shrimp
                                   22 tonnes        35 ton fish
                                                                   100 ton fish
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


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


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

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Producer Organizations - some WorldFish Experiences

  • 1. Producer Organizations - some WorldFish experiences Michael Phillips, Malcolm Beveridge and Wayne Rogers Producer Organization workshop 25th September 2012, Cairo, Egypt
  • 2. Overview • Background • Case studies • Lessons • The presentation is based largely on Asian experiences
  • 3. 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
  • 4. .. 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
  • 5. .. 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
  • 6. .. 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)
  • 8. India – crowded coastal aquaculture Partnership • Excellence • Growth
  • 9. 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
  • 10. 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
  • 11. .. 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
  • 13. 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
  • 14. Outcomes – improved pond yields • Kg/farmer increased by 376% • Total production increased from 37 tons p.a. to 870 tons p.a. 1,400 1,192 1,200 1,000 913 800 800 870 672 Total production p.a kg/farmer 736 730 600 Total production p.a. tons Total number of farmers 379 400 308 250 200 147 130 58 5 - 37 4 22 40 Baseline (2001 survey) 2002 2003 2004 2005 2006
  • 15. 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% 7,000 6,621 6,000 5,072 5,000 4,000 3,556 Revenue per farmer p.a. 3,000 2,648 Profit per farmer p.a. 2,107 2,029 Production kg/farmer 2,000 1,368 1,113 889 843 1,000 342 1,192 278 913 800 - 250 379 308 Baseline (2001 2002 2003 2004 2005 2006 survey)
  • 16. Outcomes – excellent project returns • Strong returns - $272k investment generated net 5,100,000 profits of $3.52m 4,833,333 4,800,000 4,500,000 4,200,000 3,900,000 Revenue generated - total $8,884,444 3,733,333 3,600,000 Net profit generated - total $3,524,444 3,300,000 Investments - total $272,000 3,000,000 2,700,000 2,400,000 2,100,000 1,933,333 1,800,000 1,493,333 1,500,000 1,200,000 900,000 600,000 177,778 122,222 300,000 163,542 44,444 17,778 48,889 81000 4,444 50,000 31,000 - 40,886 28,000 43,000 39,000 Baseline (2001 2002 2003 2004 2005 2006 survey)
  • 17. 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.
  • 18. Farmer cooperative in Aceh, Indonesia 72 71 08 74 09 10 11 16 17 05 73 06 07 14 15 13 12 04 03 01 02
  • 19. Recent history – Internal conflict – mid 90s till 2004 – Earthquake and tsunami in December 2004 – Responses  Humanitarian  Infrastructure rehabilitation  Improved management and rebuilding farmer organizations
  • 20. 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
  • 21. 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
  • 22. Outcomes - participation • Core farmer group increased from 47 in 2007, to 2,639 in 2010 • Additional 19,500 farmers received indirect benefits Post- 47 Tsunami Rehabilit ation 2005-06 2007 2008 2009 2010 Village level Cluster level Districts Districts Rehabilitation of Damaged 11 villages 4 Clusters 84 Villages 100 Villages farms and 47 farmers 34 Village 1150 farmers 2656 farmers restart of farming 22 Ha 260 farmers 1027 Ha 2250 Ha 3 tonnes 184 Ha 105 ton shrimp 250 tonnes Shrimp 22 tonnes 35 ton fish 100 ton fish
  • 23. Economics provides a strong incentive for better management
  • 24. 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
  • 25. .. 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
  • 26. 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
  • 27. 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
  • 28. 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
  • 29. 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?
  • 30. 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
  • 31. 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!
  • 32. External factors that influence success – External partnerships (govt, NGO’s, donors) – Private sector relations – Enabling institutional environment
  • 33. 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
  • 34. WorldFish resources Videos Farming Waters, Changing Lives: https://vimeo.com/40206928 Investing in hope: Rusli's story: http://www.worldfishcenter.org/feature/fish-farms-help-post-tsunami- acehnese-communities Publications Kasam et al (2010) - http://www.fao.org/docrep/014/i2275e/i2275e00.htm