CHAPTER ONE

GENERAL INTRODUCTION

1.0 Introduction

The International Co-Operative Alliance defines a cooperative, or co-op, as “an autonomous association of persons united volunatarily to meet their common economic, social, and cultural needs and aspirations through a jointly-owned and democratically controlled enterprise.” In other words, cooperatives are created by people who have a specific need and who are willing to work together to operate and organize a company that will meet that need.

1.1 Background to the Study

The modern cooperative originated in Europe and spread to other industrializing countries during the late 19th century as a self-help method to counter extreme conditions of poverty (Hoyt, 1989). However, one development that probably had the greatest singular impact on determining agricultural cooperatives’ unique operating principles was the formation in 1844 of the Rochdale Society of Equitable Pioneers, Ltd.

This was a consumer cooperative established in Rochdale, England, by a group of workers representing various trades who formulated a set of basic operating rules based on a two-year study of cooperatives, including some that were not successful. The cooperative’s objectives were to address members’ needs for better housing, employment, food, education and other social requirements. Another important development regarding cooperatives serving as credit or banking institutions was the establishment of the first savings and credit cooperative in 1864 by Friedrich Wilhelm Raiffeisen in Germany. The objective of the Raiffeisen Bank was to provide savings and credit services in urban and rural areas based on the idea of “self-help”. Raiffeisen is generally given credit for developing the rules that govern present-day credit unions (Ingalsbe & Groves, 1989).

The development of cooperatives over time has been shaped by many factors and influences. Ingalsbe and Groves (1989) group these into three main types, all interrelated: economic conditions such as (war, depression, technology, government economic policy.), farmer organizations (including quality of their leadership, their motivation and enthusiasm to promote cooperatives, power to influence public policy.) and public policy (as determined by government interest, legislative initiative, and judicial interpretation). Since about 1988 two phenomena have been occurring in the organization of agricultural cooperatives in the US: the restructuring and consolidation of conventional cooperatives and the emergence of new generation cooperatives (NGCs) (Cook, 1995).

NGCs retain many of the characteristics of conventional cooperatives, but they focus on value-added activities. Member capital contributions are linked to product delivery (marketing) rights which attain value and can be transferred, and membership is closed or restricted. These developments suggest that cooperative strategies are becoming more offensive in nature. Cropp (2002) contends that cooperatives in the US have matured to become a significant force in agriculture, and play an increasing role in influencing national agricultural policies.

In developing countries attempts to organize farmers into cooperatives have often failed, although cooperatives have the potential to supply farm inputs and market farm products that are both important for agricultural development (Hoyt, 1989). The DTI (2003) provides a brief overview of cooperative development in African countries.

Akwabi-Ameyaw (1997) suggests that in Africa farmer cooperatives have often failed because of problems in holding management accountable to the members (moral hazard), leading to inappropriate political activities or financial irregularities in management. Van Niekerk (1988) reports that cooperative failures in the former (less-developed) homelands of South Africa were due mainly to lack of management experience and knowledge, lack of capital resources, and disloyalty of members due to ignorance. Some successes include food processing cooperatives in Argentina and Brazil, and cooperatives processing and marketing milk, sugar, and oil seeds in India (Hoyt, 1989). ACDI/VOCA (2005) lists a number of successful cooperative ventures that they helped to establish in developing countries. Government policies regarding cooperatives are critical because they can constrain or enhance independent cooperative development (Hoyt, 1989).

The agricultural sector in Cameroon is among the main occupations for over 70% of Cameroonians and contributes enormously to the country’s economy (Abia et al., 2016) and accounts for 22.9% of the Gross Domestic Product (GDP) (Ball, 2016). About 75% of Cameroon’s population live in rural areas and depend on agriculture as a source of livelihood. According to the third general population and housing census 2010 figures, the rural population of the North West and South West regions which make up the study area is 1,044,236 and 722,199 people, respectively. According to Cameroon’s National Development Strategy 2020-2030, agriculture is a major component in the structural transformation of Cameroon’s economy. Therefore, the performance of the agricultural sector determines the fate of the economy of the country (Birchall and Simmons 2009).

Despite this contribution to the economy, the growth of this sector is, however, handicapped by the poor quality and inadequacy of rural infrastructure, constraints related to the financing of production, lack of access to market information, improved technologies, functioning markets (for inputs, outputs, finance, consumer goods, and services) and the remoteness of the production areas in relation to the consumption centers (African Development Bank and African Development Fund, 2009). Farmers can overcome these problems by acting cooperatively to obtain collective strength that they do not have individually, and in doing so, they can find the pathway out of poverty and powerlessness (Birchall and Simmons, 2009). Besides collective strength, farmers also join agricultural cooperatives to have access to trainings, government support, local and international markets, credits and input supply (ATA, 2012).

According to Cameroon’s National Development Strategy 2020-2030, the government intends to carry out an agricultural revolution. The aim is to modernize the sector, increase its productivity, create jobs and thereby improve living standards, reduce rural poverty by way of increased productivity through intensification of agribusiness activities and modernization of farms driven by the demand of the agro-food industries.

Agricultural cooperatives can play a major role in achieving this aim. Cooperatives have been conducting business in a way now being recommended as the most effective route to transformational development (Oluwakemi et al., 2012). This explains why the government is promoting cooperatives in order to facilitate producers’ access to inputs, improve agricultural productivity and producers’ living conditions. According to Barton (2000) as cited in Ortmann and Kings (2007), Burt (2004) and California Centre for Cooperative Development (2017), agricultural cooperatives, like any other businesses, start with the recognition of a need or an opportunity.

The International Cooperative Alliance (ICA) defines a cooperative as “an autonomous association of persons united voluntarily to meet their common economic, social, and cultural needs and aspirations through a jointly owned and democratically-controlled enterprise” (ICA, 2015). This definition is widely accepted because ICA a non-governmental organization with over 230-member organizations from 100 countries is recognized by cooperative leaders around the world as a leading authority on cooperative definition and values (Zeuli and Cropp, 2004). On the other hand, agricultural cooperatives are cooperatives whose members are agricultural producers or involved in agriculture related activities (Nnadozie et al., 2015).

According to Rondot and Marie-Helene (2001) and Francesconi et al. (2015), an agricultural cooperative, which is also known as a farmers’ cooperative or agricultural producer organization, is a cooperative where farmers pool their resources in certain areas of activity. They can be single or multiple purpose cooperatives, agricultural input supply cooperatives, marketing cooperatives, agricultural credit cooperatives, machinery cooperatives, land acquisition cooperatives, livestock producers cooperatives, fishermen cooperative society, oil mill cooperatives, rice mill cooperatives, among others (Nnadozie et al., 2015).

In Buea, there are different agricultural cooperatives that try to help farmers in agricultural work. Though to an extent, the works of agricultural cooperative in Buea is not really seen because most farmers still appear to be in the traditional system of farmer despite the presence of agricultural cooperatives such as SOWEDA, ACEFA, and AIVDP, which calls for the concern of this research work, which is investigating cooperative funding in agricultural development.

1.2 Statement of the Problem

The population of Cameroon is growing rapidly by the day and most people are dependent on agricultural products for survival but there is a limited supply of this agricultural product. This is because many because many agricultural cooperatives face difficulties in raising funds to support these agricultural activities, though funding cooperatives do assist sometimes in providing funds to this agricultural cooperative in order to fund agricultural activities, to an extent there becomes a limit where this funding cooperatives end.

Despite the presence of this funding organization, agricultural cooperatives still cannot sustain in marketing. This is a real problem because if it is not looked into, it might lead to food crisis or greater food insecurity.

1.3 Objectives

1.3.1 Main Objective

To investigate how agricultural cooperatives, raise funds to promote their activities.

1.3.2 Specific objectives

1. To understand the role of agricultural cooperatives in economic development.
2. To examine the strategies of AIVDP in promoting agricultural development.

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