How does Agriculture Cooperatives Work?
The working of the agriculture cooperative is simply providing a reward for the efforts put into agricultural practice through the pulling together of resources by members who have mutual/common interests. But before we delve deeper into how the Agricultural cooperative works, let us first recognize a well-known fact that Agriculture employs a large percentage of the population of any country, and the case is the same for Nigeria in which agriculture is responsible for employing over 70 percent of the population.
It is therefore important that all those employed by agriculture receive as much reward for their efforts as possible, and agricultural cooperatives are one of the ways for ensuring this.
A Cooperative also known as Union is usually defined as an association of persons, usually of limited means, who have voluntarily joined together to achieve a common economic end through the formation of a democratically controlled business Organisation, making an equitable contribution to the capital required and accepting a fair share of the risks and benefits of the undertaking in which members participate.
What this means is that an agricultural cooperative is a group of people coming together voluntarily and with a view to achieving a particular agriculture-based goal. Every member of the cooperative is responsible for the decision-making process and the benefits and risks are equally shared among its members.
How Has Cooperative Farming/Agriculture Cooperatives Helped The Farmers?
There are many ways in which Cooperative Farming has helped and keeps helping farmers around the globe. For the sake of Clarity, we have outlined a few of them below:
- Economic of Scale: This is the benefits farmers enjoy when they buy farm resources/inputs in bulk. This benefit is only possible when resources are bought in bulk. Buying resources in bulk might usually be too costly for an individual farmer which will definitely affect their chances of enjoying an economy of scale. With cooperative farming, farmers are presented with the rare privilege of pulling capital together, buy the needed resources in bulk, and therefore enjoy the dividend of bulk purchase which usually comes in the form of price discounting.
- Access To Aggregators/Off takers: An Aggregator is one who collects harvested crops in bulk, usually for the sake of mass production of Agricultural finished goods. Profitable Aggregators are usually not usually easy to come by, but with Cooperative farming, a member might have access to a needed aggregator, and this might pave way for quick sales of collected farm crops.
- Access to Government Fund Interventions: One way to understand this is to look into the NIRSAL Anchor Borrowers Program of the CBN. Cooperative farming opens the way for easy qualification for various government loans and grants.
Forms of Agricultural Cooperatives
Agricultural cooperatives can take different forms which include but not limited to the following:
- Agricultural Producer Cooperatives: These types of agricultural cooperatives help to unite rural farmers in the joint use and exploitation of the various factors of production such as land, labor, and machinery. The farmers share these factors of production among themselves which reduces the need for farmers to purchase their own thereby reducing their cost.
- Agricultural Produce Marketing Cooperatives: These agricultural cooperatives specialize in marketing the product of their members. They are able to negotiate better prices for their members in the market.
- Agricultural Thrift and Credit Cooperatives: These cooperatives are set up to help their members save money on a monthly basis. They also provide credit or loans to their members which they usually pay in monthly installments.
- Multipurpose Cooperative Societies: These forms of cooperatives operate as a form of jack of all trades and take part in all two or more roles.
Roles of Cooperatives in Agricultural Development
- It leads to improved well being for its members
- Cooperatives reduce the problem of accessing funds as they give out loans to their members
- This leads to job creation and creation of employment opportunities
- It can serve as a way of transferring or sharing new innovations among its members
- It leads to better savings among members of the cooperatives
- They help reduce the risks faced by individual farmers
- Farmers are able to get better prices for their products when they sell through cooperatives.
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