SALT LAKE CITY, Utah — Agriculture is the primary source of income for the estimated three-quarters of the global poor that live in rural communities. Any aspirations of poverty eradication are essentially dependent on these communities. The longstanding tradition of agriculture cooperatives, in which small farms pool resources, might be able to offset the effects of endemic poverty in agrarian economies.
A Moment In the Sun
In 2012, three branches of the United Nations launched the International Year of Cooperatives. The initiative aimed to highlight the financial disadvantages of small farms. It also highlighted the potential for inter-community economic unions to fight poverty. Agricultural cooperatives were especially important to this process, as they create 20% more employment opportunities than multinational enterprises. So, the long-term potential for sustainable job creation by agriculture cooperatives in impoverished rural communities is paramount to poverty eradication.
In fact, a 2020 report from the World Bank concluded that funding agricultural productivity is twice as effective at reducing extreme poverty than alternative methods.
Crucially, the exhaustive report details the long-held belief that industrial farms are the gold standard of high-yield agriculture.
Because impoverished rural communities are overwhelmingly populated with small-scale subsistence farms, agriculture cooperatives in impoverished rural communities are essential.
Each cooperative has distinct requirements that defy a universal approach, as they are all unique entities based on democratic principles. Members of these cooperatives serve as both suppliers and owners, which creates economic complexities that lead to multifaceted organizations with financial and social obligations. This is opposed to corporate performance, which is based solely on finance and profitability.
The dualistic nature of cooperatives as inherently business and community actors gives these organizations a great deal of leverage to impact the well-being of their communities.
Portuguese Traditions in the Age of Globalism
Throughout the long history of winemaking cooperatives in Portugal, these unions have consistently allowed members to garner higher prices and greater market share. They also improve value chains and decrease transaction expenses. Cooperative bylaws are actually enshrined in Portugal’s constitution, making them integral to the national economy.
In the country’s Douro wine-growing region there are 39,506 vineyards alone. Thus, implementing structural reform could not be more relevant to ensuring the long-term economic future of an essential component of Portuguese national character. Since most farms are on less than one hectare of land, individual producers must combine resources to vinify grapes. This means cooperatives represent 46% of regional production.
But after several failed governmental attempts at modernization in response to globalism, agricultural cooperatives have been stymied by encroaching foreign markets. When Portugal joined the E.U. in 1986, the business model that previously sustained wine cooperatives became untenable as cheap imports because larger wine-producing nations like France and Italy became increasingly competitive.
Furthermore, environmental and geographic factors prevented Portuguese vineyards from countering increasing imports through higher production. Because of inefficient bureaucracies, many Portuguese wine agriculture cooperatives in impoverished rural communities did not survive the opening salvos of globalism.
Think Local, Act Global
The culling of slow responding cooperatives has forced researchers and policymakers to develop a framework for adaptability. Several organizations, native and foreign, are involved in shaping and communicating the strategies for agriculture cooperatives in impoverished rural communities. These organizations include:
- CASES: As previously noted, cooperatives must satisfy social obligations in addition to economic concerns. Cooperativa Antonio Sergio para a Economia Social (CASES) is an NGO focused on the interrelatedness of finance and society. At this organization, an alliance of Portuguese Creditors finances various cooperatives. As a €12.5 million endeavor, Social Investe enabled several wine cooperatives to fund various projects and improvements.
- PDR2020: The active involvement of governmental agencies is crucial to structural reform. Wine industry infrastructure is notoriously expensive and beyond the resources of independent producers. However, a federal initiative, the Programa de Desenvolvimento Rural de Portugal (PDR), funds agricultural purchases crucial for Portuguese vineyards. Contributing €37.5 million in 2020 alone, these grants also help farmers adapt to increasingly frequent climatic abnormalities that disrupt production.
- FENADEGAS: To improve the regulatory environment, wine cooperatives actively lobby for policy reform. Adegas Cooperativas de Portugal (FENADEGAS) is a coalition of 41 members. It represents a unified agenda in addressing distinct exigencies of the industry. Additionally, the organization provides a global marketing platform, helping one cooperative survive the COVID pandemic by increasing exports by 18% in 2020.
- SALSA: The dual requirements of integrating with the local economy and tailoring production while simultaneously developing global strategies presents major challenges. With the intergovernmental organization Small Farms, Small Food Businesses and Sustainable Food Security (SALSA), Alentejo regional farmers created the Km0 Evora label that certifies local provenance within 50 km. Efficient value chains are a traditional strength of cooperatives. However, pressures of globalism have disrupted local economies making community initiatives and branding more relevant. Mimicking Km0’s success, several European agricultural cooperatives have introduced similar measures.
- ADEGA DE BORBA: Maximization of member profit and temporary gain often leave cooperatives under-invested. Founded in 1955, Adega Cooperativa de Borba successfully transitioned to the global marketplace despite initial struggles. It now produces 15 million bottles annually. Crucially, a €12 million investment to build a state-of-the-art production facility has allowed 300 small farmers to compete internationally by diversifying product offerings.
As rural communities face increasing pressure from foreign influence, these already disenfranchised populations will struggle to find a voice. Portuguese winemakers, overwhelmed by a rapidly changing economy, suffered immense emigration as farming no longer provided sufficient income.
Thus, restoring profitability to agriculture is the sole mechanism to eradicate endemic poverty. Organizations at numerous levels will be instrumental in this effort, but progress must begin with collaboration in agrarian rural communities.
– Kit Krajeski