New strategies for mobilizing capital in agricultural service cooperatives

This booklet produced by the Sustainable Development Department of FAO, looks at the changing cooperative environment and how agricultural service coops face declining financial support from donors and governments and an increasing need to compete in open markets. This trend towards greater independence is creating new opportunities for cooperatives to grow and prosper on their own terms and become viable businesses, serving their members’ needs.

Cooperatives can increase the financial returns to their members only through business transactions. Typical transactions include members’ delivery of produce to the cooperative for processing or marketing or purchase of inputs and materials from their cooperative. To be competitive cooperatives have to offer efficient services at attractive prices and, therefore, need to find ways to minimise costs or improve service quality.

The booklet goes on to examine the different ways that cooperatives can be funded, with the core sources being directly from members, from retained business surpluses and from outsiders. There is a discussion on which kind of funds are best and guidance is given on how the mobilisation of member funds can be improved, which has the simultaneous benefit of enhancing member involvement and control. A later section looks at innovative capitalization from external sources and the final part focuses on strategies for achieving cooperative self-reliance.

Related Resources