HOW ARE OTHERS STRENGTHENING FARMER ORGANISATIONS MANAGEMENT CAPACITY?
By George Z Goliati
In search for a host for the test-phase of the e3 anchor farms model, the Smallholder Irrigation and Value Addition Project (SIVAP) was the first to come in mind. 7 value addition centres (VAC) were constructed under the SIVAP in 7 districts across all regions in Malawi. The underutilization of these VACs was learnt earlier on such that it was found useful and exciting to test the model on one of them. The nearest was found in Chikwawa. This is Thabwa value addition centre located at Thabwa trading center in Chikwawa district. At the same time, we have just learnt about Shire Valley Transformation programme (SVTP). As such, Chikwawa became an excellent destination. The SVTP is another upcoming opportunity and sounds very familiar and corresponding with the e3 anchor farms model. That's not enough, the journey also taught us about another underutilised opportunity. This is the underutilization of irrigation schemes. Even if that wasn't enough, we also learnt about self-motivated and visionary farmers ready for development but without clue of where and how to get support. This was regarded as another unexploited opportunity!
Today let's gossip about Thabwa VAC and NGO-based or donor-funded Farmer Organisations (FOs) capacity strengthening and keep the rest for another day. Before we start, here is a little background of SIVAP. The project was funded by African Development Bank and was implemented by the Ministry of Agriculture, Irrigation and Water Development of the Malawi Government in Thyolo, Chikwawa, Nsanje, Machinga, Karonga, Nkhotakota and Salima districts. It ran from 2013 to 2018. The specific objective was to increase agricultural production and productivity through intensification of irrigation, crop diversification, value addition and capacity building. It had 3 interventions which included (i) sustainable land and water management (development of 2,030 ha of new area and 1,295 ha of existing schemes to be rehabilitated, that is, construction of 11 new irrigation schemes and rehabilitation of 5 existing schemes), (ii) crop diversification and value chain development, which involved construction of 7 value addition centres (VACs) and (iii) institutional strengthening and capacity building.
Towards the end, the project facilitated formation of farmer organisations in form of cooperatives to take over management of the VACs. The Thabwa VAC was left in the hands of two cooperatives, namely Dumwaliri and Livuzu. The two have formed a single apex body to manage the VAC. However, it was realised that the FOs are challenged with management capacity. Therefore, some NGOs and secondary cooperatives took the task to strengthen the FOs management capacity. This is another form of local farmer organisations strengthening, apart from apex bodies like NASFAM and similar large associations. It is known that Masenjere VAC in Nsanje is run by Tatsogola Lower Shire Rice cooperative while, Bua (Nkhotakota), Lifidzi (Salima), Nsanama (Machinga) and Thabwa are ran by Challenges Malawi under the Creating Robust Opportunities for Crop Production and Sale (CROPS), in collaboration with Opportunity International and funded by the Scottish Government. The five-year CROPS project, which launched in October 2018, aims at improving livelihoods of more than 6200 rural farmers in four districts, Nkhotakota, Salima, Machinga and Chikwawa through the four Value Addition Centres (VAC) to improve the value chains of a range of crops, and seeks to increase household incomes of the farmers by 10% by 2023.
The Secretary of the apex body of the two Thabwa cooperatives, Mr Simon Thom Thaphwanya was interviewed on 24 July 2020 at the VAC premises. Challenge Malawi provides the cooperatives with its own employed production manager, marketing manager, machine operators and guards. These are commonly referred to as donor-funded employees or managers. The practice is fairly common where various NGOs, secondary cooperatives and other apex bodies are involved. Thabwa VAC started functioning in 2019. The Secretary revealed that it has improved farmers rice marketing as they can now mill their produce at lower rates (K50/kg than K100/kg at private millers), add value with the graders and sell at higher prices than before. For instance, they have been selling at K800/kg (USD1.1) as a cooperative through the VAC unlike selling at K180/kg of paddy rice or equivalent of k300/kg locally polished rice as individual farmers. The mill can also be accessed by non-members of the cooperatives. The cooperatives have been selling the rice to two formal markets. That is Nankhunda seminary secondary school and The Hunger Project (a Non-Governmental Organisation). The two customers have been buying 650kgs of rice per month. However, in February and March 2020, the demand rose to 850kgs per month and the cooperatives could not satisfy the customers.
In 2019, Livuzu cooperative alone produced 68 bags of 50kgs (3,400kgs) of rice. This year 2020, they had bought 78 bags of 50kgs (3,900kgs) by 24 July and the cooperative was still buying at K14,000/50kg, that is K280/kg of paddy rice or equivalent of K450/kg of polished rice from the farmer members. Livuzu cooperative has 212 members while Dumwaliri has 64, as 276 members in total under the apex body. The cooperatives use shares as investment capital for buying rice from its members. The share price is at K4,800 per year per member. This translated to an investment capital of K1,017,600 capital for Livuzu cooperative alone with 212 members. Each member is expected to produce and sell 7 bags of K50kgs (350kgs) of paddy rice at K14,000. When calculated, this amounted to K20,776,000 to buy the estimated 1,484 bags 50kgs of all 212 members. When asked how they would balance this up, the treasure revealed that they have been supported with a credit amounting to K10,000,000 by Challenges UK facilitated by Challenges Malawi. So far they had used K3,000,000. That is, apart from employing management staff, Challenges Malawi supports the cooperatives with credit facility.
When asked if they could manage to operate on their own, the treasurer admitted that they could not afford to employ the management staff and access the credit facility to buy the rice from their members. He also disclosed that the peagion pea processing machines were only used to mill 10 bags of K50 kgs (500kgs) of the crop last year (2019). It has remained unfunctional this year and there were no any plans to utilise it this year or season and that they were looking forward to the management staff to organise something. He further pointed out that a similar VAC in Thyolo is lying idle. These responses affirmed that the local farmers organizations are challenged with management capacity to utilise development opportunities. Therefore strengthening their capacity is fundamental. However, the approaches might also affect the outcomes. Donor-funded management is one way of strengthening management capacity and it shows to be efficient since the staff are well paid and the organization is well connected to donors that other necessities like credit can also be easily accessed.
On the other hand, the farmers might not be fully involved, and the resources or available opportunities might not also be fully exploited under donor-funded management. For instance, the treasurer indicated that he and the other farmer leaders do not have an adequate market outlook and do not know how much they need to supply in order to sustain the business. In addition, having the peagion peas processing plant unfunctional and without any strategic plan at hand backed up the argument that they are not fully involved in the plans and/or the managers or the NGOs are not concerned with full utilisation of the structures. Whereas with the e3 anchor farms model, the farmer leaders will be involved in strategic planning and every opportunity exploited for maximum benefits. One of main component of the model is to involve the LFO executive board in strategic planning for strong management, marketing and growth. This does not essentially means imparting them with skills, but making them understand commercial farming and organisational business so that we move on the same page.
