Cooperatives play a critical role in building value chains that links smallholders with higher-value agricultural products. They provide downstream buyers with access to certified and otherwise high quality products, as well as reduce transactions costs for their members. They may also help poor farmers by providing them with important services for agricultural production. However, building viable cooperatives doesn’t come cheap or easy. It often requires extensive co-investment by civil society and downstream actors in the value chain over an extended period. The challenge facing cooperatives and their co-investors lies in making the most effective use of these investments.
The fair-trade certified cooperative “Soppexcca” in Nicaragua highlights the potential for co-investment to yield improved business viability and positive impacts on poor farmers. Since 2004, Soppexcca has partnered with NGOs, donors, and a handful of coffee buyers to expand its coffee exports and improve its package of services for its nearly 500 members. Support from donors and NGOs allowed Soppexcca to expand and improve its services for members. Much of this support arrived in response to the coffee crisis – a period between 1999 and 2004 when international coffee prices fell below costs of production for farmers in Central America. In exchange for preferential access to high quality, certified coffee, buyers have provided the cooperative with affordable credit and lucrative coffee contracts....Read more.