The link between professional agribusinesses and living income in Côte d’Ivoire
Agricultural cooperatives can have a significant role in decreasing poverty in countries like Côte d’Ivoire. By professionalizing these cooperatives, we can help them create an enabling environment in which their members can earn a living income.
Cooperative’s role in reducing poverty
Cooperatives can increase farmer incomes
Multiple studies have shown that cooperatives can play a role in raising farmer income. In southwest Nigeria, researchers found that the incomes of farmers who are cooperative members is approximately 10% higher than non-members. A similar analysis in Ethiopia showed that cooperative-affiliated farmers have higher incomes, more savings, and better access to inputs. Thus, in theory, cooperatives should be able to help farmers receive a higher, steadier income. However, in practice, this only occurs when the cooperatives are managed effectively as businesses.
Professional cooperatives are more effective
A professional cooperative is one that “can manage its resources and processes using its human capital (leaders, management, staff, and members) efficiently and effectively and thereby achieving the organization’s goals.” As the professionalism of a cooperative grows, their profit does as well. Cooperatives that are classified as professional by a SCOPE assessment receive significantly larger annual profits than less mature organizations. These higher profits can often translate into higher incomes for the member farmers.
Cooperative influences on living income
Together with NewForesight, we have created a model to assess the likelihood that a cooperative can contribute to an enabling environment in which its members can achieve a living income. The five main drivers of living income in SCOPEinsight’s model are: The price of the produce, the overall yield, the size of the farm, the cost of production, and any diversification efforts made by the farmer. We have found that cooperatives can influence four out of these five drivers, and often to a significant extent. By strengthening their business practices, cooperatives can have a modest influence over price and a major influence over yield, cost of production, and diversification. However, only strong, professional cooperatives can exert this influence and thereby increase the likelihood of a living income for their members.
The cooperative sector in Côte d’Ivoire
There are over 5,000 cooperatives in Côte d’Ivoire, with over 90% in the agricultural sector. Specifically, over 3,000 cooperatives work in the coffee-cocoa sector, and about 300 work in cotton. These cooperatives have enormous potential to improve the livelihoods of their members.
Since 2016, we have assessed over 1000 cooperatives across Côte d’Ivoire. Of these cooperatives, we have found over half are in the “maturing” phase. As a result, these cooperatives are likely to have:
- ● Weak business & financial planning,
- ● No/weak strategic & operational planning,
- ● Low access to finance,
- ● No support systems/technologies,
- ● Low resilience to external shocks, and
- ● Environmentally unsustainable practices.
These cooperatives have less of an ability to provide for their members than professional cooperatives. This can result, for instance, in lower annual profits earned by the cooperative (see the bar graph to the right). Farmers can only receive the full benefits of joining a cooperative when that cooperative is professional.
Living income in Côte d’Ivoire
Many farmers do not currently earn a living income
A living income for a median family of eight in Côte d’Ivoire is 7,468 USD per year. However, the average yearly income is 4,937 USD, and researchers estimate that 84.6% of farmers do not earn a living income. In fact, over half of the farmers in Côte d’Ivoire are not even earning above the poverty line.
There are many reasons why farmer income in Côte d’Ivoire tends to be low. Some of these include farm gate prices, government policy, farm size, etc. These are prevailing issues in the country that are difficult for one project or intervention to solve. However, they are not the only challenges that Ivorian farmers face. Other issues include small yields and low levels of diversification.
While it is important to address the larger, prevailing challenges, it is equally important to address the smaller challenges that can be improved on a cooperative level. Increasing affordable access to high quality inputs, for example, is a cooperative-level action that can have a significant impact on farmer incomes. Professionalizing cooperatives and helping them create a stronger enabling environment for their member farmers can have an impact on increasing incomes.
Cooperatives have a high potential for improvement
As shown above, there are multiple drivers that influence living income in agriculture. These drivers are measured in six of the eight SCOPEinsight dimensions of professionalism: internal management, operations, sustainability, production base, market, and enabling environment. (The other two SCOPEinsight dimensions not mentioned here are financial management and external risks.) The average SCOPE scores in Côte d’Ivoire for these dimensions are shown below.
For all the applicable dimensions except market, the average score is between 3.0 and 4.0, indicating that the cooperative is still maturing in that area. With support, it is entirely possible for these cooperatives to become professional. This can lead to a greater chance of living income for their members.
Validation for SCOPEinsight’s Living Income model
While strong cooperatives can have an influence on the likelihood of their members earning a living income, we are aware that there are some drivers that cooperatives cannot necessarily influence. However, we do believe that professionalizing cooperatives can help to create a better enabling environment for the member farmers. The exact level of influence is something that we are actively researching.
To validate the results of our living income model, we are currently conducting farmer-level research in Côte d’Ivoire. Over the next two months, two researchers from Copenhagen University will be collecting farmer-level data on living income and comparing it to the results from SCOPEinsight’s model. This will give us the opportunity to assess the validity of our results, and if necessary, adjust our model to provide more accurate results.
This is only one step in our validation process, and we would like to do more with more partners. Do you have farmer-level data to help us validate our model? Contact us today to discuss co-development opportunities.Back to news