Cooperative societies have for a long time, played a key role in reducing poverty, and promoting national development. Many cooperatives in the country have in the recent past collapsed due to political instability, the accumulation of debts and mismanagement.
The rain started beating agricultural societies when the government introduced market liberalisation policy at a time when they were not prepared and sufficiently educated on how to compete in an open market. The societies began to experience acute shortage of agricultural produce supply because farmers started to sell to traders directly.
The societies could neither enjoy the monopoly of being the sole buyer nor get government support. Many cooperatives were forced to become financially independent, and started to compete for farmers’ produce, and also look for markets. Most cooperatives were unable to run their business operations profitably.
Agricultural societies began to reel under huge loans and ended up accumulating interest, and some of their assets were disposed by banks leading to collapse. It is apparent that even today many cooperatives are still plagued by poor management, corruption and embezzlement of funds which has contributed immensely to collapse of others.
For our country to be food secure in the future, there is need for structural transformation of the agricultural economy. This could only be achieved through virile extension services because of its vital link between research stations and farmers. Farmers need to be educated on the importance of cooperatives so that they can change their attitude to improve agricultural productivity. The national and county governments should encourage farmers’ participation in cooperatives by using it as a medium to reach them through giving out incentives rather than targeting individuals who would divert the same to unintended purposes.
Extension officers can also utilise cooperative forums to train framers in order to increase production. Government need to empower cooperatives to enable them grant loans to farmers. Government institutions like Sasra should also play a key role in the regulation of agricultural societies. Cooperatives should provide farmers with linkages to markets, higher prices, payment of dividends and add value to the raw farm produce.
In order to revive collapsed cooperatives external financial support should be provided at the initial stages to help generate equity capital to run operations.
The writer is the Managing Director of Rivatex East Africa and a Senior Agricultural Economics Lecturer at Moi University
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