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SUSTAINABLE AGRICULTURAL SYSTEMS, KNOWLEDGE AND INFORMATION (SASKI)

GOOD PRACTICE NOTE

Investing in Rural ProducerOrganizations forSustainable Agriculture

Marie-Helene Collion and Pierre Rondot

December 2001

* The World BankWork in progress Rural Development Familyfor public discussion Sustainable Agricultural Systems, Knowledge and Information (SASKI)

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Sustainable Agricultural Systems, Knowledge and Information (SASKI) is a thematic teampromoting sustainable agriculture, associated knowledge and information systems and

gender-responsive development within the Rural Development Department of theEnvironmentally & Socially Sustainable Development of the World Bank.

Contents

Foreword iv

Executive Summary v

1. Some Concepts 1

Why Invest in Producer Organizations? 1Why Strengthen RPO Capacity? 2What Are Rural Producer Organizations? 2

2. World Bank Experience in Working with RPOs 5

Lessons from Past Experiences 5Producer Organizations in Bank Projects 6

3. Guiding Principles for Bank Work with RPOs 11

Which Organizations to Support? 11What Capacities to Strengthen? 11How to Provide Support to RPOs? 12The Risks Involved 13

4. World Bank Comparative Advantage in Supporting RPOs 15

5. ... But the Bank Needs to Adjust 17

References 18

Foreword

Beginning in 1999, three different initiatives con- summarizes lessons learnt from the World Bank,verged to meet the same objective: of strength- other donors and NGOs in strengthening theening rural producer organization capacity to: capacities of RPOs. It is intended as a reference(a) promote sustainable and productive agricul- to World Bank staff and Borrowers who engagetural research and extension services; (b) pro- in working with and supporting RPOs.mote sustainable agricultural production "SASKI Good Practice Notes" are intendedsystems and (c) effectively respond to poor to disseminate views, experiences, and ideaspeople's priority to pull themselves out of that may assist World Bank Task Team Lead-poverty. ers, national counterparts from Borrower coun-

tries, and other partners with prepaTation and* SASKI thematic group identified rural pro- implementation of projects to promote sustain-

ducer organizations (RPOs) as leading ac- able agricultural production and knowledgetors in research, extension and education systems. The series contains lessons from in-and made the support to RPOs one of the novative experiences in World Bank projectstopics of its work program. This effort re- and elsewhere, and makes this informationsulted in a workshop in June 1999 that readily available for comment and use bybrought together leaders of rural producer project teams.organizations from many countries, and This Good Practice Note was prepared byrepresentatives of NGOs, donors, the pri- Marie-Helene Collion and Pierre Rondot, andvate sector and public agricultural service benefited from the review of Anthonyproviders, around the team of support to Bebbington from the University of Colorado andRPOs. from the comments of a review committee in-

* The Soil and Land Resource Management cluding Cornelis van der Meer, Eugene Terrythematic group initiated work with the In- and Robin Mearns of the World Bank. It alsoternational Federation of Agricultural Pro- benefited from the input of Cornelis de Haan,ducers and its member organizations on David Groenfieldt, Derek Byerlee and Gary Alexissues related to sustainable agricultural from the World Bank and support from Pierreproduction. Marie Bosc and Marie Rose Mercoiret from

* The Voice of the Poor study coordinated by CIRAD.Deepa Narayan, highlighted that many poor SASKI is the Thematic Group for Sustain-people interviewed identified the capacity to able Agricultural Systems, Knowledge and In-organize, as what would make the greatest formation, composed of World Bank staffdifference to their lives. working in promoting sustainable agriculture

and associated knowledge and information sys-This Good Practice Note reviews World tems. The overall team objective is to enhance

Bank experiences in working with RPOs and the effectiveness of Bank support to agricultural

iv

Foreword v

development, and thus contribute to the SASKI group emphasizes sharing of experi-Bank's objectives of reducing poverty, ensur- ences and exchange of information among ag-ing food security, and improving sustainable ricultural practitioners in the World Bank andmanagement of natural resources. The its partners.

Marie-Helene CollionChair, SASKI Thematic Group

Executive Summary

Rural producer organizations (RPOs) assume * Guarantee equal access to any RPO thatmany forms that have varying purposes and meets the criteria for funding;functions at different levels (local, regional, and * Guarantee independence from governmentnational). Helping rural producers organize or donor agencies;themselves, and supporting the development of * Ensure that supported RPOs are member-their organizational capabilities is an investment ship organizations, legally registered within social capital that addresses two of the key transparent governing rules, procedures,dimensions of poverty reduction-empower- accounting and reporting systems, andment and capacity building. However, this raises agreed upon their overarching objectivesimportant questions for an organization, such (including poverty reduction);as the World Bank. Which organizations to sup- * Design capacity building as a "learning-by-port, what capacity to strengthen, how to pro- doing" process. RPOs have to be responsiblevide the support, and what is its comparative (and not just consulted) for selecting andadvantage in this domain? implementing activities, on the basis of pro-

In the past, the Bank worked with coopera- cedures and criteria agreed upon with gov-tives (often government-sponsored) and recently ernments and donors. Systematic a posteriorion their reforms (in particular in Eastern Euro- control should be included in the process;pean and former Soviet Union countries). The * Accept limitations of RPOs, working withBank is now working with and providing sup- them at their pace.port to a number of RPOs, especially herder as-sociations, water user and forestry associations, Demand-driven services and investmentand dairy cooperatives. More recently, RPOs funds or capacity-building funds are proving tohave been research and extension partners in be an effective tool, that can ensure that theagricultural services projects, actors in decision above principles are met. However, the decisionmaking processes with Word Bank support, or to allocate resources from the Fund should bepartners with the private sector for input sup- in the hands of the RPOs themselves, on theply and marketing under World Bank initiatives. basis of agreed upon procedures and criteria.

There is no blue print to support RPOs: any Examples on how to set up such funds are de-support should be tailor-made according to scribed in this paper.country circumstances and the characteristics of Working with RPOs has inherent risks, thatthe RPOs in that country. One principle prevails have to do with exclusion, potential elite cap-however: support should be to empower RPOs, ture, political and social resistances, and possiblenot to make them the instruments of donor or co-optation and misuse of funds. Although mis-government agenda, and not to use them as sub- use of funds may be small when RPOs are fullystitute for deficient public services. With this in responsible, these risks have to be carefully as-mind, support to RPOs should: sessed. Mechanisms to monitor and check pos-

vi

Executive Summary vii

sible slippage have to be built into project de- * Promote a conducive legal and political en-sign. vironment;

In addition to providing resources, the * Promote effective decentralization to allowWorld Bank has a comparative advantage in grass root organizations to access publicsupporting rural producer organizations by pro- funding and influence local policy planning;moting an enabling environment either through * Promote institutional reforms in the deliv-projects or through policy dialogue with gov- ery of public services to ensure client-re-ernments. In particular, the Bank can: sponsive services and accountability to

users;* Ensure that RPOs are seen as full-fledged * Strengthen the capacities of RPOs' service

partners of governments, donors, and pub- providers: RPOs need quality services to belic as well as private services and seek to competitive;end the mistrust between them and public * Promote dialogue among donor agenciesservices; to harmonize approaches to supporting

RPOs.

Some Concepts

WHY INVEST IN PRODUCER ORGANIZATIONS? limited capacity to negotiate access to meansof production, and have limited weight, if

1. Today a large share of the world's poor live any, in bargaining processes (World Bank,in rural areas with agriculture or agricul- 2000; Narayan, 2000).ture-related activities as the mainstay oftheir livelihood. The diversity among rural 3. One strategy for rural producers to drawpeople making a living in agriculture is im- themselves out of poverty is to pool theirpressive covering crop and livestock pro- resources and ideas. They can organizeduction, forestry and fisheries, processing themselves to: (i) more effectively manageof agricultural products, and all other as- their natural resources and own assets (wa-pects of natural resource management. 1 ter user associations are a prime example,

as are herders associations for range land2. The World Development Report 2000-2001 management or forest user associations); (ii)

presents a conception of poverty as having expand or maintain their access to naturalfour equally important dimensions: eco- resources (access to land, forest, pasturesnomic opportunity, capability, empower- and water resources); (iii) gain access to ser-ment, and security. Poverty is not just a lack vices, credit, and market outlets throughof economic opportunity and access to re- representation and advocacy activities or bysources. The poor cannot make their voices leveraging financial resources; and (iv) in-heard and cannot access or influence ser- fluence decision-making processes affectingvices. Indeed, they often lack information resource allocation and policies related toand education to know what services are production, market's, transformation, andavailable or would be useful to them. They export of their products. In numbers, theydo not know what services to ask for, have gain bargaining power, and can have a more

2 Investing in Rural Producer Organizations for Sustainable Agriculture

effective input on decision-making pro- of public goods, at all levels-local, regionalcesses that affect their lives. and national (Binswanger and Deininger,

1997).

WHY STRENGTHEN RPO CAPACITY? 7. Complementarities between strengtheningRPOs and Community Action Programs.

4. Contribution to rural poverty alleviation. Help- Within local communities, strong RPOs pro-ing producers get organized and strength- vide the backbone for development of theening capacity of the rural producer agricultural sector. Even when agricultureorganizations (RPOs) is one way to combat is no longer the primary source of incomerural poverty. Supporting RPOs contributes for rural families, it remains central to theto rural capacity building with the broad organization of rural life. RPOs facilitateobjective of building producer capacity to: development of agriculture and agriculture-(i) negotiate with actors and institutions that related activities, thereby increasing the lo-regulate rural policies; (ii) access productive cal resource base needed to finance localassets, services and input/output markets; public services or investments. They provideand (iii) utilize these assets more efficiently producer input into local and regional de-and effectively. velopment plans and into decisionmaking

processes regarding rural infrastructure and5. Investing in social capital. Strengthening the natural resources management.

capacity of RPOs is also an investment insocial capital, which complements invest-ments in human, physical, financial andother forms of capital. RPOs provide a WHAT ARE RURAL PRODUCERframework for sharing information, coordi- ORGANIZATIONS?nating activities, making collective deci-sions, and representing the voices of 8. RPOsaremembershiporganizationscreatedbythousands of otherwise voiceless individual producers to provide services to members.families. Building "social infrastructure" is In that sense, they differ from service NGOsan indispensable complement to invest- (nongovernmental organizations), whichments in other forms of capital (Dasgupta also provide services to producers, butand Serageldin, 2000). which are not membership organizations.

The membership characteristic is essential,6. Strong producer organizations for a more effi- although some RPO's may have overlap-

cient allocation of public goods. The provision ping functions with service NGOs. Evenof public goods results from political bar- with this difference in mind, it is often diffi-gaining between interest groups. If some cult to sort through the numerous and di-groups arepowerless and underrepresented verse rural organizations, which are atthe decisions reached will be less efficient different stages of development and serveand less growth-enhancing than when par- different purposes at different levels (local,ticipation involves equally powerful inter- regional and national).est groups. Building the capacity ofproducer organizations should improve 9. Traditional versus formal organizations. In alltheir bargaining power, and thus contrib- rural societies, traditional forms of organi-ute to a more growth-enhancing allocation zations exist to facilitate collective action, re-

Some Concepts 3

duce risk from the many uncertainties of ag- * Community associations emphasize commu-ricultural production, and to regulate rela- nity development functions.tions within the groups. Although thesetraditional custom-based groupings have an Whatever their primary function, RPOs areessentially inward-oriented or "bonding" frequently requested by members to also ad-function, formal producer organizations- dress other community development con-our target in this paper-have been created cerns affecting the quality of life and goodto organize relationships between the group of the community (for example, health,and the outside world. They have a linkage schools, local infrastructure). This happensor "bridging" function (though they may especially when decentralization has notalso cover some of the traditional intra- taken place and effective local governmentsgroup functions). Formal producer organi- do not exist. Although RPOs may be orga-zations, except organizations concerned nized for a specific function, they often endwith export or high value cash-crop produc- up addressing all three of the above-men-tion, are often hybrids (such as cooperatives tioned functions to varying degrees.and unions), being rooted in local customsbut motivated by economic and nontradi- 11. RPOs diversity of scale. RPOs can be only lo-tional principles to organize (such as co- cal entities (at village and inter-village lev-operatives and unions). Local traditions els) or they can be represented at regionalstill underpin the interactions between (unions) and national levels (federations)members-determining, for example, who where policy decisions are taken. Functionhas authority and can become a leader, who and level of organization are often related.has access to resources, and what the rela- Local problems requiring local collectivetionship between sexes and between elders actions tend to be resolved better by a singleand juniors should be. On the one hand, or a limited number of grassroots producertraditional groups are generally inclusive- organizations. Hence technical and eco-everyone in the society is inherently a mem- nomic organizations tend to be stronger andber. Formal producer organizations, on the more effective at the local and regional levelother hand, tend to be more exclusive, with (for example to access services, rural creditthe attendant risk of the poorest being ex- and primary markets, manage their owncluded (see the section on risks below). natural assets, or resolve natural resource

access issues). Conversely, national level10. RPOfunctions. Producer organizations per- organizations are more effective in resolv-

form advocacy and/or economic functions ing policy issues. Advocacy groups form atand, in addition, sometimes undertake more the level at which they can most effectivelygeneral local development functions in- have input into decisionmaking on such is-volving: sues as land reform, commodity policies,

import-export policies, and fiscal policies.* Syndicates or unions emphasize advocacy or They often have great difficulties, however,

policy functions; in building a sustained relationship with* Cooperatives or other sorts of groups (for local-evel organizations, because of prob-

example, Groupement d'interet economique, lems of transparency and accountability. 2

producers associations) emphasize economicand technical functions; and 12. RPOs evolve. RPOs are not static, but are al-

ways in a process of evolution. They often


start from a traditional, custom-based, all- NOTESpurpose grouping, and move toward beingorganizations driven by economic principles 1. Examples include: groups of women raisingand nontraditional rules for organizing. In silkworms in China; herders managing communalthe process they specialize by function, ei- grazing lands in the Sahel; pensioners growing po-ther economic (cooperatives) or advocacy tatoes in dacha farms in Russia; large American or(unions), and by subsector of intervention European wheat or corn growers fighting for ac-(for example, a vegetable grower coopera- cess to world markets; apple growers bargainingtive or a small livestock producer associa- for better prices in Turkey; campesinos maintain-tion). They may also expand their functions ing their own high-yielding varieties of maize invertically within a subsector, for example, Mexico.starting with input procurement or market- 2. Some advocacy groups exist only at regionaling for members, and then expanding into or national levels without any local base. They stilltechnical services or product processing. consider themselves as representatives of local or-They also aggregate for higher-level repre- ganizations that may not be organized at the regionalsentation or association at district, regional or national level, however.and even national levels. Thus, in any onecountry, one can find RPOs coexisting atdifferent stages of evolution.

2World Bank Experiencein Working with RPOs

LESSONS FROM PAST EXPERIENCES Bank and governments, failed to analyzeinstitutional issues, were overly complex,

13. Some Bank-financed projects have involved and provided no capacity building, or onlyproducer organizations as primary actors in capacity building within the governmentproject implementation, but in most cases, (Hussi et al., 1993). The review concludedrelatively little attention has been given to that cooperatives must be treated as privatedeveloping capacities and empowering sector enterprises, and that the govern-these organizations. Lessons learned from ment's primary role should be to establishpast projects have been documented, but a conducive policy environment for theirpast experience, in most cases, has not been growth, not to control or regulate. Coopera-fully analyzed and internalized in Bank tives function best when focused on com-operations and strategies. mercial activities, and appear to be most

sustainable when they have a high business14. A 1993 review of the World Bank's role in turnover and multipurpose commercial

development of cooperatives and rural orga- activity.nizations concluded that inappropriatepolicy frameworks and political interfer- 15. Following the 1993 review, cooperative re-ence were major reasons for their failure forms have been introduced in Bank agri-to develop as viable and efficient organi- cultural development projects in Easternzations. This is in spite of significant past European countries, North Africa, and theinvestments of financial resources and tech- Middle East. These reforms have aimed atnical support from donors. Past projects restructuring and democratizing the coop-were negotiated exclusively between the erative sector, moving away from control by

5


the State, and adjusting them to a new eco- vestments and services, and encouraging thenomic environment, market conditions, and emergence of multiple service providers.member demands. Twenty such projects involving RPOs as

partners in project implementation provide16. Beaudoux et al. (1994) compiled a set of case success stories and examples of emerging

studies for the Africa region of good prac- good practice, which are the basis for thistices of RPO participation in Bank projects Note (Delion, 1999).(natural resources management, agricul-tural research and extension, agriculturalprocessing and marketing, food security, PRODUCER ORGANIZATIONSrural infrastructure, and rural finance). This IN BANK PROJECTSreview concluded that emphasis should beon RPOs as a means of farmer empower- 18. Herder associations. The central role of thesement-the development of peoples' capac- groups in range management and pastorality to initiate action on their own or to development has long been recognized ininfluence decisions. Bank projects (West Africa, Central African

Republic, Kenya, Morocco, and Mongolia).17. World Bank projects are now evolving from Herder organizational requirements vary

an exclusive focus on strengthening the sup- with function-natural resources manage-ply side of rural services to improving ment, service provision, livestock market-demand for services through user capacity- ing, advocacy and political representation,building, financing for demand-driven in- or multipurpose. Bank projects should be

Box 1. Dairy Cooperatives-Operation Flood in india

Beginning with three projects in Karnataka, produce some 13 million liters of milk daily, creatingRajasthan, and Madhya Pradesh in 1974, and fol- an annual additional income foreach family of US$90.lowing with two national dairy projects in the late Per capita milk consumption has almost doubled and1980s, the World Bank lent over US$500 million to the milk-cooperative business has created aboutdevelop the milk industry through cooperatives com- 250,000 off-farm jobs, most in rural areas.prising district unions combined into state federa- Investment has been heavy, and some observ-tions. Projects focused on.capacity building to ers are concerned about cooperatives being over-strengthen cooperative structures, training, and ac- protected and monopolistic, and occasionally makingtivities and infrastructure related to production and inappropriate use of their political power. Thesemarketing. The objective was to promote viable co- problems seem to be outweighed by impressive per-operative businesses owned and managed by pro- formance due to: (a) committed membership andducers for collecting and marketing milk products farmer control at the local level, (b) sound manage-as a means of expanding rural incomes and improv- ment, (c) influential and charismatic leadership, (d)ing dairy productivity. strong accounting systems, and (e) effective and

The national federation comprises 70,000 vil- profitable services provided to members.lage milk cooperatives with some nine million mem-bers, 60 percent of whom are landless, small, or Source: India, Second National Dairy Project, Imple-marginal farmers. The federation and its members mentation Completion Report No. 16218, World Bank.

World Bank Experience in Working with RPOs 7

proactive in assessing group organizational poor and landless rural households, createdcapacities and needs, to guide further de- 250,000 off-farm jobs, and improved nutri-velopment of pastoral group (Pratt et al., tion and incomes for poor farmers (Box 1).1997). Dairy cooperative movements, based on the

Indian model, have been established else-19. Dairy cooperatives. Dairy cooperatives ful- where, notably in Kenya and Indonesia.

fill an important function in providing nec-essary infrastructure and technical services 20. User associations for water orforest resources.for the collection, handling, quality control, Farmers whose livelihoods depend on useand transport of milk produced by thou- of collective goods (common pool goods)sands of individual smaliholders. These co- should be well motivated to manage theseoperatives often provide credit for their resources in a sustainable way. Formal or-members, and promote improved hus- ganizations can help farmers to managebandry techniques. The Bank has worked these resources quite successfully (Subra-with many dairy cooperatives around the manian et al., 1997). One example of suchworld, though the outstanding case is that sound management is Albania, where newof India, where the Bank has supported government policies transferred manage-dairy cooperatives since 1974. Investment in ment of irrigation schemes to farmer groupsIndia's dairy cooperatives has benefited (Box 2).

Box 2. Rural Producers and Water Management: The Water User Associations (WUAs) in Albania

Following the breakup of state farms and coopera- charges to WEs, according to their level of respon-tives and subsequent privatization of the agricultural sibility.sector, there was no organization to take over the By the start of the 1997 irrigation season, 78operation of irrigation systems and the distribution WUAs were in the process of assuming manage-of water. In 1994, the World Bank financed the Irri- ment of their overall irrigation systems, and 66 per-gation Rehabilitation Project (IRP) that stimulated cent of the area in the IRP districts had beenthe creation of Water User Associations (WUAs) to transferred to WUAs. The remaining rehabilitatedmaintain and operate tertiary canals and farm chan- systems were handed over before the start of thenels downstream of the tertiary off-takes. The first 1998 season.WUAs were based on village units, but because sev- The policy of irrigation management transfer iseral villages often share a single source of water, now being extended to include full system transferthe WUAs were later reorganized on the basis of by forming federations of WUAs to cover second-hydrological units to avoid disputes. ary blocks in areas that were performing best in

State-run Water Enterprises (WEs), which op- 1997. The ultimate aim is to hand over entire ba-erated the primary and secondary levels of the sins. The program has had considerable success andirrigation systems, had become overstaffed and there are now 187 WUAs covering the entire projectinefficient, and farmers had lost confidence in area (98,000 irrigated hectares). This is an impres-them and were reluctant to pay water charges. sive accomplishment for WUA members, who areThe concept of handing over management of over- full-time farmers growing wheat, vegetables, alfalfa,all irrigation systems directly to the WUAs evolved and maize.gradually, and WUAs became responsible for allcosts of operating systems. WUAs paid reduced Source: David Groenfeldt (personal communication).


In 1978, the Government of Nepal passed (Collion and Rondot, 1998). The projects,legislation handing over substantial beginning in Senegal, Burkina Faso, andamounts of public forest land and hilly ar- Mali, strengthened RPO capacities in the fol-eas to local communities. The transfer was lowing areas: analyzing constraints; identi-unsuccessful until 1993 when the Govern- fying development objectives and strategies;ment helped communities to organize them- setting priorities and accessing resources toselves in formal user groups to manage their implement programs or projects; and con-.forest resources (Box 3). tracting public or private service providers

for program implementation (Box 4).21. Strengthening the RPO capacity to demand ser-

vices. For many years, the Bank funded pub- 22. Rural producer organizations and policy and in-lic agricultural research and extension stitutional reforms. Some Bank projects haveservices. Many of these public sector pro- systematically involved RPOs in public sec-grams proved inefficient and unsustainable tor program and institutional reforms (forunder government budgeting and manage- example, Cote d'Ivoire, Togo, and Senegalment systems, even where they had pro- research and extension agencies). In Coteduced positive economic returns. Beginning d'Ivoire and Togo, RPOs are now majorityin 1995, the Bank began piloting a new ap- shareholders of research and extensionproach in the Africa region (with support agencies, having bought in equity using pro-from the French Government), involving ceeds from commodity levies and taxes onRPOs in agricultural service provision the agricultural sector. Other projects have

Box 3. Forest User Associations: Hill Community Forest Management in Nepal

In 1978 the Government of Nepal passed legisla- Ownership of land remains with the state but treestion handing over a substantial amount of public legally belong to user groups. Management controlforest land and hilly areas to local communities. rests solely with the users of the resources, whoBoth public and locally owned forest was to be develop their own operational plans, set the pricesmanaged by village authorities (panchayats) un- at which produce is sold, and determine how sur-der agreed forest management plans. The village plus income is spent. By June 1997, there were 6000government structure proved to be unsuited to user groups managing 450,000 ha, with anotherlocal forest management. Forest management 6000 waiting for formal registration.committees were formed, but seldom functioned Issues still arise, both within user groups, be-as representative discussion and decision making tween them, and with the forest department. Thesebodies. The system was revised to incorporate fea- include securing access to and authority over foresttures of indigenous management systems tradi- areas from government officials; group dominationtionally practiced by communities. These systems by local elites; politicization; and pressures from thewere based on usergroupsrather than whole com- forest department. Nevertheless, the Nepal experi-munities. Groups established management rules ence has been encouraging, and recent studies havethat were enforced by forest watchers and social demonstrated thatforest management has improvedsanctions. under the active user groups.

The role of user groups was formalized underNepal's 1993 Forest Act, with authority and respon- Source: A revised forest strategy for the World Banksibility progressively devolving to these groups. Group, draft, May 2001.

World Bank Experience in Working with RPOs 9

Box 4. RPOs and Agricultural Services in Burkina Faso

The mechanism. A community-driven-develop- proposals on the theme of their choice, request-ment approach is applied to RPO capacity building ing funding for: training, advisory services, com-in nine pilot provinces (out of 45). In each province, munication, visits, participation in national oran NGO provides support to RPOs to form a pro- international RPO meetings, small productive in-vincial RPO Forum to: (a) share experiences and dis- vestments, and on-farm R&D. The RPOs submitcuss common issues or problems, (b) set priorities proposals to the RPO provincial forums and, iffor funding productive investment or services, and the proposal is approved, implement subproject(c) select capacity building subprojects proposed by activities through a contract between the ProjectRPOs to be financed on a cost-sharing basis. RPO Management Unit and the RPO, reporting imple-Forum members are RPO leaders selected by their mentation progress to the RPO Forum.peers. Subprojects approved by provincial RPO fo- * Provincial RPO Forums establish procurementrums are implemented by RPOs with funds trans- and disbursement procedures, taking into ac-ferred directly to the RPO concerned. RPOs contract count World Bank guidelines, review RPO pri-service providers of their choice from a list of ap- orities, exchange experiences between RPOs,proved service providers. and select and monitor implementation of sub-

Implementation. Key implementation responsi- projects.bilities are shared by various implementing organi- * Facilitating NGOs help RPOs to form provincialzations. forums. The NGO disseminates information on* LocaiRPOs prepare capacity-buildingsubproject the project, its objectives, and procedures, helps

Box Figure 1. Approved Subprojects by Theme

Percent

30

25

20

10 - _

5O__- _ _

S 6'9° t @ 9<o / G° dixo\oo\ 6

Source. Quaterly reports from CECI- Burkina and personal communication with CECI manager.

10 Investing in Rural Producer Organizations for S ustainable Agriculture

Box 4. RPOs and Agricultural Services in Burkina Faso (continued)

RPOs select representatives at the local and pro- financial audit of the subprojects on a randomvincial level, helps elaborate governing rules for basis.the provincial forums and for procurement and Resultsafter two,years of implementation: Start-disbursement, maintains a data base of eligible up takes time. It took eight months for RPOs to formservice providers, trains RPO leaders and mem- Provincial Forums in nine pilot provinces. From the 4009bers, and monitors program progress. local RPOs eligible, 1480 submitted subproject pro-

* A financial management unil maintains records posals, of which RPO Provincial Forums approved onlyon subproject proposals, approvals by the RPO 908. By mid 2001, the Financial Management UnitProvincial Forums and RPO bank accounts., The had signed 201 contracts and transferred approxi-financial unit prepares contracts with RPOs and mately US$351,000 to 201 RPOs (an average oftransfers funds to their bank accounts based on US$1700/project/RPO). RPOs contributed up to 20documentation received from RPO Forums. The percent of the total costof subprojects. Approved sub-financial unit organizes systematic technical and projects by theme are shown in Box Figure 1.

involved rural peoples' organizations in creasingly involved with macroeconomicthe policy dialogue. The Ecuador Indig- and political issues of the developmentenous and Afro-Ecuadorian Peoples Devel- agenda and rural peoples' voice in decision-opment Project supports rural peoples' making processes. Rural peoples' federa-federations, whose initial concerns were tions are now at the forefront of a larger civilethnic identity, access to land, and collec- society movement advocating political andtive rights. The federations are now in- socioeconomic changes.

3Guiding Principles forBank Work with RPOs

WHICH ORGANIZATIONS TO SUPPORT? * Operate in an enabling legal and politicalenvironment;

23. Given the complexity of existing organiza- * Deal with an economically viable and buoy-tions as described above, any membership ant subsector;organization could be eligible for support * Possess "strategic capacities"-that is the ca-as long as: pacity to access information and acquire

expertise in strategic areas, as well as the* The organization is recognized as useful capacity to carry out a diagnosis of itself and

(principle of utility)l by its members; its environment (see below);* The organization has an identity,2 a history, * Possess "organizational viability" character-

and/or a territory shared by its members; ized by:and * legitimate leadership;

* The organization is legally recognized and its + functioning governing bodies;governing bodies function effectively. * cohesion among members;

* existence of an efficient system of infor-mation;

WHAT CAPACITIES TO STRENGTHEN? * existence of an appropriate system of fi-nancing; and

24. Factors contributing to an effective rural pro- * existence of a transparent and efficient finan-ducer organization. RPOs that are efficient cial management and accounting system.and effective in providing the services forwhich they were created are generally those 25. In providing support to empower RPOs,that (Rondot and Collion, 2001): the objective is to help them become more


effective in providing services for their 27. Bewareofdonor-orgovernment-driven agenda.members. Capacities to be strengthened can Given the weaknesses of public institutionsbe either technical or strategic (Mercoiret, and state withdrawal from many services,1994; Diagne and Pesche,1995; Rondot and there is a tendency to consider RPOs as anCollion, 2001). alternative to improve the cost-efficiency

and sustainability of delivery of such ser-* Technical capacities are necessary for RPOs vices. Support to RPOs contingent upon

to implement their activities. They include: them undertaking a specific donor- or gov-(i) functional literacy and numeracy; (ii) ac- ernment-driven agenda is not conducive tocounting and financial management; (iii) building sustainable RPO capacity. Supportability to run an efficient information sys- to RPOs should be provided with the ulti-tem; (iv) capacity to analyze constraints, mate objective of empowering them, not ofsynthesize members' needs, set and articu- making them instruments of public or pri-late priorities; (v) undertake specific activi- vate service delivery.ties; and (vi) design, implement, andevaluate an activity. 28. Empowering RPOs: some guidelines for support

* Strategic capacities enable an RPO to define programs. Support to RPOs should:its strategy to achieve objectives. This pre-supposes RPO capacity to analyze its own * Guarantee equal access to resources for allconstraints and capacity and its environ- RPOs complying with the criteria for fund-ment (strengths, weaknesses, opportunities, ing;and threats). Strategic capacities also include * Support RPOs with their limitations (seethe ability to access information and acquire section "Which RPOs to support") and di-expertise in strategic areas (for example, versity, and work with them at their ownmarket intelligence, donors operating pace;mechanisms). a Take time to identify the RPO's agenda and

provide them with information on otherstakeholders' agenda (donors and govern-

HOW TO PROVIDE SUPPORT TO RPOs? ment);* Provide capacity building for the activities

26. No universal approach to supporting RPOs. that RPOs themselves have chosen, based onSupport to RPOs should be tailored to the their objectives and current capacity, withspecific needs and circumstances of RPOs the level and type of support determinedin that country. In some countries, the po- through negotiations between RPOs, do-litical environment does not allow civil so- nors, and government;ciety institutions to organize. In such * Follow a "learning-by-doing" mode;extreme cases, there is not much the World * Guarantee RPO independence from govern-Bank can do except encourage an overall ment or donor agencies;democratization of the political regime. * Involve RPOs in decisions as to what to sup-When the political context is favorable, or port and what capacity to strengthen, fol-at least not obstructive, providing support lowing procedures and criteria forto RPOs becomes feasible. A support pro- consultation agreed upon with governmentsgram should embody, as a guiding prin- and donors;ciple, support for empowering members * Ensure that RPOs being supported areand the organization. legally registered and have transparent

Guiding Principles for Bank Work with RPOs 13

governing rules, procedures, and account- service providers. Ex-post independenting and reporting systems. evaluation and quality control of the service

providers should be part of any demand-29. A tool to effectively empower RPOs: the demand- driven funding program.

drivenfund. Demand-driven funding mecha-nisms allow RPOs to determine whichactivities to finance. They may be restricted THE RISKS INVOLVED

to choosing from a menu of services andthen selecting service providers and deter- 31. Although traditional groups are generallymining the timing and pace of implementa- inclusive, some formal RPOs may not be.tion. RPOs manage the funds and Membership fees are required, the organi-implement activities themselves, being al- zation may be commodity-based (thus ex-lowed to make mistakes and learn from cluding those not dealing with thethem, and thus strengthen their own capaci- commodity), and there may be invisible,ties. Demand-driven funding requires that intentional or unintentional, entry barriersdonors, RPOs, and the government agree on to participation by the poor and otherprocedures and criteria for RPOs to access groups (for example, based on gender orfunds. Some legal and political contexts do ethnicity). The poor often lack the minimumnot allow RPOs to manage the funds them- assets, including human capacities, neces-selves, but at a minimum, they should be sary to take advantage of what an RPO canable to make decisions on allocation of fund- offer. Bank-financed projects may helping. When RPOs cannot manage funds di- RPOs to improve social inclusion throughrectly, the agency managing the funds on targeted funding that facilitates participa-their behalf should be required to strictly tion and benefit sharing by the poorest.implement the RPOs' decisions. The cri- Such initiatives, however, may introduceteria and procedures for RPO funding al- conflicts between equity and efficiency ob-locations should be public to ensure jectives in supporting RPOs.transparency in fund management. De-mand-driven funds should be extensively 32. Although organized producers are not nec-advertised, through all possible communi- essarily the wealthiest, a strategy that sup-cation channels, to ensure wide awareness ports only existing RPOs may bypass theof the existence of the funds and governing unorganized poor. Social assessments canrules, especially for poor and disadvantaged identify the poor and disadvantaged thatrural groups that often do not have easy should be recognized as a target group foraccess to information. specific support. A qualified private orga-

nization (such as an NGO or educational30. When RPOs identify their service provid- institution) can operate as an intermediary

ers under demand-driven funding pro- to help disadvantaged groups organize ingrams, it is often helpful to provide them order to access the financial and technicalwith a registry of prequalified service pro- resources they need to pull themselves outviders approved by the financing entity. of poverty. Such activities could be fundedSuch registries should be as inclusive as under World Bank projects.possible, be regularly updated, and com-pletely transparent, and yet maintain appro- 33. RPOs may suffer from a lack of legitimacypriate quality and professional standards for of leadership, if leaders are out of touch with


the membership base or lack accountability afraid of losing control, their prerogatives,to members. Programs to strengthen RPOs or even their jobs, and because they are un-are intended to resolve these problems, but sure of what they will gain in the process.if strongly entrenched leaders control the Political parties and individuals will try toRPO, they may block members' access to co-opt the process and use RPOs as a ve-funds and services and capture resources for hicle to promote their own agenda. The em-their own use. This can help them become powerment process may then be hijacked byeven further entrenched and can act to the hidden political objectives, which may havedetriment of members. Strengthening RPOs counterproductive results with regard tomay therefore result in giving more power empowerment. Support to RPO programsto already powerful local groups or indi- should include stakeholder analysis to iden-viduals. A well-designed monitoring and in- tify potential opponents and resistance toformation system is necessary to support RPO capacity strengthening. This shouldprograms. This should provide members then facilitate design of specific activities towith transparent information on RPO re- overcome opposition, creating, wheneversources and their use, and should give fund- possible, win-win situations.ing agencies information on progress withreforms and participation and coverage of 37. Building capacity in RPOs is a slow and un-all groups of members. Such information even process, regulated by existing social be-will not eliminate, but will mitigate, risks of havior and cultural norms, as well as bycapture by local elites. economic principles. Donors frequently get

impatient and attempt to force the process34. A learning-by-doing process may result in artificially, resulting in unsustainable

misuse of funds. Appropriate ex-post con- advances.trols and audits are required. In case of mis-use of funds, there should be immediateexclusion and, where appropriate, prosecu- NOTEStion of groups or individuals involved.

1. The principle of utility: Whatever its origin or35. The process of empowerment may lead to a its size, an organization can be qualified as an RPO if

shift in the existing power relationship, it is of use to its members, and the members are ac-thereby creating counterforces in the com- tively committed to making it work and enabling itmunity or society. There is a crucial need for to achieve the objectives they have set for it.stakeholders (for example, local institutions, 2. The principle of identity: An RPO necessarilygovernment, donors) to keep a close check has an identity, a history and/or a geographic spaceon the process to ensure that all actors and shared by its members. It has operating rules that,groups are equally informed and participate even if they are not formally laid down, regulate theactively. Otherwise existing elite groups may relations between its members and between the mem-prevent the development of counterforces. bers and the outside world. The identity of an RPO

implies a vision of its future and of what it wants to36. Strengthening RPOs is likely to result in a achieve (Rondot and Collion, 2001). An RPO with-

redistribution of power. Governments and out identity is just a formless group used by otherscivil servants are likely to resist the change, to accomplish their own objectives.

4World Bank Comparative Advantagein Supporting RPOs

38. The World Bank can actively contribute to strong influence to help RPOs obtain recog-RPO empowerment through its projects or nition from governments. RPOs frequently,through its policy dialogue with govern- and for various reasons, are subject to mis-ments by improving the enabling environ- trust and antagonism from public servicement of RPOs, and by ensuring that RPOs agencies and from their governments. Gov-can access resources to strengthen their ca- ernment policies and attitudes favorable topacity. RPO empowerment is relevant for RPO development and readiness to share re-various Bank thematic areas, including: sponsibilities and decisionmaking processeswater resource management, sustainable with them, are essential for RPOs to becomeland and crop management, natural re- active partners in the development process.source management, agricultural knowl- The government and public agencies neededge and information systems, rural finance, to be reassured that they will benefit fromand private sector and agribusiness. Any partnerships with strong and effectiveproject that addresses these themes can have RPOs.a component that provides resources for * Include RPOs in project planning and manage-RPOs to strengthen their capacity. ment processes: The World Bank can help

ensure that RPOs are recognized as full-39. Promoting an enabling environment can be fledged, indispensable partners of govern-

done either through projects or through the ment, donors, and the private sector byBank policy dialogue with government, giving them substantive roles in Banksuch as: project design and oversight. This might

involve participation of RPOs at local and* Obtaining recognition of RPO legitimacy by national levels in preparation and negotia-

governments: The World Bank can have a tions of rural development policy or strat-

15


egy (for example, CAS, PRSPs), and at all accountability, decentralization, and per-phases of rural development projects/pro- sonnel management creates a favorable in-grams preparation, implementation, moni- stitutional environment for RPO-ledtoring, and evaluation. For RPOs to agricultural development. Individual per-effectively participate in these forums, they formance evaluation and reward systems,must be given enough time, resources, and user-responsiveness, and a "listening atti-access to information to prepare their con- tude" should be introduced, even when stafftribution with their members. still belong to the civil service. Mechanisms

* Promote a conducive legal environment. The should be introduced to ensure accountabil-legal environment is often outdated or not ity to users, which might include suchadapted to RPO functions. The World Bank mechanisms as local contracting arrange-can assist borrowers with preparation of ments between RPOs and service providers.draft laws and encourage their adoption. * Strengthen capabilities of service providers. Ser-Similarly, a well-regulated and controlled vices, whether provided by public or privateeconomic environment is required to regu- agencies or NGOs, are of variable quality.late the relations between RPOs and the pri- Because of increasing international compe-vate sector. tition, RPOs must be able to access quality

* Promote effective decentralization. Decen- professional services for themselves and fortralization mechanisms empower local their members. World Bank projects shouldcommunities. In an effective decentralized contribute to improving the competence andenvironment, RPOs can concentrate on their professionalism of service providers andeconomic, technical, and advocacy function trainers.and leave local development functions to * Promote a dialogue among donor agencies.rural communities. Decentralized systems Within the same country, numerous donorallow for devolution of responsibilities away agencies often provide support to RPOs,from centralized institutions, and provide a each of them with different approaches andfavorable environment for RPOs to develop procedures. This makes it difficult and con-local answers to local problems. fusing for RPOs. The World Bank, together

* Promote institutional reforms to ensure client- with governments, can establish a dialogueresponsive services and accountability to among donor agencies to harmonize ap-users. Bank strategy emphasizing public sec- proaches and procedures and improve effi-tor institutional reforms in governance, ciency of support to RPOs.

5... But the Bank Needs to Adjust

40. To contribute to the empowerment of RPOs, and design a program to deal with resis-the World Bank needs to adjust, in at least tance and opponents.three ways: * Adopt a long-term, institutional develop-

ment perspective and avoid focusing only* Implement simplified disbursement, pro- on immediate results. Rural capacity build-

curement, and accounting procedures for ing is a long-term process that cannot beRPO support, such as the ones currently restricted to the short-term schedule ofused with social funds and demand-driven projects.investments funds (see website: http:// * Recognize the limited expertise in the Bankwww.worldbank.org/html/fpd/water/ for work with RPOs, and seek partnershipstopics/commcontracting.html) under Pro- with other institutions that have such exper-curement and Disbursement Manual for tise. The Bank is already collaborating withProjects with Community Participation. local, national, and international producers

organizations, bilateral donor agencies, and* Introduce social assessment and stake- national and international NGOs support-

holder analysis in rural development ing RPOs. These collaborative arrangementsprojects that includes support to RPOs, need to be strengthened.

17

References

Beaudoux, Eliane, Andre Bourque, Marie- Risks and Precautions from a Social Perspec-Helene Collion, Jean Delion, Dominique tive. Unpublished paper, World Bank.Gentil, Charles Kabuga, Jurgen Schettman, Diagne, Daouda, and Denis Pesche (eds.). 1995.and Ashih Shah. 1994. Farmer Empowerment Peasant and Rural Organizations: Forces forin Africa through Farmer Organizations: Best Development in Sub-saharan Africa. Frenchpractices. AFTES Working Paper No. 14. The Ministry of Cooperation, Paris.World Bank. Washington, D.C. Hussi, Pekka, Josette Murphy, Ole Lindberg,

Binswanger, Hans, and Klaus Deininger. 1997. and Lyle Brenneman. 1993. The Development"Explaining Agriculture and Agrarian Poli- of Cooperatives and other Rural Organizations.cies in Developing Countries." Journal of Eco- World Bank Technical Paper No 199. Thenomic Literature 35: 1958-2005. World Bank. Washington, D.C.

Collion, M-H., and P. Rondot. 1998. Partnerships Mercoiret, Marie Rose. 1994. L'appui auxBetween Agricultural Services Institutions producteurs ruraux. Guide a l'usage des agentsand Producers' Organizations: Myth or Re- de developpement et des responsables deality? Agricultural Research and Extension groupements. Editions Karthala, Paris.Network. No. 80. Overseas Development In- Narayan, Deepa. 2000. Voices of the Poor: Canstitute, London. Anyone Hear US? Oxford University Press.

Dasgupta, Partha, and Ismail Serageldin Pratt, David John, Francois Le Gall, and Cornelis(eds.). 2000. Social Capital. A Multifaceted de Haan. 1997. Investing in Pastoralism: Sus-Perspective. The World Bank. Washington, tainable Natural Resource Use in Arid AfricaD.C. and the Middle East. Chapter 7: Herders As-

Delion, Jean. 1999. Producer Organizations - sociations. World Bank Technical Paper No.Donor Partnerships in Project Implementation: 365. The World Bank. Washington, D.C.

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References 19

Subramanian, Ashok, Vijay Jagannathan, and 2001. Agricultural Producer OrganizationsRuth Meinzen-Dick. 1997. User Organizations Empowerment. Workshop Proceedings,for Sustainable Water Services. World Bank TheWorld Bank, Washington, D.C.Technical Paper No. 354. The World Bank. World Bank. 2000. Attacking Poverty. World De-Washington, D.C. velopment Report 2000-2001, The World Bank,

Rondot, Pierre, and Marie-Helene Collion (eds.). Washington, D.C.

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