cooperative development...

Cooperative Development Program

South Africa

2361 Players Pond Lane Reston, Virginia 20191

TEL. (705) 742-3340

STRENGTHENING COOPERATIVES' BRIDGE TO VALUE CHAINS:

A SOUTH AFRICAN CASE STUDY

December 2017

Submitted to:

Cooperative Resources International

MattRhodyGlobalDevelopmentAdministratorCooperativeResourcesInternational117EastGreenBayStreetShawanoWisconsin54166

Contact: David Cohen [email protected]

David Cohen Consulting

CooperativeDevelopmentProgram

STRENGTHENINGCOOPERATIVES'BRIDGETOVALUECHAINS:ASOUTHAFRICANCASESTUDY

I. Summary.......................................................................................................................1II. Purpose.........................................................................................................................2III. Methodology................................................................................................................3IV. TheProject...................................................................................................................3V. CooperativesProgressInnovatively.............................................................................4VI. EnablersandInhibitors...............................................................................................17

VII. TakeawaysandConclusions OutcomesandImpact..........................................................................................20

TheoryofChange:ANewParadigm.....................................................................22

Mayime:AnEconomicTransformationSuccessStory...........................................................27Appendix Itinerary KeyInformantQuestionnaire

David Cohen Consulting — Case Study: Strengthening Cooperatives' Bridge To Value Chains 1

STRENGTHENINGCOOPERATIVES'BRIDGETOVALUECHAINSASOUTHAFRICANCASESTUDY

Investmentsinagriculturearesomethingofanobrainer…we'rerethinkinghowinternationaldevelopmentinitiativesaredesigned, tested, rolled-outandwe'reembracingthecreativityandtheentrepreneurship thatonly theprivatesectorcanbringtothetable.

—MarkGreenAdministrator,USAID

2017WorldFoodPrizeSymposia

I. SummaryAmultiyearUSAID-fundedCooperativeDevelopmentProgramthatseekstostrengthenagriculturalcooperatives'asprofitablecommercialenterprisesparticipatinginvaluechains—assupplierstolocalandregionalprocessorsandasbuyersofinputsfromlocalandregionalfirms—isnearingitsend.TogainadeeperunderstandingoftheimpactofCooperativeResourceInternational'sstrategicapproachto cooperative development and outcomes — intended and otherwise — a case study of 5agricultural cooperatives, just a slice of its much larger CDP activity, was conducted to informcooperativedevelopmentorganizations,USAID,otherdonors, and localpartnersofwhathasworked and what has not. The overarching conclusion is that despite substantial obstacles,cooperativedevelopmentorganizations that: (a) encourage innovation, (b) promotebusinessfundamentals,(c)acceptthefactthatprogress isslow,and(d)embraceflexiblemanagementcanachieveagreatdeal.ThisreportspotlightshowtheCDPhasbeenacatalyticchangeagentin pioneering a new paradigm to transforming household level, subsistence agriculture intocooperativelyorganized,profitablecommercialfirmsandsocialenterprises.Results.DespiteSouthAfrica'sworstdrought innearly35yearsandtheenormouschallengesandconstraintsoperatingbusinessesoncommunallandfacedbycollateralizationrestrictions,injustthelast3years:(a)newjointventuresandpurchasercontractsareinplacebetweenadvancedprimaryandsecondarycooperativesandbuyersandsellers;(b)cooperativesareaccessingnewgrant,valuechain,privateinvestmentanddebtfinancing;(c)secondarycooperativesareoperatingstrongerandnewviablecommercialbusinesses;and(d)cooperativeleadersandmanagershaveadeeper,morematureunderstandingofbusiness—theneeds,opportunities,risks,costs,andrewards.Theory of Change. Among agriculture cooperatives, a handful of distinct factors, singly and incombination,appeartomostaffecttheabilityofcooperativestoachievelong-termsuccessasviablecommercial enterprises, not dependent on outside assistance to operate their businesses. Forcooperatives,nothingisquiteasimportantashavingaccesstofinancing,buttheprecursortothatistheirgrounding inthebasicunderstandingofgovernanceandbusinessfundamentals.The latter iscritical because it serves as the foundation for virtually all advancements, achievements andaccomplishmentsinbusiness.Fordevelopmentimplementingpartners,therecordinSouthAfricaisclear:progressisslow,especiallyinagriculturewithitslongperiodsofcropandlivestockcyclesandtheslowpaceofbuildingbusinesses.Thismeansthatalongtimehorizonisessentialasistheneedforflexibilityinprojectmanagement.Conditionsandassumptionschangeastowhatwillworkwhenaprojectisdesigned.Unanticipatedobstacles,hurdlesandbarriers,sometimesyearsafteraproject'sapproval,meanschangesinimplementationmustbemadeaswellifgoalsaretobemet.

David Cohen Consulting — Case Study: Strengthening Cooperatives' Bridge To Value Chains

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Impact. With many cooperatives' new found basic understanding of business fundamentals,cooperative leaders are looking beyond their immediate production activities. The majority havedevelopedsophisticatedplanstobuildontheirjoint-venturesorinfrastructurefinancingtodevelop100 percent wholly-owned and controlled commercial enterprises that benefit either theircommunitiesdirectlyortheirmember-farmers.Yogurtproductionandavegetablepackingplantarejusttwoexamples.Withgreaterawarenessoffinancialsandtheirbusinessesoverall,cooperativesarebetter stewards of their own businesses; there is more stability, less infighting, and less conflict.Cooperativemembersaskbetterquestions,pushtheirboardsandmanagersforgreatertransparencyonfinancials,demandaccountability,andexpectstrongbusinessresults.Access to credit — a core ingredient in commercialization— is virtually inaccessible to pre-andnascent cooperatives in South Africa. Cooperatives and their farmer-members are simply notcreditworthywithintheircurrentcircumstances.Yet,capitalandcredit,usuallyalotofit,isessentialforanycommercialactivity.Withoutit,nothingelsematters.Emergingfarmershavefoundasolutionbytakingadvantageofseveraloptionsuniquelyavailabletothem:(a)governmentgrants,(b)value-chainfinancing,and(c)privateequityinvestment.AformofthelatterhasevolvedasaresultoftheCooperativeDevelopmentProgramandmayreflectanewandinnovativeparadigmthatcombinesbothimplementerandbusinesspartnerbymeansofprivateequityjointventures.SuchdevelopmentinvestmentschemesmaycontributegreatlytotheeconomictransformationofAfricanagriculture.ANewParadigm.Developmentally,themostnoveloutcome,aclearbyproductofCRI'sstrategy,hasbeenthedirect investmentin jointventuresbyCRI'sownstaff. It isanimpressivefinancingmodelthatencompassesaninherentexitstrategyfromdonoraidanditissustainable.Nobodyknowsthejointventurepartner(atargetedCDPbeneficiary)betterthantheCDPstaffthemselves,yetfew,ifany,actually investonasubstantialbasistheirownresourcesinaprojecttheyhavebeenchargedwithimplementingandmanaging.Yet,thisiswhatisbeingdoneinCRI'scooperativedevelopmentprogram.Having"skin in thegame" tookonawholenewmeaningand levelof commitmentandcredibilitywhenCRI'sCDPchiefofpartyfoundedFarmInvesttopersonallyjointventurewithprivateequityinseveralCDPtargetedcooperatives.From the beginning, CRI's strategy has been to treat agriculture as a business, approaching eachactivitylessasprojectsthanoncreatingandentrepreneuriallystrengtheningviableenterprises.Thisshared business-driven, investment-driven, development-driven strategy appears to be paying off.Whatisclearisthatdevelopmentisnotlinear.Asmuchasthecooperativecommunityseekstohave"the"model,at least inSouthAfrica, itdoesnotexist.Thatsaid, successfulcooperativesdoreachtipping points as the cooperatives examined in the pages that follow reveal. Chief of Party LiebVenter'sgreatestwish,hepurports,istoshinealightonwhatisdoable,whatisatstake,andwhatcanbegainedforeveryonebyfollowinghisexample.II. PurposeCooperative Resources International is pioneering a unique approach to international economicdevelopmentthatisyieldinginnovative,outsizedandsustainableeconomicandbusinessgainsthatare improvingagriculturalcooperatives'productivityandprofitability. InSouthAfrica, it'sEnterprise


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CooperativeTransitionprojectisaUSAID-supportedstrategyisbringingabout:(a)amaterialdropincooperatives'dependencyondonorsupport;(b)anexpansioninthenumberandvalueofmultiyear,commercial-led transactions where there had been none or few before; and (c) a materialstrengtheningofcooperatives'businesscapacitytoenter,stayandexpandinthemarketplacewithasound,competitive,sustainablefooting.Bottomline:itishavingameasurableeconomicimpact.Withtheproject'swind-downnearing,CRIhasdevelopedacasestudyof5agriculturalcooperativesthatarepartofadiscreetcomponentofitslargerUSAIDcooperativedevelopmentprogram,knownasPhaseII.Theideawastodocumentasliceofthebroaderproject'soutcomes,barriers,needs,andgaps,allinanefforttogainadeeperunderstandingoflessonslearned,bestpracticesandimpactofCRI'sstrategicapproachtocooperativedevelopment.Thegameplanof thecasestudywasthree-pronged:(a)Hastheprojectbeeneffective,relevantandefficient?(b)Hastheprojectgeneratednewknowledgeasaresultoftheactivities?(c)Whatisthelikelihoodthatthebenefitsoftheprojectwillendureovertimeoncetheprojectiscomplete?Afterreadingthefollowingpages,youbethejudge.III. MethodologyDavidCohenConsultingconductedindependenton-sitefieldinterviewswith:(a)theleadershipof5CDP-targetedcooperatives:MayimePrimaryAgriculturalCooperative, ZulukamaCattleAgriculturalSecondaryCooperative,IkhephuAgriculturalSecondaryCooperative,SevenStarsCentralSecondaryCooperative,andGwatyuFarmer'sAssociation;(b)ChrisHaniDistrictMunicipality,akeycollaboratingorganization; and (c) CRI field staff responsible for project implementation. The interviews wereconducted in Queenstown, Elliot, Whittlesea and Jeffreys Bay in the Eastern Cape, South Africa,October9-13,2017.Overthecourseoftheweek,nearly16hoursofinterviewswererecordedandtranscribed. Time and geographic constraints prevented amore thorough assessment thatwouldhaveincludedCRI'sstrategicpartner,SouthAfrica'sDepartmentofAgriculture,Forestry&Fisheries'Agricultural Research Council; SouthAfrica's LandBank, another key player; vital processors; jointventure partners; and buyers. Apart from the on-site key-informant interviews, considerable deskanalyseswasconductedofrelevantprojectdocumentation:FY'15Phase IIaddendumtoCRI'sCDPcooperativeagreement;FY'16PhaseIIextensiontotheCDPcooperativeagreement;2015PhaseIIMidtermAssessmentReport;FY'17extensiontotheCDPcooperativeagreement;andboththe2015and2016baselinesurveys.IV. TheProjectThe overarching goal of CRI's multiyear Cooperative Development Program is to transformhousehold-level dairy and beef producers and their cooperatives into profitable small-scalecommercial firmsparticipating invaluechains,assuppliers to localandregionalprocessorsandasbuyersofinputsfromlocalandregionalfirms.Theexpectedresultsareincreasedaccesstoaffordableinputs to enhance livestock producers' productivity and expanded producers' share of themarketplace.Bottomline:increasedprofits,highersales,expandedincomes.PhaseII.WhengiventheopportunitytoexpanditsCDPasadditionalfundingbecameavailableforFY'15,CRIarguedthatwherethethenexistingCDPhadfocusedonthesupplysideofthebeefand


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dairysector,i.e.,dairyandbeefproducersandtheirco-ops,itwasnowtimetoturntothedemandsideofproduction—buyers,lenders,inputsuppliersandextensionproviders—whohadlittleornounderstandingofthemostlyblack-ownedandoperatedcooperatives.CRIcalledthisPhaseII.Objectives. Phase II shifted the CDP focus for a small group of 5 secondary or near-secondarycooperatives in the Eastern Cape province of South Africa to higher level agricultural ventures—secondary cooperatives and advanced primary cooperatives at the ready to start secondarycooperatives,wherethe leverageandrippleeffect insofarasbusinessexpansionandsustainabilitycouldbeexpectedtobesignificant.Essentially,PhaseIIsoughttoexpanddairyandbeefsecondarycooperatives'participationinvaluechains,assupplierstolocalandregionalbuyersandasbuyersofinputs from local and regional firms,by creatinggreater awarenessamong firmsandgovernmentwho: (a) purchase co-op outputs; (b) supply inputs to co-ops; (c) oversee co-ops from a legalstandpoint;and(d)provideco-opsextensionservicesandsupport.Expectations.Bytheproject'send,CRIandtheparticipatingcooperativesalikewouldlookforwardtoa material advance in the strength of each cooperative's business — financially, operationally,managerially, and organizationally. The project's success is measured by the degree to whichcooperatives:(a)haveenteredintonewjointventureand/orpurchasercontractswithprocessors/buyers; (b) are independently securing credit on affordable terms and accessing other affordableinputsonbehalfoftheirmember;and(c)areoperatingviablecommercialbusinesses.Interventionshaveincluded:(a)seminarsandsponsoredtradefairvisits;(b)mentoringcooperativeson establishing, understanding, and growing business relationships; (c) facilitating linkages andmatchmaker introductionswithpotential buyers, lenders, input suppliers, government authorities,andextensionproviders;(d)assuringcompliancewithrelevantlawsandregulations;and(e)providinggovernance, business and agricultural training and technical assistance to improve cooperatives'capacitytoproduce,process,andmarkettheirproducts.V. CooperativesProgressInnovativelyTheBigPicture.PhaseIItargets5secondaryoradvancedprimarycooperativesthatintendtoformasecondary cooperative of their member cooperatives. The group was originally comprised of 32primary cooperatives, 1,623 producers (21 percent women), and approximately 4,500 householdfamilymembers.ThesinglelargestisIkhephu,asecondarycooperativewith936members.Asagroup,thePhaseIIcooperativeshavethusfarmetorexceededjustunderhalfofitstargetedmetrics,thoughtheindicatorsinsomeinstancesaremisleading,given:(a)someflawedaspectsoftheproposaldesign;(b)difficultyincollectingaccuratedata;and(c)theimpactofexogenousfactors,suchas severe drought and currency weakness that can mask progress made in basic businessunderstanding,visioning,strategizing,planningandmanaging.Regardless,thecooperativesevaluatedreflectsignificantadvancementeconomicallyinthelast3yearsinwaysnotoriginallyenvisioned.Thosethatareperformingwellhaveadoptednovelapproachestofinance,management,technologyandaccesstovaluechains.Thefactisthatevenwithastrongmetricforthegrouplikethedoublingof


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sales from $2.5million to $5.2million, producers are facedwith a long list of both inherent andexternalchallenges,anyoneofwhichcandampeneventheotherwisemostsuccessfulofenterprises.InSouthAfrica,thelistcanbelong.Someofthemorestubbornchallengescaninclude:persistentdroughtwithinadequateaccesstoirrigation;thelongincubationperiodofbothcropsandlivestocknecessary to reflect change; currency weakening; few assets to collateralize for borrowing;counterproductive government policies; poor governance and managerial practices; and crude,inconsistent,questionableandoftenunreliablebookkeepingandrecordkeepingpractices.1. MayimePrimaryAgriculturalCooperative Snapshot.Mayimeisa395-member,black-ownedcooperativefoundedin2003torestorecommunalfarmlandgrantedbytheSouthAfricangovernmentthathadbecomeunproductive.Theareaincludes2,189hectares;18percent(411hectares)isirrigated.Membersofthecooperativeoriginallywantedtoplantvegetables,potatoes,milkanddairyproducts,however,barriersweresteep.Therewasnoaccess to financing, inadequate access to water, and virtually no governance, managerial oragriculturalexperienceamong itsmembers. In2012, itentered intoa "milk-sharing" jointventurewithAmadlelo,awhite-ownedcommercialdairyproducer.TwoyearslateritbegangrowinggrapestomakeintowineandjuiceinSouthAfrica'sfirst-evercommunity-ownedwineproducingvineyardinajoint venture with FarmInvest, a private equity investment firm founded by the COP of CRI'scooperativedevelopmentprogram.Ineachcase,Mayime'scommunallandtrust,ShilohDairyTrust'soperatingentity—MayimePrimaryAgriculturalCooperative—partneredwithcommercialfirmsineachbusinesstoformthejointventures.EachjointventureisgovernedbyitsownboardofdirectorscomprisedofrepresentativesfrombothJVpartnerorganizations.Aspiration.Today,Mayimeisseekingtoproduceitsownprivatelylabeledwine(Inkosi),createjobs,support the community and become a leading black empowered enterprise selling milk andprocesseddairyproducts.Itsellsitsrawmilktocommercialprocessorsanditsellsitswineinthelocalmarketplace,thoughitisalsonegotiatingdealswithdistributorsintheNetherlandsandChina.Ithasreceived financing to construct a processing facility to pasteurize its ownmilk and to construct aprocessingfacilitytoproduce,bottleandlabelitsgrapesintowine.Inthefuture,itaspirestoowning,controllingandmanagingallofitsenterprisesindependentlyandonacommercialbasis.BiggestObstacle(s).Mayimeessentiallyholdsrestrictedtitletoitsland.Withitscommunalpropertyithas long-term use the of the land to use as it wishes. Income produced as a result of the landownershipisthecooperative'stokeep,however,thevalueoftheassetisseverelylimitedbecausecommercialbankswillnotacceptcommunallandasanassettobecollateralized.Neitherarebankscollateralizingthesaleoffuturecropsor livestockforproductionfinancing.Thelackofmovableorfixedassetsthatcanbecollateralizedforborrowing,lackofabusinesstrackrecord,andvirtuallynooperationaloragriculturalknow-how,meansMayime,andotherslikeit,areatasharpdisadvantageinestablishing,maintainingorgrowingviableagriculturalenterprises.Apart from the land title issue, the allocation of water is insufficient. Government allocates theamountofwaterthatcanbeaccessedandisconsideringadoublingofitscurrentleveltoMayimetobetter accommodate its needs.Until that happens, the lack ofwater is self-limiting.Nonetheless,


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dairy production has doubled in the last 3 years, but with more cows the dairy could groweconomically.ThisspotlightsaprobleminSouthAfrica.Whetherit'saccesstogovernmentgrantsforfarms in terms of its infrastructure or access to water, a host of decisions are controlled by thegovernmentwhichmeansthepoliticalprocessitselfcanbeacomplicatingfactor.ChangesinelectedofficialsinChisHaniin2017,forinstance,haveresultedinadramaticdropinthebudgetallocationforthekindoffinancingofagriculturalcooperativesthathavebenefitedMayimesinceitsstart.Simplyput:politicalprioritieschanged.Workarounds.With advice from the SouthAfricanDepartment of Agriculture,Mayime concludedthatithadoneofthreechoicesoracombinationofthemitifwantedtomoveahead:valuechainfinancing, inwhichtheprocessor/purchaserofMayime'sproductionprovidesshort-termfinancing;grants fromvariousnationalandprovincialSouthAfricangovernmentalagencies;orsharedequityjoint-ventures with established commercial enterprises. With support of the USAID CooperativeDevelopmentProgram,SouthAfricanDevelopmentCorporation,SouthAfricaDepartmentofTradeand Industry,andSouthAfricaDepartmentofAgriculture,Mayimereceived trainingand technicalassistanceinbusinessandagricultureandaccesstoaffordablefinancing.Dairy:Mayimeenteredintoa50-50sharemilkingjointventurewithAmadlelo.Theco-opcontributes

all fixed assets (mostly land and fixed improvements, such as buildings and fencing) and thecommercialJVpartner(Amadlelo)contributesallmoveableassets(cows,tractors,implements),cash,andmanagement.Thedairy farm infrastructure (fixed improvements)wascapitalizedbyboththeprovincialgovernment'sChrisHaniDistrictMunicipality($556,484)andtheDepartmentof Rural Development and Agrarian Reform ($973,847), mostly to build a new dairy parlor,irrigationsystem,fencing,andfarmroads.Eachpartnerretainsownershipandresponsibilityforanyliabilityoftheirasset.ProfitsaresplitevenlybetweenthetwoJVpartners.About34peopleinthecommunityareemployedfulltime;threeyearsago15peoplewereemployedfulltime.Theyaresupervisedbymanagingpartner,Amadlelo.Inthatsameperiod,salesincreased50percent,from$521,704to$784,884andthenumberofcowshavedoubled,from500to1,000.TheJVisup for renewal every 5 years. As production grows, with better access to more water andhectares,sotoowillMayimeexpanditsbusiness,justasitsproductivityandprofitabilityisalsoexpected to improve. The bulk of themilk produced is sold under contract to CoegaDairy, aprocessor.WithaneyeontransformingitsJVexperiencetoindependentcontrolandoperations,Mayimeisawaitingactiononitsproposalforeithergrantorloan-financingtoconstructanon-siteprocessing plant to produce pasteurizedmilk, Amasi (fermentedmilk) and yogurt, starting bypasteurizing 2,000 liters/day, increasing to 5,000 liters daily output within 3 years. Revenueprojectionsfortheproposedplantrangefrom$500,000inYear1to$1.25millioninYear4.

Grapes: With FarmInvest, Mayime entered into a 55-45 joint venture ownership, with Mayime

holding the controlling interest. As with the dairy JV, each partner retains ownership andresponsibilityforanyliabilityoftheirasset.Unlikethedairyenterprise,theJVendsafter10years,atwhich pointMayime has the option of purchasing FarmInvest's share for the then currentappraisedmarketvalue.Basedonthesuccessofitsshare-milkingjointventure,Mayimeplantedavineyard in 2012. Mayime provides the land and infrastructure and FarmInvest provides themanagement, movable assets (equipment and implements) and working capital. The South


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Africangovernmentprovidesaccesstoirrigation.Thevineyardwascapitalizedbytheprovincialgovernment'sChrisHaniDistrictMunicipality,mostlytobuymachinery,establishvineyards,andinstallirrigationsystems.Inlate2017,theLandBankapprovedaloantotheJVforanadditional$846,154toconstruct itsownwinery.FarmInvestprovides100percentoftheworkingcapital,includingMayime's55percentshare,which isa loanoncommercial terms.Mayimerepays itsproductionloantoFarmInvestatzerointerestoncethegrapeshavebeenharvested,madeintowine,andissold.

Atotalof20peopleworkfulltimeinthevineyardthatwerenotthere3yearsago.Seasonallabor

growstosome100,allfromthecommunity,topickgrapes.Themanager,alocalresident,isaqualifiedviticulturistandwinemaker.In2016,theJVbottled3,800bottlesofwine;in2017,theproductionofPinotage,Chardonnay,CheninBlancandColombardhas risen to16,000bottles.Withwineproductionincomeswillincreasesignificantly.Today,grapesaregrownon12hectares,up from an original 5 hectares in 2012. If demand for its wines continues, Mayime has thecapacitytoexpandto100hectares—an8-foldincreasepotential—onlanditcurrentlycontrols.

ResultsandImpact.Today,thecooperativehasformedtwojointventureswithcommercial-ownedfirmsthatareeachmanagingtheJV.Salesandjobsaregrowingexponentially.It'swines,eachsellingforabout$14.00abottle,have receivednumer-ous topawards.With its second JV,Mayimeac-quiredmajoritycontrol,asuresignofitsintenttocontinue along its path to independent businessmanagementandsustainability.Withashiftfrombasic production of milk and grapes to value-addedprocessing,thecooperativeistransformingitselfintoaviablecommercialenterprise.Today,Mayimeisoperatingatnearcapacity.Withaccesstomorewaterandsubsequentlowerproductioncostsandexpansionofbusiness,aseconddairyandvalueaddedprocessingisenvisioned.MayimeisnotanagriculturalcooperativeinthetraditionalWesternsenseinsofarasfarmer-memberswhoproducecropsand livestockthatrelyontheircooperative for farmandrelatedservices;bulkpurchasing of inputs and supplies; and marketing. Rather, Mayime views its joint ventures asinvestments.Membersofthecooperativederivetheircoreincomesfrompensions,traditionaljobs,andgovernmentassistance.Asaninvestment,Mayime'smembersreceiveabout$210annuallyonthedairyproduction,whilethevineyardcontinuestobe inastart-upmode.Members, thus,earnincomeasshareholdersratherthanfarmers.Priortothejointventures,therewaszeroincome.Thepotential,sayMayimeofficials,isadoublingofincometo$420perfamilywhichisbasedonlyonits55percentstakeinthevineyardand50percentownershipofthedairy.Whereastoday'sgrapesareshipped toBergsigWinery in theWesternCape forprocessing,bottlingand labeling,with itsownwinery,Mayimehasthepotentialtogivebirthtoamorevibranttourismindustryinthearea.What Made the Difference. Notwithstanding Amadlelo's joint venture with Mayime, without acooperative development program,Mayime would essentially be in the same place it had beenbeforetheCDP.TheCDP,however,providedfinancialmanagementtrainingtothecooperativesothatMayime'sgovernancebecamestronger.TheFarmInvestJVwouldhavebeenunlikelybecause

"IwasembarrassedwhenIfirstsawthevineyard.Now,peopleareturningtheirheadsbecauseit'sstartingtolooklikeacommercialfarm.Ittakestime."

—RolandBrownTechnicalAdvisor



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there would have been little to no engagement between the JV partner andMayime. The CDPprovidedbusinesstrainingwiththeoverallimpactbeingthatMayime'sleadersarebetterstewardsoftheirowncooperativeenterpriseasmanagers.ButProjectManagerJannieStrydomsaystheimpactismoresubtle,"Thereismorestability,lessinfighting,andlessconflict."Moreover,MayimeChairmanSelborneCecane,sayscooperativemembersaremoreaware."Theyareaskingbetterquestionsandpushingtheboardandmanagementtobemoretransparentwithfinancials."Wants and Needs. Mayime views the community as direct beneficiaries of its joint ventureenterprises. It realizes that it continues to need to improve its governance, business, agriculturalproduction,processingandmarketingcapacity. Ithasbegunholdingbackprofits forreinvestment,generallyaround10percent, though itmaybemore ingoodyears.Mayimemaintainsnosavingsaccountsformembers,apotentialmemberservicedowntheroad.2. IkhephuAgriculturalSecondaryCooperativeSnapshot. Ikhephu is a secondary beef, sheep, soybean and maize cooperative with 5 primarycooperatives.Startedin2011,itiscomprisedof169farmsand936memberson62,000hectaresandownsanabattoirthatissupportedbysome7,500cattle.Theunderlyingprimarycooperativeswereestablishedin2004withlandboughtfromthegovernmentandwhichisnowownedoutright.Unliketheothercooperativesexaminedinthisreport,thereisnocommunalland.Thesecondarysupplyandmarketingcooperativebenefitstheprimarycooperativesmostlythroughbulkbuyingof inputsandmarketing of livestock and crops. Services are available both to members and non-cooperativemembers.Togrowitscapacityandfurthersupportitsmembers,IkhephuaccessedgrantfundingfromtheSouthAfricangovernmenttobuildafeedlotallowingmemberstofinishandaggregatetheircattlebeforemarketingthem.Italsoassistsmemberstoincreasetheirmaizeandothercropproductioninorder to create its own feedmill at the site of its feedlot. It has been aggressively exploring theproduction of other crops in an effort to further diversify; add value-added capabilities with thedevelopmentofanewprocessingfacilities;anditisscrutinizingthepotentialofofferingbeefcattleartificialinseminationservicesforbothcooperativemembersandnon-cooperativefarmers.Aspiration.Thesecondarycooperativewascreatedtoprovidethreekeyservicestoitsmembers:(a)a500-head feedlot formembers to createmore value prior to sending cattle to the abattoir; (b) ameanstosourcemaizeforfeedfromtheprimarycooperatives;and(c)ameanstopurchaseinputscollectively, in bulk, and thus, cheaper. In largemeasure, it is accomplishing these goals.With aprogressive,well-educatedandmember-supportedleadershipinplace,today,thecooperativeisnowlooking todiversify its cropproduction to includepulsesandexpand intovalueaddedproductioncapabilities.IthasbeenintalkswiththeSouthAfricanDepartmentofTradeandIndustrytofundtheconstruction of a packaging plant, possibly with Ikhephu's own label. In 2017, Ikhephu beganconductingtheduediligencetoofferanAIservicetoitsprimarycooperativefarmersforsome150heifersonatrialbasis,withagoalofinseminatingatleast1,000heifersandinthefuture,asmany3,600.ThehighdegreeofinterestexpressedbyfarmerstoaccessAIservicesandtobecometrainedasAItechniciansareindicatorsofinterestandsupportfortheendeavor.


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BiggestObstacle(s).AswithallSouthAfrica'semergingblackfarmersandsmallholdercooperatives,accessinginfrastructuregrants,productionfinancing,concessionalloans,orcommercialborrowingisoftentimes insurmountable without strong technical assistance. Ikhephu is not yet independentlyobtaining commercial lending; infrastructure needs still require government grants to achievecommercialviability.Severedroughthashadaparticularlyharshimpactonthecooperativebecauseitaffectscropproduction(neededforfeedandgrazing);reducesanimalgrowthandconditioning,andthus, its value in the marketplace; and limits the number of cows with the adequate bodyconditioningtomakeAIworthwhile.Workarounds.TheCooperativeDevelopmentProgramhelped Ikhephuovercome theobstaclesbyproviding its leadershipwithvisioning,strategicbusinessplanningguidance,andanimalhusbandrytraining. Working hand-in-hand with the cooperative, the CDP developed a business plan forinfrastructure financing to transform the farms into productive enterprises. Previously, Chris HaniDevelopmentMunicipalityandtheprimarycooperativeswereworkingonanindividualbasis.Financing is available via the Land Bank and through value chain financing, namely purchasers ofIkhephu'soutputwhicharefinancingtheproductionneeds,suchasUnigrain,amillerandBerlinBeef,anabattoir.ThepositivenewsisthatIkhephuhasinplaceapurchaseragreementwithPick'nPay,amajorfoodretailerandBoxer,asubsidiaryofPick'nPayintheKwaZuluNatalmarket.Likewise,non-GMOmaizeisbeingsoldtoalocalmillingcompany.InputsarefinancedbytheSouthAfricaLandBank.Artificial InseminationMemberService:Withassistance fromtheCDP, Ikhephucreatedabusiness

plan toprovide an artificial insemination service for its beefproducermembers as a separateprimary cooperative that is wholly owned by the secondary cooperative. Ikhephu farmersunderstand thatbettergeneticswill result inbetterprices.CRIprovided trained technicians tosupportorganizingtheservice.FarmersarewillingtopayfortheAIservice,whichiscurrentlynotaccessible in their area. With the idea of creating a primary cooperative as a wholly-ownedsubsidiaryofIkhephu,theAIcooperativeisbeingseenasaprofit-generatingbusiness.Inadditiontotheincomegeneratedbytheserviceandre-saleofsemen,thecooperativewillalsobenefitbyimproving the productivity of their members’ cattle, which will, in turn, improve theirmarketabilityandprofitability.Theresultswillguide Ikhephu'ssubsequentyear'sstrategyforamoreextensiverollout.

CRIprovidedgeneticstogeteverythingstarted.IkhephupaidforthesemenataCRI-subsidized

rateonbehalfof itsmembers.CRIcontributedthedifference inthefullcost tothesubsidizedpriceascostsharetotheproject.Thelocalabattoirpaysforweanersandtheco-op,inturns,paysmembersafterafeeiswithheld.Afixedfeeof$64.00ispaidbythefarmertotheco-op,whichserves as a type of insurance. If there is a problem in the feedlot, then farmers can becompensated.Thefeealsocoversadministrativeexpensesoftheco-op.

InordertoprovideanAIservice,anintermediaryneedstobecreatedtofinancetheactivityfor

the9-monthgestationperiodandforanadditional6monthstoraisethecalf.Theintermediarycanbeeitherafor-profitornon-profitbusinesstoprovidetheexpertiseandcommercialstandingneededtoobtainup-frontproduction,AIfinancing,andmanagerialexpertise.AswithMayime,


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theideaonthetableistoestablishanequityinvestmentjointventuretoprovidetheAIinputsandservice,management,etc.tofarmers.EitherIkhephuortheAIsubsidiarywouldhavea60percent share in the company and the intermediary would have a 40 percent share. Theintermediarywouldacquiretheneededfinancing.

JustaswithFarmInvesttherewouldbeanexitstrategyafteraperiodofyears.Atsomefuture

agreed date, 7-10 years hence, farmers would be given the right to buy out the for-profitintermediaryatthethenfairvalueofthefirm,basedonitscurrentmarketvalue,orsimplytakeover the non-profit intermediary if it chooses to go in that direction. This innovative schemeenablesthefarmerstoaccesshighqualitygeneticsnototherwisepossible,whichinturnwoulddrive both the cooperative's productivity and profitability. It inserts a business-like approachwithinadevelopmentalcontexttoachieve impact.Themainaim isnotaboutthemoney, it isabout having the entity achieve the objective. It will not likely occur without this kind ofintervention.ThisapproachwouldleveragetheCDPbeneficially.

ResultsandImpact.DespiteIkhephu'snumerousadvancementsthatarefundamentaltoitslong-termbusiness success, metrics can sometimes tell another story. In agriculture, and specifically withIkhephu,factorsbeyonditscontrol,namelydrought,havehadadebilitatingimpact.Caseinpointisa26percentdeclineinrevenuein3years.Despitethis,theSouthAfricangovernmentandcommercialbuyers have increased their grants and value-chain financing. Some key decision-makers see thepossibilities even though they appear to bemasked by some powerful economic indicators thatreflectpoorlyonthecooperative'strackrecord.Thecooperative'sprogressive leader-shipisassertiveandimpressive.Newmember services like artificialinsemination;leveragingitsresourcesand the value of its farmer's cropswithprivatelabelprocessing;andex-panding its crop diversification re-flectsasoundinvestmentthatcannotbeevaluatedfullyintheshort-termofafewyears.Indeed,theprogress has been substantial compared to 3 years ago, says Strydom,who adds, "therewas nomoneyavailableforinvestmentthen,comparedtotoday."Anotherinnovationthatreflectstheprogressivenessofthecooperativeisitsdesiretoinvestinlandthatisnotfullyutilizedbytheindividualfarmer-ownerbyhavingthecooperativeleasethelandtogenerate revenue for the co-op. This allows the land to be another economic engine wheneverfinancingisavailablefromtheLandBank.What Made the Difference. Ikhephu and its members have taken a big step in becoming morecommerciallysuccessfuloverthepastfewyears,inpartbecauseofassistancefromCRI.Inadditiontooverallfarmandmarketplanning,CRIisalsohelpingtoimprovemembers’livestockgeneticsthroughartificialinseminationwhereithascorecompetencies.WithouttheCDP,wherewouldIkhephube?Ona scaleof 1-10, saysGcinaMadasa, the chairmanof Ikhephu, "Iwould give it a 7 in termsof

"TheCooperativeDevelopmentProgramsupportisvaluableforcreatingabaseforustounderstandhowtooperateandmanageasecondarycooperative…theimportanceofrecordkeeping,importanceofgovernance,importanceofcommunicationbetweenboards,primariesandgeneralmembersoftheorganizationaresomeexamples."

—GcinaMadasaChairman

IkhephuAgriculturalSecondaryCooperative


11

support and value of CDP insofar aswherewewere andwherewe are today." Askedwhatwillhappeniftheprojectends?"Thereisneverenoughhelp."NeedsandWants.FarmersarepositiveonthepotentialforanAIservice.CRIrecommendedwaitinguntil2018tobreedsothatcalvingwilloccurinamoreconduciveseason;Ikhephu'sleadershipagrees.Ikhephuhassetagoaltobreed650animalsin2018,expandingthenumbertoincludecowsingoodbody condition. Farmswill be selected forhealthyanimals andherdmanagement trainingwill beprovidedtoassuregoodbodyconditionatthetimeofbreeding.Meanwhile,AItechnicianscontinuetoreceivetrainingtoassuretheyareabletoadministertheAIsuccessfully.CooperativesinKwaZulu-Natalhave, likewise,expressedadesiretoprovideanAIservice in their region.CRI isplanninganexchangevisitforKZNfarmerstovisitIkhephuinordertolearnfromtheirsuccesses.3. ZulukamaCattleAgriculturalSecondaryCooperativeSnapshot.TheZulukamaSecondaryCooperativewasestablishedbytheZulukamaDevelopmentTrustoncommunallandin2006todeveloptheregioneconomically.Theimpetusforthetrustcamefromlocal youth who petitioned the tribal chief for his approval. At that time there was little to noinfrastructurethatcouldenablecommercialcroporlivestockproduction.Whatagriculturewastakingplacewasessentiallydoneonasubsistencebasis,withsomecattlesoldtotheEastLondonAbattoirfor slaughter. In response to the South African government incentives to form cooperatives, asecondarybeefcooperativewithassistancefromtheCDPwasestablishedin2012.Fromthetimethetrustbeganuntilthenlittlehadtakenplacewithregardtoachievingthevisionofthefoundersofthetrust.Still, thedevelopmenttrusthasbeenanumbrellatodrivethedevelopmentprogramandtosourceassistance.Aspiration. A good number of those living in the Zulukama villages have regularly invested theirsavings in cattle, a traditionalmeans ofwealth creation. Although the primary cooperatives havehistoricallyyieldedlittlemorethansubsistenceoutcomes,thecreationofthesecondarycooperativein2012offersnewpossibilities."Nowweseethebusinesssideofwhatwehave.Wehavealotoflandbutdidn'tknowwhattodowith ituntilwe learnedthevalueof it throughcooperatives.Welearned you could make something out of it," said Zulukama Development Trust AdministratorCanzibe Rawana. With a commercial upgrading, Zulukama has the potential to ink long-termagreementswithlocalretailer,Woolworths,foritsbeef.Whenvillagesbegantounderstandwhatacooperativecouldoffer,theydiscoveredthatacooperativecouldnotonlysustainanindividual,butone cooperativemade up of 10 people, for example, could sustain 50 people at home. Yet, saysRawana,"wewereusingpoorbreeds….wehad500cattle,butweproducedlittleexceptexpenses.Wedecidedtohavethetrustgotothegovernmentandrequestfundingassistance."BiggestObstacle(s).Amongthesome36,000peopleresiding in thevillages,manyworkelsewherebecausejobsarescarceinthearea.Moneyissentbytheprimarybreadwinnerstofamilieswhohaveremained in thevillages.Virtuallyall residentsareearning their livelihoodsdoingsomethingotherthan farming. This creates a challenge because few derive a majority of their livelihood fromproductionoftheland.Hence,theirattentionisnotfocusedassharplyasitmightbeiftheywerefullyinvested in anenterprisewhere theyhadmoreof apersonal investment.Cattle is important, yet


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thereislittlefocusoncattle.Theoverarchingchallengetojumpstartingcommercialcattleproductionisthelackofpropergrazingpractices.Thepastureconditionshavebeendeterioratingasaresultofovergrazing,madeworsebythefactthatthereisvirtuallynoinfrastructuretocollectandstorewater;thereisalackofaccesstomarketinformation;traditionalfarmingispracticedwithpoorlyproducingbreeds;thereisalackofskills;andthereisvirtuallynoaccesstofinancing.Addtothat,thenumerouslayersindecisionmaking—tribalchief,villages,cooperatives,government,etc.—anditiseasytoseewhyprogresshasbeenslow.Workarounds.AftermeetingwithCRI,thingsbecamemoreclear.By2017,Zulukamahad72primarycooperatives.Within thecattlesector,13beefcattleprimarycooperatives,eachwithabout1,000cows,startedtheZulukamaCattleAgriculturalSecondaryCooperativetodevelopbeefproduction.Cooperative members realized that they could not penetrate the market as individual primarycooperatives and that they needed a single enterprise to negotiate, market and represent themeffectively. The trust's 36 villages aggregated 7 of those cooperatives into a pilot project, chosenbecauseoftheircentralitywithintheregionandtheirgeographicproximitytooneanother.Thepilotactivityisfocusingonrestoringunproductivefarmland,makinginfrastructureimprovements(fencing,boreholes,windmills, etc.), and providing training in grazingmanagement, breed selection animalhusbandryandbusiness.ResultsandImpact.Intheveryearlystagesofgettingstarted,theessentialoutcomethusfarhasbeenthedecisionbytheprimarycooperativestorecognizetheeconomicvalueofcommercializationoftheiroperationsby formingthesecondarycooperative. If thepilotgoeswell,Zulukama intendstoexpandtoothervillages.Inthemeantime,itiscreatingadatabaseofcattleherdssothegroupwillbereadytomoveforwardoncethepilotexpands.SaysZulukama'sadministrator:

WhatwewouldlikeyoutotakebacktotheU.S.isthis:theCDPhasworked.Wedon'thavethefundsorgrantsnow,butweknowexactlywherewewanttogowithorwithoutthegrants.Thisisthemarkyouhaveleftwithus.WhetherCRIcontinuesornot,atleastfortheremainingperiod,wewanttogainmoreinformation.WewouldlikeCRItoseethatithasleftalegacy.Weneedtodoitourselves.It'snotalwaysaboutmoney.Sometimesit'sideas,introspection,andinformation.ThemarkCRIhasmadeinthisareashows.Previouslypeopledidn'tknowwhatabusinesswas.Nowtheyknow.We'regettingthere.

WhatMadetheDifference.Fornow,theCDPishelpingtocreateamodeltoimprovetheareawithabusinessplan.Onceboundariesareset,fencingisneeded.AbusinessplanhasbeendraftedandtheZulukamaboardisreviewingit.Startingwith7pilotvillages,just3ofthe13cooperativesarerepresented. One sign of the change agents the leaders of Zulukama have become is theacknowledgementofthe"heateddiscussion"thattookplaceoverwhichvillageswouldbefirsttoparticipateinthepilotactivity.CRImayhavesparkedsomeinterest,butitcouldnothavedonethison its own. It happened because of Zulukama's leaders. For many, opportunities often gounrecognizedwhenpresentedtothem.Zulukama,however,seemstorecognizetheopportunitiesandisactingonthem.NeedsandWants.All the cattle isownedbymembers. This is anareawhere the co-op canhelpeducatemembersondeterminingfairprices.Farmersdon'tunderstandtherealvalueofthecowsbasedontheircostofproduction.Cooperativeleaderswantthecooperativestoprovidethetraining


13

service tomembers on creating a commercial enterprise. The startingpoint for all this is to haveboundariesestablished,togetthecattletotherightpeopleandthenprovidethetraining.Dotheprimarycooperativesoperateeffectively?Thereisalottolearn,saidtheroundtableofleaderswhosatforthecasestudyinterview.Theneedforrepetitivetrainingtoensurereinforcementofskillsandknow-howisessentialorthestudentswillloseit.Theleadershipofthetrustunderstandsthatiftheprimariesdonotknowhowtomanagethesecondarythenthesecondarycooperativewillhaveanissue,soit'scriticaltokeeptheprimarycooperativesstrong.WhatwilltheydoiftheCDPisnotaroundafterFY'18toaddressthetrainingandneeds?"Weaskourselves the same questions," said Rawana. "Let whatever assistance is coming find us doingsomething.Theco-opunderstandsthataslongasgovernmentprovidesgrantswewilltakeadvantageofit,butwealsounderstandthatpoliticscanchangeandthelevelofassistancecanchangewithit."4. SevenStarsCentralAgriculturalCooperativeSnapshot.SevenStarsCentralAgriculturalCooperativeisasecondarydairycooperativecomprisedof6primarycooperativesand35members,eachwiththeirownfarm.AllofthelandiscommunalandleasedfromtheSouthAfricangovernmentbythecommunity.Thecooperativeleasesadditionallandfromthemunicipalityanditleaseslanddirectlyfromfarmerswithanoptiontobuy,atpricesbasedonmonthlydairy income.Primarycooperativesbegan in2003;asecondarycooperative started in2010,atwhichtimeSevenStarsenteredintoajointventure,renewableevery5years,withAmadlelo,agroupofcommercialdairyfarmers,torestore660hectaresofunproductiveirrigatedfarmland.Thecooperativeprocessesmilkintovalue-addedproductstosellinthemarketplace.KeiskammahoekDairy Trust was formed to manage the Amadlelo side of the dairy JV; Seven Stars Trust is theoperatingentitySevenStarsCentralAgriculturalCooperativesideofthemilksharingarrangement.TheJVhas2,120dairycattleandmilksonaverage1,741cows.Thefarmproducesabout9.36millionlitersofmilkperyearandemploys55staffand4managers.ThebulkofthemilkproducedissoldtoCoegaDairy.Theinitialvalueoftheemergingfarmers’contribution(mostlyinland)isestimatedat$3.5million, including$177,000ofdebt.The initialcapitalcontributionofAmadlelowas$565,328.ThecurrentestimatedvalueofSevenStars'contributions(landandfixedimprovements)isestimatedat$7millionand$2millionforAmadlelo.SevenStarshashadanaverageannualgrowthrateof8percent,whileAmadlelohashada17percentgrowthrate.Thatcomparestoagrowthinequityof15percentannuallycomparedtoAmadlelo's-2percentequitygrowthperyear.Aspiration. To capturemoreeconomic return from its assets, SevenStarswants to independentlyestablisha100-percentownedandoperateddairyprocessingplant,apartfromitsJVwithAmadlelo.Theprocessingplantwillenablethecooperativetocomplywithfoodsafetyregulationsandtomarketa percentage of their raw milk produced directly to the local formal and informal markets aspasteurizedmilk.ThedairyprocessingplantwouldenableSevenStarstoaddvaluetoitsrawmilkandto comply with food safety standards and also create job opportunities for themembers of thecooperative and local community. The capacity of the processing plant is expected to increaseprogressivelyfrom4,000litersinYear1to6,000litersinYear3andthereafter.


14

BiggestObstacle(s).Aswithotheremergingfarmers,commercial financing isvirtuallynon-existent.South African grants are viable as is equity investment financing. Even though Seven Stars hasengagedinthelatterinitsJVwithAmadleloandhasatrackrecordof277percentgrowthinrevenue,accesstodebtfinancingandeventograntsisproblematiconitsown.PartofthereasonmaybethatSevenStarsshareholdersarenotactually farming the landthemselves,apotentialnegative in theeyesoflenders.Workarounds.SevenStarssoughtouttheCDPtoguideitindevelopingabusinessproposaltoaccessgrantfundingtoconstructaprocessingfacility.Thedairyplantwouldinitiallypasteurize4,000litersofmilkperday,increasingtomorethan6,000litersperdayinthefollowing2years.Additionalproductstobemanufactured includecheeses,amasiandyogurt.Unlocking the fullpotentialof thisprojectshouldbeamatterofinvestingingoodmanagement,trainingofworkers,newequipment,complyingwithfoodsafetystandards,andupgradingtheexistinginfrastructure.ResultsandImpact.SevenStarsstartedwith400cowsfinancedthroughagrantfromSouthAfrica'sLandBank.Amadlelocontributedabout1,000cows.TheSouthAfricangovernmenthadadirectrolein brokering themilk-sharing agreements, which in turn,establishedanimportantpartnershipbetweenthegovern-mentdonorandthecooperative.Theoriginalplanwastocombinefarmstomilk400cowstogether.However,theJVprovided the basis for significant progress. Today, in the50-50profitsharingdeal,SevenStarsownsthe land,adairyparlorand400cows;Amadleloowns1,000cattleandallmoveableassets.The1,400cowsarehandledon850hectares,thoughthelandcould supportup to4,000dairy cows,dependingon the stateof irrigation,wateravailability, anddrought.Amadlelobroughtimprovedbreedsandanimalhusbandryandmanagementexpertise.MilkissoldtoCoegaDairy,aprocessor.ThevalueofthepartnershipwiththeSouthAfricangovernmentshouldnotbeunderstated.Thereisahuge potential for the proposed processing plant to realize significant returns, but it is entirelycontingent on governmental financial support, which the CDP has contributed to strengtheningsignificantly.Oncetheplantisupandrunning,SevenStarswillbeabletosupplyboththelocalformaland informal markets with food safety compliant products; it will create rural employmentopportunitiesandskillstransfer;anditwillpossiblybeabletomanufacturealternativedairyproducts(cheese,etc.).Withanadditionalobjectiveofruraldevelopmentinmind,itispossibleforthedairyprocessingfacility initiativetofacilitatethe linkingoftheprivatesectorand localcommunities inamoreinclusivebusinessenvironmentandvaluechainentry.Apartfromtheproposeddairyprocessingplant,it'simportanttopointoutthat5percentofallprofitsareretainedbythecooperativeforoverheadandreinvestment,while95percentisdistributedtothe6primariesevenly.Theideabehindthisstrategyisthedesiretopersuadetheprimariestosaveandnottodistribute100percentofitsprofitstomemberssothatthey,too,canreinvesttheresources.AdifferentiatorforSevenStarsisitsself-awarenessthatitisnotafarmer-ownedcooperativecreatedtoimproveitsagriculturalstanding,butacommunity-wideshareholder-investorownedandoperated

"We'relookingtowhatwecandoforthecommunity.Wewanttohelpthepeople."

—JosephineMasoTrustee

SevenStarsTrust


15

asasocialenterprise."Becausethereispovertyinthecommunity,wewanttouseour5percenttocontributetoachildren'shomeoranoldagehome,"saidJosephineMaso,thelongtimetrusteeofSevenStarsCentralAgriculturalCooperative'sparent,SevenStarsTrust.At thisstage, theyarenotthinkingaboutexpandingintoanotherbusinessoutsideofdairy.However,theleadersdowanttheprimaries to be sound businesses and to grow their dairy enterprise footprint. As the primarycooperativesthemselvesbegintobuildequity,theywillhavetheresourcestopurchasemorecowsand lease them to the JV. The primaries will be paid directly outside of the secondary, therebyallowing the primaries to operate independently. Amadlelo has agreed to such an arrangement,potentiallyprovidingtheprimarycooperativeswiththemajorityofcows intheJV.Thiscouldbeapathwaytosoleownership,thekindofeffectiveexitstrategypromotedbytheCDP."We'relookingtowhatwecandoforthecommunity,"Masosaid.Wewanttohelpthepeople.Sheistalkingaboutcreatingasocialenterprise,abusinesscreatedtosupportasocialpurpose,inwholeorinpart,tohelpthecommunitymeetitsneeds.Thisworksbecausetheprimarycooperativesarenotmadeupoffarmers.Thefarmersmayoperateonasubsistencelevel,buttheyderivetheirincomeselsewhere,outsideofthefarm.CRIhelpsSevenStarsdeterminewhatitwantstodo.Overall,SevenStars'hasadopteda socialownershipapproach. In its view, the JV isaboutbenefitting thewholecommunity;itisnotaboutfarmers'economicbenefitinthetraditionalsense.What Made the Difference. Understanding that the cooperative is a business where it was notunderstoodbeforeisaclearcontributionoftheCDP.Thismaybethemostsignificantdifferenceastowhy theSevenStarsactivityworks.After theCDP training,SevenStarsbecamemorebusiness-wiseactingonitsnewunderstandingthatthecooperativeneedstooperateasabusiness.Itisnotjustaboutgettingthemoneyanddividingitamongthemembers.Moreover,theCDPmainlyprovidesgovernanceandfinancialmanagementtraining,whileagriculturaltrainingisprovidedbyAmadlelo.Giventhatthecooperativeanditsmembersareessentiallyinvestorsandnotfarmers,theimplicationsarestriking.Thegroupcametogethertoleverageitsassetsinwaysthatimprovedtheeconomicwell-beingofeveryoneinwaysthatwouldnototherwisehaveoccurrednorwereanticipated.NeedsandWants."Welooktobuymoreland.Ifyoulookatourcowsnow,ourlandislimited.Wewanttobuyadjacentland,"theroundtableofSevenStars'leadershipsaid,allechoingoneanother.Abusinessplanisbeingdevelopedtopurchaseadditionalland.SevenStarshascomealongwayin3years.Thereisapersistenceandtheleadershipappearstobeinplacetoachievetheirobjectives.Itstwostate-of-theartdairyparlorsthatarefullyoperationalandarewellmanagedisasuresignofit.5. GwatyuFarmsSecondaryCooperative(planned)Snapshot.Gwatyu isa landareacomprisedof72farmsonabout40,000hectareswith4,200beefcattle, in addition to sheep and goats. The primary cooperatives formed to access South Africangovernment funding foragriculturecooperatives. Farmerson14 farmsestablished6primarybeefcooperativeswiththeideaofcreatingasecondarybeefcattlecooperative—Gwatyu—asamarketingandinputsupplycooperative.In2013,abusinessplanwaspreparedtodevelopanambitious10-yearbeefcattleandgrainproduction jointventure tobeowned50percentbyGwatyu famersand50percent by ImijeloAgri Investments, a black-owned agribusiness investment company aimed at


16

building black owned brands. Taking advantage of South Africa's Black Economic Empowermentprogram, the JVwouldhave included: infrastructuredevelopment;branding; theestablishmentofcommercialenterprises;jobcreation;theadditionofvalueaddedenterpriseslikeabattoirsandfarmstores;livestockcapacitybuilding;restorationandconservationofdepletedfarmland;andvaluechaininvestments. As with other JV's, ImijeloAgri would provide management expertise, technicalassistance,training,etc.Within2years,incomeswereprojectedtoexpandby50percent.Aspiration. The idea driving the formation of a secondary cooperative is to have an umbrellaenterprise tooperatecommerciallyonbehalfof farmersandtheirprimarycooperatives.The localfarmershopethatwiththeprofessionalmanagementofasecondarycooperative,theywillbeabletoreturnthedegradedfarmlandandinfrastructuretoitsonceproductivestate.Biggest Obstacle(s). As with virtually all the CDP targeted cooperatives, farmers, their primarycooperativesand their secondary cooperatives suffer froma lackofmarket information; a lackoftechnical andmanagerial skills; a lack of farm equipment; poor infrastructure; a lack of businessmanagement expertise by farmers; a lack of access to financing; and a lack of farming skills andexpertise.However,Gwatyuhasanother,potentially ruinousproblem.The6primarycooperativeshave had a challenging time creating a secondary cooperative because of aggressive land tenurechallengestoformingcooperativesamidtribalconflictsontheuseofcommunalland.Alocaltribalchief, who has authority over the matter, has chosen not to act or render a decision until theconflictingprimarycooperativesandformerworkersofwhitefarmsthatmakeupthearearesolvetheirdifferences.Atonepoint,opponentstotheformationofthesecondarycooperativewentsofaras toburn tires in the road toblockavisitbygovernmentofficials.CRIdeemed the situation tooinsecure for its staff believing there was little likelihood progress could be made in the hostileenvironmentuntiltheGwatyufarmersthemselvesresolvedtheirinternalconflicts.In thepast, variousgovernmentprograms supported landacquisition. In somecases, governmentbought land for emerging farmers, giving them title. But some farmers sold their land, despitepressure from government to stay and farm the land once it was granted to the recipients.Consequently, the programwas eliminated; government now keeps ownership of the farms andleasesitlandholders.Theconflictwasovertherightofthegovernmenttoownlandafterithadearliergranted ownership to private individuals. The opposition sought, unsuccessfully, to persuade thegovernmenttoallowlandownershipforeveryone.Theoutspokennessoftheoppositionessentiallydivided the community andweighed against the chief rendering a final decision even though hereportedly supports the formationofa secondarycooperative.Until theconflict is resolved, the6cooperativeshavenoresourcestoinvestintheequityneededtoformasecondarycooperativenordotheyhavethecapacitytoindependentlyaccessgrant,privateequityordebtfinancing.Workarounds.Farmworkersarecontestingtheirrighttotheland,however,thelandwhichisownedby government, has unofficially been handed over to the chief to make the decision as to whocontrolsit.CRItriedtopersuadethegovernmenttomakethedecisionbeforesteppingawayfromconductingfurtherCDPinterventionsuntiltheconflictisresolved.Essentially,it'sapoliticalproblem.Thecommunityhastobeunifiedbeforethegovernmentwillgranttheleaseagreementsandwithoutlease agreements, the secondary cooperative cannot start. The primary cooperative leaders,


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however,believefamiliesarebeginningtofavorwiththesecondarycooperativesideandthechiefwillrenderadecisionsoon,possiblybymid-2018.Oncethesecondarycooperativeissetup,itwillstillfaceanabundanceofchallenges,namelypoorroadsandlittletonoinfrastructure,however,accessto land via lease agreements will be a critical first step to accessing commercial financing viainfrastructuregrants(fencing,equipment,etc.)fromthegovernment.Results and Impact. "If we can overcome our problems of land ownership," Gwatyu FarmersAssociationChairmanRichardMalmanargued,"thenthesecondarycooperativecanexpandincomesby100percentbecausefarmershavetheknowledgeofhowtofarm."TheCDPhasprovidedtrainingtosome200farms,aswell,inareassuchasaccountingandanimalhusbandry.Thatsaid,thegroupappearstobeactingagainstitsownself-interest.Primariesandasecondaryco-opcanoperatetoday,butwithout the leaseagreements,access to financing is limited.Thecooperativesare self-fundednow.Leaseagreementshavetobeforall72cooperatives;withoutsuchagreement,Gwatyuisnotviewed as a viable commercial enterprise.When the CDP began, the land tenure issue was notpresent.Despiteassurancesfromthe6primarycooperatives'leadershipthatresolutionofthelandissueisaroundthecorner,CDPChiefofPartyLiebVenterbelievesitwilltakemuchlonger."Attheendoftheday, the6primarycooperativesareprepared,trainedandreadytomoveforward,butuntilthelocalsworkthroughtheirownconflictproblems,littlewillhappen."WhatMadetheDifference.RegardlessofCRI'sdecisiontostepawayfromincludingGwatyuinitsprogramuntilthelandconflictissueisresolved,saysMalman,"withouttheexperienceoftheCDP,ourcooperativeswouldnothavecometogetherontheirown."HearguedfortheneedofCRIasadisinterestedthirdpartyfacilitatortokeepthe6primarycooperativesunitedamidtheirowninternaldistrustanddiscord.Despitethepleasforoutsideleadership,itwasclearfromtheinterviewthattheleadershipalreadyexists.Whatisneededisconfidencebuilding,whichisperhapsaroletheCDPcanundertake.Leadershiphastocomefromwithinbythosewhohaveastakeinit.Indeed,thepressureoftheCDPendingmayhelptofacilitateactiontomoveforward.NeedsandWants.Oncethereisasecondarycooperative,farmerswillbeinabetterplacetotakeadvantageof theCDP—governance,businessmanagementandoperations,agricultural technicalknow-how.However,without thepromiseof a secondary cooperativeand the infusionof capital,managerialexpertiseandtechnicalknow-how,theGwatyulivestockfarmswillcontinuetooperatebelow their optimal level. Richard Malman fully understands that unleashing Gwatyu's potentialshouldbeamatterofinvestingingoodmanagement,trainingoffarmers,newequipment,upgradinginfrastructure, increasing livestock numbers, improving the quality of livestock, and refining thesupplychainprocess.VI. EnablersandInhibitorsEnablers.Thecooperativesspotlightedinthiscasestudywouldnothavesucceededatanylevel—organizationally, operationally, economically, financially or agriculturally—without the support ofgovernmental,agribusiness,investment,anddonorpartnersthatenabledthecooperativestoachieveadegreeofcommercialization,growthandsustainability.Anysinglegroupofenablersactingalonewouldlikelyachievesomeoftheirgoals,aswouldthecooperativeitself.However,asCDPChiefof


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Party LiebVenter sooftenpoints out, development is akin to the spokesof awheel, each spokerepresentinganessentialaspectoftheenterprise:leadership,businessunderstandingandpractice,agricultureknow-how,socialcapital,markets,products,management,etc.Whilethewheelmayturnwithonlyafewspokes,itsstrengthcomesfromhavingthefullcomplementofspokesnecessarytomake itviableandstrong.Thepoint isthatawholerangeoforganizationscantakeat leastsomecreditinbeingapartofwhatmakesanenterprisesuccessfuland,specifically,achievetransformation.Chief among the enablers has been the SouthAfrican government,which has provided themainsourceoffunding,albeitgrants,tomostlyrestorefarmlandandbuildinfrastructurelikefencesandmilkingparlors.Formostcommunities,governmenthasalsograntedcommunal landfor the long-termuseofitsoccupantstogenerateincomewithwhatevermeanstheyseefit.AmongSouthAfricagovernment agencies, Chris Hani District Municipality and its development arm, Chris HaniDevelopmentAgency,theDepartmentofAgriculture,theLandandAgriculturalDevelopmentBankofSouth Africa, and the South Africa Department of Trade and Industry have had critical roles inprovidingstart-upandcontinuinggrantsandconcessionalloanfinancing.Amongtheprivatesector,thetransformationintoviablecommercialbusinessesofsmallholderandsubsistence farms or shareholder-controlled communal land social enterprises would not haveoccurredwithout the purchasing agreements of established commercial processors and abattoirs,suchas:CoegaDairy(processor),CloverDairy(processor),Tonga(millingfirm),Unigrain,andBerlinBeef. In some cases, these firmsbecame lenders themselvesby financing in full or sharing in thecooperatives' short-term production costs. Another example is the Cooperative of Humansdorp,whichhasanagreementwiththeLandBanktoprovidecreditforemergingfarmers.IthasrequestedCRI'sassistanceincontactingviablecooperativesinordertoinvestappropriately.Inadditiontobeingapotential source of financing,The Cooperative inHumansdorp also provides agricultural inputs tocooperatives.Another category of enablers has been commercial private equity joint venture partners, namelyAmadleloandFarmInvest,bothofwhichreachedanagreementwithrespectivecooperativestoshareapercentageofprofits inexchangeforashareintheprofitsand/orequityoftheenterprise.Bothpartiesbroughtassetstothetablethattheemergingpartnerlacked.Thecooperativesuniversallyhadland to farm and some fixed assets, such as dairy parlors. The JV partner broughtmuch neededworking capital, management expertise and moveable assets, mostly cattle. Both Amadlelo andFarmInvestprovideon-goingtechnicalsupportandtraininginadditiontotheiroverallmanagementoftheenterprises.Donors, principally USAID, via its Cooperative Development Program, has brought much neededtraining,technicalassistance,andmentoringtothecooperativesintheareasofgovernance,businessand agricultural know-how. Cooperative leaders and members alike have benefitted from adeepening and broadening of their capacity and know-how in terms of understanding into andoperating of a cooperative enterprise. In areas absolutely key to creating, growing and operatingsuccessfulenterprises,cooperativemembershavebecomemoretransparent,trustworthy,businesssavvy,strategic,focusedandcapable.


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Amyriad of alliances and apex organizations also contributed to the commercial transformationinsofaras the social capital theybrought tobear, through theirnetworkingandbusiness linkages.WiththeguidinghandoftheCooperativeDevelopmentProgram,cooperativeswereintroducedtoahostoforganizations,suchastheRedMeatProducersOrganization.Inhibitors. The flip side of the government's promotion of economic development and theinstitutionalizationof itssupporttoemergingfarmershasbeenitssomewhatcontradictorypoliciesthat result in just the opposite by restricting economic advancement of emerging farmers.Mostdecidedly,thegovernmentprovides land, leasedandmostlyonacommunaltenurebasis,tofarm,however,withoutindividualtitle,commerciallendersarehighlyreluctanttoacceptitascollateralformortgages,production,infrastructureoranyotherkindofdebtfinancing.Hence,asdescribedintheprofilesofeachofthecooperatives,theirjointventureandvaluechainfinancingstrategies.Likewise,despiteitsbesteffortstoincentivizeemerginghistoricallydisadvantaged(black)farmerstotakeadvantageofgovernmentprogramsandtocommercializetheir farmingoperations, theSouthAfrican government concluded that given the large numbers, it would encourage farmers andshareholdersof land togroupthemselves intocooperativesasa faster,moreviablemeans for thegovernmenttomeettheirfinancingneeds.Dealingwithrelativelyfewergroupsratherthanthousandsofindividualsmadealotofsense,theoretically.The solution was to offer $35,000 to any group of at least 5 individualswho wanted to start acooperative as a means of farming. "In government, there is a constant campaign to formcooperatives. Otherwise, it is not possible to service individual farms. There are toomany," saidMandleniDaweti,agriculturaldevelopmentcoordinatorfortheChrisHaniDistrictMunicipality.Thepresumption, however, was wildly optimistic. The result: near total failure of the policy. TheCooperativeDevelopmentProgramhastargetedtherelativehandfulofcooperatives,manyofthempre-cooperatives, toessentially pick upwhere the South Africanprogram failedwith foundationalinterventions to provide support where there appears to be viable leadership, visioning, and adeterminationtocreateeconomicactivitywheretherehadbeenlittletononepreviously.Cooperativeformationisbeingpushedfromthetopdown,ratherthanfromthegroundupbylocalfarmers. It'smacro-drivensocialpolicyvs. farmer-driveneconomicneed.Formost inSouthAfrica,farmersandcommunallandholdersarenotformingthecooperativesoutofself-interest.Itisbeingpushedonthemasgovernmentpolicywhichisagoodreasonwhyitmaynotbeworkingverywell.Inanotherarea,SouthAfricancommerciallenderspurportedlyloandirectlytoemergingfarmers,butthereislittleevidenceofit.Lendingcomesfromgovernmentsupportedorguaranteedinstitutions,valuechainfinancingorprivateequityinvestmentforthemostpart.Intheory,thecooperativescancollateralizetheirlandtoborrow,however,borrowersmuststillbecreditworthy,astandardthatisvirtuallyimpossibletomeet.Inatleastoneinstance,acooperativehasbeenitsownworstenemy.Facedwithrepeatedtheftoffencing, poles and equipment at its vineyard, Mayime avoided reporting the incidents to theauthoritiesforfearofviolentretaliationfromtheperpetratorsinthecommunity.Thisisaveryreal


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problem and cause for concern because it reflects a fear of retribution that is self-limiting thecommercialdevelopment.StafffromtheCDPsteppedintoprovideguidance,interveningonbehalfofthecooperative.Overtime,thisbehaviormayabet,butfornowitisahindrancetoitsdevelopment.VII. TakeawaysandConclusionsOutcomesandImpactAnewkindofpublic-privatepartnershipthatisrocketing economic transformation in SouthAfrica has emerged from Cooperative Re-sourcesInternational'sforayintointernationaldevelopment. CRI's business-oriented, non-project centric strategy and approach has resulted insomesurprisingoutcomesthatappeartobesustainable,lessdonordependentandisfor-profit,busi-ness-driven.Asamicrocosmof theentirecooperativedevelopmentprogram, theanalysisof5cooperatives in this report can inform cooperative development organizations, USAID, otherdonorsandlocalpartnersonhowinnovation,flexibility,andcollaborationcanequalmorethanthesumoftheparts.Inthissense,theCDPmaybeacatalyticchangeagentinpioneeringanewparadigm to transforming household level, subsistence agriculture into cooperatively organized,profitable,commercialandsocialenterprisefirmsthatbenefitfarmandcommunityalike.Withaneagerness tobuildbusinesses,CRI's approach centersonproviding trainingand technicalassistancetobuildneededfoundations:(a)cooperative—legalcompliance,organizationalstructure,governance,cooperativeculture,purposeandmemberfocus;(b)agricultureandanimalhusbandry—farmmanagement,animalnutrition, improvedgeneticsandsoilanalysis; (c)businessoperations—accounting, procurement, business plans, access to credit, engagement with buyers and inputproviders,marketingandprocessing;and(d)planningforwardtoimplementwhatthecooperativeslearnedandadvancedintheirbusinessplans.Despite their enormous impact and innovative approach, the joint venturesdescribed in this casestudy have not increased the number of black farmers, a presumed goal of both South Africa'sagriculturalanditsblackempowermentpolicies.Whatithasaccomplished,however,isanincreaseintheavailability,affordabilityanddiversityofproducts in the localmarketplaceandanexpansionofincomesdirectlytoproducersfarmingtheirlandortoshareholdersofcommunalinvestinginco-opsassocialenterprises.Communities likeZulukama,SevenStarsandMayimethatviewtheirassets interms of community and their role as shareholders are, in effect, social enterprises. Smallholdertransformationtocommercialenterprisesisnotaboutjobcreationforthesegroupsasmuchasitisaboutexpandingtheproductivityandprofitabilityofthegroup'sassetsinwaysthatexpandincomes,wealthandwidespreadsocialcapitalthatcanbenefitcommunitiesovertheindividual.ThePhase II cooperatives thathavebeenthesubjectof this studyhave,overall,madesubstantialprogress intheirbusinesscapacitycomparedtothreeyearsagowhenanassessmentmadeofthesame cooperativesone year after theproject's start, reported that "notmuchprogresshadbeenachieved insofar as the anticipated outcomes." CRI and the co-ops themselves expected more

"We'vebeentrainednow."WithouttheCDP,itmighttakeus10yearstobewherewearetoday."

—CanzibeRawanaAdministrator

ZulukamaDevelopmentTrust


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advancementinthetimeframethanperhapswasreasonable.OnefactorthatdamagedCRI’soverallresultsdataisthatGwatyu,aspreviouslyreported,experiencedinternalconflictthatseverelylimitedit from making headway. This, in turn, necessitated it being dropped from the CDP until theenvironmentstabilized.Assuch,thenumberofbeneficiaryPhaseIIcooperativeshasbeenreducedfromfivetofour.Regardless,sinceCRIbeganPhaseII in2014,cooperativeshavemettheoverallgoalsof increasinginputpurchases;increasingtransactionswithbuyersandlong-termpurchasingagreements;improv-

ing transactions with government authorities;increasing the value of government assistance;increasing attendance at industry events andmeetingswithindustrypartners;andthecreatingviable business plans. The success in thesecategoriesdemonstratethatthecooperativesare

becomingmoresophisticatedbusinesses.After3years: (a)newjointventure/purchasercontractsareinplacebetweensecondaryco-opsandbuyers/sellers;(b)cooperativesareaccessingnewgrant,privateinvestmentordebtfinancing;(c)secondarycooperativesareoperatingstrongerandnewvia-blecommercialbusinesses;and(d)cooperativeleadersandmanagershaveadeeper,morematureunderstandingofbusiness—theopportunities,risks,constraints,costs,andrewards.Particularlynoteworthyisthatwithmanycooperatives'newfoundbasicunderstandingofbusinessfundamentals, cooperative leaders are looking beyond their immediate production activities. Themajority have developed sophisticated plans to build on their joint venture or grant financing todevelop100percentwholly-ownedandcontrolledcommercialenterprisesthatbenefiteithertheircommunitiesdirectlyortheirmember-farmers.Mayime'swineproductionandIkhephu'svegetablepackingplantareexamples. "Ikhephu,ZulukamaandMayimeknowhowto runabusiness.Whenthere are people who understand the concept of business, the cooperatives will work," arguedMandleniDaweti,agriculturaldevelopmentcoordinatorfortheChrisHaniDistrictMunicipality.Atthesametimesomegoalswillnotbeachieved inareaswhereCRIandcooperativesalikehavebeenoverlyoptimisticgiventhelimitedtimeframeandbusinessenvironmentinSouthAfrica.CRIisadjustingtheexpectationsforseveralofitsexpectedresults,inparticular:(a)increasedlevelofcreditaccessedandtransactionswithlenders;and(b)expandedyouthandgenderengagement.Severalfactorshavecontributedtothechallengeofmeetingtheanticipatedresults:Weather.Firstandforemost,in2016,SouthAfricaexperiencedtheworstdroughtinnearly35years,accordingtotheSouthAfricanWeatherServices.Theseveredrought,coupledwiththeweakeningofthe South African rand has created an extremely challenging environment for any agriculturalbusinesstoprogress,letalonethenascentcooperativestargetedbytheCDP.Farmershavebeeninsurvivalmode. They simply have not had extra resources to grow and diversify their cooperativeactivities.Nevertheless,cooperativesappeartobemakingrealprogressintermsoftheirdeepeningbusinesscapacity, inspiteoftheeconomic,climaticandpoliticalobstacles.Whiletheymaynotbereflectedinthecurrentfinancialmetrics,thecooperativesoperationalandriskmitigationcapabilities

"Thebusinessmodelneedstoaccommodatethedevelopmentalneedsandrealities."Ifwedon'tactivelypushagainsttheboundariesitwon'thappenbyitself."

—LiebVenterChiefofParty



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meantheywillbewellpositionedandreadytotakeadvantageofopportunitiesastheyariseandastheagriculturalandeconomicclimateimproves.LandOwnership.Cooperativesthatwerenotoperatingoncommunallanddidmateriallybetter.Theywerelessconstrainedbythelackofcollateralizationrestrictions.Giventhehistoryofrestrictivelandtitlingandother lawsandpolicies inplace,co-opsarehobbled in theirability toaccessaffordablecredit.Theyhavebeenallowedtousecertainassetslikelandandkeeptheincomeearnedfromitsuse,however,theydonotowntitletothe landoutrightwhichcouldbeusedtocollateralizetheirborrowingfromcommercial lenders.Thevalueoftheassetisseverelylimitedbecausecommercialbankswillnotacceptcommunallandasanassettobecollateralized.Neitherarebankscollateralizingthe sale of future crops or livestock for production financing. They simply won't take the riskwithoutacommercialpartnerandtheprivateequityinvestorswillnotworkwithsmallerfarms.Thelackofmovableorfixedassetsthatcanbecollateralizedforborrowing,lackofabusinesstrackrecord, and virtually no operational or agricultural know-how,meansmost cooperatives are at asharp disadvantage in establishing, maintaining or growing a viable agricultural enterprise.CooperativeslikeIkhephu,ontheotherhand,wherefarmersholdoutrighttitletotheirland,haveamaterialadvantage.Evenso,theytoofacelimitationsasemergingfarmers,despitethegovernment'sBlack Economic Empowerment policies designed to remedy the historical biases. Secondarycooperatives help, because they can collectively represent large numbers of famers andcommunity members with one voice. They also tend to have better educated and moreprofessionalstaffcapableof innovativelyaccessingcreditwithvalue-chainfinancingand jointventures'privateequity.Shareholder-Driven Social Enterprises vs. Farmer-Driven Cooperatives. Traditional farmer co-opsemergeoutofarecognitionthatinafreeenterprisesystem,farmerscandobetterbandingtogetherthanbyactingalone,tobuyneededfarminputsandcollectivelymarkettheircropsandlivestock.InSouthAfrica,themoderngenesisofcooperatives issomewhatdifferent.ThePhaseIIcooperativesexaminedinthisreporttendtoviewthemselveslessastraditionalfarmer-ownedcooperativesthanasshareholderswhooperateasocialenterpriseforthebenefitoftheircommunity.This isat leastpartially an outcome of Apartheid and the lack of entrepreneurial opportunities; the near totalownershipofproductive landapportionedascommunalproperty;andtherelativelyfewemergingfarmers with agricultural know-how. Regardless, the essential idea underpinning cooperativeformation is thesame.Collectiveeconomicadvancement intheformofbusiness,notwithstandingthebeneficiaries,advancesinternationaleconomicdevelopmentinsoundandsustainableways.TheoryofChange:ANewParadigmAmong agriculture cooperatives in South Africa, a handful of distinct factors, singly and incombination,appeartomostaffecttheabilityofcooperativestoachievelong-termsuccessasviablecommercial enterprises, not dependent on outside assistance to operate their business. Forcooperatives,nothingisquiteasimportantashavingaccesstorealisticfinancing,buttheprecursortothat is their grounding in the basic understanding in governance and business fundamentals. Thelatterservesasthefoundationforallfutureadvancements,achievementsandaccomplishments.For


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developmentimplementingpartners,therecordinSouthAfricaisclear:progressisslow,especiallyinagriculturewithitslongperiodsofcropandlivestockcyclesandtheslowpaceofbuildingbusinesses.Alongtimehorizonisessentialasistheneedforflexibilityinprojectmanagement.Conditionsandassumptionschangeastowhatwillworkwhenaprojectisdesigned.Unanticipatedobstacles,hurdlesandbarriers,sometimesyearsafteraproject'sapproval,meanschangesinimplementationmustbemadeaswell,ifgoalsaretobemet.Unique InvestmentModel.Auniquefinancingmodel that isevolving inSouthAfricamayreflectanewparadigmthatcombinesbothimplementerandbusinesspartnerbymeansofjointventures,onethat is fundamental to the economic transformation of African agriculture. It encompasses aninherentexitstrategyfromdonoraidanditissustainable.Itrecognizesthatwithgreaterawarenessof financials and their business overall, cooperatives are better stewards of their ownbusinesses.Cooperativemembersaskbetterquestions,pushtheirboardsandmanagersforgreatertransparencyon financials, demand accountability, and expect strong business results. From a developmentalperspective,themostnoveloutcome,perhapsmoreaptlyabyproductofCRI'sstrategy,hasbeenthedirectinvestmentinjointventuresbyCRI'sownstaff.Fromthebeginning,CRI'sstrategyhasbeentotreat agriculture as a business, approaching each activity less as projects than on creating andstrengtheningviablebusinesses.Thissharedbusiness-driven,investment-driven,development-drivenstrategyappearstobepayingoff.Asmuchasthecooperativecommunityseekstohave"the"model,atleastinSouthAfrica,itdoesnotexist. Successful cooperatives do, however, have tipping points. Nobody knows the joint venturepartner (a targeted CDP beneficiary) better than the CDP staff themselves, yet few, if any, haveactually invested their own substantial resources into the developmental project they themselveshavebeenchargedwithimplementingandmanaging.Yet,thisiswhathasbeenundertakeninCRI'scooperativedevelopmentprogram.Having"skin in thegame" tookonawholenewmeaningandlevelofcommitmentandcredibilitywhenCRI'sCDPchiefofpartyfoundedFarmInvesttopersonallyjoint venturewith private equity in several CDP targeted cooperatives. Venter's greatestwish, hepurports,istoshinealightonwhatisdoable,whatisatstake,andwhatcanbegainedforeveryonebyfollowinghisexample.1. AccesstoFinancingAccesstofinancing—thecoreingredienttocommercialization—isvirtuallynon-existenttopre-andnascent cooperatives. Cooperatives and their farmer-members are simplynot creditworthywithintheircurrentcircumstances.Yet,capitalandcredit,usuallyalotofit,isessentialforanycommercialactivity. For thosewanting to transform fromhousehold level farming to a commercial scale, theobstacles are many and enormous. First and foremost is access to affordable credit. Without it,nothingelsematters.WithvirtuallynocommercialdebtfinancinginSouthAfrica,severalalternativeshaveevolved:(a)governmentgrants,(b)value-chainfinancing,and(c)privateequityinvestment.GovernmentGrants.TheSouthAfricanAgricultureDepartment,LandBank,DepartmentofTradeandIndustryandChrisHaniDistrictMunicipalityintheEasternCapehaveservedastheprinciplesourcesof financing for historically disadvantaged farmers in the post-Apartheid period. Support to


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agricultural cooperativeswasmadeapriority,particularly secondary cooperatives,which couldbeservicedfasterandmorecheaply.However,mostcooperativeshavehaddifficultydevelopingviableapplicationstosecuregrantstofinanceproductionandinfrastructureimprovements.Withthehelpofthecooperativedevelopmentprogram,however,since2012theseagenciesapprovedmorethan$95millioningrantstoahandfulofprimaryandsecondarycooperativesthathavepartneredwithCRIthrough itsCDP.Theupsidetothissourceofcapital is thesizeof theavailablepoolof funds.Thedownside is the uncertainty of the continued availability of the funds that can change and arechangingamidthepoliticalvagariesofeachelection.Value Chain Financing. As cooperatives build their business track record and sophistication, valuechain financing, i.e., factoring— the extension of short-term credit for production and operatingexpenses that is repaid once the offtake occur by buyers of the product — is a viable option.Numerous commercial agreements between the CDP cooperatives between suppliers and buyershavebeennoted:MayimesellsmilktoCoegaDairyandCloverDairy.ZulukamaandIkhephusellbeeftoEast LondonAbattoir,BerlinBeef andPick'nPay.Mayime isprocessinggrapes throughBergsigWinery.ZulukamaisworkingonanagreementtosellitsmeattoWoolworths,agroceryretailer.Inmanycases,thevaluechainfinancing,isineffect,governmentguarantees.Forexample,theLandBank,anoffshootofSouthAfrica'sDepartmentofFinance,investsindevelopmentprojects,butdoessomostly through intermediaries. The Black Business Council (BBC), for instance, is handling thepackagingdealthatisintheworkswithIkhephu.UnigrainandothersalsoserveasintermediariesforBBC. Inputs are financed by a soft loan, with a concessional interest rate over 5 years. Crops orlivestockareinsuredatacommercialrate.Theupsideisaccesstoaviablesourceofcreditthatistiedtothecroporlivestock.Thedownsideisthecostofcredit,cooperatives'weaknegotiatingcapability,andthecostofinsurance,shouldanaturaldisasterstrike.Private Equity Investment. In South Africa, most former homelands are communally owned.Commercial lenders largely refuse to provide credit without title to land to collateralize theborrowing. Enter the private equity development investor. In contrast to other private equityinvestments,FarmInvestisanoutlier,perhapsbeingtheonlysuchinvestorinthecountry.Itsmotiveislessaboutmaximizingitsownprofitsthaninenlargingtheeconomicpiebyexpandingeconomicdevelopmentthatcanexistwithoutgrantsandotherdonorassistance. In its twocurrentprojects,FarmInvest takes either a 50 percent or minority equity stake in the venture. In each of itsinvestments,theperiodofthejointventureisfor10-years,afterwhichanindependentvaluationofthebusiness is conducted.At thatpoint thecooperativehas theoption tobuyout its investmentpartner,FarmInvest,atitsthenassessedvalue.Intheinterveningyears,FarmInvestsharestheprofitsandco-managesthefarmingoperationwithalocalcooperativemanagerservingasadeputy,ineffectlearningthebusiness.Whilecommercialfinancingissecuredonthebasisoftheexperiencedpartnerduring the 10-year JV period, by the end of the 10 years, the objective is for the black-ownedemerging cooperative to secure bank financing on its own.When additional financing is requiredoutsideofgrantsorbanklending,FarmInvestloanscapitaltothecooperativeforitsshareoftheJVatmarket rates, currently around 10.25 percent. There are variations on the FarmInvest approach,thoughnoneengagethelocalpartnerquiteassharplyasFarmInvestwiththeintentofachievingnotjustasoundinvestmentoutcome,butasustainabledevelopmentaloutcome,too.


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2. UnderstandingtheFundamentalsLearningisnotquick.Cooperativesinthiscasestudyrepeatedlycamearoundtoasingleconclusionwhen asked about the value of the cooperative development program. They all talked about thedeep, consistent, personal, confidence-building help from CRI, whether it was on the basicunderstandingofbusiness,cooperativegovernance, livestockor justhowtotrustoneanotherandgetalong.Intheprivatesector,thiscouldreasonablybeviewedasconsulting; inthedevelopmentcontext, itmaybetterbe referred toasmentoringorproviding technicalassistance.Regardless,amajoroutcometheCRIstaffhashadinworkingdailyandholisticallywiththetargetedcooperativesistheexceptionallyhighdegreeoftrust,support,commitment,andunderstandingthatisfoundationalandessentialtocooperatives'success.Leadershipisapartofit.NaturalleaderscanemergeandwithsupportofprogramsliketheCDP,theycangrowandachievemuchfortheirorganizations.Othersmaynotbeawareoftheirpotential,soprogramsliketheCDPcanidentifythem,teachthem,anddomuchtowipingasidetheirinsecurities.3. ALongTimeHorizonCooperativeformationcantakeyearstooccur.Itrequirespullingpeopletogetherwithoutanyrealfoundationincooperativesandwhohavenobusinesssenseorentrepreneurialframework.Inmostcases, there is a lack of physical farm infrastructure. Yet, this hasmore often than not been thestartingpointfortheCDPactivitiesinSouthAfrica.Oncepastthefundamentalstherearefactorsandcircumstancesdistinct toagriculture: (a) longcropand livestockproductioncycles,e.g.wine is3-4years,cattleproductionisatleast18months,etc.;(b)cooperativeformation,i.e.legalandregulatorycompliance, governance skills, business capacity and agricultural knowhow that each requireextensivetraining,mentoringandtechnicalassistance;(c)addressingthelackoffarminfrastructurerequiresvisioning,strategizing,businessplandevelopmentandapplyingforcreditorgrants.;(d)lackofaccesstowaterandtechnology,suchascoldchains,computerizeddairyparlors,andelectricity;(e)exogenous and uncontrollable factors like drought, pests, animal disease, currency valuation andpoliticalregimechange,etc.;(f)theslowprogressofbuildingoperationalandprofitablebusinesses;and(g)constantchallengesofboardturnoverandtriballeadershipinfluence.4. Management/ImplementationFlexibilityCRIemployedamanagementmodelunique indevelopment,butcommonplace in itsday-to-dayapproachtoitsbusiness.Itretainedalocalconsultingfirm(FarmVision)tomanageitsCDPproject.Byhiringaconsultingfirm,thewholementalityofprojectmanagementbecamelinear.Itwasaboutbusiness management, not project management. The approach to achieving the goals andexpectationsofCRI's cooperative agreement transcendedaprescribed courseof actiondictatedwithin a project design thatwas developedwithout the consultation of anyone responsible forimplementing it or within a realistic context. As in business, the strategy driving the technicalapproachchangedwithnewconditions,newinformation,andsetbacks.Whilethatistrueformanydevelopmentactivities,thedifferencewithCRI'sapproachisthatitregularlyadjusteditsstaffing,approach, and interventions to the needs and success ofwhatwas being tried. The day-to-day


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opportunitiesandchallengesalsofiguredprominentlyintooperatingwithintheoverarchinggoalofdoingwhatwasneededtocreatecooperativebusinesses.Successisnotconsideredthecompletionoftheproject,it'stheactualizationofjointventuresandsimilar business outcomes in the case of CRI's cooperative development program. Not allapproachesfitwithinacooperativemodelforallkindsofreasons,betheyhistoricalconsiderationsor organizational idiosyncrasies.Without flexibility tomanage for results, however, projectswillsimplynotsucceed. WithouttheCooperativeDevelopmentProgram,thecooperativeswouldbemoving,butnotatthis

rate.CRIhaspreparedthemwithviablebusinessplanning.Withouttheinterventions,theywouldnotbeoperatingatacommerciallevel.Theyaregettingfinancingfromgrantsnowwheretheyhadnotbeenabletogethelpearlier.

—MandleniDawetiAgricultureDevelopmentCoordinator

ChisHaniDistrictMunicipality


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AGRICULTURE COOPERATIVE PRIVATE EQUITY INVESTMENT POWERS SUSTAINABLE ECONOMIC TRANSFORMATION

Eastern Cape, South Africa. A new kind of public-private partnership that is powering economic transfor-mation has emerged as an unintended outcome of the little-known USAID-supported Cooperative Devel-opment Program (CDP). The extraordinary story begins with Lieb Venter, a principal of FarmVision whose South African agricultural development firm is helping Cooperative Resources International (CRI) manage its CDP program locally. CRI set out to transform household level producers and their cooperatives into profitable small-scale firms participating in value chains, as suppliers to local and regional processors and as buyers of inputs from local and regional firms. Along the way, it discovered that a core ingredient to com-mercialization — access to financing —was virtually non-existent to the nascent producers in South Africa's Eastern Cape region. In South Africa, as in 90 percent of Africa, all of the land in the former homelands is communally owned. Commercial lenders largely refuse to provide credit without title to land to collateralize the borrowing. It presents a paradox: South Africa wants to promote agricultural development, but without financing little can be accom-plished to commercialize household level farming. Yet, commercialization is key to the economic transformation of agricul-ture into sustainable enterprises not de-pendent on governmental support. From the beginning, CRI's strategy has been to treat agriculture as a business, approach-ing each activity less as projects than on creating and strengthening viable busi-nesses. Having initially identified 16 agricultural cooperatives with the potential to operate credible busi-nesses, training centered on governance, business capacity and agricultural know-how. None of that would make a difference, however, without the resources needed to operate and grow the co-operative businesses. Loans for seasonal production, infrastructure financing, and value-added processing

are among the most in demand. The Cooperative Development Program provided help, for the first time, to the cooperatives by guiding the development of business plans that served as applica-tions for South African government financing. In just over 3 years, the co-ops were awarded more than $94 million, a remark-able feat in itself. Despite the outsized results, CRI and the coop-eratives themselves understood that such financing can be far too

ephemeral. As the economic needs, politics, and politicians change over time, so too, can the availability of such grants. Indeed, today, the level of grant support has shrunk precipitously. Development-Driven Private Equity. Enter CRI's Chief of Party Lieb Venter, an entrepreneur who inde-pendently formed FarmInvest to take a minority investment in several of the CDP cooperatives with his own resources. He says that joint ventures are "the heart of the model for agriculture development in South Africa because it removes risk which, in turn, permits financial institutions to loan money." So far, FarmIn-vest has co-invested more than $100,000 and expects to invest an additional $150,000. "Unlike other private

We're all about business. We have no social agenda. But we do want to help emerging farmers to grow.

—Lieb Venter Partner, FarmInvest

MayimeCooperative—FarmInvestVineyardJointVenture


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equity investors, however, from the beginning, it's their company. At the end of the day, once we go, this company has a track record. Banks will lend to it. It has a market. It has input supplies. From the beginning, we put our manager in and the blacks put a manager next to him. Without the CDP, investment would have stopped long ago because we would not have been familiar with the cooperative," says Venter. From his standpoint, "the more around the table, the better," Venter argues. The Model. In contrast to other private equity in-vestments, FarmInvest's principle motive is less about maximizing its own profits than in enlarging the economic pie by expanding economic devel-opment that can exist without grants and other do-nor assistance. Among its two current projects, FarmInvest has a 45 percent equity stake in a vine-yard to Mayime Agriculture Primary Cooperative's 55 percent stake, a diversified cooperative that produces both dairy and grapes. In each investment, the period of the joint venture is for 10-years, after which an in-dependent valuation of the business is conducted. At that point the cooperative has the option to buy out its investment partner, FarmInvest, at its then assessed value. In the intervening years, FarmInvest shares the profits and co-manages the farming operation with a local cooperative manager serving as a deputy, in effect learning the business. While commercial financing is secured on the basis of the experienced partner during the 10-year JV period, by the end of the 10 years, the objective is for the black-owned emerging cooperative to secure bank financing on its own. When additional financing is required outside of grants or bank lend-ing, FarmInvest loans capital to the cooperative for its share of the JV at market rates, currently around 10.25 percent. The financing scheme has proved successful beyond expectations, says Venter. The Vineyard Blooms. With the JV firmly in place, South Africa's Land Bank, in late 2017, agreed to lend Mayime $800,000 (at market rates) to process, bottle and label its own wine. This reduces production costs considerably by avoiding the need to pay a third-party to process the grapes into wine, thus providing more profits to the cooperative and more income to co-op members and their families. In the 3 years since Mayime's 375 members established a wine grape enter-prise, with the assistance from CRI, the vineyard is on track to expand from its original production of 5 hectares to 100 hectares, with a 100-ton winery to be built on the premises. Between 2016 and 2017, wine production has grown from 3,800 bottles to 16,000 bottles and new export sales agreements to China and the Netherlands are in the works, in addition to sales in the local marketplace. Likewise, in 3 years the permanent employment force has grown to 20 from zero with about 100 seasonal workers hired annually to pick grapes. Mayime's wine has won several top honors among wine in-dustry, further putting it on a pathway to success. The Bottom Line. The financing model that is evolving in South Africa is reflecting a new paradigm that combines both implementer and business partner by means of joint ventures, one that is fundamental to the economic transformation of African agri-culture. It encompasses an inherent exit strategy from donor aid and it is sustainable. With greater awareness of financials and their business overall, cooperatives are better stewards of their own businesses; there is more stability, less infighting, and less conflict. Co-op members ask better questions, push their boards and managers for greater transparency on financials, demand accountability, and expect strong business results.

We put our own money in it. We're not looking to maximize the profit, but we do want to maximize the developmental impact. There's such a big need. We're getting calls every day. Please come help us, they say.

— FarmInvest

David Cohen Consulting — Case Study: Strengthening Cooperatives' Bridge To Value Chains 29

Appendix Itinerary KeyInformantInterviewsDetails—name,titledate,location) KeyInformantQuestionnaire


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ITINERARY

SouthAfrica(EasternCape)—October9-13,2013

October9GwatySecondaryCooperativeQueenstown,EasternCape Mr.RichardMalman–Chairman,GwatyFarmer'sAssociation Mr.LungeloMketso,DeputyChairman,GwatyFarmer'sAssociation ChrisHaniDistrictMunicipalityandChrisHaniDevelopmentAgencyQueenstown,EasternCape Mr.MandleniDaweti,AgriculturalDevelopmentCoordinator Ms.NokhanyoMoyake,AgriclturalDevelopmentCooperatorforLivestock CDPAgricultureTechnicalAdvisorQueenstown,EasternCape Mr.RollandBrownCDPPhaseIIManagerQueenstown,EasternCape Mr.JannieStrydomOctober10MayimeWittlesea,EasternCape Mr.SelborneCecane—ChairmanZulukamaSecondaryCooperativeandZulukamaDevelopmentTrustWittlesea,EasternCape Mr.CanzibeRawana—Administrator,ZulukamaDevelopmentTrust Mr.NomvuyoMtshiselene—Chair,ZulakamaSecondaryCooperative Mr.JosephMadlongwana—TraditionalLeader PhaseIIManagerQueenstown,EasternCape Mr.JannieStrydom


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October11IkhephuFarmer'sCooperativeElliot,EasternCape Mr.GcinaMadasa—Chairman PhaseIIManagerQueenstown,EasternCape Mr.JannieStrydomOctober12SevenStarsSecondaryCooperativeKeiskammahoek,EasternCape Mr.AlfredMcasi—ViceChairman Ms.JosephineMaso—Trustee,ShilohDairyTrustOctober13CDPChiefofPartyandPartner,FarmInvestJeffreysBay,EasternCape Mr.LiebVenter


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SOUTHAFRICAKEYINFORMANTKEYINTERVIEWQUESTIONNAIRE9-13October2017

Purposes

FulfillUSAIDCDPrequirementincooperativeagreementtowriteacasestudyonPhaseIIoftheCDPandtocontributetothefinalreportcoveringtheperiod,2010-2018"CRIwillshareprojectoutcomes,lessonslearned,andbestpracticesinpostingstoitswebsite,ina case study with members of OCDC and USAID, and locally in South Africa with the CDP’sstakeholders at the project’s end. The case studywill document and share project outcomes,barriers, needs, gaps and the subsequent lessons learned, best practices and impact…..Theoverarchingapproachwillbethree-pronged:(a)accountability—hastheprojectbeeneffective,relevantandefficient?(b)learning—hastheprojectgeneratednewknowledgeasaresultofthePhase IIactivities? (c)sustainability—what is the likelihoodthat thebenefitsof theprojectwillendureovertimeoncetheprojectiscomplete?"

Stakeholders • CDPStaff • 5Cooperatives—Mayime,Ikhephu,7-Stars,Zulukama,Gwatyu • Government/IndustryGroups/JointVenturePartners/OthersPhaseIICooperatives—Outcomes,Barriers,Needs,GapsandImpact CooperativeDevelopmentProgram—Goal To transform household-level dairy and beef producers and their cooperatives into profitable

small-scale commercial firms participating in value chains, as suppliers to local and regionalprocessorsandasbuyersofinputsfromlocalandregionalfirms.Thegoalsaretoincreaseaccesstoaffordableinputstoenhancelivestockproducers'productivityandtoexpandthoseproducers'shareofthemarketplace.Bottomline:increasedprofits,highersales,expandedincomes.

1. TheBigPictureQuestions

• Tellmeaboutyourself?WhathasbeenyourconnectiontoCRIandtheCDPproject?Whatisyourroleinit?

• Tellmeaboutyourcooperative.Whatisyourprimarybusiness(e.g.,dairy,beef,supply,

somethingelse)andstructure(e.g.,primarycooperative,secondarycooperative,cooperativeunion,trust,association)?

• Whatdoesthecooperativeanditsfarmer-memberswanttoachieve?What'syourvision

andstrategy?Doyouhaveaplanforgettingthere?What'sthetimeframe?• Howlonghasyourgroupbeenaround?Howmanymembers?Women?Youth?Doyou

wantmoremembers?


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• Wouldyousaythecooperativeneedstodotobesuccessful?Accesstocredit?Markets?Memberservices?Sustainability?Priorities?

• Whatareyoursaleslike?Aretheygrowing?Whatareyourmarkets?

• Cooperativecapitalization:memberequity/savings? • Tellmeaboutthecompetition. • Whatisthecooperative'sgreateststrength? • Whatchallengesdoesthecooperativeface?

• Resilienceandriskmitigationaretwinhazardsinbusiness.Howdoesyourcooperativehelpitsmembersmitigaterisks—economic,financial,market,weather,andproduction?

o Memberequity/capitalization? o Commercialagreements? o Memberservices?

2. YourCooperative'sManagementandOperations • Thefirststepasuccessbusinessistohaveagoodorganizationinplace.Tellmeabouthow

yourcooperativeisgoverned?Whomakesdecisionsandhowaretheymade?Domembersparticipateinmakingdecisions?How?

• Doyoutrustthatthecooperativeisoperatinghonestlywiththemembers'money?

Government? • Howiscommunicationwithinthecoop—managers,leaders,members,buyers,sellers,

investors,government?

• Areyoubeinginformedofthecooperative'sfinancesandoperations?Doyouunderstandit?Canyouaskquestionsandgetgoodanswers?

• Howarethecooperative'searningsused?Aretheypaidouttomembersorreinvested?Are

yousatisfiedwiththewaythemoneyisbeingused?Whatwouldyoudodifferently? • Collectingandrecordinginformationfinancial,production,salesandsimilardataisimportant

tounderstandinghowwellthecooperativeisdoingandhowwellyouaredoingasamember-farmer.Isdatabeingcollected?Doyouthinkitisreliable?Howisthefinancialandbusinessinformationanddataused?

• Isthecooperativecompliantwithpertinentlawsandotherrequirements,e.g.sanitaryrequirementsformilkhandling?

• Doesco-ophaveanauditeachyearonitsfinancialbooks?


34

• Oneindicationofasuccessfulbusinessisitscommercialagreements(bothsalesandpurchases),accesstocreditandjointventureslikeAmadlelo/FarmVisionmilk-sharingagreements.Yourthoughts?

• Abasicprincipleofacooperativeisthatit'smemberssupporttheorganizationwiththeirown

moneytogetitstartedandoperateit?Somecallit"havingskininthegame."Dothemember-farmerscontributemoney,inanyway—cash,check-offspercentageofproductsold,retainedearningsbasedonpatronage.

• Domembershavesavingsaccountsthroughthecooperative?Tellmehowthatworks? • Domembersbuyandsellonlythroughthecooperative?Whatpercent? • Memberservices?Providedbycooperative?Desiredbythecooperative/members? • Howdoyoumarketnow?Roadside?Farmersmarket?Processors?3. CRI/FarmVision,theCDPProjectandYourCooperative • USAID(donor)wantstohearabouthowtheCDPisworking.Inthelast3years,what

differencehastheCDPmadeoverall?Tothecooperative?Tofarmersandtheirfamilies?Tothecommunity?Howhasitmadeadifference?Areyoubetteroffbecauseofit?How?Willtheprojectendswhatwillhappen?

• WhatdoyouthinkabouttheideathatCRIrequiresthecooptosignanMOUtobepartofthe

CDP? • HastheCDPmadeadifference(positiveornegative)inthewayyourcoopismanaged,

governedandbeingled?Howso? • IstheCDPhelpingtotransformyourcooperativeintoaviablebusinessthatcansurviveonits

ownwithoutsupportfromoutsidefundingandtechnicalassistance? • Whatcouldthisprojectbeaddressingthatitisnotcurrentlydoing?

• DoyoubelievetheCDPprojectisstaffedproperly?Enoughstaff?Therightstaffintermsofexpertise?WhatdoyouseeastheroleoftheCOP?

• DoyouthinktheCDPsworkplan,projectmonitoringplan,thewayitcollectsinformationand

evaluatesitisaboutright?Howwouldyouchangeanyofthemforthisprojectorforfutureprojects?Areyoucomfortablewiththebaselinesurveythatwasconducted?

• Howhasthetraining,technicalassistance,mentoringaffectedthecooperative?It'sabilityto

solveproblems?Istheretrainingandsupportthatyouneedorwantthatyouhavenotbeenabletoreceive?


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• HowhasthecollaborationwithCRIaffectedtherelationshipandleveloftrustamongthecooperative'sleadership,membersandoutsiders?

• Howhastheabilityofleadershiptointeractwithlocalgovernment,nationalgovernmentand

otherinternationalorganizationschangedasaresultofcollaborationwithCRI? • Whatchangeshaveoccurred(bothpositiveandnegative)totheorganizationalstructureof

cooperativeleadershipfromcollaborationwithCRI? • WhatwerepositiveandnegativeaspectsofyourexperienceworkingwithCRI?Expectations

beingmet? • Wherewouldtheco-opbetodayhadtherenotbeenaCDP? • Describethespecificchallenges,obstacles,workarounds;Co-opexpectationsvs.realitiesof

theCDP.4. Lastly,InJustaFewWords.InthelastFewYears….. • Whathaveyoulearned?

• Wouldyousaytheseareyourmostimportantsuccesses?• Whathavebeenthecooperative'sbiggestdisappointmentsandchallenges?• Whathasthecooperativedonetoaddressthoseproblems?• Whatarethecooperativesbiggestunmetneeds?• Wheredoyouseethecooperative'sbiggestgapsintermsofitsvision,strategicplansand

businessplananditscurrentsituation?• Whathashadthebiggestimpactonthecooperative,itsleaders,itsfarmer-members,their

families,thecommunity,andthemarketplace?• HowmuchoftheprogressistheresultoftheCDP?• WhatwouldyouliketoseefromanewCDPproject?• Isthereanythingyouwouldliketoaddthatwehavenotdiscussed?

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