In this interview Wim Polman, Rural Development Officer of the FAO's Regional Office for Asia and the Pacific, gives us an overview of the situation of agricultural cooperatives in the Asian-Pacific region and comments on the future events being organized to promote the development of small rural enterprises in this region.

What is the present situation of Asian small scale rural producers and which good practices in terms of capacity building are currently emerging?

After a long spell of decline in overall investment in the agricultural and rural sector and falling overall world market prices of primary agricultural produce, small farmers' households, in most Asian countries, were affected by deep poverty and food insecurity. This was due mainly to the lack of opportunities for improving their livelihoods. Meanwhile, agricultural produce exporting countries from Europe and other countries such as USA and Japan increased their overall subsidy to their farm sector to more than 300 billion dollars per year.

Fortunately, Asian decision makers who deal with small-scale production in the agriculture and rural sector are awakening to a regional call to take up a pro-active leadership role in support of small farmers as rural small scale entrepreneurs at regional level. In particular, largest populated countries such as India and China have been restructuring the small farmer cooperative sector. In India alone, new federal legislation liberating farmer cooperatives from political control was adopted and implemented at State level.

In countries lacking cooperative laws such as China, the Ministry of Agriculture rehabilitated more than 150,000 so-called professional economic organizations, into viable agro-processing and marketing cooperatives. Asian countries expressed a need for FAO technical assistance to transform small farmer cooperatives into viable small and medium scale rural enterprises (SMEs). From field missions, I've learned again and again that in the end, most activities developed by informal groups in villages, are seldom transformed into cooperatives by either NGO's or development agencies. Yet, agricultural cooperatives provide the rural poor the most suitable institutional form for rural enterprise development combining social forces of the rural poor, while keeping the equity principle in business development.

Government agencies, NGOs and Hilltribe Associations welcomed technical assistance on village level hilltribe group enterprise development in North Thailand. Pilot activities in selected villages demonstrated the adaptability of cooperative savings and credit unions to develop into village enterprises based upon handicrafts and food processing activities.

What impact do WTO agreements have on agricultural cooperatives?

The emergence of WTO and regional trade organisations has defined the areas and rules of the game for trade in agricultural commodities and processed produce, which are simply not easy to follow by developing countries. Agriculture and rural development in Asian countries in which a large majority of the total population live in rural areas and depend for their livelihoods upon the agricultural sector development, is far from viable and sustainable for most of the rural poor. Food insecurity, poverty and inequity are dominant features. In this sense, WTO rules are hardening the adverse livelihood conditions of rural poor who are mostly small and medium producers, without much market oriented organisational and management capacities.

In pure financial terms due to WTO negotiations, adverse agricultural policies are being strengthened as subsidies are being reduced, causing a decrease in profits and hence an increase in product prices, affecting both rural and urban poor. At the same time, external subsidized grains and other farm products are imported (if not dumped) causing local food production to be too costly, unprofitable. It is no surprise that rural poverty and food insecurity in real numbers aren't being reduced in this region.

What measures should be implemented in order to build an enabling environment?

In the context of WTO, there are domestic support policy options in favour of small farmers and other rural producers. Public investment in agriculture and rural development as well as an enabling policy framework, is of crucial importance for: 1) local agricultural cooperative development and diversification of production and services, 2) training to enhance entrepreneurial management capacities; 3) improved access to product and market information, 4) the implementation of adequate small scale producer technology and access to credit that will enhance profitability of their produce at national and even export markets.

However the most urgent aspect is to rehabilitate and re-establish a viable agricultural extension system based upon a holistic concept of rural enterprise development not just pest control or production increase. This leads us to the conclusion that yes, the WTO impact is serious but of most immediate concern are domestic policies and programs in support of rural SME's and related external development assistance. Therefore, the regional rural development activities in this area are prioritizing regional networking in support of rural SMEs through agricultural cooperative development. The viability of 90% of rural SMEs depends on adequate country SME and Cooperative development policies, legislation and support programs. Rural SME development in terms of fair trade starts at home with domestic policies giving equal opportunities and incentives to small-scale rural producers on local, national and export markets.

How can agricultural cooperatives, especially those in the Asia and Pacific areas, face the ongoing changes that globalization and trade liberalization are producing in the economic scene?

High level conferences and seminars have been organized on policy dialogue, institutional capacity building and promoted field level exchange visits on Agricultural Cooperative Enterprise Development (ACED) as rural SMEs. These rural development activities are planned and implemented in close consultation and collaboration with partner agencies from 11 Asian countries, who are members of the regional Network for Development of Agricultural Cooperatives (NEDAC). A Joint Action Plan of NEDAC and International Cooperative Alliance (ICA) on Promotion of Food Security through Agricultural Cooperative Development, was adopted, in Beijing, by Asian Cooperative Ministers and the members of the Agricultural Committee of the International Cooperative Alliance in 1999. In addition, a joint FAO-ICA agricultural cooperative project formulation mission took place in Nepal and 7 country level policy and training seminars were held in NEDAC member countries. Three regional meetings were organized on WTO, Globalization and Privatization and formulation of a regional project on capacity building for promotion of ACED as rural SMEs. The reaction everywhere is of enthusiasm. There are now hundreds of successful exporting agricultural cooperatives in the region which realize their potentials for trade within the region itself. The best example of this is the trading and production of fertilizers by agricultural cooperatives among NEDAC members in India and Nepal. Asian policy cooperative decision makers now discover, through their participation in FAO-NEDAC activities, their common agri-business interests. At the level of agricultural cooperatives, there is an enormous build up of social capital in terms of human resources development and leadership for promotion of viable agricultural rural enterprise development.

What are the expectations of the launching of the first Asian Forum meeting on SME's and Fair Trade?

The main idea behind this Asian regional initiative organized by the Asian and Pacific Development Centre in collaboration with the FAO-RAPS rural development unit, NEDAC and other Asian regional networks on savings and credit, agricultural cooperative banking and specialised NGOs, is to expand existing regional networking to promote pro-rural poor, pro-market oriented agricultural and rural development policies and programs in support of rural SMEs and fair trade practices.
The immediate goal is to strengthen NEDAC as an ACED platform for policy advocacy and for regional cooperative trade. Secondly, on a mid term basis, another goal is to develop NEDAC activities into an Asian-Pacific Economic Cooperation (APEC) platform on promotion of rural SMEs. A first Asian Forum meeting is planned in Thailand in Chiang Mai in August 2003, as a side event of the official APEC SME Working Group meeting. The Asian Forum members will also discuss next steps for the Asian participation of representatives from the small rural producers' organizations at the 3rd World Social Forum in India 2004.

Who will participate in the meeting?

We are planning to bring to the Asian Forum meeting in Chiang Mai, representatives from NEDAC member organizations who will present information material on their promotion of village based agricultural, women, hill-tribe SMEs with export potentials. These representatives include women senior agricultural cooperative managers, managers of cooperative investment banks, senior policy makers, information technology experts and local agricultural cooperative development planners.

We will also be matching at the Asian Forum with Asian savings and credit union experts and cooperative bankers with experience in Business to Business (B2B) trade promotion among cooperatives.

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Disclaimer: The opinions expressed in this interview do not imply the expression of any opinion whatsoever on the part of the UN System Network on Rural Development and Food Security nor of the Food and Agriculture Organization of the United Nations.