Research in Action: Insights about Loyalty and Governance in Farmer-Based Organizations
One of the major challenges for producer-owned cooperatives, farmer organizations and out-grower schemes alike is the lack of farmer loyalty exemplified by side selling to other entities.
Although loyalty plays a significant role in the functionality of agricultural value chains and market systems, a number of factors inhibit its development. Shocks prevent organizations from building and maintaining relationships with farmers. Mistrust decreases members’ confidence and ability to exercise voice in their organizations. Some farmer organizations and cooperatives have found ways to manage these challenges through different mechanisms including graduated sanctions and selective benefits. Though, many still struggle to effectively eliminate side-selling and lack of member loyalty.
The May Ag Sector Council Seminar highlighted how practitioners can leverage insights to improve the performance of cooperatives and farmer organizations. Land O’Lakes International Development Program Manager for Cooperative Development Greg Grothe and economists Lorenzo Casaburi of Stanford University and Rocco Macchiavello of Warwick University presented new findings and insights on farmer loyalty and the implications on governing through collective action. Grothe drew on research and extensive evidence-based work with farmer organizations funded by USAID’s Cooperative Development Program. Based on collaborations with Land O’Lakes as well as independent research, Casaburi and Macchiavello provided additional in-depth insights on the dynamics of farmer organizations and member behavior.
Topics related to this discussion included:
- Drivers of farmer loyalty
- Challenges with enforcements, penalties and rewards
- Implications of heterogeneity on organizational governance
- Financial services and loyalty: opportunities and challenges
By better understanding what influences farmers’ trust and loyalty, practitioners can improve the efficacy of farmer-based organizations and positively affect agricultural markets and food security.
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Land O’Lakes International Development