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Strong membership organizations are necessary to fight inequality

Jur Schuurman | 22 February 2013

The inequality debate should try to find answers to two questions: the issue of definition and measurement, and the means by which to reduce inequality. As to the latter, there are good theoretical and historical reasons to make the claim that strong membership organizations are a necessary condition for equality.

But first on measurement. We have to agree on what inequality is and how we measure it, not just because we want to know what we are talking about, but also because it is the only way to set objectives for policy. In his Annual Letter 2013, Bill Gates makes the point very clearly: if, for any intervention, you do not set a target than enables you to measure progress towards it, your attempts to monitor progress, to make corrections and, eventually, to claim success  are doomed to fail. Charles Gore (if he is the same Charles Gore whose ‘Regions in Question’ I read 25 years ago: congratulations! A great book) at least writes about the need for specific goal-setting, but he does not make any concrete suggestions. We need to do that, however, to ask ourselves:

  • What is inequality?
  • Why is it bad, or rather, at what point does it turn bad?
  • What is the current inequality situation for country X or region Y or the world, expressed in a measurable unit?
  • And what would we like that situation to be, again, expressed in a measurable unit?

If we don’t answer these questions, our policy debate runs the risk of remaining very abstract.

The above is not to say that my organization (Agriterra) has the answers to these questions completely up and running. We do know that we want to contribute to the reduction of inequality in developing countries, expressed in a lower Gini index. We also can monitor that – but not how successful it is, because we still do not have a target to work towards.

This brings me to the claim I put forward. No doubt there are many, mutually complementary, ways to fight inequality; we at Agriterra are convinced that the presence of strong membership organizations is of fundamental importance. Such organizations, by their very nature, give voice and (market) power to their members, who would not have much leverage as individuals. Their presence means that the powers that be cannot just act as they please: they are being watched! This controlling function is essential for the relationship between strong associations of people (farmers, labourers, retailers…) and equality: it is an expression of the checks and balances that prevent a society from becoming (too) unequal, or becoming equal only because of charity. If interest groups are organized in a solid way, they can never be ignored; they constitute a vital countervailing power, and a necessary condition for achieving more equality.

Dutch history is a case in point, and also points to yet another element in the causal relationship between farmers’ organizations and equality.  Dutch farmers emancipated themselves by starting to found local cooperative societies in the late 19th century, in order to conquer a fairer share of the pie. This happened in the context of the transition to a non-agrarian society (the structural transformation). Cooperative societies and other forms of associations mitigated the disruptive impact of structural transformation on employment and food availability, with a growing population that is increasingly employed outside agriculture. The Netherlands would never have been a country with so much equality within and among economic sectors if it was not for organized farming and other economic associations, like, for example, trade unions. Mergers and growth transformed these local coops  into internationally active farmer-owned cooperative societies. This gradual process guaranteed a relatively rapid economic growth and structural transformation, safeguarding employment and food balances; and fostering a more equal distribution of income and wealth.

That is why Agriterra works at making genuinely membership-based rural membership organizations - that is, associations, farmers’ unions, cooperative societies - stronger. They are good for equality.  And there is evidence that in developing countries the same holds true. For instance, African farmers’ organizations lobby to increase the share of public spending on agriculture. The Confédération des Associations de Producteurs Agricoles pour le Développement (CAPAD) of Burundi, for example, succeeded in forcing that share up from 3% to 6.2%. Still not the 10% agreed in the 2003 Maputo Declaration, but it is progress, brought about by the controlling function of a strong association.

Also, a recent study in over 2,500 Chinese villages showed how the presence of producer organizations fostered agricultural specialization, and this specialization in turn made rural incomes increase. This means that villages with more cooperatives and more farmers in cooperatives were wealthier and more prosperous than others.

Developing countries will undergo a structural transformation, whether we want it or not. But this can happen either by means of relatively sudden high-scale and sophisticated industrial investments, or through gradual rural farmer-led industrialization. The former occurs in selected countries and regions, it takes a very long time to spread, and the employment effects are low due to the use of technology that requires little labour; markets are flooded with products ousting local producers from business. The second ‘roadmap’ is based on the processing and marketing of agricultural produce and initiated by the organizations of the people who live and work in rural areas. This will also take a long time, but probably not as much, and with less disruption. Growth rates will probably be even higher. Imagine its impact: it will be impressive in terms of the employment created in rural areas, and the growth and distribution of rural income. Strong farmers’ associations can make this happen!

References:

Yang, Dan & Zimin Liu (2012) Does farmer economic organization and agricultural specialization improve rural income? Evidence from China. In: Economic modelling 29, pp. 990-993.

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Jur Schuurman

Jur Schuurman was head of the support and quality department at Agriterra, the Netherlands until...

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