Chapter II - Combatting Poverty in Rural Areas

   This document has been made available in electronic format
      by the International Co-operative Alliance ICA

  Contribution of Co-operative Enterprises and the International
     Co-operative Movement to Implementation of UN AGENDA 21:
       Programme of Action for Sustainable Development 

                     Prepared jointly by
             the International Co-operative Alliance
                      the United Nations
  Department for Policy Coordination and Sustainable Development

                 Geneva and New York, April 1995

        For information purposes only. Not an official
   document of the United Nations and not officially edited.

                         CHAPTER II

A.  Poverty eradication, alleviation or avoidance as a central
    theme in all United Nations global strategic initiatives
    taken during the 1990s

    Poverty is at the centre of a complex of interacting
processes and structures to which attention reoccurs throughout
the series of recent major United Nations conferences and events.
The Programme of Action of the International Conference on
Population and Development gives specific attention in its
Chapter III to population, sustained economic growth and poverty.

Eradication of poverty was one of the three core issues of the
World Summit for Social Development.  Commitment 2 of the
Copenhagen Declaration adopted by the World Summit is concerned
with "the goal of eradicating poverty in the world, through
decisive national actions and international cooperation, as an
ethical, social, political and economic imperative of humankind."
It is the subject of Chapter II of the Copenhagen Programme of
Action.  The draft Platform of Action for the Fourth World
Conference for Women: Equality, Development and Peace lists as
the first strategic objective the resolution of "the persistent
and increasing burden of poverty on women".  The International
Year for the Eradication of Poverty, 1996, is, of course, devoted
to this issue. The draft Global Plan of Action for the United
Nations Conference on Human Settlements (Habitat II) to be held
in June 1996 at Istanbul, Turkey, also gives predominance to the
issue of poverty.

    These strategies stress the link between poverty and the
difficulty of achieving sustainable development. Co-operative
enterprises contribute to overcoming this difficulty not only by
the direct means of adjusting their goals and practices to more
environmentally-friendly forms, but by contributing very
substantially to the eradication of poverty.

B.  Recognition by the United Nations of the contribution
    of co-operative enterprise and the international co-operative
    movement to the eradication of poverty

    In his latest report to the General Assembly on co-operatives
(A/94/213 of 1 July 1994) the Secretary-General concluded that
"co-operative enterprises provide the organizational means
whereby a significant proportion of humanity is able to take into
its own hands the tasks of creating productive employment,
overcoming poverty and achieving social integration" (para.
72(a)). He reported that co-operatives "continued to be an
important means, often the only one available, whereby the poor,
as well as those better off but at perpetual risk of becoming
poor, have been able to achieve economic security and an
acceptable standard of living and quality of life."(para.30).

    The Copenhagen Programme of Action adopted by the World
Summit for Social Development at Copenhagen, Denmark in March
1995 included among proposed actions designed to enhance
opportunities for income generation, diversification of
activities and increase of productivity in low-income and poor
communities several intended to promote and support co-operative
enterprises. Chapter II, para.31 (f) and (g)).

C.  The contribution of co-operative enterprise and the 
    international co-operative movement to eradication of

    Co-operative enterprises contribute both directly and
indirectly to the eradication of poverty among members and
employees, and more widely throughout the communities in which
they operate. They help those who are poor to escape from poverty
by means of joint self-help efforts, and protect those who are
at significant risk of becoming poor. They often constitute the
only type of formal organization offering such opportunities by
means of joint self-help.

    One of the principal means is the provision of various forms
of employment, including self-employment.  Each is the basis for
earning income either in the form of shares of surplus, wages and
salaries or profits, depending upon the type of co-operative.  
Those co-operatives where members themselves constitute the work-
force (production co-operatives in the primary and secondary
sector and service provision co-operatives; labour-co-operatives)
provide self-employment and shares of the surplus generated by
the enterprise. Those co-operatives which are owned by
independent enterprises in order to provide certain benefits
(purchasing, supply and marketing co-operatives in all economic
sectors, savings and credit co-operatives, co-operative banks,
co-operative insurance enterprises) help to provide and protect
employment in the member enterprises by helping them to achieve
and retain viability within the market.  Such co-operatives also
employ considerable numbers of persons at all skill levels.   
Those co-operatives which are owned by households for the purpose
of providing inputs to the micro-enterprises constituted by
households, or owned by individuals for the purpose of providing
commodities and services for their final consumption (savings and
credit co-operatives, co-operative banks, co-operative insurance
enterprises, wholesale and retail distribution co-operatives,
health, education, housing, social service co-operatives) also
provide very substantial employment.

   Co-operative enterprises supplying households and individual
consumers of commodities and services help to eradicate,
alleviate or avoid poverty among their member-owners.   Basic
living costs consume such a high proportion of income that little
or nothing remains for entrepreneurial development, education,
training, improving health or other activities necessary if an
individual is to escape from poverty, or seek protection from
falling into it. Co-operatives are able to reduce such costs
while simultaneously assuring the adequate provision of
appropriate and high quality goods and services.  Bulk
purchasing, limited expenditures on advertising and concentration
on a limited number of product lines assure adequate supplies of
basic necessities to those with limited incomes.

   Co-operative enterprises are particularly effective in
protecting consumer interests because their member-owners are
able to establish their own business goals and practices.   For
this reason they have been in the forefront in the introduction
of consumer-responsive practices such as unit-pricing and truth-
in-advertising. Some national consumer co-operatives have
established their own advertising agencies, whose practices must
conform to an ethical code.  Because of their economic weight
they are able to take direct and effective economic action,
including insistence on quality from suppliers, often doubly
secured by purchasing only from producer co-operatives.

   Financial co-operatives are of special value for the poor,
especially for women.  They can operate in areas not served by
commercial banks, and where public sector credit programmes are
insufficient.  Savings and credit co-operatives ("credit unions")
and co-operative banks often provide the only secure institution
for the deposit of savings - however small these may be.  They
provide affordable means for concentrating and recirculating
local capital by providing credit for entrepreneurial use and for
improvements in the household.  Moreover, because these co-
operatives are owned by their members, costs are kept to the
minimum and services and procedures adapted to their particular
needs and circumstances.  Such co-operatives allow the poor to
escape from the control exercised by private money lenders.  In
both developed and developing market economies, governments
support financial co-operative development in poor communities,
acknowledging their unique capacity for capital mobilization and
appropriate investment.

    Co-operative insurance enterprises provide affordable, non-
exploitive and appropriate policies to their individual,
household and enterprise members. These policies are adjusted to
the special needs of women and other sections of society at
special risk.  They also protect co-operatives and other small-
and medium-sized enterprises. Costs are kept at a reasonable
level, not only by efficient operation and avoidance of surplus,
but also by the high priority given to prevention.

    User-owned co-operative enterprises contribute significantly
to overcoming conditions which both express and contribute to the
perpetuation of chronic poverty:  inadequate housing, fuel,
energy, water, sanitation, infrastructure and essential services.

Such co-operative enterprises include housing construction and
maintenance co-operatives; electricity, heating, telephone, water
and sanitation co-operatives; health-care and social service
provision co-operatives; and community development co-operatives.
The impact of their activities is to free the time and energies
of the disadvantaged, including the poor, so that they are able
to engage more effectively in education and training, seek and
keep jobs, engage in entrepreneurial activities, and undertake
community development work.

    The provision of education and training for members, leaders
and employees is a basic principle of co-operative organization. 
Where members are poor, this is usually extended to provision of
basic education, literacy, numeracy, business methods and
technical and vocational training in the areas of activity of the

    Finally, poor persons attempting to establish a co-operative
enterprise can call upon the support and practical help of
existing co-operatives in the neighbourhood, including co-
operative financing institutions. They are also able, through
their membership in broad federations of co-operatives, to exert
an influence in national policy making that otherwise they would
have little opportunity of doing.

    Because co-operative enterprises of different types
contribute to poverty eradication differently, because the types
of co-operative differ between rural and urban areas, and because
the contribution of co-operative enterprises to poverty
eradication is of such central importance to achievement of
sustainable development, it is useful in this study to examine
the contribution in predominantly rural regions separately from
that in urban regions. While the former will be dealt with in the
present chapter, the contribution of co-operatives to the
eradication of poverty in urban regions will be dealt with in
Chapter IX.

D.  The co-operative presence in rural areas

    One of the most effective means whereby rural populations
have been able to safeguard their livelihood, overcome poverty
and protect themselves from renewed poverty in the face of broad
processes tending toward impoverishing and marginalizing large
sections of rural populations has been their ability to form co-
operatives capable of enhancing their ability to protect their
own interests and improve their strength in the market. The fact
that in the advanced market economies co-operatives are intrinsic
components of their rural economies and are effective even in the
most competitive market conditions suggests that in developing
and transitional economies also the co-operative approach to the
solution of rural poverty - and hence rural sustainability - is
of major significance.

    In 1994 about 22 per cent of ICA's individual membership of
760,000,000 persons - that is about 167,000,000 - were members
of agricultural and fisheries co-operatives. Given an average
household size of four persons, this implied that about
670,000,000 persons were closely associated as agricultural and
fisheries producers with co-operatives. 

    Some of these co-operatives were producer co-operatives,
whose members were themselves engaged in agricultural production
or fishing. Most operated non-co-operatively organized small- or
medium-sized farm enterprises or fisheries enterprises, usually
family-owned and operated, but had joined together to establish
purchasing, supply and marketing co-operatives. The dimensions
of this co-operative presence are documented below.

    In advanced market economies a very high proportion of
independent agricultural producers, and almost all small- and
medium-sized family-owned and operated farms, are member-owners
of supply and marketing co-operatives, many of whom extend the
provision of inputs and the marketing of outputs to provision of
a wide range of services not only for production, but also for
consumption by farm and rural households, and engage also in
manufacturing of inputs and processing and distribution of

    In a policy document adopted by the International Federation
of Agricultural Producers at its 31st General Conference held at
Istanbul, Turkey, in May 1994, it was stated that farmer-owned
businesses such as agricultural co-operatives and farmer
associations can invigorate the rural environment. They
contribute both income and stability to the rural population by
providing essential services to the rural areas, furnishing
environmentally-sound inputs, generating employment opportunities
and encouraging agro-processing which raises the value-added
going directly to the farmer.  Such business also provide farmers
with the vital link to the marketplace. The stronger this link,
the greater the influence and control the farmer has, not only
over his own income and strength in the marketplace but also in
his or her ability to guarantee the consumer food safety and
quality throughout the food chain, from farm inputs to processed
product. 36/

   In addition, many rural areas are served by utilities co-
operatives (electricity, telephone); manufacturing - including
handcraft - co-operatives; housing, health and social service co-
operatives; service and consumer co-operatives; and financial co-
operatives (rural savings and credit co-operatives or credit
unions, rural co-operative banks, rural insurance co-operatives).

All are owned and controlled by rural households and enterprises.

    Given the centrality of poverty to the issue of achieving
sustainable agriculture, it is of the greatest importance to
understand the potential of co-operative forms of enterprise for
contributing directly to poverty eradication (examined in this
chapter), and more broadly to the whole question of achieving a
healthy and high-quality rural economy.

E.  The expansion of productive employment and the reduction of 

    Agenda 21 identifies the expansion of productive occupations,
remunerative employment and sustainable livelihoods as a major
means to combat poverty.

1.  Capacity for creating business enterprises

    A very high proportion of the poor, particularly in both the
informal rural and urban sectors, are self-employed, operating
as individuals, or as family-owned, -managed, and -operated
micro-enterprises.  In most cases these informal enterprises have
little or no legal status, and this, together with lack of
assets, is an impediment to their upgrading in terms of
productivity and access to inputs and markets.

    The co-operative model of business enterprise is a
conceptually simple but universally applicable organizational
solution to a common problem: that faced by an individual wishing
to establish an enterprise but unable to do so alone due to a
lack of resources, notably capital, or access to markets.  The
solution is to combine with others in a jointly-owned enterprise.

This organizational model, constituted by the co-operative
enterprise, has been tested thoroughly, revealing an unrivalled
capacity for creating and protecting productive employment in
both rural and urban areas.

    A co-operative enterprise is a means whereby any group of
persons may seek to realize their ambitions.   For disadvantaged
persons it is especially appropriate, and often the only
available effective means for increasing their economic and
social well-being. It provides better control of the economic
environment;  combines resources, however limited, so that these
become operationally effective;  manages common resources
efficiently; ensures that returns accrue only to member-owners,
remain under their joint control and are used primarily for
reinvestment; establishes formal legal status, thereby protecting
common assets and facilitating operation in the formal market; 
and provides access to formal auditing, thereby encouraging
confidence among members and customers.

   Moreover, members of most new co-operative enterprises do not
have to rely entirely on their own efforts.  A large co-operative
movement exists to support them, offering advice and information;

membership in financial, supply and marketing co-operative
systems; specialized co-operative development institutions; broad
international co-operative technical assistance programmes and
support from trade unions, governments and intergovernmental

2.  Access to land, water and other resources for primary

    Agenda 21 proposes action to achieve access to land,
particularly by the landless poor so that they can acquire the
means of production and reliable access to natural resources. 
Special consideration to the means for achievement of such access
by women is called for. To this end the legal frameworks relevant
to access to land resources, land ownership and protection of
tenants - in particular of women - needed to be developed or
strengthened.  Measures were required to promote the sustainable
use of resources for basic human needs and to provide substantial
increases in productive resource use specifically in order to
ensure that local populations benefitted adequately from resource
use.  Food security should be promoted and, where appropriate,
self-sufficiency within the context of sustainable agriculture.

   In some countries production co-operatives allow members to
aggregate resources and help to formalize and legalize claims to
ownership or long-term rights to usufruct over such resources. 
 Membership of supply and marketing co-operatives also supports
viable enterprises and hence recognized occupancy and rights.

3.  Access to other non-financial inputs and to marketing systems

    In most developed market economies almost all independent
agricultural producers operating as small and medium enterprises
(indeed all but large agribusinesses) organize the purchase and
supply of inputs and the marketing of outputs through co-
operative enterprises which they own and whose business goals and
practices they control. In many of these economies these
multifunctional supply and marketing co-operatives are closely
linked with rural financial co-operative systems.

   In 1993, for example, in the countries of the European Union,
Austria, Finland and Sweden, rural supply and marketing co-
operatives had 14 million members - the individual farm
enterprises which owned the co-operatives. They employed 800,000
persons, had a turnover of 205,000,000,000 European currency
units (ECU) and shares of total farm inputs of 55 per cent and
of total marketed outputs of 60 per cent. 37/

   In France co-operative enterprises forming part of the
Confederation of Agricultural Co-operatives constitute a major
element in the national agro-alimentary economy. In 1993 they
worked on behalf of one million agricultural production
enterprises - 90 per cent of the total in the country. They
employed 100,000 persons in 12,000 service co-operatives and
3,800 industrial and commercial enterprises, and had a combined
annual turnover of 400,000,000,000 French Francs. 38/

   In Germany in 1992 almost all farmers, market gardeners and
wine-growers - a total of 4,250,000 individual enterprises - were
members of one of the 5,300 local rural commodity and service co-
operatives and of one of the 3,100 local co-operative banks that
form the base of the Raiffeisen co-operative movement. Each co-
operative enterprise is simultaneously a voluntary organization
of individual persons, who are independent agricultural
producers, and a legally autonomous economic enterprise. The
basic principles on which they operate are self-help, self-
administration and self-responsibility.  Members make up a stable
economic community which can operate autonomously and without
external assistance. They are co-owners and the co-operatives'
business partners with full rights and obligations.  Each member
assumes self-responsibility by making a financial contribution,
by exercising voting rights and by taking part in all important
decisions in the co-operative. Self-administration is guaranteed
by the existence of honourary members, and through the election
of a board and supervisory council from amongst the membership.

   Although autonomous business enterprises, these primary co-
operatives are themselves members of regional centres which
assume tasks whose economic dimension is such that they cannot
be carried out effectively by primary co-operatives. They
aggregate supply and demand on behalf of their affiliated member
co-operatives and are thus able to purchase and sell on wholesale
terms.  Modern storage, processing and marketing facilities
ensure a supraregional market. They render a multitude of
services to their members. In 1992 regional centres comprised
nine central supply and marketing co-operatives, 10 central
dairies, six central livestock and meat co-operatives, six
central wine-growers' co-operatives and 13 data processing

   The regional centres in their turn established four national
level institutions for the purpose of their joint co-operative
operation - coordination of supra-regional market clearing; joint
purchase on international markets; world-wide exports and
development of joint trademarks. These federal institutions
comprised a commodity centre, a diary centre, a wine marketing
centre and a federation of fruit and vegetable producers'

   Complementary to the regional centres having economic
functions are 13 regional associations of the primary co-
operatives which provide statutory auditing, represent member
interests, advise in legal, economic and business matters,
organize training and further education and coordinate public
relations activities. At the national level the German Raiffeisen
Federation represents the interests of all members vis-a-vis the
Government, other interest groups, and European intergovernmental
and economic institutions.   This Federation is linked also to
the Federation of German People's Banks and Raiffeisen Banks and
the Central Association of Integrated Industrial Groups,
representing industrial co-operative societies. The three
federations form a joint national organization - the German Co-
operative and Raiffeisen Confederation (DGRV).  A number of
specialized institutes are owned by these co-operative
organizations: the German Co-operative Bank (DG Bank), the R+V
Insurance Co., the German Co-operative Mortgage Bank, the Munich
Mortgage Bank and the Union Investment Society.

   The Raiffeisen movement offers those individual agricultural
producers who are members supplies of production materials;
advice on how to produce market-oriented and environmentally
acceptable products; research and development of alternative
products; and promotion of industrial utilization of regenerable
raw-materials. It collects and processes almost the entire range
of agricultural products and markets them as advantageously as
possible. It provides such services as regular inspections of
crop spraying machines, repairs of agricultural machinery and
environmentally acceptable storage of fertilizers and pesticides
which ensures sufficient inputs are available when needed, but
are stored safely in bulk. 39/

   In 1994 in the United States about 30 per cent of farmers'
products and supplies were marketed through such co-operatives. 
 Many such enterprises were among the country's largest
enterprises - 12 agricultural supply and marketing enterprises
were included in the Fortune 500 list of major corporations.  The
country's top 100 co-operative enterprises all had individual
annual revenues of over US $ 200,000,000. In 1992, according to
statistics provided by the United States Department of
Agriculture, 1,618 farm supply co-operatives provided petroleum,
feed, fertilizer, farm chemicals and seed worth US $ 18.5
billion, and 2,223 farm marketing co-operatives - those that sold
value-added products - did US $ 58.6 billion in business. For
example, the largest multifunctional supply and marketing co-
operative - Farmland Industries, located in Kansas City - was
owned by 2,000 co-operatives in 19 Midwestern States, themselves
owned by independent farmers.  It had revenues of US $ 4.7
billion in 1993.   The fourth largest beef and fifth largest pork
processing enterprise in the United States, it had revenues of
US $ 4.7 billion in 1993. 40/

   In Canada in 1992 eight of the top 10 agricultural enterprises
were supply and marketing co-operatives. Those in the Prairie
Provinces marketed 75 per cent of Western Canadian grain and
oilseed and accounted for 60 per cent of exports of these
commodities. 41/

    In Japan almost every farm enterprise is a member of a
multifunctional supply and marketing co-operative enterprise,
which market 95 per cent of rice production. 42/

    In developing economies rural producers' supply and marketing
co-operatives play a most important role in securing an
acceptable livelihood for rural communities.  For example, ICA's
Regional Office for West Africa, supplying information for use
in the report of the Secretary-General of the United Nations to
the General Assembly on co-operatives (A/49/213), stated that
such co-operatives played a very important role in production of
both foodstuffs for local and national consumption as well as
export crops.  In almost all countries in the region farm inputs,
including, for example, equipment for draught animals, were
supplied through these co-operatives.  Technical supervision and
extension services were also predominantly provided through them.

Access to irrigated plots for rice and vegetable production was
almost exclusively reserved for farmers organized in co-
operatives.  High proportions of cash crops were collected,
processed, transported and marketed through co-operatives.   Thus
in 1989-1990 in Cote d'Ivoire 44 per cent of coffee and cocoa and
99 per cent of cotton was produced and collected by co-
operatives, although export marketing remained in the hands of
State agencies. 43/ 

    Elsewhere, former parastatal marketing agencies have been
replaced by genuine co-operative enterprises: as for example in
Nigeria, where the Association of Nigerian Co-op Exporters is
responsible for most coffee and cocoa exports. In Swaziland in
1993 the Central Co-operative Union handled 85 per cent of all
fertilizers used in the smallholder sector. In Kenya in 1992
marketing co-operatives dealt with 82 per cent of coffee, 87 per
cent of pyrethrum and 100 per cent of cotton. 44/

   In India there were in 1994 about 90,000 primary agricultural
supply and marketing co-operatives, owned by producers of coffee,
tea, fruit and vegetables, sugar and dairy products. These
constituted the major component of a co-operative movement
comprising over 100,000 primary societies and an individual
membership of 160,000,000 persons. One of the most important co-
operative systems in any developing market economy is the AMUL
system of dairying co-operatives, originating in Gujerat and
comprising 6,000,000 individual producers, mostly women, 57,000
primary co-operative societies, and a system of State and
national level federations throughout India.  In 1993 34 per cent
of fertilizers consumed by Indian farmers was supplied by co-
operative enterprises: and 25 per cent was produced by two co-
operative enterprises owned by farmers: IFFCO and KRIBHCO. 45/

    In Indonesia  90 per cent of agricultural inputs are supplied
through co-operatives, which market 100 per cent of milk and 90
per cent of rice. 46/

    In Brazil 50 percent of wheat and 40 per cent of cotton is
marketed through producer-owned co-operatives.   In Costa Rica
37 per cent and in Colombia 50 per cent of coffee exports are
marketed by such co-operatives. 47/ 

4.  Access to infrastructure and utilities

    Rural households and enterprises in some developed market
economies have overcome problems created by the inability of
public agencies, and the unwillingness of private investor-driven
enterprises, to provide infrastructure, utilities and associated
services by establishing their own consumer-owned, locally-
managed and co-operatively-organized enterprises.  In the United
States in 1994, for example, 900 rural electricity supply co-
operatives provide services in 2,600 of the more than 3,100
counties in the United States, Puerto Rico and American Samoa -
that is over 90 per cent of the national territory. They own 62
generation and transmission co-operatives and operate more than
half of the electric distribution lines in the country, providing
electricity to 11 million households and 25 million persons.  In
the face of competition and changing consumer needs many of these
co-operatives have diversified to promote and supply other types
of energy use. 48/ 

    Electricity supply co-operatives exist also in developing
countries.  In Latin America in 1994 there were 800 such co-
operative enterprises. In Costa Rica the four electricity co-
operatives provide electricity to ten per cent of all users.

    In some countries telephone co-operatives owned by rural
enterprises and households fill the gaps left by public and
private for-profit enterprises. In the United States in 1994, for
example, 260 rural telephone co-operatives served 1,200,000
persons in 31 States.  Their national federation, the National
Telephone Co-operative Association, provided technical assistance
to telephone co-operatives in a number of developing
countries. 50/

5.  Access to credit and financial services for entrepreneurial

    Agenda 21 identifies improvement in credit systems as one
means to bring about expansion in productive employment.   Not
only credit, but the means for broad financial management,
including savings, transactions are required.

   In most advanced market economies a substantial proportion of
credit made available to the rural economy is provided by co-
operative banks and savings and credit co-operatives. In the
United States, for example, the Farm Credit System, the oldest
and largest financial co-operative, in 1993 loaned more than US
$ 54 billion to its 500,000 borrower members - farm co-
operatives, electricity and telephone co-operatives, rural
utility and water co-operatives.   This was 25 per cent of all
money loaned to the United States agricultural sector.  In
addition to operating loans, the System provided crop insurance,
real estate loans and home mortgage loans.  The System comprises
three Banks for Co-operatives (CoBank, the St.Paul Bank and the
Springfield Bank for Co-operatives) and eight regional Farm
Credit Banks that supervise 238 locally owned Farm Credit
associations.  In 1994 the System was limited to lending to
communities with populations of 2,500 persons or less, but
legislation was under consideration to extend this limit to
communities with populations of up to 20,000.   CoBank (the Bank
for Co-operatives) provided in 1994 80 per cent of money borrowed
by farm co-operatives, and had US $ 11 billion in outstanding
loans.  Like other co-operatives the CoBank returns a patronage
rebate to its members every year.  In 1992 this amounted to US
$ 80,000. 51/ 

    In developing market economies also co-operatives have an
important role in the provision of financial services to rural
economies.   In India in 1993, for example, 43 per cent of
agricultural credit was provided through co-operative financial
institutions. 52/  As a result of the process of structural
adjustment in West African countries the parastatal financial
institutions serving the rural economy collapsed.   The
disappearance of National Agricultural Development Banks and
national Agricultural Credit Banks left a vacuum, but this was
quickly filled by rural co-operative banks and savings and credit
co-operatives which were able to meet the needs of rural
entrepreneurs and households more effectively.

    In 1992 the Secretary-General of the United Nations, in his
report to the General Assembly on the status and role of co-
operatives in the light of new economic and social trends
(A/47/216-E/1992/43), concluded that savings and credit co-
operatives "have a strong potential for mobilizing local savings
and providing credit to members, particularly important in
apparently capital-scarce conditions, thereby encouraging thrift
and entrepreneurial activity and hence stimulating local

    The Copenhagen Plan of Action adopted by the World Summit for
Social Development in March 1995 proposes that opportunities for
income generation, diversification of activities and increase of
productivity in low-income and poor communities should be
enhanced by means of a number of actions, including by:

    "strengthening and improving financial and technical
    assistance for community-based development and self-help
    programmes and strengthening cooperation among Governments,
    community organizations, co-operatives, formal and informal
    banking institutions, private enterprises and international
    agencies, with the aim of mobilizing local savings, promoting
    the creation of local financial networks, and increasing the
    availability of credit and market information to small
    entrepreneurs, small farmers and other low-income self-
    employed workers, with particular efforts to ensure
    availability of such services to women." (para.31(f))   

    Agricultural and other rural producer insurance is of major
significance for the viability of rural economies.   In many
developed market economies co-operative insurance enterprises
owned by farmers are major elements of the national financial
sector.   For example, in Japan the farmers' insurance co-
operative ZENKYOREN had in 1993 managed assets of more than US
$ 132,000,000,000 and was one of the world's top ten insurance
enterprises. 53/ 

F.   Provision to households of affordable goods and 
     services and consumer protection

     In many of the developed market economies consumer-owned
wholesale and retail co-operatives which have nation-wide systems
extend into rural areas and in doing so ensure not only that
member-users benefit from the appropriate and high quality
commodities and services normally provided by consumer co-
operatives, but, in many communities, benefit from the existence
of a retail outlet of any kind. This is because local communities
themselves have an interest in retaining a retail outlet, and the
broader co-operative system is interested, because of reasons of
solidarity, in ensuring that there is provision even in
communities unlikely to generate large profits. Some retail co-
operatives supplement the services provided by fixed retail
outlets in rural areas with mobile shops, savings, credit and
banking services and associated services such as libraries and
mobile health clinics.

G.   Effective management of household finance and effective
     protection against financial and other risks

    Because local communities in rural areas are able to
establish their own co-operative enterprises for the purpose of
providing financial services, particularly the safe deposit of
savings, the ready availability of credit at reasonable cost, and
the availability of insurance against risk, they have been able
in many rural regions in both developed and developing economies
to fill the gap which usually results from the disinterest of
for-profit financial enterprises in such areas.

   Because rural community financial co-operatives are able to
federate with others in nation-wide movements they are able to
secure financial services themselves which ensure their
viability.  They are also able to benefit from technical and
managerial training and access to advanced technology.

   Thus, in addition to the financial services available to rural
entrepreneurs, which have been considered above in Section E.5,
rural households have greater financial security to a significant
extent by means of co-operative financial enterprise.

H.  Provision of acceptable living conditions needed for human
    resource development

    The co-operatively organized utilities and services which
have been identified as being of major significance to rural
entrepreneurs are also available to households. They are of vital
importance in many rural communities not only because they render
household micro-enterprises better able to support the other
economic activities of their members, but because they satisfy
basic needs and enhance the quality of rural life.  Consequently,
individuals are ready to remain rural residents and to be
motivated to contribute to rural society.

36/  International Federation of Agricultural Producers, Farmers
     for a sustainable future: the leadership role of
     agriculture.   Paris, November 1994.  pp. 12-13.
37/  A/49/213, para.15.
38/  Review of International Co-operation, vol. 86, No.4 (1993),
     p. 61.
39/  Deutscher Raiffeisenverband e. V. (German Raiffeisen
     Federation, Raiffeisen 1992, (English version), Bonn, n.d.
40/  National Cooperative Bank, A day in the life of cooperative
     America, Washington D.C., n.d. (1994), pp. 16-17.
41/  Communication from ICA, March 1994.
42/  Ibid.
43/  Communication from ICA Regional Office for West Africa, May
44/  Ibid.
45/  Communication from ICA Regional Office for Asia and the
     Pacific, May 1994.
46/  Communication from ICA, March 1994.
47/  Ibid.
48/  National Cooperative Bank, op.cit., p. 20.
49/  Communication from ICA, March 1994.
50/  National Cooperative Bank, op.cit., p. 19.
51/  Ibid., pp. 17-18.
52/  Communication from ICA Regional Office for Asia and the
     Pacific, May 1994.
53/  Communication from ICA, March 1994.