Chapter III - Sustainable Agriculture & Rural Development

   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 III

      (CHAPTER 14)

    Co-operative enterprises and the co-operatively organized
economic systems which they are capable of establishing, have a
most important and central role to play in the achievement of
sustainable agriculture and rural development. Farmers, as well
as entrepreneurs in forest products, in fish farming and
freshwater fisheries have the most direct and comprehensive
function and responsibility in respect to the interface between
human society and the natural environment in rural areas.    Co-
operative forms of enterprise have been seen in the previous
chapter to constitute an essential element in the organizational
structure whereby rural enterprise in full market conditions is
able simultaneously to maintain a viable rural economy and
provide both rural and urban populations with food security as
well as numerous industrial enterprises with inputs and provide
a high-quality rural environment for their recreation.

    Co-operative enterprises and the co-operative movement have
been able to play a central role in the eradication of rural
poverty, in the viability and sustainability of rural
communities, in establishing an economic base for farmers and
other rural entrepreneurs to adjust toward a sustainable rural
economy: a process which they acknowledge to be one of their
primary responsibilities, but which they point out requires an
appropriate organizational structure as well as supportive
macroeconomic context.

    Consequently it can be acknowledged that co-operative
enterprises play a significant role in the rural regions of
developed - and increasingly, developing - market economies.  
Indeed it may be suggested that, given the nature of the
organization of such economies, the viability of rural economies
and societies can only be protected and maintained by means of
the adoption by the communities concerned of co-operative forms
of organization of their enterprise in a wide range of economic
and social activities.

    Potentially, therefore, co-operative enterprises and the
broader co-operative movement of which they are a part, must be
presumed to have a key role in any strategy whose purpose is to
promote and support adjustments in rural economies and societies
designed to achieve sustainable forms of development.   Co-
operatives not only possess a high potential in this regard
because they have a broad dimension within the economic
structures which must be affected: in addition, they have an
inherent propensity for preferring sustainable to non-sustainable

    However, in order to realize that potential it is necessary
not only that the members and owners of rural co-operative
enterprises - whether as entrepreneurs or as individuals and
households - must be convinced that sustainable development is
necessary. They must also have the necessary technological and
organizational knowledge, the relevant equipment, and the
necessary capital. Moreover, as they cannot act in isolation, it
is necessary that the entire system of purchasing, supply and
marketing, the complementary system of financing, and the
provision of infrastructure, utilities and services be capable
of a coordinated transformation.

   As has been pointed out in the Introduction the co-operative
movement is well placed to meet these prerequisites: and it is
capable of promoting awareness, education and training;  it is
also capable of adjusting supply, marketing and the supportive
system of infrastructure, finance, utilities and services.

A.  Promotion of sustainable agriculture

    Given the fact that in most advanced market economies, and
in an increasing proportion of developing market economies, high
proportions of farm inputs, including extension services, and
farm product marketing, including market guidance and commodity
processing, is undertaken by co-operative enterprises owned by
independent agricultural producers, the agricultural co-operative
movements which they constitute are in a position to play a
central and essential role in the promotion of sustainable
agriculture, which requires substantial and flexible support for
farmers while helping to transform enterprise behaviour in
extremely difficult market conditions.

   The agricultural co-operative movement in many countries is
committed to play its part in this transformation of agriculture.

In Japan, for example, the National Federation of Agricultural
Co-operative Associations (ZEN-NOH) aims to ensure sustainable
agriculture and forestry, emphasizes environmental conservation,
and develops related industries with maximum recycling capacity. 
To this end it promotes environmentally friendly agricultural
technologies and a harmonious and balanced regional development
of land cultivation and animal husbandry. It also emphasizes the
need to secure farm income sufficient to maintain the viability
of farm enterprises incurring additional costs and foregoing
existing income because of environmental considerations.  In
addition it emphasises the relevance of achieving and maintaining
viable human settlements in rural areas. In 1992 the National
Federation was to inaugurate an Environmental Action Plan. 54/

   In Israel the Organization of Agricultural Co-operatives
reported in 1991 that its members were becoming more aware of the
need for sustainable agriculture, and were introducing new
techniques in respect to pest control, tillage and crop rotation,
water use, soil nutrient management, maintenance of soil
fertility and the genetic improvement of plants. 55/

    In Kenya in 1992 the 123,000 members of over 100 co-operative
dairies had adopted "zero-grazing" techniques. Animals were kept
in special sheds and fed cultivated napier grass, maize stalks
and other types of fodder. This made it possible to cease the
practice of grazing which caused break up of top soil and
resulted in soil erosion in the rainy season. Kenya's almost
600,000 coffee producers, organized in 300 coffee producing co-
operative enterprises in 1992, operate on steeply sloping land
subject to heavy soil erosion unless cultivation methods are
particularly appropriate.  Particular attention has been given
to terracing and grass ground cover. 56/

   The Uganda Co-operative Alliance acknowledges that Ugandan
farmers are one of the main environmental stakeholders and that
they can only maintain economic viability by developing
sustainable agricultural practices and by changing their
production methods.  Consequently it was necessary for farmers'
organisations to go beyond their traditional role of marketing
and take on research, education, training and information
services to help farmers improve their production and management
techniques. 57/ 

B.   Promotion of organic agriculture

    While it is realised that organic agriculture, horticulture
and livestock raising is only one part of the transformation of
the rural economy to more sustainable practices, it is
nevertheless a significant part, and also an indicator of the
levels of awareness of rural entrepreneurs, and of their capacity
to respond to changes in consumer preferences.

    Agricultural marketing co-operatives contribute to more
organic farming methods in some countries. For example, in Canada
the Victoria Farmers' Co-operative had stopped dumping old
produce by 1989, and had begun to make it available to members
for use as animal feed and compost. This had reduced the co-
operative's waste disposal bill by 25 per cent. 58/

   In the United Kingdom the Co-operative Wholesale Society Ltd
(CWS) runs a 150 acre experimental organic farm (Stoughton Park)
(with which is associated Stoughton Grange Farm Park, whose
purpose is to promote conservation and care of the countryside).

   In Japan the Union of Agricultural Co-operatives adopted in
1991 guidelines for an environment-friendly agriculture which
included campaigns to improve soil productivity and reduce
fertilizer use; to encourage the use of preventive practices for
disease and pest control aimed at reducing the need for
agricultural chemicals; and to develop and diffuse fertilizing
methods and types of fertilizers which were environment-friendly.

   In 1991 the National Federation of Agricultural Cooperators
and Producers (MOSZ) in Hungary reported that 16 of its member
co-operatives had adopted organic farming methods on part of the
land where they grew for export.  Other co-operatives had shown
an interest in organic farming and in the export opportunities
which this method of production provided. The lead in organic
farming had been provided in private garden allotments and then
in small-holdings. 61/

     Consumer co-operative movements in a number of countries
have taken action to promote organic agriculture among their
suppliers of agricultural commodities. For example, in Japan the
agricultural co-operative movement, of which almost all rural
households are members, advocates the development and
popularization of organic agricultural technologies as an element
of environmentally friendly technologies within a sustainable
agriculture and forestry sector.62/ In Denmark the consumer co-
operative FDB has retailed vegetables, milk and pork produced by
organic farmers since the mid-1980s. 63/ In 1994 Coop Suisse,
which retails 13 per cent of national food consumption in
Switzerland, reported that its "Coop Natura" plan, which had a
turnover in 1993 of 35 million Francs, had an even greater
success in 1994.   This plan offers Swiss farmers an outlet for
organic products - fruit, vegetables, eggs, dairy products and
meat from free range cattle and poultry.   In 1994 1,700 farms
participated in the scheme, which provided consumers with safe
and healthy foods. 64/ 

    In Japan also the consumer co-operative movement promoted on
behalf of its members the organic production of foods retailed
by its member enterprises.  For example, the Kanagawa consumer
co-operative promoted commercial organic rice production in 1992.
The co-operative had supported its members' production of
vegetables without chemicals, and provided for the retailing of
this produce through its stores. 65/

   The adoption by Kenyan dairy co-operatives of zero-grazing
techniques made it possible for agricultural producers to collect
manure from stall-fed animals for use in horticulture, thereby
reducing inputs of chemical fertilizers.  Moreover, farmers have
become self-sufficient in fodder production, reducing thereby
input of purchased animal feed containing dangerous
chemicals. 66/ 

C. Co-operative rural extension systems

    The purchasing and supply co-operatives owned by independent
agricultural producers in many developed countries provide
advisory and extension services to their members in addition to
inputs.  In many cases these services are designed to support the
use of specific inputs. In many instances, however, they are more
in the nature of services designed to improve the level of farm
management and the productivity of farm operations.

   The rural extension services provided by supply and marketing
co-operatives in both developed and developing market economies
are very widespread, proficient and sensitive to member
requirements. This results from the fact that it is the members
who are both the users of the service and the owners and
controllers of the co-operative enterprise which provides them. 
However, it is not yet known whether or not all such extension
services are in fact engaged in helping rural entrepreneurs to
shift to sustainable forms of production and consumption.  
Certainly, they have a very substantial potential for bringing
about sustainable development because they are the means whereby
rural entrepreneurs and households may gain the knowledge and
equipment necessary in order to adjust operations and consumption
patterns once they are convinced that this is desirable.

   In developing market economies also many agricultural supply
co-operatives provide extension services as well as promoting
general farm and rural development. In India, for example, the
Indian Farmers' Fertilizer Co-operative Ltd (IFFCO-India), the
largest fertilizer co-operative in Asia, owned by 30,000 farm
enterprises, created a Co-operative Rural Development Trust which
conducts training programmes for farmers at the Moti Lal Nehru
Farmers' Training Institute at Phulpur, and training for village
leaders at Kalol.  As a complement to the introduction of
improved agricultural techniques and performance, IFFCO organises
training programmes, including field demonstrations, farmers'
meetings, field days, crop seminars, exhibitions, radio and TV
programmes, soil testing campaigns.  In Uttar Pradesh free
training is offered to develop skills in agricultural production,
dairy, horticulture, fisheries, poultry as well as professional
programmes on farm management, animal husbandry, land
reclamation, horticulture and agricultural engineering. Courses
are organized for farmers, farm women, and co-operative
personnel. 67/

    Such extension services are considered more efficient than
governmental extensions services because of the very high levels
of motivation of participants. These are members and owners of
the co-operative enterprises providing training and are able to
ensure through their control that the extension services are
designed specifically to meet their requirements. Their potential
for bringing about the diffusion of understanding and knowledge
for sustainable development is very great.

D. Implications for co-operative manufacturing enterprises

   Transformation to sustainable agriculture and rural
development implies considerable changes in the schedule of
manufactured inputs to farms, including both reduction in
chemical fertilizers and pesticides, and possibly their
substitution with organic, or non-organic but environmentally
friendly products.

   In many countries farmer-owned co-operatives supply
considerable proportions of farm inputs, including chemicals
(fertilizers, pesticides, etcetera).  In Europe, for example, the
supply and marketing co-operative system provides 55
per cent of farm inputs.  In the United States supply co-
operatives provided 28 per cent of farm inputs of chemicals in
199.  The Indian Farmers' Fertilizer Co-operative Ltd. (IFFCO-
India) supplied in 1992 over 29,000 agricultural co-operatives
in 18 states and three Union territories.  It owned four
fertilizer plants with a total production of 2,600,000 tonnes of
fertilizer, and had an annual turnover of US $ 400,000,000. 68/

E.  Conservation of the countryside and the rural landscape

    In a number of countries co-operative movements, both rural
supply and marketing movements and consumer movements, are aware
that conservation of the countryside, rural landscape and rural
life are of significance to the quality of life not only of rural
regions, but of urban residents and the broader socio-cultural
life of national society.

    In Japan the Association for Education and Publication
Regarding Agricultural Co-operatives (IE-NO-HIKARI) has pointed
out that the Japanese rural landscape, in particular its system
of irrigated terraces, has a significant role within national
culture. The farmers, almost all of whom are members of multi-
functional agricultural and rural co-operative enterprises, have
an important role in maintaining this landscape for this reason,
in addition to the basic economic reasons. 69/ 

    In the United Kingdom the Co-operative Wholesale Society Ltd.
operates Stoughton Grange Farm Park in association with a 150
acre experimental organic farm, which has the purpose of
promoting conservation and care of the countryside. 70/ 

F.  Co-operative enterprises and broader issues of the 
    quality of the rural economy and society

    The supply and marketing co-operatives owned by independent
farmers and other rural producers in many countries have
diversified their functions to encompass the supply of a broad
range of goods and services to the rural population.  By doing
so they ensure that rural areas stay alive and worth living in. 
For example, the Raiffeisen movement in Germany delivers to rural
and suburban communities fuel, operates modern supermarkets
offering a wide range of articles for the construction and repair
of farm buildings and homes, supplies a wide range of equipment
and goods for use in homes. The Raiffeisen movement has set up
factories for the production and processing of inputs to rural
entrepreneurs, and for the processing of outputs. Many of these
plants are located in rural regions, providing employment there. 
 Together with service activities, including financial services,
about 130,000 persons were employed in 1992 by the Raiffeisen
movement.  Moreover, during the five year period 1987-1991 the
movement had invested 1,500,000,000 Deutche marke annually in
buildings and technical installations, increasingly for equipment
specifically designed for environmental protection.71/

G.  Comprehensive community and sub-regional development and
    the promotion of balanced regional development in
    predominantly rural regions

    In some countries financial co-operatives have used their
resources to promote comprehensive regional development, and
specifically to stimulate balanced growth in less developed and
"problem" sub-regions and communities.  For example, in Canada
the Mouvement des caisses Desjardins, a savings and credit co-
operative movement which has been built up since its foundation
in 1900 by its members throughout the Province of Quebec until
it now occupies first place in the Province's financial
institutions, contributes to comprehensive regional development
both by means of the normal range of financial services it
provides, and by its undertaking special promotional and support
programmes.  The Mouvement is the largest private employer in
Quebec, with 36,000 employees, and counts on the services also
of 17,000 elected volunteer officers who act as supervisors and
directors of the member "caisses" or credit unions.

   In 1993 the Mouvement had 4,500,000 members, a high proportion
of the adult population of the Province. It consisted of 1,325
local area "caisses": of these 675 were the only financial
institution in the municipalities in which they operated.   This
in itself was an important factor in supporting and promoting
entrepreneurial activity, employment maintenance and creation and
livelihood in less prosperous communities. Even small investments
made in local communities were often sufficient to support the
creation of a few jobs, but an initial impact could trigger a
continual local expansion:  in a small community, the creation
of 10 or 50 or 100 jobs was sufficient to keep the whole
community alive.  Although the basis of the activity of each
"caisse" remains the mobilization of local capital by means of
the savings of the members who are local residents, the fact that
the local "caisse" is part of a broader federation of financial
institutions means that external capital is available under
highly favourable conditions.  Local communities are able to
benefit also from the specialized financial subsidiaries owned
by the Mouvement, including insurance, trust services, industrial
and commercial credit, investment, discount brokerage, securities
transportation and credit card services.

    The Mouvement's involvement in regional development is an
extension of its basic operating principles, which stress
fundamental concentration of individual savings so that they can
be more effectively used to support each member, first in the
local community, then in the town or region, and then in Quebec. 
 Subsidiarity, solidarity and responsibility are basic tenets. 
In helping local communities the approach taken by the Mouvement
is to establish a partnership with local community stakeholders,
help them to take control over their own affairs, look for
solutions together with them and support them in their concrete
actions to ensure development. By making people in each community
feel responsible for their own development, they will be able to
make the most of their energy, creativity and dynamism, and all
their talents will be put to work.  Local and regional
development called for the dynamic, active involvement and
combined efforts of individuals in their own communities.   By
this means they become active consumers and taxpayers.   These
are expressions of the basic co-operative principles of self-help
and mutual aid. 

    Employment is considered the basis for the development of a
region and its population. It is basic to an individual's
security and to the opportunity a person will be given to settle
down, start a family, become involved in the local community's
economic and social life and eventually to be involved in the
development of society.  In order to promote employment, it was
necessary to encourage the creation of enterprises: and this must
result from a community's own decisions and determination.   It
is the members of the community, before anyone else, who with
their ideas, their will and their ability to use local resources,
can guarantee the strength of the local, and thence the regional

    In 1989 the Mouvement des caisses Desjardins joined a Forum
for Employment, together with other representatives of the co-
operative movement, and of employers' associations, unions,
universities, youth and women's associations, cultural
organizations, universities and local government authorities.  
Provincial and Federal Government representatives were not
included purposely to avoid the danger of simply preparing
demands and turning over to the Government responsibility for
action, instead of seeking the most effective use of local
resources and initiatives.  Numerous and varied, but usually
innovative, actions had been undertaken by means of new
partnerships established within this Forum.

    The Mouvement des caisses Desjardins has become also a
leading partner in the creation of a network of regional
investment corporations in Quebec. These provided an
organizational means whereby local persons would be responsible
for analyzing and supporting the dynamism of their own region. 
 The corporations would make investments ranging from CAN $
50,000 to 500,000 and would be actively involved in the strategic
management of recipient enterprises.  Priority would be given to
able entrepreneurs who would be willing to invest in human
resource management as much as in marketing, and to regions
otherwise likely to suffer economic hardship.

    Finally, the Mouvement des caisses Desjardins, together with
manufacturers' associations, unions, farmers' associations, other
co-operatives, had begun a campaign labelled "Qualite-Quebec"
whose purpose was to promote intermediate and final consumption
of goods and services produced in Quebec provided that they were
of the same quality and price as those imported from other parts
of Canada or elsewhere.  This was a means to maintain and promote
employment. 72/ 

   In many countries community development co-operatives and co-
operatively structured community development corporations combine
local community initiatives and resources with funding from other
private and from public sources in order to revitalize or to
develop local communities. In the United States, for example, in
1994 about 2,000 such co-operatives operated in mainly low-income
rural as well as inner city communities. Here they originated in
the War on Poverty of the 1960s. According to the National
Congress for Community Economic Development they have developed
more than 300,000 units of housing for low- and moderate-income
households, financed the construction of more than 17 million
square feet of industrial and commercial space, provided loans
to more than 3,500 businesses and created or retained over 90,000
jobs. They provide social services such as job training
programmes, health clinics and day-care centres that enable
residents of distressed communities to participate in local
economic development efforts. 73/

   In the United States also the National Rural Electric Co-
operative Association began in the mid 1980s to advise its
members - 900 electricity supply co-operatives operating in 2,600
of the 3,100 counties in the United States, Puerto Rico and
American Samoa - to become more actively involved in matters that
directly affected the quality of life in rural America, notably
economic development and job creation. Consequently, three-
quarters of the co-operatives were involved in 1994 in community
development activities.  Some have built industrial parks and
community centres, others provide business development services
and affordable operating loans to enterprises in their service
areas.  The largest electricity co-operative - the Ogelthorpe
Power Corporation in Tucker, Georgia, had helped to attract 300
new businesses to its supply area.  In 1993 national legislation
was adopted which permitted the Rural Electrification
Administration to provide loans to rural electricity co-
operatives for purposes such as the provision of water and
sanitation services to communities in their supply areas.  Since
1969 the National Rural Utilities Cooperative Finance Corporation
has provided financing for rural electricity and telephone co-
operatives to develop and diversify. 74/

    In the United States also 260 rural telephone co-operatives
provide services to 1.2 million persons in 31 States.  These and
other small independent telephone enterprises are members of the
National Telephone Cooperative Association.  They are financed
by the Rural Telephone Finance Cooperative, an affiliate of the
National Rural Utilities Cooperative Finance Corporation. 75/

   In 1986 the National Rural Telecommunications Cooperative was
established by almost 800 rural telephone and electricity co-
operatives in order to provide media and telecommunications needs
in rural regions. It provides satellite television programmes and
intends to provide direct broadcast satellite programming to
eight million rural households.  Electronic mail and interactive
video services are planned. 76/

54/  Review of International Co-operation, vol. 85, No. 4
     (1992), p. 141.
55/  International Conference on the Environment and Sustainable
     Growth: the Key Role of Farmers, 16th-18th October 1991,
     Reykjavik, Iceland - Proceedings, Paris, International
     Federation of Agricultural Producers, n.d. (1992), p.149.
56/  ICAN, No.3, 1992, p. 24.
57/  International Conference on the Environment and Sustainable
     Growth .. , op.cit., p.9.
58/  Review of International Co-operation, vol. 83, No. 2
     (1990), p.80.
59/  Ibid., p. 97.
60/  ICA News, No. 3, 1992, p. 17.
61/  International Conference on the Environment and Sustainable
     Growth .., op.cit., p. 128.
62/  Review of International Co-operation, vol. 85, No.4
     (19912), p. 141.
63/  Review of International Co-operation, vol. 83, No.2 (1990,
     p. 85.
64/  Cooperation (Basle), No. 30, 28 July 1994 and No. 32, 11
     August 1994.
65/  Review of International Co-operation, vol. 85, No. 4
     (1992), p. 146.
66/  ICA News, No. 2, 1993, p. 24.
67/  Review of International Co-operation, vol. 85, No.4 (1992),
     p. 137.
68/  Ibid.
69/  Ibid., p. 140.
70/  Review of International Co-operation, vol. 83, No.2 (1990),
71/  Deutscher Raiffeisenverband e.V., op.cit.
72/  Review of International Co-operation, vol.86, No.4 (1993),
     pp. 76-84.
73/  National Cooperative Bank, op.cit., p. 7.
74/  Ibid., pp. 20-22.
75/  Ibid., p. 19.
76/  Ibid., p. 22.