Making a difference in Asia and the Pacific



Issue 28: July-August 2009

Working with Cooperatives

In this issue


In this issue

On 5 July 2009, the world celebrated the International Day of Cooperatives proclaimed by the United Nations General Assembly in 1992. Recognizing that cooperatives were becoming an indispensable factor of economic and social development, the Assembly invited governments, international organizations, specialized agen­cies and national and international cooperatives to observe the Day every year.

This issue of the newsletter presents examples of IFAD’s work with agricultural and marketing cooperatives in China, DPR Korea, Indonesia, Nepal, Sri Lanka and Viet Nam. It also includes a guest contribution from the National Agricultural Cooperative Federation (NACF) of South Korea.

In China, IFAD works with the government through farmers’ associations and cooperatives, to improve farmers’ access to markets, services, technology and investment support. Martina Spisiakova, Newsletter Coordinator, describes how a new IFAD-funded programme will promote the creation of linkages between production and marketing organizations such as farmers’ cooperatives to strengthen farmers’ negotiating power and enable them respond to changing market dynamics.

In DPR Korea, activities funded by IFAD operate in the context of the cooperative farms that are the basic building blocks of the country’s rural economy. Ganesh Thapa, Regional Economist, presents the findings of the recent Independent Evaluation of the IFAD-assisted Upland Food Security Project, through which IFAD helped 46 cooperative farms to secure food production and incomes of farmers living in the uplands.

Riana Ambarsari, a Micro Enterprise Specialist, describes how the IFAD-supported Post-Crisis Programme for Participatory Integrated Development in Rainfed Areas (PIDRA) in Indonesia is helping establish a district community-based cooperative to strengthen the existing self-help groups in Blitar district of East Java Province.

In Nepal, IFAD works with local agricultural cooperatives in many different ways. One example is the establishment of cooperative goat resource centres that help farmers develop markets for a sustainable supply of high-quality breeding goats, as discussed by Sunita Sanjyal from the Center for Integrated Agriculture and Cooperative System. Another example is the promotion of sustainable livelihoods by providing a range of services to beneficiaries. This contribution comes from Krishna Thapa, Monitoring Officer from the Centre for Environmental and Agricultural Policy Research Extension and Development (CEAPRED).

H. L. Tissera, National Programme Coordinator of the IFAD-supported post tsunami programmes, explains IFAD’s work with the Women’s Bank – a cooperative bank in Sri Lanka – to enable poor women who belong to fishing communities in the areas affected by the Indian Ocean tsunami in December 2004 to access finance and undertake microfinance activities.

Over the last four decades, NACF has supported farmers, rural communities and agriculture in areas such as marketing and supply, banking and education in South Korea. Chan-Ho Choi, General Manager, International Cooperation Office, NACF describes how NACF works with agricultural cooperatives to assist South Korean farmers.

In Viet Nam’s Tra Vinh Province, IFAD works together with Deutsche Gesellschaft für Technische Zusammenarbeit (GTZ) to improve participation of poor rural people in markets. Tran Thi Vien, Project Director, Improving Market Participation of the Poor in Tra Vinh Province, describes how the programme promotes the establishment of marketing cooperatives to improve the market power of individual farmers.

Martina Spisiakova, Newsletter Coordinator, IFAD

What is a cooperative?

A cooperative is an autonomous association of people united voluntarily to meet their common economic, social and cultural needs and aspirations through a jointly owned and democratically controlled enterprise. It is based on the values of self-help, self-responsibility, democracy, equality, equity and solidarity. In the tradition of their founders, cooperative members believe in the ethical values of honesty, openness, social responsibility and caring for others.

The cooperative principles are guidelines by which cooperatives put their values into practice. These principles are:

  1. Voluntary and Open Membership – Cooperatives are voluntary organizations, open to all people able to use their services and willing to accept the responsibilities of membership, without gender, social, racial, political or religious discrimination.
  1. Democratic Member Control – Cooperatives are democratic organizations controlled by their members, who actively participate in setting their policies and making decisions. Men and women serving as elected representatives are accountable to the membership. 
  1. Members’ Economic Participation – Members contribute equitably to, and democratically control, the capital of their cooperative. At least part of that capital is usually the common property of the cooperative. Members usually receive limited, if any,  compensation on capital subscribed as a condition of membership.
  1. Autonomy and Independence – Cooperatives are autonomous, self-help organizations controlled by their members. If they enter to agreements with other organizations, including governments, or raise capital from external sources, they do so on terms that ensure democratic control by their members and maintain their cooperative autonomy.
  1. Education, Training and Information – Cooperatives provide education and training for their members, elected representatives, managers and employees so they can contribute effectively to the development of their cooperative. They inform the general public –  particularly young people and opinion leaders – about the nature and benefits of cooperation.
  1. Cooperation among Cooperatives – Cooperatives serve their members most effectively and strengthen the cooperative movement by working together through local, national, regional and international structures.
  1. Concern for Community – Cooperatives work for the sustainable development of their communities through policies approved by their members.

Source: International Cooperative Alliance

International Cooperative Alliance (ICA) is an independent, non-governmental organization which unites, represents and serves cooperatives worldwide. ICA members are national and international cooperative organizations in all sectors of activity including agriculture, banking, fisheries, health, housing, industry, insurance, tourism and consumer cooperatives. Currently, ICA has 222 member organizations from 85 countries, representing more than 800 million individuals worldwide.

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Working with farmer cooperatives in China

In December 2008, IFAD’s Executive Board approved a US$ 32 million loan to finance the Dabieshan Area Poverty Reduction Programme. It aims to develop innovative pilot approaches to poverty reduction that can be applied on a larger scale by the Government of China and other donors. In selected poverty-stricken counties of Xinyang prefecture, Henan province, the programme will seek to improve access to markets, services, technology and investment support by working with farmers’ associations and cooperatives.

Poor people in Xinyang


A credit officer from the Rural Credit Cooperatives brings a loan to a borrower


Xinyang is an agricultural area with a low level of industrialization and weak market bargaining power of farmers. Agriculture is almost entirely based on smallholder farming. Most farmers still use traditional techniques, have limited resources and lack access to new technologies and production and marketing institutions. These conditions make them disadvantaged and vulnerable as they are unable to produce higher value-added products to sell at the market.

Nevertheless, farmers who offer their products for sale are part of a value chain, no matter what quantities they bring to the market and how remote their locations are. Farmers face lower profit margins when their integration in the value chain is low. As a result, their competitiveness is poor and their negotiation power is low, especially among poor households headed by women.

Regional economic development would not be fully sustainable if it bypassed poor rural people. Efforts to develop market access should include these people, offering them equitable opportunities to improve their livelihoods. One of the programme’s main initiatives is to support the establishment of value chain linkages between poor farmers and traders through farmers’ associations such as cooperatives.

From individual households to cooperatives

 Poor households that do not belong to any farmers’ organization lack money to explore new opportunities and often have only second-hand access to market information. As production is demand-driven, competitiveness is important to help farmers maintain an equitable position in the value chain.

To address this problem, local governments and the business community are promoting the creation of close linkages between production and marketing by organizing individual households into formal or informal production and marketing organizations such as cooperatives. These organizations strengthen farmers’ negotiating power, enabling them to respond to changing market dynamics.

In recent years, the development of farmers’ organizations has been booming. There are 682 farmers’ organizations recorded in the programme counties, of which 32 per cent are legally registered as cooperatives or social development associations with, respectively, the Bureau of Industry and Commerce Administration and the Bureau of Civil Affairs. Cooperatives generally help farmers to:

  • sell processed and semi-processed products
  • link their products to the supply chain of a lead company
  • establish quality standard to meet supply and demand for their products. increase their production and marketing efficiency, and thereby gain value-added, as they join the local value chain systemimprove their social and economic status through their participation and by gaining a share of the total value generated by their cooperative increase their capacity and opportunities to organize themselves to contribute to sustainable community development.

The programme will work with existing or newly established cooperatives to reach the poorest people to improve their access to markets – particularly households headed by women in which farming is practiced with low levels of efficiency and organization.

How the cooperatives will work

Once the cooperatives identify their desired members, poor households will be recruited and provided with personalized technical coaching to help improve their efficiency in production and market access.

A concrete bonus should be offered to poor households to join the cooperative, such as a reduced or no-fee membership and free training in various income-generating skills. As an incentive for cooperatives to recruit poor households as members, the programme will provide technical assistance to improve their governance and to enhance technical skills of their members.

To assist the new members, the cooperatives will:

  • help them draw up an annual plan for income generation
  • help them achieve the expected quality and quantity of production, as with the old cooperative members
  • organize learning and training events, such as in processing, storing, packing and packaging, transporting and sales, to improve their production and marketing skills and efficiency
  • pay special attention to increase their profit margin along the value chain, through standardization and certification and other methods of quality production and processing
  • work with quality control agencies to introduce certified farming, especially for organic products where applicable
  • promote specialization and diversification of production according to market demand to reduce the risks inherent in relying upon only one product
  • identify experts to undertake market studies (for example, on members’ existing and prospective income-generating activities, target customers, strategies of main competitors and efficiency of distribution channels) to help establish a strategic marketing plan for the cooperative.


By the end of the programme, participating cooperatives should be able to provide market-driven services to their members, improve market access for small farmers, and enhance their skills as entrepreneurs to engage as value-chain actors. Farmer households will have more reliable, robust and lucrative markets for their farm produce. They will gain better access to farm inputs and market information. The sum of these benefits will lead to higher rural incomes and expanded farm production. It is expected that 24,000 households (45 per cent of which are headed by women) will benefit from the initiative.

The cooperatives supported by the programme should become institutionally sustainable and commercially viable as they continue to play a prominent role in the rural economic development of China.

Martina Spisiakova, Newsletter Coordinator, IFAD

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IFAD supports cooperative farms in DPR Korea to enhance food production and social empowerment

Most agricultural work in the Democratic People’s Republic of Korea (DPR Korea) is carried out by cooperative farms, which are the basic building blocks of the country’s rural economy. Food production is IFAD’s immediate priority in response to chronic hunger, but its investments also have the strategic longer-term aim of supporting sustainable agriculture and crop diversification. Through the Upland Food Security Project (2001-2008), IFAD supported 45 cooperative farms to secure food production and incomes of farmers living in the country’s upland areas.


In-vitro potato seed multiplication at Gwanhung Cooperative Farm, Ryanggang Province, Source: Ernst Schaltegger


Organized to be co-terminus with ri boundaries (the smallest political division, equivalent to a large village), there are about 3,900 cooperative farms in the country. The average cooperative farm has around 500 hectares and 1,200 workers.

Cooperative farms have both economic and social functions. Their first priority is to meet the nationally defined targets for food grains and other agricultural commodities. The main sources of income of cooperative farms are crops and livestock products. Net income is distributed to the members of cooperative farms on the basis of work points earned during the year. They also have to provide social services such as shelter, basic infrastructure, education and health care to their members.

Beginning in 2002, the government allowed greater freedom to the managers of cooperative farms to set their work plans. All families that belong to cooperative farms are allotted a household garden, usually 100 square meters in size. Production on these plots is outside quota and farmers can sell their produce in farmers’ markets.

From April 2001 to June 2008, the Government of DPR Korea implemented the Upland Food Security Project with funding support from IFAD. Its goal was to achieve balanced, sustainable and replicable cropping systems and environment management that would improve soil fertility and enable higher and more secure food production. This would lead to improved living standards for 18,000 low-income households that belong to 46 cooperative farms in upland areas of four counties in two provinces.

An interim evaluation of the project undertaken by IFAD’s Independent Office of Evaluation in 2008 concluded that the project had a positive impact on rural poverty. Over the life of the project, the evaluation noted the following changes:

  • Income and assets increased significantly for about 20,000 households in 46 participating cooperative farms, with a corresponding increase in purchasing power.
  • Food security was enhanced through increased food grain productivity and through increased production of meat and milk.
  • The widespread adoption of improved crop rotations by cooperative farms was judged to be technically sound; rotations are likely to be continued after the project.
  • Potato seed supply became sustainable.
  • Efforts to preserve the environment increased.

The project supported field-level propagation of potato seeds in 37 cooperative farms. A total of 12 million disease-free potato mini tubers were produced and distributed to project farm cooperatives during the life of the project. Nurseries were established in all 46 participating cooperative farms to supply saplings for forestation. 

The evaluation observed that the project contributed to improving the management capacity of cooperative farms, which provide social safety nets to an important part of the rural population and function in a democratic and relatively transparent manner. Households gained social capital and empowerment, especially women, who received 90 per cent of the household loans extended by the project.

The project also established a fund to stimulate a process of participatory planning and investment at the cooperative farm level. A methodology based on participatory rural appraisal (PRA) was tested, and cooperative farm members from four cooperative farms were trained. The training consisted of:

  • discussion of the PRA concept, approaches and techniques
  • application of the learning through field practices
  • a learning integration workshop.

A total of 163 community facilities were built and/or rehabilitated in 37 cooperative farms with project support, including cultural centres, kindergartens, clinics, bridges and threshing sites.

The project supported a number of important technical innovations such as:

  • improved crop rotations and a potato seed multiplication scheme that have been replicated outside the project cooperative farms
  • the credit component, which promoted household animal breeding and fattening activities
  • adaptation of the credit component to the cooperative system in DPR Korea in order to maximize efficiency.

IFAD is planning to work with selected cooperative farms in the country to pilot test conservation agricultural technologies through a country grant project, If the pilot is successful, it can be scaled up in a future investment project

Ganesh Thapa, Regional Economist, Asia and the Pacific Division, IFAD

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A cooperative helps local organizations drive rural economic development in East Java in Indonesia

Since 2001, the IFAD-funded Post-Crisis Programme for Participatory Integrated Development in Rainfed Areas (PIDRA) has supported nearly half a million people living in the 500 poorest villages in the provinces of East Java, Nusa Tenggara Barat and Nusa Tenggara Timur. As the programme concludes this year, it needs to ensure that the benefits of its operations continue afterward. Self-help groups (SHGs) are important actors in ensuring this sustainability. To strengthen the SHGs, in Blitar district of East Java Province, PIDRA has helped set up a district community-based cooperative.

Federations of self-help groups


A member of the cooperative filling plastic jars with cooking oil to be distributed to village federations in Blitar


The development of SHGs has been very successful under PIDRA. SHGs have been effective in mobilizing savings and providing small amounts of credit to their members, However, even with the addition of a matching grant from PIDRA, the amount of capital that SHGs are able to accumulate is quite small. This places serious limitations on the amount of credit that SHGs are able to provide to their members. 

To address this issue, since 2003 PIDRA has been helping to establish and develop federations at each participating village to consolidate SHGs into a larger organization. SHGs are free to join a federation. By joining a federation, a community should have better positioning power in marketing. For example, if a market needs a certain volume of a product, farmers need to organize themselves to collect this volume. Normally, the market is not willing to collect the product from each individual farmer due to related costs. Traders prefer to deal with one person or a party such as a federation to reduce the cost.

In some villages the federations provide services such as:

  • money-lending for productive activities (buying fertilizer and pesticides)
  • non-productive purposes (education and health)
  • collective marketing (collecting products from the members for a fee and selling to a trader, or buying products from the farmers and selling to traders). 

Federations are careful in providing credit to SHGs, ensuring that they are credit-worthy and operating effectively. However, SHGs are demanding more credit. In response, the programme management in Blitar District is identifying ways to increase the credit available to participants so that they can finance microenterprises and other productive economic activities. One way is by establishing and managing a legalized district cooperative.  The programme expects that through the cooperative, SHGs and their members would receive support from the government, such as soft loans and guidance in how to manage a cooperative.  

One step further: creating a cooperative


A member of the cooperative making bird cages


The cooperative is called Koperasi Serba UsahaPidra Mandiri’ (A multi purpose cooperative called  ‘Pidra Mandiri’) and is located in Ngrejo Village, Bakung sub-district in Blitar. It  was legalized on 22 April 2008 and to date has 782 members.

The objective of the cooperative is to strengthen the existing capital to support microenterpreneur activities in the villages, and to improve the access of SHGs to this capital.

The cooperative is managed by members of SHGs. To raise the capital for the cooperative, each member should pay a compulsary fee of IDR 25,000 (US$ 2.5) and deposit a monthly saving of IDR 1,000 (US$ 0.1).
The cooperative provides the following services to its members which are also members of SHGs and the federation:

  • providing soft loans and allowing members to deposit savings
  • facilitating collective marketing – the cooperative collects the products of its members and sells them to traders
  • purchasing products from its members and selling them to wholesalers at the district level and beyond
  • purchasing agricultural inputs such as fertilizers and seeds, and re-selling to the members for a lower price than the price charged by regular kiosks.

The cooperative has also developed a partnership with private trading firms (for example, with the company ’Sekar Ayu Mandiri in Malang’) supplying cooking oil from other districts. Village federations serve as a village distributor to sell cooking oil to SHG members and non-members. Furthermore, with the company ’Prima Jaya Lestari in Surabaya’, the cooperative has a contract for selling dried cassava that cooperative members have produced.

The cooperative plans to help the village federations develop a village kiosk at each village for selling agricultural inputs, food staples (such as rice, cooking oils and sugar) and other products of the members. 

Riana Ambarsari, a Micro Enterprise Specialist, PIDRA-District Management Office of Blitar District, East Java

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Cooperative goat resource centres for high-quality breeding goats in Nepal 

In Nepal, goats – also called ‘poor man’s cows’ – are considered the pillar of country’s agricultural systems. Goat keeping is a ‘poor-friendly’ enterprise because of its low labour and investment requirements. In 2007, IFAD provided grant resources to the Center for Integrated Agriculture and Cooperative System (COCIS) and Community Forestry Research and Training Center (COMFORTC), based in Kathmandu, to establish Cooperative Goat Resource Centres. The centres will help develop markets for a sustainable supply of high-quality breeding goats.


In Nepal, goats are considered the pillar of country’s agricultural systems


COCIS and COMFORTC are government-registered organizations working in rural areas of Nepal. In 2007, they received a grant from IFAD to implement a project Establishment and Strengthening of Cooperative Goat Resource Centres for Development of Markets for Sustainable Supply of High-Quality Breeding Goats.

The project focuses on institutionalizing cooperative goat production, and insurance and marketing systems in selected districts. It works in close synergy with the ongoing Leasehold Forestry and Livestock Development Programme. The objectives are to:

  • improve the capacity of beneficiaries (members of the cooperatives) to produce high quality breeding goats and selected goat products
  • ensure sufficient supply of breeding goats to meet the demand within the country through goat producers' and marketing cooperatives
  • improve livelihood conditions of the members of the cooperatives through increased goat production and ensured markets for goats.

Various governmental organizations, bilateral donors and many international non-governmental organizations have been distributing goats to selected groups/households in their project/programme areas to improve goat production and reduce poverty. However, the haphazard distribution of goats has only resulted in an increased number of goats rather than improvement in quality. It has also led to a lower availability of good genetic material.

Thus, the Cooperative Goat Breeding Resource Centre was set up to respond – firstly to safeguard the genetic resource and secondly to improve goat production.

With the establishment of the centre, farmers will be encouraged to save the best female and male kids for breeding purposes based on the pedigree and individual selection.

However, the government and the private sector cannot afford to continuously support the provision of various resources and genetic materials. A sustainable, community-managed resource centre is needed – which will also become an income generation centre for farmers.

The project is planning to establish 18 cooperatives in three districts of the Leasehold Forestry and Livestock Development Programme – Kavre, Mugling and Salyan. To date, nine cooperatives have been registered.

A cooperative, being an association of a number of small farmers, acts as a large business entity in the market, reaping the significant advantages of economies of scale that are not available to its members individually. Each member is responsible for participating in the group, doing his or her fair share of the work and maintaining good working relationships among members. All members are equal regardless of gender, ethnicity and religion. Equality is not about making equal contributions to the group. It means having the same value and being given equal consideration.

All members have the right and obligation to express their ideas and opinions and to be listened to with respect and consideration. Decisions are made by a combination of consensus and majority rule after a thorough discussion considering the merits of all points of view and focusing on reasoning and information.

Case study: a cooperative changes the lives of goat farmers in Meithenkot village in Kavre district


Training in the management of Goat Resource Centres, Bandipur, Tanahun, Nepal


Before September 2008, goat-raising farmers in Meithenkot village acted as individual producers and sellers. A farmer alone was unable to negotiate the price of a goat with traders and thus was compelled to sell goats for the price that the middlemen demanded. This made farmers tired of farming and rearing animals.

The project organized the goat producers into a cooperative and then into a Goat Breeding Resource Centre. Initially, only 25 farmers understood the importance of collective work and became members of the cooperative. Other farmers were not convinced about how the membership could help them. However, membership increased over time. Formation of the cooperative took a lot of hard work, patience, vision, coordination and commitment of project staff and farmers. The farmers then formed a committee of nine members which guided the members of the cooperative. They started collecting shares and monthly saving within the cooperative.

The farmers received orientation and training in:

  • understanding the importance of a Goat Breeding Resource Centre
  • establishing the resource centres
  • adopting the selection criteria of goats to be placed in the resource centre
  • developing market linkages
  • cultivating and marketing high-value organic crops.

Realizing the importance of group work, other farmers also joined the cooperative. Now the cooperative has 124 shareholders, about half of whom are women. The cooperative includes all castes and tribes and treats them equally. For example, it has 14 Dalit and 32 Janajati members – ethnic communities considered to be among the poorest in Nepal.

Only a month has passed since the cooperative at Meithenkot has been registered. It has already started collective goat rearing along with the cultivation of high-value crops. The pay-off from selling goats is already visible. Within a month following the registration of the cooperative, farmers have earned NPR 40,000 (US$ 524) by selling breeding goats and bucks. They are confident that their earning will increase dramatically.

Advantages of being a member of a cooperative

Project beneficiaries have noted a number of advantages and opportunities that cooperatives offer:

  • Increased bargaining power of farmers – in the current agricultural marketing system, often an individual farmer has to face a well-organized group of clever intermediaries. Farmers organized into cooperatives are less prone to exploitation.
  • Direct marketing – cooperatives can skip intermediaries and enter into direct relations with final buyers. This can eliminate exploiters and ensure fair prices to both producers and consumers.
  • Provision of credit – marketing cooperatives provide credit to farmers to prevent them from having to sell their produce immediately after harvesting and to enable them to purchase breeding stocks and seeds. This ensures better returns to the farmers.
  • Easier and cheaper transportation of agricultural products – bulk transportation and the fact that sometimes the cooperatives have their own means of transportation further reduce the cost of transporting agricultural products to the market.
  • Up-to-date information on prices and other market factors – cooperatives can obtain data on market prices, demand, supply and other related information from the markets on a regular basis and can plan their activities accordingly. This enables farmers to better negotiate with traders.
  • Influencing market prices – previously, market prices were determined by mediators and merchants, and farmers were likely to accept whatever was offered to them. Cooperatives have changed the game. Strong marketing cooperatives can bargain and achieve better prices for their agricultural produce.
  • Boosting self-confidence – cooperatives can inspire a spirit of self-confidence and collective action among the farmers, without which their agricultural development wouldn’t be possible.

The programme has designated leasehold forestry development for poor people as a core poverty reduction programme. More importantly, the programme organized poor people into cooperatives and redefined their role from being merely recipients and beneficiaries to actors who influence and provide key inputs to the development activities. Established cooperative-based resource centres increase farmers’ income and create a strong sense of belonging, which is fundamental to ensure a centre’s sustainability.

Sunita Sanjyal, Project Coordinator, Center for Integrated Agriculture and Cooperative System (COCIS)

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Cooperatives: a case study from Mid-Western Development Region of Nepal

Fair people respond to globalization through co-operatives,” says Keshav Badal,  a writer and leader of the cooperative movement in Nepal. Cooperatives help reduce the gap between the rich and the poor, and thereby help minimize conflict. They are established and managed by their individual members, who apply democratic norms and thus increase social justice. Productivity is also increased through the collective efforts of the members. Social justice and productivity are essential in a country where two-thirds of the population are living on less than US$ 2 per day.The Local Livelihood Programme (2006-2009), funded by IFAD and implemented by the Centre for Environmental and Agricultural Policy Research Extension and Development (CEAPRED), promotes sustainable livelihoods by providing services to its beneficiaries through local cooperatives.


Members of a group discussing their social and economic agenda at Kunathari, Surkhet District


In Nepal, many programmes promoting livelihoods are providing services through cooperatives. One of them is the Local Livelihood Programme, which is focusing on developing the North-South Corridor Road, identified as a priority by the Government of Nepal. The corridor will help development along the road linking upland regions to the terai (lower plains) of the Mid-Western Development Region.

The Local Livelihood Programme is being implemented along the two new road corridors (Surkhet-Jumla and Chhinchu-Jajarkot). By promoting cooperatives, it is helping people who live along the road corridors to:

  • improve the social and economic conditions of 5,000 households of five districts (Dailekh, Jajarkot, Kalikot, Salyan and Surkhet) of the Region
  • stop labour migration to India
  • eliminate conflicts along the road corridors.

The programme has been working with 234 production groups, 53 of which already existed in the area before the programme started. The programme formed the other 181 groups. The main economic activities of the group members include:

  • producing seasonal and off-seasonal vegetables
  • rearing goats, pigs and poultry
  • producing non-timber forest products (NTFPs)
  • sewing and knitting
  • developing local agricultural input suppliers.

The programme has played a significant role in turning these groups into cooperatives. It has currently been working with ten agriculture production and marketing cooperatives, and one savings and credit cooperative. The production groups working with the programme are registered as single and multipurpose cooperatives. Some of these groups have affiliated themselves with other functional cooperatives.

Programme support    


Tomatoes stored at the collection centre at Amalakhali, Surkhet District


The programme is supporting disadvantaged participants in the programme area by providing:

  • training to individual farmers/group members to promote microenterprise development such as nursery management, vegetable/NTFPs/spice production, post-harvest management, integrated pest management, quality control and agro-vet promotion
  • training to production groups on village animal health
  • vegetable seeds, goats, poultry and agricultural materials
  • micro-irrigation facilities to agro-production groups
  • training to groups and cooperatives in community financial management, group dynamics, cooperative education, business plan development, social mobilization, gender and development, and leadership development
  • training in market management and linkage development for executive members of the cooperatives/groups.

Developing linkages


Cooperative building, market and collection centre developed by the programme in Salibazar, Salyan District


As an apex body of production groups, a cooperative plays a vital role in connecting farmers to collection centres and bazaars where farmers can trade their products. For example, in Surkhet District, cooperatives are linking farmers with ‘Bulbule Agri-products Market Management and Hat Bazaar Management Committee’ – a Regional Market Management Committee located in district headquarters. The Committee then sells the produce in local markets in Nepalgunj, Jumla and markets located at the border with India.

The cooperatives have established institutional linkages by signing a Memorandum of Understanding (MoU) with the regional committee to sell their products. The production groups have also established institutional linkages with local agricultural input suppliers developed by the programme, in coordination with their respective cooperative.

The groups have also linked with government service centres (agriculture and livestock service) and local private service centres to provide technical services. So the programme has facilitated institutional linkages of groups and cooperatives with key actors – traders, service providers and inputs suppliers.

Every year, the programme organizes a stakeholders’ workshop. Farmer groups, traders (inputs and outputs), service providers and support organizations participate in the workshop. The farmer groups present their production plan, based on which an MoU is formulated and signed between the farmers and key actors.



Market network along the two road corridors – Surkhet-Jumla and Chhinchu-Jajarkot in Mid-Western Development Region of Nepal


The groups along the road corridors are now affiliated with cooperatives within the defined geographical periphery. The programme had resulted in a number of positive outcomes:

  • Increased social harmony and less conflict among people are demonstrated by most of the groups mixing with different ethnicities (dalit, Janajati, higher caste) and working together to promote their livelihoods.
  • An institutional market network has been established along the corridors, comprised of groups/cooperatives rather than  individual farmers and traders.
  • The most disadvantaged people in the region – women, and dalit and janjati communities – have been socially and economically empowered. Forty-seven per cent of group members are women who are actively involved in income-generating activities. Thirty-four out of 234 groups established by the programme are led by women, and their number is increasing every year.
  • Vegetable production along both corridors increased by 5,241 MT in three years.
  • Every year, the groups sell about 4,548 MT of vegetables, earning NR 33.25 million (US$ 443,333). The baseline sales status was 497 MT and average income was only NR 2,352 (US$ 31). Now, the yearly income has increased by NR 43.11 million (US$ 0.575 million) from selling vegetables, with the average income at NR  8,434 (US$ 112).
  • About 283 MT of spices and 203 MT of non-timber forest products (especially Xanthosylum Armatum) that farmers used to produce only for home consumption have now been sold. 

Cooperatives are succeeding in joining people in networks, helping farmers to enhance their economic status by linking them to service providers, and creating social harmony in society.

Krishna Thapa, Monitoring Officer, LLP, CEAPRED

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Women’s Cooperative Bank helps women access finance  in tsunami-affected areas of Sri Lanka

The IFAD-funded Post-Tsunami Coastal Rehabilitation and Resources Management Programme and the Post-Tsunami Livelihoods Support and Partnership Programme in Sri Lanka work to restore the assets of poor rural communities affected by the Indian Ocean tsunami of 26 December 2004. The programmes work with the Women’s Cooperative Bank in Sri Lanka to develop an innovative approach to enable poor women living in fishing communities to access finance and undertake microfinance activities. This work is based on cooperative values and principles which allow the poorest people to fully participate in their economic development.


Women beneficiaries participating in a ‘mobile saving camp’ of the Women’s Bank


The two IFAD-supported programmes aim to re-establish the economic activities of poor rural people following the tsunami, and help them diversify into new and profitable income-generating activities. They also aim to eliminate some of the root causes of poverty in the coastal communities hit by the tsunami that are the main obstacles to their economic and social betterment. These causes are:

  • Lack of capacity of rural men and women to undertake development activities – In the past, rural people had few opportunities to plan and participate in their own development processes. The two programmes are involving beneficiaries in planning, implementation and monitoring phases from the outset.
  • Difficulties in accessing formal financial resources – Poor rural people face various challenges in accessing loans, such as living in remote areas, the high cost of loans, a selection process that rejects their loan applications because they might not be able to repay the loan, and many others.
  • Lack of participation by coastal communities in activities supporting sustainable livelihoods – Collective efforts are needed to sustain the effectiveness and productivity of individual socio-economic activities such as addressing common marketing challenges by clustering the same kind of livelihood activities.

The programmes have looked at ways of changing individual, family and social behaviour to sustainably alleviate poverty. They focus on women as the key agents of change, as their role is vital for reducing household poverty and improving social integration for collective action.

The Women’s Cooperative Bank (known as ‘Women’s Bank’) is a cooperative bank incorporated under the Cooperative Law of Sri Lanka. Its branches consist of saving and loan groups. All group members or their representatives meet regularly. The Bank has been identified by the government as a major implementing agency for achieving the goals and objectives of the programmes. The Bank has established 6,000 women’s self-help groups (SHGs) and amalgamated all groups into 200 branches across the country. 

The Bank is not merely a financial institution. It is an organization that:

  • accumulates financial, physical and knowledge resources understands poor women and provides opportunities for them to fulfill their own needs in a participatory manner and through cooperative values and principles
  • enables poor people to ensure ownership of their development process by participatory planning and decision making process from the beginning.

The Bank is implementing the activities of the programmes, such as promotion of savings and credit and development of women’s microenterprises. Its bottom-up approach, starting from groups at the village or community level that gradually federate at higher levels, has shown considerable results in savings mobilization and institutional ownership by the beneficiaries, as well as a strong sense of empowerment.


Women participating at a monthly conference of the Women’s Bank


Both programmes aim to strengthen these women’s capital basis through establishing and training women’s groups and promoting savings mobilization and internal group lending. The groups include five to fifteen low-income women living in close proximity and who have agreed to meet once a week, save LKR 5 (US$ 0.04) and make collective decisions.  Apart from saving money, they lend money to their members in the form of emergency loans, as well as review and decide on their activities.

Once groups have demonstrated their internal cohesion and financial viability, such as through high recovery rates on small loans and substantial saving mobilization efforts, the programmes will provide a matching capital grant to reinforce group operations and serve as a guarantee for possible bank loans. This will be part of a new development programme which is in its design stage.

The programmes selected the Women Cooperative Bank because it:

  • operates in the seven districts of the programme
  • has mobilized women of different social strata, including many in fishing communities
  • is fully self-sufficient and mobilizes its own resources to support and manage its branches, district level committee and national council
  • pays a lot of attention to women’s position in society and strives to strengthen that position through regular exchanges between their members
  • mobilizes experienced senior members to provide services to new members

The Bank is confident that it will be able to expand its outreach to about ten to twelve new branches in the programme districts. Each branch would have up to 100 members. The multi-level structure (branches, divisions, districts, national) of the Bank and the participatory working methods of the organization will not be altered by this collaboration with the programmes.

Cooperatives are based on the values of self-help, self-responsibility, democracy, equality, equity and solidarity. Their members believe in ethical values of honesty, openness, social responsibility and caring for others. They work on the principles of voluntary and open membership, democratic member control and economic participation, autonomy and independence, education, training and information, cooperation and concern for the community. Working with such cooperatives, based on these values and principles, is an effective way for IFAD-supported programmes to reach the poorest of the poor and address their needs.

H. L. Tissera, National Programme Coordinator, Post Tsunami Coastal Rehabilitation and Resource Management Programme and Post Tsunami Livelihood Support and Partnership Programme

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Agricultural cooperatives support 2.4 million farmers in South Korea

Since their inception in 1961, Korean agricultural cooperatives and the National Agricultural Cooperative Federation (NACF) have grown quickly and increased their contribution to the development of the country’s agricultural and rural society. Today, they support 2.4 million farmers in South Korea.


Rice milling and processing complex of the Boeun Agricultural Cooperative, South Korea


Early achievements of agricultural cooperatives in South Korea were remarkable. The mutual credit services initiated in 1969 eradicated usuries with interest rates of over 50 per cent that prevailed in rural areas. The cooperatives used the deposits of their members and the general public to make loans available to members at half of the usury rate. Today, this type of mutual credit account provides more than 80 per cent of the rural loan markets with low interest rates.

The chain-store business has also made a significant contribution to the economy of rural Korea. It was introduced in 1971 and spread to every village cooperative. Prices of basic commodities were standardized to the level of the bargaining prices of cooperatives at that time. There are now 2,140 chain stores (known as ‘Hanaro Mart’) that are mostly operated by member cooperatives.

The NACF is the apex organization of 1,187 multipurpose agricultural cooperatives. It provides all kinds of services to farmers. Services can be grouped into the following types:

  • farm supply and agricultural marketing – the NACF tries to ensure that high quality standards are sustained by providing assistance to farmers at every stage of the production, processing and marketing processes
  • livestock business and guidance – the NACF aims to provide livestock farm households with the support they require as they face aggressive competition from international market imports 
  • banking and insurance – as the NACF’s main profit-generating service, the banking business secures capital and revenue to finance extension services and marketing business for its member farmers
  • extension and welfare services – the NACF tries to facilitate the progress of rural communities and enhance the socio-economic conditions of member farmers and their families.

Women sorting apples in the Agri-products Processing Center of the Jangsu Agricultural Cooperative, South Korea


The NACF Group has 22 subsidiaries that focus on farm inputs, agricultural and food marketing and financial portfolios. Its main affiliated organizations include the Cooperative College, Farmers’ Newspaper and the Nong Hyup Cultural & Welfare Foundation. The NACF Group has as many as 67,877 employees and its business volume is ranked fourth in the list of the International Co-operative Alliance (ICA) Global 300 (a list of the 300 largest cooperatives and mutuals in the world according to turnover).

Nowadays, the NACF is known as a successful model of multi-purpose cooperative for small farmers at the global level. In western countries, agricultural cooperatives have been organized either for collectively purchasing farm inputs and accessing credit, or for pooling farm products. Unlike the western model of cooperatives, the NACF is unique in that it provides a full set of services for more than 95 per cent of Korean farmers whose average farm land is 1.4 hectares. It is believed that Korea’s multi-purpose agricultural cooperative model has contributed greatly to the rapid advancement of Korean agriculture.


A worker sorting melons in the Agriproduct Processing Center of the Sangju Agricultural Cooperative, South Korea


During the early history of cooperative development in late 1970s, the NACF promoted the organization of the ‘Crop Farming Group’ to ensure that they adopted new farming technologies and produced standardized quality products. This set the stage for cooperative marketing not only for the wholesale markets but also for the NACF-run Integrated Agricultural Marketing Center (IAMC) located in the cities. The IAMC integrates the wholesale market and a wide retailing space where cooperatives can sell their fresh products directly to urban consumers.

The original idea behind this marketing centre was to construct a direct marketing channel to reduce marketing costs and physical losses incurred, and thus to provide benefits for both producers and consumers. The IAMCs have been internationally recognized for their good performance, advanced logistics and cooling facilities, computerized real-time order-supply system, and a wide array of distribution to various end users, including restaurants, schools, armed forces and on-line shoppers.

Member cooperatives have also strived to develop their marketing facilities. When Korean agriculture experienced increased market openings due to the Uruguay Round, member cooperatives moved quickly to construct the Rice Processing Complex (RPC) in 1992.


The Garak Agricultural Wholesale Market, the largest market in Korea


Thanks to the financial support from the government, member cooperatives have been able to build 165 RPCs and 701 rice drying and storage centres. As a result, farmers were able to bring their paddy rice directly to PRCs, and the NACF and its member cooperatives account for more than 65 per cent of the total volume of rice traded in the domestic rice market.

For fresh products like vegetables, fruits and mushrooms, the NACF has been running the Agri-product Processing Center (APC) since 2001. Farm products are collected, sorted, packed, stored and processed in the APCs. As of 2009, the NACF has a total of 224 APCs, which are used as the strategic facilities for the farmers’ groups and cooperatives.

In striving to meet various needs of small farmers, the NACF is known as a successful cooperative model at the international level. Together with 2.4 million member farmers and without being complacent about its achievement made so far, the NACF will continue to innovate its networks, management and services in order to effectively respond to rapidly changing business environments.

Chan-Ho CHOI, General Manager, International Cooperation Office, NACF

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Establishing cooperatives of rice farmers in Viet Nam

Improving Market Participation of the Poor in Tra Vinh (IMPP Tra Vinh)is a programme in Viet Nam jointly implemented by the Provincial People’s Committees of Tra Vinh, IFAD and the Deutsche Gesellschaft für Technische Zusammenarbeit (GTZ). The programme’s objective is to improve market participation of poor rural people, many of whom are smallholder farmers. Acting as individuals, their market power is weak. The programme is empowering these individuals by organizing them into cooperative marketing institutions.


The head of a cooperative group introducing the group and its products to potential buyers


In the province of Tra Vinh, located in Viet Nam’s Mekong Delta, a typical smallholder farmer owns a quarter hectare of irrigated land, on which he or she harvests paddy three times per year. There are only a few post-harvest activities at the farm level, usually limited to sun-drying the paddy in the farm yard.

Marketing is also in its infancy. Millers and exporters are not interested in dealing with individual farmers, so farmers sell individually to small-scale collectors, who themselves sell to larger traders. Smallholder farmers largely act individually, which renders them too weak to establish any significant level of market power, and prevents them from increasing their share of value added.

Farmers could significantly increase their share of value added if they joined together in cooperatives. As members of a cooperative, they could benefit in the following ways:

  • Coordinating their production could help produce sufficiently large amounts of rice of a single variety, as required by millers and exporters.
  • Organizing post-harvest activities would often mean using rice dryers, which cannot be operated profitably by an individual farmer, but can generate significant value added when operated by a cooperative.
  • Cooperatives could establish direct business relationships with larger millers, and perhaps also with exporters, to market and sell their products.

In summary, cooperatives, as opposed to individual smallholders, can exploit economies of scale. The programme’s strategy is to support the establishment of marketing cooperatives for smallholder farmers.

There is an obstacle, though. In the 1970s and 1980s, many farmers were urged to join state-run production cooperatives, which operated only with limited success. Most of these cooperatives were dissolved long ago, but farmers still have unfavourable memories of their time as cooperative members. The Government of Viet Nam, being well aware of this situation, modernized legislation in 2007 by issuing Decree 151 On the Organisation and Operation of Cooperative Groups. Key features of this decree are that it:

  • decentralizes responsibility and significantly reduces administrative hurdles for establishing cooperative groups (for example, the necessary permits can be obtained from the commune administration)
  • allows cooperative groups to be operated and managed like a commercial enterprise
  • particularly targets smallholders and poor farmers, who, for instance, have reduced tax liabilities.

This transition to modern legislation holds several challenges for implementing the programme’s support strategy:

  • There is little awareness among farmers of the opportunities that the new legislation offers.
  • Nascent groups need intensive capacity building so they can develop their internal organization while they grow from an initial unofficial grouping of interested farmers to an officially registered, economically active business entity.
  • Even the most advanced groups need active assistance in establishing market linkages with higher-order enterprises like millers and food-trading enterprises.

The IMPP Tra Vinh is addressing these challenges in several steps. The first step is creating awareness about the new legislation on cooperative groups, and the opportunities it holds for farmers. This is done mostly through meetings at the village level, which are held as part of the programme’s communal planning process.

In a second step, groups of about 20 to 40 farmers who show an initial interest in exploring group formation can apply for training on matters of production or, less frequently, marketing. This is funded from the commune budget that the programme supplies. The training is designed and delivered in such a way that after the training, even if a group of trainees decides that they would rather not continue as a group, they can still benefit individually from what they have learned.


Training of beneficiaries on how to negotiate contracts with buyers


The third step is training in market basics for key representatives of those farmer groups who make credible efforts to move towards forming an officially registered cooperative group. The training has been jointly designed, and is jointly delivered by the IMPP Tra Vinh, the provincial branch of Viet Nam Cooperative Alliance, the Department of Agriculture and Rural Development, and the Agriculture and Fisheries Extension Centre.

As a fourth step, groups deemed sufficiently strong and well organized can apply for simple business development services, such as business plan drafting, or establishment of management regulations.

These group-building steps reflect the understanding of the programme staff that groups move along a development path, and need time to form and to consolidate. Not all groups of farmers that show initial interest will proceed towards establishing a formal cooperative group. Some groups will dissolve on their way, while others may consolidate and merge into larger groups.

Group-building is accompanied by market linkage workshops, where both informal and formally registered cooperative groups can meet buyers.  The IMPP Tra Vinh organizes these workshops like a ‘mini trade fair’, where sellers (group representatives) and buyers (millers or seed enterprises) mingle and explore their mutual interest in entering into business relationships. These workshops have become quite popular, as they help overcome the communication barrier between farmers and enterprises.

Even when they have organized in cooperative groups, farmers are rather unaccustomed to dealing with enterprises. Not surprisingly so, since most of them have dealt only with small traders through most of their farming career. The IMPP Tra Vinh especially encourages representatives of farmers’ groups, who have not yet formally registered as a cooperative group, to participate in these workshops as an initial exposure to how viable farmers’ groups can conduct business.

The IMPP Tra Vinh started in 2007. The first unofficial groupings of interested farmers formed in 2008. To date, in Tra Vinh, 25 groups, varying in size between 30 and 70 members and managing an area of more than 700 hectares, have entered into contractual business arrangements with enterprises. In the years to come, the programme aims to increase the overall number of farmers organized into cooperative groups, and to assist the present small cooperative groups to merge into larger business entities, thus increasing their market power.

Ms Tran Thi Vien, Project Director, Improving Market Participation of the Poor in Tra Vinh

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Call for expressions of interest – think tank initiative

The Think Tank Initiative is a multi-donor programme supported by the William and Flora Hewlett Foundation, the Bill & Melinda Gates Foundation, and Canada's International Development Research Centre. It is dedicated to strengthening independent policy research institutions – the so-called ‘think tanks’ – in developing countries, enabling them to better provide sound research that both informs and influences policy. The success of the initiative will lie in supporting locally created development policies that drive positive change in the lives of millions of poor people.

The Think Tank Initiative will provide a series of grants to cover operating and research costs and institutional strengthening activities of selected promising think tanks in developing countries. 

A Call for Expressions of Interest from organizations in East and West Africa, which closed in August 2008, met with an overwhelming response. Independent policy research institutions in 11 participating countries were invited to identify long-term strategies to develop their research agenda, increase their ability to inform and influence policy, and improve key aspects of their organizational performance. Almost 300 applications were received, and 24 African think tanks finally qualified for a combined, multi-year grant of US$ 30 million. The result was announced at Dakar in May 2009.

The next Call for Expressions of Interest, from South Asian and Latin American think tanks, was issued on 27 July 2009. Think tanks from the following countries are eligible to apply: Latin America –  Bolivia, Ecuador, El Salvador, Guatemala, Honduras, Paraguay, Peru; South Asia – Bangladesh, India, Nepal, Pakistan, Sri Lanka.

Deadline: September 28, 2009.

To learn more about the initiative and the application process, please visit the website

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Martina Spisiakova
Tel: 3906-54592295

Making a Difference in Asia and the Pacific

Issues 27: June 2009
Knowledge management: Perspectives from the field

Issues 26: May-June 2009
Knowledge Management: perspectives from headquarters

Issue 25: March-April 2009

Issue 24: January-February 2009
Country responses to the food crisis

Issue 23: November-December 2008
Public-private-people partnership

Special issue: October 2008
Supporting agricultural research through grants

Issue 22: August 2008

Issue 21: June-July 2008
Food security in the context of increasing commodity prices

Issue 20: January-February 2008
Rural infrastructure

Issue 19: January-February 2008
Rural finance

Issue 18: December 2007

Issue 17: September-October 2007

Issue 16: June-July 2007
Managing risks and reducing vulnerability to natural hazards

Issue 15:
March/April 2007

Energy for sustainable development

Issue 14: January/February 2007 - Sustainable natural resource management

Issue 13: November/December 2006 - PBAS: looking beyond the resource allocation system

Issue 12: September/October 2006 - Communication for poverty reduction and rural development

Issue 11: July/August 2006 - Working with UN agencies at the country level

Issue 10: May/June 2006 - Indigenous peoples and ethnic minorities

Issue 9: March/April 2006 - Access to land

Issue 8: January/February 2006 - Agricultural Technology Management

Issue 7: November/December 2005 - Pro-poor policies

Issue 6: September/October 2005 - Gender & MDGs

Issue 5: July/August 2005 - Partnership

Issue 4: May/June 2005 - Rural Finance

Issue 3: March/ April 2005 - Donor Harmonization

Issue 2: January/ February 2005

Issue 1: November/ December 2004

Upcoming events and missions:


Supervision mission – Knowledge Networking for Rural Development in Asia/Pacific Region (ENRAP III), New Delhi, 27-30 July 2009


Start-up workshop and training – Sichuan Post-earthquake Agricultural Rehabilitation Project, 3-5 August 2009

Start-up workshop – Dabieshan Area Poverty Reduction Programme, 3-5 August 2009

Refresher training on financial management and procurement for selected project staff, 1-5 September 2009

Africa-China exchange visit (south-south cooperation), 17-30 September 2009


Joint review mission – Livelihoods Improvement Project in the Himalayas (Uttaranchal), 29 July – 12 August 2009

Joint review mission – Tejaswini Rural Women’s Empowerment Programme (Maharashtra),  30 July – 12 August 2009

Annual Portfolio Review Workshop, 17-22 August 2009, Bhubaneshwar, Orissa

Tribal Conference, 27-29 August 2009, Delhi


Supervision mission – Rural Poverty Reduction Programme, 23 August – 10 September 2009


Training project staff in more effective writing, 3-8 August 2009

Nepal Country Programme Management Team Meeting, 26 August 2009

Pacific Islands

Design mission – Papua New Guinea, July 2009

Design mission – Timor Leste, July 2009


Mid-term review mission – Microfinance Innovation and Outreach Programme, 12 July – 4 August 2009

Socio-economic surveys for two new projects, August-September 2009

Project completion review mission – Northern Area Development Project, 31 August – 20 September 2009

Loan negotiations – Crop Maximization Support Project, early September 2009

Sri Lanka

Supervision mission Smallholder Plantations Entrepreneurship Development Programme, 13- 27 July 2009

Detailed design mission National Agribusiness Development Programme, 22 July – 20 August 2009

Mid Term Review Dry Zone Livelihood Support and Partnership Programme, 27 July – 21 August 2009

Supervision mission Post-Tsunami Coastal Rehabilitation and Resource Management Programme, 7-25 September 2009

Stakeholder workshop Country Programme Opportunities Programme, September 2009

Viet Nam

Country programme review workshop, July 2009

About IFAD

The International Fund for Agricultural Development (IFAD) is a specialized agency of the United Nations, dedicated to eradicating poverty and hunger in developing countries. Its work in remote rural areas of the world helps countries achieve the Millennium Development Goals. Through low-interest loans and grants, IFAD develops and finances projects that enable rural poor people to overcome poverty themselves.

IFAD tackles poverty not just as a lender, but as an advocate for the small farmers, herders, fisherfolk, landless workers, artisans and indigenous peoples who live in rural areas and represent 75 per cent of the world's 1.2 billion extremely poor people. IFAD works with governments, donors, non-governmental organizations, local communities and many other partners to fight the underlying causes of rural poverty. It acts as a catalyst, bringing together partners, resources, knowledge and policies that create the conditions in which rural poor people can increase agricultural productivity, as well as seek out other options for earning income.

IFAD-supported rural development programmes and projects increase rural poor people's access to financial services, markets, technology, land and other natural resources.

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