Farmers Associations in Macedonia

The WB-CEI-FAO Workshop

Sarajevo, May 24-27 2004

The need of macedonian farmers to be organized in associations/cooperatives is due to:

• Transition to a market economy;

• Collapse of the former agro-combinats and big traders;

• Limited absorption capacity of Macedonian market (former Yugoslavian market 22 millions);

• Problems regarding sale and payments;

• Support in overcoming different problems of technical and informative nature;

• Realization of common inters through FAs;

History of FAs in Macedonia

• First FA in Macedonia is established 90 years ago, by Bee- Keepers as the pioneers in this field, Association established in 1910 at Veles.

• Noticeable support activities for the establishment of FA’s started in 1995.

• The process was initiated by groups of farmers under the direct support from the WB “Private Farmer Support Project ”.

• The support obtained by the Regional Branches of the National Extension Agency (NEA) through preparation and distribution of Statute proposals and organization of General Assemblies.

• More intensive establishment of FAs after 1999, facilitated by the Law on Association of Citizens and Foundations of 1998;

• Established with initial optimism expecting foreign funds and support by various donors;

Farmers Associations in Macedonia

Variable number of established FAs

• More than 300 farmer associations, according World Bank Agriculture Sector Review, 2003;

• 200 local FAs function in 2003, according Agriculture Report 2003, MAWFE;

• 178 local FA’s according FMF. The most of the FA’s are organized into 38 regional and 9 national branch unions under the Federation of the Macedonian Farmers (FMF);

• New National Union of Organic Food Producers (NUOFP) is establishing;

Status of FAs

• Most associations tend to be commodity based for example as milk, grape, livestock, bee keepers, goats, pigs, rabbits, poultry, vegetables and arable crops production associations;

• Some associations tend to privatize extension, but most are commodity based;

• More than half of them only registered, but not functioning;

The Law on Citizen Associations and Foundations, 1998

• It is not permitted to be engaged in business/economic activities (FA can found limited liability companies and shareholding companies);

• FA’s have a status of non-profit organisations though:- The law comments on the possibility to have profits;- Definition of term “profit” unclear, how profit is determined, how far profits are allowed, utilisation of profits (A weakness of the law to be clarified);

• Foreigners are not allowed to be founders of FA/CA, according The Law on Citizen Associations and Foundations Art.16, only as members Art.21

Structure of Association

• All members equal at the Assembly and select the President and Steering Committee of the FA.

• An association is managed by a president, assisted by a secretary.

• The number of members per FA depends on the type of agricultural activity, but also on the reputation of the President of the association (from 15-950 members).

• The members of FA’s pays an annual membership fee from €5 to € 10.

The main activities of existing FAs

• FAs are engaged in distribution (sometimes sales) of inputs obtained through the assistance of foreign foundations;

• Providing of production inputs like seeds, fertilizer, plant protection materials, live animal, animal feed, building material etc;

• FAs provide education through vocational training, workshops/seminars, study tours, etc. on agriculture practices/marketing within the specific subject matter of the association;

• Application of modern technologies in the production process, sometimes implementation demonstration trials;

FAs activities

• Staff training on management and business plan development;

• Presentation at various local/ regional/international fairs;

• Contacts with various donors and MAFWE;

• Co-operation with other FAs from the region and the country;

• The more progressive associations developed activities in the field of collection, processing and trade, but only in relation to the function of the activity;

FA’s activities vary from place to place:

FAs and farmers relations

• Farmers have high expectations of the FAs;

• Farmers have demand much higher levels of openness and transparency, especially regarding financial contributions from donor agencies;

• Farmers show low levels of pro-active behaviour in getting their FAs functioning;

• Difficulties collecting membership fees from registered members;

Negative trends

• A lack of clearly defined functional objectives among new-established associations;

• Dependence on donor funding;

• Insufficient institutional/managing capacity and low level of activities;

• Inadequate services to members and lack of transparency and information flow inside FAs;

• Lack of assets, offices and office equipment;

• Lack of agricultural products marketing and communication;

• Lack of democracy, activity planning. recording;

• Bad financial management, difficult collection of membership;

Negative trends

• The state doesn’t lease the state-owned land to the FAs, because the FAs don’t have legal rights and obligation like registered companies.

• The majority of members of the associations sell their products individually to the buyers, without mediation of the association, therefore weak negotiation power and poor marketing procedures;

• not organized approach to banks, saving houses, local branches of MAWFE, donors.

Current trends

• Too much emphasis on building regional and national associations in order to boost political influence;

• Not enough emphasis on using associations to strengthen access to markets;

• Little direct return to association membership, the impact and credibility of group-based activity is being undermined;

• Macedonian Economic Chamber of Commerce also claims to represent the interests of small farmers, but has registered only one private farmers’ association;

FMF - Federation of Macedonian farmers

•Established 2002•Under their umbrella: - 9 National Associations; - 38 Regional Associations; - 178 Associations; - Over 27,000 farmers; The activities supported by GTZ and SIDA through international NGOs

Activities of FMF

• Representation of the FAs in relations with the Ministry of Agriculture and other players;

• Adopt Codex of the farmers and their organizations;

• Issuing informative bulletin;• Web page of the FMF;• SWOT analysis for 5 national associations;• Study tour and co-operation with

Federation of Swedish farmers;

FMF constraints

• The national bodies have been formed prematurely without the important farmer support;

• Communication difficulties between FMF management and the member associations (co-ordination, participation, membership, etc);

• Activities on voluntary base (not engaged professionals on salary) without proper skill, because lack of finance;

• Waiting support from donors, the leadership has low competency, administration ability is poor;

FAO experience with FAs

• Previous projects supported already established FA’s, where the presidents of FAs limit the proper functioning;

• With the new project, new FAS built on more transparent, democratic and economic base.

• FAs need support at least 2 years for institution strengthening and capacity building, democracy in decision making and functioning;

FAO supports 3 new Associations in Horticulture

- AGROS Kocani – 190 farmers/10 villages ;- AGRO-MERIS v. Studenicani, Skopje 80 farmers/ 2 villages; - AGRO-RECICA v. Recica, Kumanovo 24 farmers/1 village;

• FAO support by Technical Advisor, responsible for planning, development, co-ordination and capacity building;

• President and Steering Committee are paid from the membership for the activities;

• The President and the Advisor (in future employed Professional) activities:- Group input supply, implementation of good agriculture practices, institutional strengthening, negotiation with the buyers for organized selling, implementation of Contract Farming;

• The provision for buy-out and quality control services in Association fund;

Next steps for stronger FAs

• Institutional strengthening and capacity building, engagement of professionals;

• Permanent education and awareness of FAs role;• Involvement of the associations into market chains;• Contract farming between farmers and

traders/processors, where is possible through FAs;• Introducing quality and food safety standards,

EUROGAP, traceability;• Organized input supply and sale of the commodities;• Support in new investments, equipment, finance

etc.

Agriculture Cooperatives

In 1997 survey from 240 agricultural cooperatives re-registered:

• 100 cooperatives had ceased business;• 45 were under bankruptcy procedures;• 60 were more or less moribund but retained 1-30

employees• 35 retained some land assets and active in agricultural

production.

In 2002 brought new Law on Cooperatives. • Unfortunately the re-registration is still not performed,

because administrative and legal constraints of the status of founders and employed, cooperatives property etc.

Status of Agro-cooperatives

• The former co-operatives are in unenviable position at the moment;

• The legal framework for the structure of cooperatives also needs to be thoroughly updated to provide membership on a one-member-one-vote basis, with fees-proportional to throughput, and management and membership separated.