Cooperatives as a safe haven from neoliberalism

Cooperatives Offer an Alternative
By Emilio Godoy

MEXICO CITY, Mar 15, 2011 (IPS) – After years of decline, the cooperative movement in Mexico is reviving as a relatively safe haven from the shocks of the neoliberal free- market model of production and the financial and food crises that have affected the country.

"Cooperatives have had a positive impact on job creation, investment, education and health. They have helped drive community development," Juan Domínguez, general coordinator of the Cooperative of Advisers for Social Progress (SCAAS), which has worked with non-governmental organisations (NGOs) since 1990, told IPS.

Domínguez, a member of the National Network of Researchers and Educators in Cooperativism and Solidarity Economics, is the author of two research publications, the most recent of which is a 2007 book titled "Las cooperativas, polos de desarrollo regional en México" (Cooperatives: Poles of Regional Development in Mexico).

In 2005 a group of bean farmers in the northern state of Zacatecas formed a cooperative called "El Granero Nacional" (National Granary), a wholesale centre for agricultural supplies and comprehensive services, to facilitate storage and marketing.

"The cooperative has made a real difference; one of the main advantages is bulk marketing," José Villegas, president of the 600-member cooperative, told IPS. "Farmers store their produce in the warehouses and the cooperative sells it. We also acquire equipment that farmers would not be able to buy on their own."

Each member of the cooperative farms an average of 20 hectares, with an average yield of one tonne per hectare. In 2010 the agriculture ministry guaranteed a price of 0.67 dollars per kilogram of beans.

There are some 15,000 cooperatives in Mexico, most of them consumer or producer cooperatives, with a total membership of about five million people, according to information from the Social Development Fund of the Mexico City Federal District government.

In this country of 112 million people, the unemployment rate is 5.4 percent of the economically active population of 46 million people, according to the National Institute of Statistics and Geography (INEGI).

But cooperatives have scant access to public and private financing, which hampers their creation and operation, so the cooperative movement in Mexico is lagging behind that of other Latin American countries.

In the Americas, this particular expression of the social economy has grown from north to south. In the United States, for example, there were 29,000 cooperatives in 2009, with 80 million members, and in Argentina there were nearly 18,000 cooperatives with some nine million members, according to the International Cooperative Alliance (ICA).

In Mexico, people involved in cooperatives complain of lack of support. "There are too few resources, there is very little start-up capital and it is difficult to buy supplies and acquire infrastructure," Alma Ortega told IPS.

Ortega founded two cooperatives in Mexico City in the 1990s, in transportation and marketing of goods. Between them they have 22 members, and they are both now self-supporting.

The law that regulates cooperatives, in force in Mexico since 1994, defines them as organisations based on "common interests and the principles of solidarity, self-help and mutual aid, in order to meet individual and collective needs, through the economic activities of production, distribution and consumption of goods and services."

But loopholes in the law have created problems in implementation and enforcement. Senator Jorge Ocejo of the governing rightwing National Action Party (PAN), chair of the Senate committee on economic development, promised in February that a new law would be drafted to correct them.

Ocejo pointed out that, far from being poor or representing a marginalised economy, cooperatives in Mexico have total assets of over 8.3 billion dollars, and need a law to stimulate them as well as provide them with legal security.

The resurgence of cooperatives was boosted by initiatives adopted since 2006 by the Federal District, governed by the leftwing Party of the Democratic Revolution (PRD).

In 2006 the Federal District approved the Cooperative Development Law, and in 2009 the city government launched a programme to promote the social economy, in all its various forms.

PRD Senator René Arce said that 15 percent of the country's economically active population is involved in alternative methods of production. Apart from cooperatives, there are 26,000 "ejidos" or communities where the land is collectively owned, and 600 worker-owned businesses.

"This segment of society practises mutual aid and solidarity, exercising direct democracy and economic practices centred on human development," Arce said.

"The most difficult, yet the most accessible, scenario is to make headway in the market," said Domínguez. "We want to develop the inter-cooperative market, so that buying and selling raw materials and supplies between the cooperatives themselves becomes a priority. It's a fairly untapped area."

Although there are no exact figures for the share of GDP attributable to cooperatives, the 2007 study showed that in 17 of Mexico's 32 states, 200 worker-managed businesses played a significant role in regional development.

Fishing cooperatives were the most numerous, and had a large impact on their communities. Many producers' cooperatives have focused on niche markets, such as the one for organic coffee, under fair trade marketing schemes.

A group of NGOs has called for reform of Article 25 of the Mexican constitution with the aim of promoting the social economy.

"We should modernise our cleaning equipment, which is already 20 or 25 years old, and the system for purchasing supplies, so that they will be available for producers when they need them," said Villegas, of the National Granary cooperative, which has 8,000 tonnes of warehouse capacity. "We also want to develop contract farming, so that farmers have a guaranteed buyer."

"Cooperatives are a good way of creating jobs and fighting the food crisis," said Ortega, who is a member of the independent Mexican Institute for Cooperative Development (IMDECOOP), founded in 1996. "That's why we are working for the formation of more cooperatives, and for them to have projects with real impact," she said.

The United Nations has declared 2012 the International Year of Cooperatives, under the slogan "Cooperative Enterprises Build a Better World." Cooperatives directly employ more than 100 million people worldwide, according to the U.N.

The first Saturday in July is International Day of Cooperatives, adopted by the United Nations in 1992. Its theme this year is "Youth, the future of cooperative enterprise." The cooperative movement also has its own domain name for internet addresses, .coop.

The ICA, founded in 1895 and with a membership of one billion people in 91 countries, will hold its general assembly in November in the southeastern Mexican Caribbean resort of Cancún. (END)

 

Posted in Economic and Human Rights