How to Set Up a Farmers Cooperative in Nigeria

SETTING UP AN AGRICULTURAL (Farmers) CO-OPERATIVE.





In order to setup a successful agricultural cooperative, it is necessary to have an element of commonality, this is ensures a unity of purpose, thinking, regular interaction and harmonious relationship among members.

Various steps are involved in setting up an Agricultural co-operative:

STEP1

  1. Identify the Objectives
  2. Determine the name and location of proposed co-operative.
  3. Equipment’s (Land, Building, Properties)
  4. Financial Arrangements
  5. Human Capital
  6. Identify interested Members / Invite them to the meeting
  7. Present the concept

In this stage a few farmers realize the objectives of the group and draw up a blue print of the objectives to be achieved by the group.

Details of potential stakeholders, collaborators, models to be adopted, and business environments are formulated. The co-operative could be any of four types, and could also be two or more types:

Machine Pool: Allows for provision and easy access of machinery for farmers such as tractors, bulldozers etc. It can be obtained as a loan at subsidized amounts.







Farming Pool: This type of cooperative serves as a medium for its members to jointly own a farm land, in other to combine their farming resources to generate a larger output, also the output will be consistent as most off takers want steady supply for their inventory or production plant. They can collectively own the business while proceeds would go into a central purse and profit will be divided among members based on his/her own contribution periodically.

Manufacturing / Marketing Cooperatives: This type of agricultural co-operative serves as a platform for its members to access the market, acting as a middle man for purchase of items such as fertilizers, farm tools and also helps in sell of farm produce.





Credit Union: Financial institutions reserves high credit ratings for successful and large scale farmers, leaving small scale farmers with little or no access to credit and loans. This type of co-operative bridges the gap providing credit, funds and loans for its members.



STEP2

  1. Design a business plan
  2. Selection of Steering Committee
  3. Draw up Constitution

The objectives of the co-operative can now be enlarged to form a cogent business plan, this involve detailed procedures on how the objectives of the society is to be achieved.

A good Agricultural co-operative business plan should answer the following Questions:

  1. Who makes what decisions?
  2. How are decisions made and communicated?
  3. What committees and co-ordinators would be needed?
  4. What responsibilities and decisions would be delegated to whom?
  5. What Legal form would the co-operative take?
  6. How would property be managed and income distributed?

A steering committee of its founding and most experienced members can now be constituted, as it is expected they would guide in developing a viable constitution which contains rules and procedures to be followed in achieving the organizations aim and objectives.


STEP 3

  1. Select Leadership and Management Board
  2. Staffing
  3. Job descriptions

The board of directors and management team provide leadership and inspiration. They should be trusted entrepreneurs with proven skills in business management and human relations.

They can be selected by a means of vote from the members of the co-operative to allow for accountability.

The co-operative can now go ahead to staff the offices with low level staffs, each having a pre-determined job description. Congruence between the goals of the individuals and the organization must be high and performance that exceed expectations needs to be recognized and rewarded.




STEP 4

  1. Registering the Co-operative
  2. Capitalization

Registration of the co-operative would require documents which includes:

  1. A certificate of a copy of resolution of the first meeting of the group with the Province Co-operative Officer (PCO)
  2. Feasibility Study Report
  3. Four copies of the constitution (Proposed by-laws) of the Co-operative
  4. Letter of intent (to join the society) from prospective members

The co-operative would be required to pay a fee usually about N10,000 (Ten thousand Naira) and after 2-3 months would be issued with a license which expires after three years. Before which the co-operative would be given a certificate of registration which can be cancelled if only there is a breach of law by the group.

According to Nigeria Civil Laws, the co-operative society must have the following

  1. At least 20 members
  2. Board members should be twenty one years (21) and above
  3. A member must be atleast eighteen years (18) of age
  4. Every member must have an occupation relevant to primary society
  5. A member must be capable of paying fees and buying shares.

Capitalization:

With the co-operative registered, members and executive can set about sourcing for funds and capital. While concept and human motivation are key ingredients of a successful business, these ideas cannot be implemented without adequate capital.

Potential source of income for the co-operative can vary, but are most often limited to include the members, preferred shareholders, suppliers, employers, retained earnings, bank loans, and government grants e.t.c

With a good accounting system in place like ProbityBooks Accounting Software the co-operative can minimize losses and block leakages of funds.

Budget and Financial Control Systems for Agricultural Co-operative.

The co-operative society after registration can set about designing its budget and financial control frame work. This is for serving various purposes such as:

  1. Set measurable targets or performance standards for the organization
  2. Provide a basis for financial control and management decision making
  3. Providing financial arguments to raise capital which can be utilized as a support for co-operative members

Every co-operative whether established for profit or not for profit requires some return on investment. In other to achieve these targets, the co-operative is expected to keep a system that allows it to keep a track of financial transactions within the organization.





I recommend ProbityCoop, it’s a cooperative management software and can be bundled with ProbityFarms which is farm management software.

These two software can be deployed separately to manage the cooperative and farm activities of deployed together in the cloud on premise to manage both entities in one place.

By Abraham Olaleke

Technology Junkie & Agric Enthusiast

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