Coperative development policy as a tool for the development of the smallholder tea sub sector

BACKGROUND
Introduction
 
Cooperative Societies are commonly defined as “associations of persons” who have voluntarily joined together for the purpose of achieving a common need through the formation of democratically controlled organizations and who make equitable contributions to the capital required for the formation of such organizations, and who accept the risks and the benefits of the undertaking in which they actively participate. The aim of cooperatives is to empower members to solve economic as well as social problems and thus achieve goals that could not have been achieved individually. It is for this reason that the Government of Tanzania considers Cooperative Societies as important organizations for achieving goals of development programmes in which peoples’ participation is a key requirement. Similarly on the similar merits of organizations in achieving development goals, one of the functions of TSHTDA is to organize smallholder tea growers into groups and grassroots associations/cooperatives so that smallholder tea growers can jointly get the access to resources for production and marketing their tea. 
 
Evolution of Cooperative Development Policy
One of the major developments in the history of Cooperatives in Tanzania was to put in place the policy framework for cooperative development by formulating the first Cooperative Development Policy in 1997 (URT 1997). Despite different Cooperative Legislations, there was no Cooperative Policy to support such legislations prior to 1997. In recognition of the International Cooperative Alliance Principles, the 1997 Cooperative Policy reiterated the Government commitment for the development of cooperatives that belong to members. However, the development of Cooperatives under this policy faced several challenges including the inability to operate under a liberalized economy. This together with other reasons such as lack of recognition of farmers’ groups as basic units for cooperative development, lack of provisions for internal management of cooperatives and failure to address some of the critical problems of cooperatives such as misappropriation of cooperative resources and management dishonesty; led to the revision of the 1997 Cooperative Development Policy was revised and formulation of the new Cooperative Development Policy, 2002 (URT 2003).  
 
POLICY OBJECTIVES
The 2002 Cooperative Development Policy envisions a future Tanzanian cooperative system which is geared towards improved and sustainable Cooperatives that are capable of fulfilling members’ economic and social needs. In this context, the policy mission is to develop cooperatives that:-
 
(a) are owned and controlled by members;
(b) work for the betterment of members’ own economic and social development and that of the community in which they live
(c) operate competitively as independent economic entities; and
(d) care for present and future members.
 
Based on its vision and mission, the main policy objectives include the following:-
(a) To encourage the establishment and continuous operation of member-owned and member-controlled cooperatives;
(b) To encourage the establishment of economically strong cooperatives that are capable of operating as viable independent business entities;
(c) To protect cooperative business operations against unfair competition;
(d) To support the establishment of viable cooperative financial institutions;
(e) To encourage internal cooperative capital formation;
(f) To recognize and support small producer group initiatives with the view of transforming them into future economically strong cooperatives;
(g) To ensure existence of good cooperative leadership and management that are capable of managing a cooperative in a business-like manner while being accountable to members;
(h) To foster an efficient and effective cooperative movement structure
(i) To support and encourage the provision of cooperative education, training and research services that focus on member empowerment;
(j) To widen the scope of operations of cooperative societies in various sectors of the economy;
(k) To encourage sustainable operation and development of cooperatives by ensuring that:-
• Present cooperative members respect interests of future members and of the whole community;
• Cooperatives carry out activities that respect equality and environmental protection.
 
RELEVANCE OF THE POLICY OBJECTIVES TO TSHTDA’s FARMERS EMPOWERMENT INITIATIVES.
TSHTDA’s farmer empowerment initiatives aim at enhancing the ability of smallholder tea growers through their groups, associations, networks and other forms of organizations to determine their own needs and aspirations and assume the authority, resources and capabilities to articulate and exert their demand for services in the areas of inputs, research, extension services, green leaf marketing and investment. In the context which also applies to the Cooperative Development Policy, TSHTDA is endeavoring to achieve its farmers’ empowerment objectives in the following major areas:-
 
(a) Organizational empowerment
• Providing catalytic support to start and sustain group formation processes
• Assisting farmer groups to form Tea Growers’ Associations that can better represent their views and also assist members with input supply and marketing; 
• Strengthening the existing farmer organizations/associations/cooperatives through motivation, advice and training.
(b) Knowledge empowerment
• Enhancing farmer knowledge, decision-making capacity and capability of interacting with sources of tea production input and other service providers
• Improving knowledge of agricultural policies and regulations.
• Providing farmers with training on business and negotiation skills at production and marketing of green leaf. 
• Facilitating  Tea Growers Association Leaders’ Inter-Area Visits:
 
(c) Financial empowerment.
• Encouraging formation of sustainable Savings and Credit Cooperative Societies (SACCOS) as vehicle for deepening financial intermediation among the farming communities;
• Encouraging the formation of development funds for supporting the procurement and distribution of farm inputs;
• Liaising with  Land Surveying Authorities for processing smallholder fields title deeds with the view to using tea fields as collaterals in negotiating with financial institutions for loans; and
• Providing the technical support in the preparation of business plans/project proposals that may be used when negotiating for loans/grants with financial institutions/donor communities. 
Pursuant to its farmers’ empowerment objectives, TSHTDA has made the following achievements:-
 
(a)  Organizational empowerment
• Formation and consolidation of farmer groups into 12 District/Local Smallholder Tea Growers Associations
• Formation and consolidation of farmer groups into four District/Local Tea Growers’ Cooperative Societies 
• Formation of an apex Organization, Tanzania Smallholder Tea Growers Association (TASTGA). 
 
Experiences on the organizational empowerment of smallholder tea growers have proved that there are more development prospects in cooperative based organizations than in associations. This is mainly because of the policy and legal frameworks which provide for the management of conflicts and crisis in the cooperatives. There are also evidences of more support going for smallholder tea development cooperatives than is the case for associations. 
 
(b) Knowledge empowerment
• Training of group and association/cooperative leaders on leadership, management and negotiation skills as well as the application of business principles in tea production
• Organizing the exchange visits to allow learning amongst the tea growers organizational entities (less successful visiting more successful entities)
• Awareness creation on the importance of smallholder owned and operated green leaf processing factories
• Enhancing knowledge of the cooperative policy and legal framework with the view to persuasion of tea growers associations into tea growers’ cooperatives.
 
(c) Financial empowerment
• Encouraging tea growers to establish and strengthen Savings and Credit Cooperative Societies (SACCOS). Nine SACCOS with the capital base of Tsh 1.27 billion have so far been established and extended to members loans worthy Tshs. 2.6 billion. 
• Support the formation of a smallholder Tea Growers’ Development Trust Fund for the provision of bank loan guarantees 
 
WAY FORWARD
TSHTDA’s determination is to have tea growers associations transformed into well functioning and credit worthy institutions. This is being pursued through training and sensitization campaigns to raise the awareness among smallholder tea farmers on need for a strong cooperative system as the Government embarks on transforming the smallholder tea growers into commercial and competitive players in the National, Regional and Global economies. Transformation of the existing tea growers associations into cooperatives is expected to be achieved in either of two ways namely:-
• Re-registering the associations as cooperatives; and
• Associations joining existing cooperatives as members , 
 
Since SACCOS are very important for the effective smallholder tea sub sector operations and because most of the existing tea schemes SACCOS lack enough capital, TSHTDA future plans are as follows:
• To continue mobilizing the establishment of more tea growers SACCOS especially in the new tea growing areas.
• To strengthen SACCOS through capacity building to SACCOS leaders and members.
• To seek assistance from government (DADPs fund) for SACCOS office building and provision of tools like safe and computers.
• To collaborate with the Cooperative Development Authorities in soliciting funds for strengthening SACCOS