Premium
Promoting the role of farmer‐based organizations for value chain integration: the tension between a program's targeting and an organization's investment strategy
Author(s) -
Francesconi Gian Nicola,
Wouterse Fleur
Publication year - 2015
Publication title -
agricultural economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.29
H-Index - 82
eISSN - 1574-0862
pISSN - 0169-5150
DOI - 10.1111/agec.12179
Subject(s) - collective action , incentive , offensive , business , investment (military) , value (mathematics) , economics , cash , social capital , marketing , public economics , industrial organization , economic growth , public relations , finance , microeconomics , management , politics , machine learning , political science , computer science , law , social science , sociology
We use new data on 500 Farmer‐Based Organizations (FBOs) in Ghana and regression analysis to reveal determinants of collective investments and the case of the Millennium Development Authority's (MiDA) agricultural program in Ghana to demonstrate that development programs offering hard incentives may be counterproductive in promoting collective action. We show that when a program sets criteria for participation and offers in‐cash and in‐kind support to selected FBOs, it may promote rent‐seeking and crowd out equity capital formation. This is so because FBOs may have formed for the sole purpose of benefitting from incentives offered by the program and thus lack an economic justification, which is an important condition for progression through the cooperative life cycle. Further, by setting stringent participation criteria, the program may end up selecting younger organizations while it is the more consolidated organizations that are able to connect to business development services (BDS) and engage in more offensive collective action.