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Horizontal Linkages
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The Factors and Catalysts that Affect and Facilitate Horizontal Coordination
Groups can be formal or informal (as depicted in the image) depending on their resources, relationships, roles and rules, and on members objectives and
knowledge. The degree of formality needed to create or maintain horizontal links between members depends on factors that are internal and external to the group.
Likewise, catalysts for group formation may be internal or external each has strengths and weaknesses.
The key to gaining value from horizontal cooperation is recognizing common constraintsinadequate volume, high input costs, lack of market access, unfavorable
trade policies, or a combination of these and othersthat require collective action. The Agricultural Cooperatives in Ethiopia (ACE)[1] program helped develop
and promote a modern, business-oriented agricultural cooperative system that became actively involved in input supply, volume sales, branding, advocacy and
marketing crops such as coffee, grains, sesame, nigerseed and others. The coffee cooperatives and their unions have been particularly successful in improving coffee
quality and enabling Ethiopian cooperatives to market branded specialty (organic and Fair Trade) coffees to European and U.S. markets. Union lobbying efforts
garnered authorization to sell directly to foreign coffee buyers rather than through the low-return domestic auction system.
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identify opportunities and determine which of their crops had a competitive advantage; provided the farmers with training on market-oriented production and
self-organization; and initiated meetings between group representatives and a buyer. The strategy did not directly create groups, but it did enable the
communities to form groups and to develop market linkages for themselves.
Carefully weigh the costs of meeting product requirements in a highly competitive market and of sustaining horizontal linkages with expected returns to
group members. Only encourage producers to form associations if issues in the rest of the chain can also be addressed. For example, when coffee prices
[3]
decided to go into dairy farming due to high local demand for milk. To bypass traders (who made over 50% in profits) and
collapsed, some Kenyan farmers
ensure regular payment, they organized themselves into a group, obtained a license from the dairy board, rented a stall in town, and began collecting milk. In
the first week, they sold 250 liters/day and faced demand for another 150 liters. Over time, the group grew to 1,000 members who diversified product lines
and began selling snacks along with milk.
Base the value chain linkages on economic win-win relationships and initiate them through internal catalysts, where possible. Links forged by outside
agents such as NGOs can lead to expectations of long-term, subsidized assistance; meanwhile, links formed for commercial activities can create effective
incentives and lead to increased investment in the group. For example, the Bangladesh JOBS [4] project worked with TMSS, a national womens NGO/MFI, to
develop a producer group--in this case, a handicrafts association--from its micro-entrepreneur client base. In exchange for products, TMSS provided the
group with business training and technical assistance, brokerage and financial services. Although these activities delivered some immediate benefits to the
group, the relationship with TMSS has the potential to distort the commercial viability of the groups product.
Trust is an essential element of effective cooperation. Building on the social capital generated by group activities can provide an entry point to develop
horizontal linkages for economic activities. For example, in Zimbabwe, [5] women who belonged to a womens association played an effective role in collective
decision-making, financial management, rule-making and other aspects of local water management. Other members of the group trusted and listened to the
association members because of strong track records, and these women were more likely than non-members to occupy important positions on committees
and be involved in group decision-making.
Resources
The Nature, Determinants and Consequences of MSE Participation in Value Chains: Evidence from the Horticulture and Handicrafts Sectors in
Guatemala. Bloom, David, et al. AMAP BDS Knowledge and Practice microREPORT #78, 2007.
Walking Tightropes: Supporting Farmer Organizations for Market Access, Chirwa, Ephraim, et al., Natural Resource Perspectives, Number 99. The Overseas
Development Institute, U.K., November 2005.
Social Capital, Dikito-Wachtmeister, Mercy S., IFPRI 2020 Focus No. 06 - Brief 09, August 2001, http://www.ifpri.org/2020/focus/focus06/focus06_09.asp
GTZ ValueLinks Manual
Modal Choice in International Alliances between Producers of Horticultural Products., Neven David, and Thomas Reardon, Michigan State University
Department of Agricultural Economics. Paper delivered at the 5th International Conference on Chain and Network Management in Agribusiness, 2002.
Farmer Organizations for Market Access: Briefing Paper, Stockbridge, Michael, Dorward, Andrew, Kydd, Jonathan, Department for International
Development (DFID) Crop Post Harvest Research Programme of the Natural Resources Research Programme, 2003.
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