Improving Institutional Capacity:
Strengthening Farmer Organizations in the OIC Member Countries
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 A fully capable Co-operative College ‘Centre of Excellence’, which will be a valuable
training centre on cooperative development and approaches to improve farm incomes
and productivity. Educational programs and training materials for various high-
priority areas have already been developed, followed by pilot training efforts held with
sesame unions in 2013.
 Capacity building efforts aim to improve the technical and infrastructural capabilities
of FOs in Ethiopia, in particular in the Tigray and Amhara regions. These efforts have
involved the construction of four warehouses, accompanied by technical training in
key areas.
 A Commission-Based Output Marketing system, wherein cooperatives market the
product of farmers and deduct a commission for the services they provide, paying the
net profits to farmers. ATA recommended this marketing system improvement after
reviewing the current marketing system, in which surpluses are often not distributed
as expected to FO members. In this system, the FO doesn’t take ownership of the
product but rather offers the marketing service to members of the cooperative and
receives a commission for its service. The amount of commission is also decided by
mutual agreement between the cooperative and the farmers, ensuring that agricultural
commodity trade will deliver more gains to smallholder farmers.
The above initiatives aim to ensure Ethiopian FOs are operating as high-functioning business
organizations. Today, Ethiopia’s Federal Co-operative Agency recognizes approximately
40,000 cooperatives and farmer organisations in the country, 10,000 of which are estimated to
be farmer organizations, suggesting significant potential for growth in the sector in the coming
years.
The example of Malaysia
Malaysia’s economy is less dependent on farming than Ethiopia, with only 11% of its
workforce engaged in agriculture; this nation of 30m people is well on its way to developed-
nation status. Malaysia aims by 2020 to have a Gross National Income (GNI) per capita of
US$15,000 as a result of an Economic Transformation Programme (ETP) launched in 2010.
The ETP calls for US$444bn in investments to create 3.3m new jobs across 12 National Key
Economic Areas (NKEAs), sectors that contribute significantly to the country’s GNI.105
However, even in an upper-middle-income country such as Malaysia, agriculture is important
to broader economic development, and the government recognizes this fact. The plan for the
agriculture sector, identified as an NKEA, “focuses on transforming a traditionally small-scale
production-based sector into a large-scale agribusiness industry that contributes to economic
growth and sustainability. 106” This involves four key actions: capitalising on competitive
advantages, tapping premium markets, aligning food security objectives with increasing GNI,
and participating in the regional agriculture value chain. 107
But even before the ETP, the Malaysian government had recognized that FOs and cooperatives
in general face unique challenges. Specifically, small-scale operations, poor understanding of
cooperative values, and a lack of entrepreneurial culture and professionalism troubled the
country’s cooperatives. In response, the National Cooperative Policy of 2011-2020, aligned
with the ETP, was implemented. The policy calls for:
105 Website of the Malaysian Economic Transformation Programme (ETP).
106 Pemandu, Government of Malaysia website. 2014
107 Ibid.