The role of cooperatives in enhancing the welfare of people in rural areas

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RESOURCES AND WELFARE ECONOMICS

The role of cooperatives in enhancing the welfare of people in rural areas

BNI OUMAIMA

Prof. Georgantzis Nicolaos

MAICH

Contents

Introduction        2

1. Agricultural cooperatives in rural areas        3
2. Argan Oil in morocco        4
3. Pareto optimality and Cooperatives        4
4. Externalities of Cooperative        6
5. Property Rights Issues in Cooperatives        8

CONCLUSION        9

Bibliography        10

Introduction

Cooperatives allow people to cooperate together and use resources to achieve a common goal that would be difficult to be performed individually. In other words, the objective of cooperative is for example to those who have only some kilos of a commodity given, sold, transported or processed at a lower cost and in the best conditions. Such an alternative allows its member to benefit from economies of scale and thereby to reduce costs by collaborating with other people to establish a business.

Cooperative was the result of several problems that affected workers especially in working conditions that were very difficult. Even today, some people work in very bad conditions where they are not even considered as employees, for that, cooperatives are here to help their members to cooperate together to solve their problems.

Agricultural cooperatives are made up of agricultural producers who are the owners, it provide inputs to the farmers, improve the production system and facilitate the sale of products. Their mission is to help and promote the development of the farms. This development is in the heart of the rural growth and became an effective tool of self- promotion and improvement of the living conditions of the rural areas, so when members are farmers, they have the opportunity to have fair-price agricultural inputs that allow them to improve the quality of their products. In doing so, they make economies of scale while increasing the added value of their products; ; Farmers also have the possibility of creating a flow cooperative to centralize and market agricultural products. By reducing the number intermediaries, producers are able to do a much better job deal with the trader or can simply do without his services and conclude a contract with any buyer. While when members are workers, they participate in the management of the company and have a job and receive a good salary

1. Agricultural cooperatives in rural areas

When we talk about an agricultural cooperative, we talk about farmers, production, processes and marketing. But a cooperative is much more than that. It is a business model of modernity that faces current economic, social and environmental issues. This business model, that of "cooperative" reconciles freedom of enterprise, economic solidarity by placing farmers at the heart of the governance and the development project of the company.

An agricultural cooperative is therefore a company created by farmers and governed by them. They are the owners but also the suppliers in animal or vegetable productions that will be collected and transformed by their cooperative often to the consumer product.

The economic power of farmers is being a member of an agricultural cooperative, is a way of controlling their economic independence through the structuring of its own agricultural sectors and the marketing of products in their cooperative. By making their agricultural supply, investing together in innovative services and processing tools, they are better equipped to compete in highly competitive markets.

Cooperatives play an important role in rural areas, especially where firms hesitate to go and where public administration does not provide basic services. Creating productive employment opportunities, as well as health care, education, clean water, sanitation, roads and market access. Agricultural cooperatives provide also an important economic benefits to farmers by sharing resources, improving market access, improving yields for their products, and strengthening their bargaining position, to entry into food processing, enabling members to access and gain access to higher value-added markets.

1. Argan Oil of morocco

Argan oil has become one of the most expensive oils in the world. It is even more expensive as a cosmetic product and is the subject of several cosmetic patents in the US and Europe. This oil, has been a source of income for people in rural areas of Morocco for many centuries, has experienced a reveal of interest with the various discoveries of its cosmetic and even medicinal virtues. In the last decade, it has led to a significant growth in the high argan market. NGOs, national and international development agencies and local argan oil cooperatives played a central role in the market; the objective is to increase the incomes of local people and to protect argan trees.

Today, the argan tree is responsible for more than 20 million work days, of which 7.5 million are taken by women; those cooperatives are to ensure the socio-economic promotion of women in rural areas of the argan tree. Also, to give women a place in the society, even though currently some cooperatives accepted to introduce the mechanized extraction methods in order to reduce the workload of women. These jobs are a crucial element for their emancipation, but also for the demographic stability of the southern regions of the country. Finally, some cooperatives use the profits generated to finance projects for women's literacy and schooling of children.

1. Pareto optimality and Cooperatives

Cooperatives allows all members to participate in a management by establishing collective governance where each person need to vote in the general meetings regardless of the number of part of the capital that he has. This characteristic reinforces the relationships between the persons in the cooperative, especially the managers and consumers. Thus, the feeling of belonging to the cooperative organization gives impetus to the members, as main stakeholder, to provide more effort and loyalty, and defend the cooperative identity. Cooperatives have stakeholder governance, while firms are governed by owners of invested capital (shareholders). In fact, even with democratic governance, we can find people; for example having a higher level of education than others; more dominant in decision-making.

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