MARKETING, AGRICULTURAL PRODUCE AND MARKETING. AND COOPERATIVEMARKETING IN TRADITIONAL RURAL AREAS By Zvi Galor www.coopgalor.com 1990

1. Introduction - What is marketing?

There exist today a wide variety of concepts of marketing andits nature. The very definitions of marketing have alsoundergone considerable development in the second half of the2nd century, which is reflected in the literature mentionedbelow. Today we encounter several basic concepts of marketingand its nature. The five main marketing concepts are listedbelow [1]: -

"The production approach - being a managerial orientationassuming that customers would prefer products which are bothaccessible and affordable. The main managerial function wouldthen be the improvement of production efficiency and of thedistribution system. .

The product approach - being a managerial orientation assumingthat customers would prefer products of the highest quality fora given price. The firm should accordingly devote its mainresources to improvement of product quality...

The sales approach - being a managerial orientation assumingthat customers would (or would not) acquire the firm'sproducts, in proportion to the efforts made by the firm togenerate an interest in the product. The firm shouldaccordingly locate potential customers and try to convincethem, sometimes aggressively, that its products are somethingthey cannot do without...

The marketing approach - being a managerial orientationmaintaining that the key to the attainment of the firm’sobjectives consists in the determination of the needs andaspirations of the target market, and in tailoring theorganization so as to cater to consumers desires in a betterand more efficient manner than competing firms. •

1

The marketing-social approach - being a managerial orientationwhich calls for focusing upon the diagnosis of the needs of thetarget market and their fulfillment; in parallel, publicwelfare should be upheld in the long term."

These approaches outline the general framework of theoreticaland practical thinking about marketing. Let us now review thevarious definitions of marketing as put forward in variousstudies over the last 3 years, in order to trace thedevelopment of this subject.

The first definition, in a study dating back to 1952 [2],refers to marketing as a production-dependent activity. Thedefinition states “ marketing is the means by which you disposeof the output of a farm, of factories, mines, quarries,forests, fisheries, hunting, oil, as well as everythingimported." The following is added by way of explanation:From the seller’s viewpoint, marketing is the ability of themarketing system to transfer everything produced from theproducer to the consumer, (with minimum hindrances for thehighest possible return and wages. On the other hand, fromthe consumer’s viewpoint, marketing is simply the ability totransfer goods in which he is interested, in the form and themanner he desires, and at the lowest price to him. By makinga synthesis of these two viewpoints, it should be clear to usthat marketing is in fact a series of foregone decisions,based on a suitable market survey, as to what are the goods oneshould produce or import, and in what quantities.In fact, these definitions teach us the basic concept ofmarketing. Inside any marketing system, we find the produceron the one hand, and the consumer on the other hand; and inbetween ¥them we find the mechanism which causes the productsand services to pass from the producer's side on to theconsumer’s side.

First definition of our review referred to marketing as asystem assuming that the center of gravity is with the producerand his point of view. Another definition which also datesback to the fifties clarifies the following for us:"Production means the concentration of raw materials in oneplace, while marketing means that this parcel of finished

2

products is sent into farther and farther, far-flung regions"[3]. Another definition of the same period which stresses thepassage from the producer to the consumer and also theimportance of product-ion says the following: [4] "Marketingin general may be defined as the whole process by which realmarketable surplus, belonging to the producers, reaches theconsumers." In the sixties we find a shift in perspective andthe center of gravity of the marketing definitions in theliterature on the subject. Researchers now find that thestress falls somewhere in the middle - between the producerand the consumer. The stress is now made on that mechanismwhich enables goods and services to pass on from the producerto the consumer. Ottenson and others [5] explained that: "Thefirm is the bridge of decision-making between the market itseries and the sources from which it buys. The buyer’s marketconstitutes the main source of income, whereas the sellingmarket is the main absorber of the firm's outlays." We furtherfind that in that decade of the 6's it was attempted to extendand refine the concept of marketing, in which the firm occupiesa central position, and the following definition [6] tries topresent a marketing model which describes price relationsbetween different points in geographical space, differentpoints in the time dimension, as well as between differentalternatives based on the same raw material:

"Prices in different geographical locations within the samecountry will differ by no more than the cost of transportationfrom one point to another, within one given marketing area.Prices will differ precisely by the cost of transportation fromthe point of production to the marketing location. Prices atone point in time will differ from prices at another point intime, precisely by the storage costs-The price of one product will differ from the price of anotherproduct manufactured from the same raw material, by thedifference in processing costs."

This concept also fits in with the discussion concerning themarketing of agricultural products and the role of thecooperative in this set-up. Indeed, a definition of marketingwith preference to the agricultural system again stresses theimportance of this marketing system as a link between producerand consumer [7]:

3

"The performance of business activities directed towards, andincidental to, the flow of goods and services from producer toconsumer or user." During the 80's the center of gravity ofmarketing definitions shifted from its former midway positionbetween the producer and the consumer, to the side of theconsumer. The consumer and society are the main issuesnowadays, and the manner of satisfying their needs. Successfulmarketing is that which accounts for the consumer and itsenvironment, as this is outlined by the following definition[8]:

"Consumer satisfaction with social responsibility has beenregarded as the center around which all marketing activitiesshould revolve".

Again we find that as opposed to the past concept of marketing,which stressed the sale of products, the approach nowadays laysemphasis on the satisfaction of consumer needs.

Figure 1

2. Agricultural Marketing

Now that we know what marketing is, and how the variousapproaches have developed in understanding this process, let us

4

examine and learn what agricultural marketing is. Let us tryto find out, if what holds for marketing in general also holdfor agricultural marketing, and for marketing in traditionalrural areas in developing countries. It is fairly clear thatwhen we consider a marketing method suitable for atraditional agricultural society, it will have to be adapted tothe pattern of the traditional society for which the saidprogram is intended (9)

Traditional rural areas are distinguished by a subsistenceeconomy. In such villages the production unit is the family,which produces the food for its own consumption, and for thepayment of rent or tax, at the equivalent monetary value.Surplus is offered for sale only after a particularly plentifulcultivation season. The family unit considered as a productionunit, is quite small and such units operate separately. Thissituation makes it difficult to concentrate the produce forefficient marketing. In certain areas the vast majority of thepopulation is not at all used to thinking in terms of commerceand barter trading. Another characteristic of these areas liesin the fact that many of the traditional peasants would beprepared to switch over to the cultivation of market crops,provided a price system is set up which gives them an incentive(10).

The traditional peasant in developing countries sells hisproduce at the time and for the price, which are the leastadvantageous for him. He sells in order to pay his debts, butthe cycle is repeated, and he becomes involved in new debts.In developing countries, the peasants sell a "forced" surplus.The peasant is forced to sell a sizeable part of his produce,sometimes much more than he would have sold if he had had thechoice. In fact, the surplus marketed in the developingcountries is determined as follows: If we work out the totalproduce of the peasant, deduct from this the family’s ownconsumption, plus payments he makes by handing over produce, aswell as the payment of various debts, usually to money-lenders,we finally obtain the amount left to the peasant for marketing(11).

Maynard and Beckman in their study [12] list the main functionsof agricultural marketing. These include purchasing, sales,

5

transportation, storage, sorting and grading, financing, addedrisk, and marketing information. Purchase and sale involvechange of ownership. A thing sold is also bought, and anythingbought is also sold. Transportation involves the transferfrom a place of surplus to a place of shortage this is thegeographical dimension, while storage involves the transferfrom a period of surplus to a period of shortage - the timedimension.

Mathur in his study of 1971 further extends the stages involvedin agricultural marketing [13]. He argues that marketingstarts at the peasant's field and includes the following:collecting produce surplus from individual peasants,transportation to a nearby depot, sorting and grading, stockingup, processing, storage, packing, transportation to consumercenters, contact between producer and consumer, and sale to theconsumer. Most of the operations of the potential marketing requirecapital, and are carried out at a high risk. The agriculturalproduce is usually transported in bulk. Storage andtransportation are very costly. The produce is seasonal,whereas the demand for it continues all year round. Thetraditional peasant is a small marketing unit. Hence producecollection is complicated and expensive. Agriculturalmarketing involves losses, damage, and quality impairmentduring storage and transportation. It is difficult for thetraditional Peasant to undertake the marketing operations, andtherefore most of these operations are carried out bymiddlemen.

The obstacles in traditional marketing are the following: Themarketing circle is long and archaic. The marketing circle:stages through which the products pass. Starting with theproducer, and on until they reach the consumer. Within theframework of a traditional market, the stages which theproducts go through are extremely long and weighed down by aplethora of middlemen.

The infrastructure of transportation is archaic, the roads arebad or do not exist at all, producers are a long way from themarket, and consequently transportation costs are very high.The fact that there is no planning in the production and the

6

irregularity in supplying the market, causes either a surplusor a seasonal scarcity of products on the market Importedproducts compete with the local production. Lack of sorting,processing and of warehouses and lack of organization ofproducers and consumers.

Mathur goes on to classify the traditional markets. In thefirst place, we have the primary market. This market is at thevillage level. The market does not function every day, but atfixed intervals of a few days. The market usually serves anarea of about 1 km radius.

Next we have the secondary market. This already operates dayby day, and the action is wholesale. The market is regional,located in the central area of the region, close to arterialroads, and it embraces a wider radius of activities.

The final market is the one in which the produce passesdirectly to the consumer, or goes on to be processed, or to beprepared for transportation to markets abroad. An example is amarket located close to a harbor.

One must distinguish between the traditional market and themarket which functions regularly every day and also includeswarehouses and wholesale services, of private or state ownership (15).

The local traditional market is usually maintained in areaswhere transportation is almost impossible for the ruralpopulation with its limited means. And the goods and servicesare intended for local consumption. The local market isusually located in a market place. This is a site in which thegoods offered change from season to season. Such local marketform a network, in which one market is linked to anotherthrough the passage of goods, services and people. The localmarket is a meeting place of occasional sellers, who set up atrandom in sales shacks, and come together at fixed timeintervals at that fixed site. This is where goods and servicesare distributed between the villagers, who act both as buyersand sellers (16).

7

Who are the market operators? - In the first place, we have theitinerant village trader. He is the main operator in theprimary market. Sometimes he himself is the producer. Inother cases, he is the one who transports goods to and from thesecondary markets. He attends to the storage and sees first¬hand reaction to of the agricultural produce. In some cases,he hands out advances on account of the produce, and thusfinances the peasants. The second type of trader forms thelink between the village level and the secondary market level.He sells produce on a commission basis, which he collects bothfrom the seller as well as from the buyer. He often financesthe village level, and thus forces the peasants to sell throughhim.

The third type of traders are those who represent more seriouspurchasing outfits. They operate on a commission basis. Theytake care of cleaning up the produce, as well as processing itweighing, packing and dispatch to centers of transportation.'these people have a large amount of capital at their disposaland finance their business independently [17].

One further factor worthy of mention is the price of marketing,which includes all the subsidiary expenses of the marketingprocess. These expenses usually give rise to the differencebetween the consumer price and what the producer gets paid.The reasons for this are many. Farms are widely dispersed andproduction units are too small. There is no uniformity in thequality of the produce. Transportation is difficult, andmarketing information is faulty. There is insufficient capitalfor the processing and storage, and financing costs are high.Other factors which raise the cost of agricultural marketingare e many and "'ed levies, the failure to sort the producewhich detracts from the return to the grower, inefficient salesprocedures, neglecting to weigh the produce, and delayedpayment to the grower. There are too many middlemen, and noregulation of the distribution among markets [18].

The mechanism of market prices: This is composed of thefollowing: The price of a product is determined by the supplyand demand in the market. The supply represents the quantityof products offered the same day on a certain regional market.The demand represents the willingness to buy the same products

8

by the consumers, the same day on the market. The price of theproduct on the market is not the price that the producerreceives. The following expenses will be deducted from theprice paid by the consumer:

(a) Transportation costs - distance, the means oftransportation, kind of product transferred and its processingare factors which determine the cost of transportation. As the distance in transportation becomes shorter and thequantity for transfer increases, so the cost of transportation,which comprises part of the cost price of the product,diminishes considerably.

(b) Processing: presentation of the product must be enticing,in unit packing, thus allowing direct consumption to theconsumer.

(c) Sales: Cash sales are convenient to the producer. Creditsales are also convenient as they increase the range ofcustomers; however, the risk of unpaid debts and the interestinvolved in credit terms, may lead to these sales being writtenoff as Bad Debts.

(d) Storage of the surpluses during times when demand is higherthan supply. The cost of storage is influenced by the followingfactors:

- Construction costs - Maintenance and depreciation (labor & financing expenses) - Volume of products produced, due consideration beingtaken of the storage capacity. - Special conditions for storage of various products

(perishable food, liquids, etc.). - Average, burglary and losses.

(e) We can add also factors that have an impact on demand. Themore plentiful the products offered to the market, the harderit will be for the consumer to take a decision, viz. in regardto:

- Advertising - Presentation of the product - Trademark.

9

(f) To sum up: the selling price of a product is determined bythe law of supply and demand. The price the producer receivesis lower than the selling price. The price of the product soldimplies the evidence of all the abovementioned factors, as wellas the profit of the middlemen, wholesalers and retailers.

3. The Problems of Marketing

We deal here with the principles of marketing, and assume thatwhat is right for marketing in general also holds good foragricultural marketing. In order to test this assumption, itis a good idea to examine an additional component of themarketing system, which is the firm. The firm is the decision-making bridge between the marketing it serves and the sourcesit buys from. The firm’s expenses arise when it raises andreceives capital, labor, and other resources needed forproduction, while on the other hand it provides a supply, forwhich it assumes there is a demand, in the market it has chosento serve [20].The firm’s main problem is how to manage its resources in suchmanner as to maintain an optimum relationship betweenexpenditure and income. In other words, the firm mustimplement an efficient conversion of resources so as to providea supply answering an existing demand. The firm should decidewhat to offer, and how to pick the suitable market in which tooffer its supply. The combination of all the variables ofwhich the firm decides to make use constitutes what we call"the marketing mix."The firm management must find out and establish its optimummarketing mix. The component parts are many: how much of ourresources are we going to invest in production; how much shouldbe devote to product development and future planning, and howmuch to present production; how much should be spent onpublicity; the advertising budget must be divided between thedifferent forms of media, between various products, betweenareas of distribution, between methods of distribution, andbetween potential customers.

The firm must decide what is going to be the final price of theproduct, the amount of discounts granted to middlemen, what are

10

going to be the sales areas, and the type and number ofintermediary agencies.Other considerations facing the firm include the types ofpackaging, the trade name, possibilities of obtaining credit,repair service for products sold, product warranty, subjectswhich should figure in publicity, promotion frequency, messagescommunicated, gadgets for salesmen, points of sale, and giftsto customers.

To sum up, the firm's marketing task is to combine all thevariables of the marketing mix into an effective marketingprogram. A good program should take into account all thecomponents for each and every product. Every variable of themarketing mix is interchangeable with another. For instance,if we can grant a reduction in the price of a product, perhapswe can do with less promotion outlay. Similarly, the placementof more salesmen could perhaps be an alternative to an increasein the sales promotion budget.

The firm knows that all the marketing mix components areexpensive, and the main question is how much of each variableit is worthwhile to apply, and how much money to spend on eachof them. The firm faces the traditional problem of choice, inview of financing limitations, out of an almost infinite numberof possible combinations of the variables.

On certain of these variables the firm has no control, thoughit does exercise an influence on them, such as the market andthe demand it represents, who the competitors are within thismarket, what the various sales channels in this market are, thefirm’s employees, and the technology, which affects the use ofthe firm’s products. There are also such variables, which areentirely beyond the sphere of influence of the firm, such ascyclical price fluctuations, and the change of seasons, thegeneral level of employment, the legal framework, the social-environmental framework, and the structure of socialestablishments. The people responsible for marketing withinthe firm may find themselves in conflict with other factorswithin the system, such as restrictions of advertisingbudget, forbidden marketing channels, and imposed minimum andmaximum prices.

11

The firm’s main task is to put together the marketing mix ofinstruments so as to achieve the maximum profit. The firm willdiscover that it has achieved the maximum profit by applyingthe marginal profit approach. It will put the optimum mix tothe test, which should show that there is no longer anyimprovement in net profit, neither upon a change in one of thecomponents of the mix, nor with a new combination at a higherrate of expenditures.

In order to achieve such a high "level optimum, it is necessaryto have a clear estimate of the relationship between the costand income for each of the mixed variables, severally as wellas jointly, with the other variables, in order to gauge in whatmeasure they serve the firm's purposes. One needs to equalizethe marginal net profit for every single one of the mixedcomponents, so that if the last dollar invested in publicityyields a further marginal profit of $50, whereas the lastdollar invested in personal sales yields only $25, then if $1is taken out of personal sales and invested in publicity, itwill certainly increase the net income of the firm.

We wish to reach a point at which the net return to the firmupon variations in price, quality, product form and design,sales promotion, distribution, and all the other components ofthe mix, will be the same. The firm's marketing program shouldbe not just balanced, it must be balanced at the highestprofitability level, and then we have the optimum mix [21].

4. Constraints of Agricultural Marketing

Most small farmers do not possess suitable marketing means, andthis is the main handicap to increased production. Many of thefarmers feel -that they run -too high a risk of no-t being ableto sell their produce at a fair price. The traditionalfarmer’s need above all is to have faith in the marketingsystem. It is possible to conclude, and we shall return tothis point further on, that one of the main ways of improvingthe farmer’s productivity, does not consist merely in improvingthe inputs and the production methods. It is important tosecure a reliable market, a suitable price, and a system by wayof which the farmer can market his produce, and at the same

12

time receive the highest possible share of the price paid bythe consumer for that produce. [22]

When the farmer sets about marketing his produce, he faces manyconstraints. Overcoming them will help us in restoring hisself-confidence, and will help him to develop. The first groupof constraints is those due to physical conditions. Theprimary condition is the general infrastructure, which includesinsufficient means of transportation, bad roads, andundeveloped markets. A further factor is the absence ofagreed standards. There are no agreed standard rates andmeasures, and in most places the scales used are biased to thedetriment of the farmer. The next factor is the means ofstorage. Insufficient storage space, and faulty facilitiesgive rise to losses. The lack of storage facilities preventsthe farmer from keeping over his produce until the season whenits price rises, resulting in loss of income.Handling does not exist, or is in very bad repair. Transportmethods are outdated, and packing and containers unsuitable.The points of unloading, loading and supply are unsuitable.The supply inputs are unsatisfactory to the farmer. These arenot provided in the quantities requested, neither when they areneeded, nor again are they of the kinds and qualities required.The constraints of agricultural marketing, which hamper thetraditional farmer, also include components, which are morespecifically related to marketing.

Commercial efficiency is hardly accorded any attention,particularly by government and semi-government institutions,and sometimes also in cooperative societies set up by thegovernment. The farmer has a very slim bargaining edge, andthis fact is exploited by the private traders. The traditionalfarmer has no financial means. Further constraints he facesare related to the marketing price and the pricing policy. Inmany cases, the price paid to the farmer leaves him no profitat all.The input prices are too high in relation to the marketingprices. The price fluctuations are excessive, and this inaddition to high and unjustified marketing levies as well asimport taxes and exports taxes. The system of payment and themanner of payment to the farmer is also significant - usually

13

the farmer receives payment too late, at too low a rate, not incash, and occasionally only part of the sum due.

This factor is bound up with the next factor, which is credit.Credit to farmers is virtually non-existent. When it doesexist, it is insufficient. When it is granted, the price forit is too high. Marketing information is an important factor,which in most cases is not at the farmer's disposal.Information concerning prices, markets and other data, isfaulty and deficient. Information concerning supply anddemand in markets at various places is almost non-existent,which prevents the farmer from rationally regulating the supplyof his produce.

The government agrarian policy affects the farmer in a majorway. Many governments have a general policy of food imports,or received food products through foreign aid, which reach thatcountry at prices far below the prices required by the farmerin return for his produce. Unrealistic exchange rate policyresults in unprofitable exports, and gives rise to cheapimports, which compete with the local producer. Manygovernments do not carry out a real agrarian reform policy,which could help out the farmers. The small farmer findshimself in a vicious circle. Companies and marketingorganizations have no economic interest in providing marketingservices to a far ranging and non-uniform farmer population,scattered in remote and hard to reach places. Without suchservices, the small farmers will not take on the risk ofstepping up production beyond their proper consumption.

5. Cooperative Marketing

A marketing cooperative is set up in order to market and sellthe surplus produce of its members, being such a surplus, asthey cannot consume themselves. Marketing cooperativesgenerally sell agricultural produce, but there are also those,which sell fish produce or handicrafts [23]. There are alsoother definitions of cooperative marketing. Margaret Digbydefines a marketing cooperative as a system in which a group offarmers join together in order to carry out part or all of theprocesses involved in bringing the produce from the producer tothe consumer. The Bank of India defines a marketing

14

cooperative as a society of farmers, organized for the purposeof helping the members to market their produce, so as to obtainhigher profits than is possible by way of private marketing[24].

The reasons for the establishment of such cooperatives are:

When there is a surplus in production over the consumption.

In order to save expenses for middlemen who benefit from theproducer in various fields, such as: bad weight, very lowprices and loans at high rates of interest.When the system in force is archaic, it does not meet therequirements at all, involves many middlemen or compensatesvery weakly for the producer's work. Thus, a marketingcooperative must offer its members a more efficient servicethan that in force, so that its members obtain a greater profitfrom their work.

When establishing a marketing cooperative, it is indispensableto study various aspects and problems:

What products shall we produce and sell on the market? Whet,experience in regard to production? What species aremarketable every season, quantities and qualities that arepreferred? What are the perishable items that can be storedand under what conditions? What is the present marketingsystem? What system of payment is practiced for the producers?Is any advance payments allowed just after the crop, or willpayments be effected only after the sale of the products? Whatis the best marketing circle of the production? Does theproduct undergo a process for its improvement? To have a soundknowledge of the medium of the improvement.

Financing Problems: One producer expects to get his money uponimmediate sale of his products. Another producer wishes toreceive a down payment. Whereas, the cooperative is paid onlyafter the sale of its products. Sometimes, it is evennecessary to store the crop for many months before it can besold. It is also possible that the output will be sold at adistant market, which entails transportation costs-, or,sometimes, the retailer will delay payment of his bill. All

15

these factors produce a clash of interests between the needsof the producer and the existing possibilities of thecooperative. Therefore, working capital is indispensable tomeet the requirements and to comply, at least partially, withthe interests of all.

Possibilities: An important working capital to farmers.Financing on short-terms by a bank. Financing by a cooperativebank. Establishment of a financing enterprise where themembers of the cooperative are also the shareholders. Such afinancing enterprise will be established by the marketingcooperative. It is the most advantageous and cooperativesolution. Cheap credit is allocated to the farmer provided hesells all his output through the cooperative.

When the cooperative has determined the exact quantities, whichit will be able to sell, it is in its own interest to makeagreements for sates in advance. A sound sale crowns theproducer's work. This is the reason why the establishment of acooperative is a necessity to the farmer. The cooperativeprevents unhealthy competition between its members, sorts outthe products conscientiously and directs the supply towards thedemand.

The cooperative has to cope with all the abovementionedproblems when selling its production. Other problems alsoarise, such as: A small supply of different products; therebysmall quantities for sate. The production of vegetables andpoultry must be sold several times each week. As theagricultural cooperatives are far away from the market,transportation costs go up. Bad roads and high transportationcosts further increase the cost price of the product. [25]

The marketing cooperative was created in order -to push up theselling price as much as possible and to increase the return tothe member’s -For their output [26]. The cooperative offersits members an improved bargaining position in regard toservices such as transportation, and is capable of affecting abetter sale. The better the service the more members will bekeen to join the cooperative. More members in the cooperativewill enable a reduction in the price for various services, aswell as in running costs. The cooperative makes it possible to

16

maintain services such as storage, bulk transport, extendedcredit, markets survey, cooperative education, which the singlefarmer is generally unable to achieve [27].

Marketing cooperatives in developing countries encounter manydifficulties. G. Hyden describes some of them [28]. Many ofthe marketing cooperative in Tanzania was set up by localpoliticians who were influential at the national level. Themain argument was that cooperatives would minimizeexploitation. The cooperatives were set up without anyfeasibility study or field survey, and as a result they fellinto considerable monetary dependence on externalorganizations, such as marketing organizations or financialinstitutions. Since the cooperatives were set up to suitexternal decrees (the politicians), the marketingcooperatives' fields of activity neither accorded nor covered,either functionally or regionally, the needs of the productiveunits at work in the rural areas. The cooperatives weretroubled by grave management problems, and in parallel by lackof skilled manpower.

In Bangladesh a very extended system of agriculturalcooperatives was organized [29]. The marketing cooperatives,which are of the third level, are concerned with four mainactivities - the marketing of agricultural produce of allkinds, the marketing of semi-industrial products(handicrafts), marketing of fisheries produce, and marketing ofdairy products.

Agricultural villages form the base of this structure, wherebyevery fifteen villagers make up a secondary level unit. Allsecondary level cooperatives are organized into a third levelcooperative. Though these cooperatives have made significantachievements, they are also faced with weighty problems. Thefirst problem is credit. The farmer would like to sell hisproduce for cash, and this requires the cooperative to havecommand of considerable liquid resources, for which it mustobviously pay dearly. One of the solutions to this problem is,of course, to sell the farmers' produce on a commission basis[30]. But as is the case in India, so in Bangladesh, thecardinal problem of the marketing cooperative is the lack ofany link between marketing and credit [31]. Further problems

17

in Bangladesh are the great distances between the cooperativebranches and the farmers in the villages. The management ofthose cooperatives is not professional, and many of thesocieties are in fact reduced to waiting for things to happen[32].

At the other end of the scale we have examples of marketingcooperatives, which have been successful. In Jordan, the olivemarketing cooperatives have changed the farmer’s methods ofcultivation. The farmer was obliged to pick the olivescarefully and in a selective manner, so as not to harm them.The olives were transported directly to the oil press, withoutinterim storage. The farmer could step up production, but hewas required to supply better quality and cleaner produce.The produce was graded into various quality levels, and thisgrading also increased the demand on the part of the consumers.The cooperative also succeeded in influencing prices.The cooperative led to an increase of the return to the farmerby 1% over the market price, with customers being on the lookout for the cooperatives olive oil, as they were confident ofits quality (33).

The carob marketing societies in Cyprus have also beensuccessful, and so have other marketing societies. Among thereasons for this success we may note the fact that the farmerwas more exploited in the past. The marketing cooperative, onaccount of its size advantage, has attained lower marketingcosts than the private traders, on top of the high level ofmanagement [34]. Another example is the agricultural marketing system inAlgeria. This system, which had been influenced by thesocialist dogmas, which placed the State above all. Is anexample of severe failure in everything that concernsmarketing? The system has tailed in all that concerns transferof information, packing, transport and storage [35].

6. Models of Marketing Cooperatives

Marketing is the process that an agricultural product goesthrough on its way from the producer to the consumer.

18

Traditional marketing involves several intermediary stageswithin this process. The result is, of course, that theconsumer pays an exorbitant price and the producer receives avery low price for his production. Naturally, it is in theinterests of both producer and consumer that the number ofsteps in the marketing process be reduced as much as possible.The result: the producer will earn more and the consumer willpay less.

The first form of marketing is the traditional marketing circleI he peasant sells his production at a local market which isheld in his village every 5 or 6 days - this is the firststage. The intermediary who buys this production transportsit. Usually on overloaded small open trucks covered with atarpaulin, to a regional market. Another intermediary will buythese goods and transport them to an urban market. Theproduction will then be sold and distributed at theneighborhood markets where the retailers will come to get theirsupplies for sale to the consumers. This way agriculturalproduce has undergone too many stages from producer toconsumer. All intermediaries have benefited -From thisprocess, but not the producer nor the consumer.

The solution to this state of affairs: a marketing cooperativeowned by the producers. This cooperative's aims are to reduceto a minimum the number of marketing stages between producerand consumer. In Israel, the Tnuva cooperative is a marketingcooperative belonging to all moshavim and kibbutzim, and todayhas the fourth largest turnover among Israeli enterprises.Tnuva has organized a national network, which takes upon itselfthe collection, transportation, storage, processing and sale ofapproximately 75% of agricultural output earmarked for thelocal market in Israel. The setting up of Tnuva has reducedthe number of steps in the marketing circle, but not enough.Agricultural produce leaves the farm, passes through "Tnuva"and is then sold in the local market and in various smallshops.

Another alternative reduces the number of steps even more.This alternative involves direct contact between themarketing cooperative owned by the farmers and the consumercooperative owned by the consumers. Thus, the sale of

19

agricultural products takes place from one cooperative toanother, and in principle, the profitability for the producerincreases while the purchase price for the consumer decreases.This situation, though far removed from the traditionalmarketing circle, does not go far enough. It is stillnecessary to try to eliminate superfluous steps in themarketing circle. Two solutions have been found:The first consists of consumer sale centers, belonging to themarketing cooperative, an example of which is Tnuva in Israel.These sale centers link producers directly to consumers. Thesecond solution consists in supply centers for agriculturalproduce, which are owned by the consumer cooperatives, thelatter belonging to the consumers. In this example theconsumers have organized themselves in order to acquire theirconsumer goods directly from the producers.

The last marketing method, which we shall discuss, concerns theorganizations which belong to the farmers and the governmentand which deal with the export of agricultural products [36].

The last stage in our model is the stage at which selling takesplace directly from the producer to the consumer. This is thepreferable stage because it produces the best results of all,both as far as the producer is concerned, as well as for theconsumer. An example of this is direct selling outlets, whichhave been set up by moshavim and kibbutzim at roadsides allover the country, which sell their produce directly to thepublic. This solution is beset with problems and is not alwayspossible of implementation - but this is the solution we strivefor.

Figure 2.

20

21

7. A Marketing Cooperative in Israel - The Tnuva Case Study

Agricultural marketing cooperatives throughout the world aremostly concerned with the marketing of agricultural produce ofindividual producers who run their farms on their own. Thesefarmers cooperate mostly for the sake of marketing theirproduce. Tnuva, the biggest marketing cooperative in Israel,is a cooperative of the second degree, which markets theagricultural produce of its members, which are the primarycooperatives [37]. Tnuva was founded in 1926, when theagricultural produce marketing division was detached fromHamashbir Hamerkazi. Hamashbir Hamerkazi served as the centralcooperative for the supply of basic provisions, and belonged,as it still does today, to the moshavim and to the kibbutzim.It must be stressed that Tnuva was founded, like othermarketing cooperatives, from below, and not by decree ofgovernment or other authorities, from above. Membership inTnuva was and remains to this day open to any Moshav andkibbutz, or to any other agricultural cooperative in Israel.The member joining is not required to invest money in buying ashare, but has to fulfill other obligations. A Tnuva member isrequired to market all his agricultural produce through thecooperative, without exception, for the following two reasons:In order to prevent competition with other Tnuva members, andin order to tighten the link between credit and marketing [38].

Tnuva members participate in the cooperative central executivecouncils, sending one, two or three representatives to thecooperative general assembly. The number of representatives isdetermined according to the farmer membership in each primarycooperative (Moshav or Kibbutz) and is independent of themonetary production volume, or the quantity of producemarketed.There were two important operational guidelines in Tnuva. Asalready mentioned, all the output of Tnuva members must bemarketed through the cooperative. The member settlement mustpay Tnuva a fixed commission, which may occasionally be quitehigh, compared to other marketing networks [39]. Thiscommission is deducted as a certain percentage of the marketedproduce. Tnuva in fact operates as a non-profit organization.The entire marketing return is passed on to the farmer, lessthe commission, which is calculated for each type of produce

22

separately, in order to cover the direct expenses and thecooperative financing expenses. Since it’s founding to thisvery day, Tnuva policy has been directed at two main goals.The first was to sell all agricultural produce of thecooperative members. The second was to safeguard theconsumer’s interests.

The first goal is attained when the cooperative sells theproduce transferred to it. Tnuva has always endeavored, as ageneral policy, to obtain the maximum return for the produce ofthe farmer member [40]. In addition to the abovementionedcommission, Tnuva further deducted a very low commission,usually much less than 1%, from each sale affected. Tnuvanamed this deduction, "member's contribution towards thepurchase of Tnuva shares" [41]. The money thus collected wasintended for investment in the cooperative. We have here twoPhenomena investment in the cooperative. We have here twosignificant phenomena:

- Tnuva has accumulated a property (equity) which was financedby a percentage it deducted from the sates of each member, butwas actually totally anonymous, and the member had no way ofknowing, or perhaps had no desire to be able to know whom thoseshares belonged to. The member did not know, and could notknow the worth of those shares for which he had paid. Theshares conferred on him no rights whatever, and in fact aftermany years an enormous equity was amassed at Tnuva, which wasnot linked to the member in any form whatever, except perhapsin the abstract. - In spite of the fact that it is the primary cooperativesthat are the Tnuva members, not the individual people, theabove monies are deducted from the individual. Tnuva forms adirect link with the member of the primary cooperative, notwith the primary cooperative as a unit. The farmer memberbecame acquainted with Tnuva directly in everything regardingthe sates organization, the marketing, prices, and deductions,but so far as the democratic system of the second-degreecooperative was concerned, he was quite definitely outof touch. Representatives at the Tnuva institutions wereusually delegated at the executive level of the cooperative to

23

which he belonged. The individual member had very little say inthis in practical terms.

The second interest mentioned - safeguarding the rights of theconsumers was a principle, which was to guide Tnuva’s businessactivity throughout its existence. Tnuva attempted to minimizethe marketing stages, and bring the producer closer to theconsumer. This was evident during the 30's and 40’s in theestablishment of dozens of retail sales branches of Tnuvathroughout the country, in the cities and townships [42], aswell as during the 80's, when the largest supermarket networkin Israel was founded. Tnuva deals with the various aspectsagricultural marketing, such as the processing of marketingproduce, sorting and grading, quality control and packaging [43]. One of the main problems with which Tnuva is confronted is theprice problem. Tnuva sells its produce at market prices,particularly as regards fruits and vegetables, as well as anyother product not under government control. On the other hand,the size of the cooperative (Tnuva is the fourth largestcompany in Israel) enables it also to regulate the pricesof agricultural produce and thus to be of service to theconsumers as well [44]. Tnuva's price policy, and the factthat Tnuva is a cooperative, has generally helped to reduce thegap between the price received by the producer and the pricepaid by the consumer. The argument in Israel in the past wasthat this gap is relatively small, on account of the marketingbeing done by cooperative. We may perhaps add thatIsrael's limited geographical extent, in consequence of whichtransportation distances are short, certainly also contributesin this respect. Verlinski lists a number of measures by whichthe gap may be reduced [45], such as maintaining a higherquality, grading and packaging, maximum efficiency in wholesaletransportation, as well as suitable retail packages, andcentralized retail marketing, which enables increasedturnover and the reduction of costs as well as improvedservice.

How can we in practice estimate the price of a product from theproducer up to the consumer? This path is quite long and hasbeen described as follows [46]:

24

Rice passes the farmer's gates on its way out. The dispatchedrice has not yet been threshed and cleaned up. To the price ofthe rice at the farm gate we must add the cost of transport tothe village collection depot, as well as additional expensessuch as sacks, etc. This gives us the price of the rice at thevillage collection depot. To this price we must add thetransport costs to the rice station, the cost of weight tossdue to the drying of the rice, the storage cost which dependson how long is it going to be stored, material losses of wasteand damage, general expenses of the rural station, as well asthe profit made by the people who run this station. Ricetransported to the rice station for threshing will undergo aprice increase by the costs of threshing, storage, additionaldrying, transport to the wholesaler, packing costs, generalexpenses and the profit of the threshing station. This is theprice of the rice when it is passed on the wholesaler. To thisprice we must add the average storage costs at the wholesaler,waste and material losses, cost of transport to the retailer,general expenses of the wholesaler and his profit. Theretailer will add to this price his general expenses as well asthe profit he hopes to receive and thus we finally reach theconsumer price. This chapter concerning Tnuva may be concludedwith a quotation from Nahum Verlinski, one of the firstdirectors of Tnuva, who wrote in the 6's [47]:

The marketing of agricultural produce is the final stage of theproducer's work and is the factor, which dictates hisactivities throughout the year. The farmer’s success orfailure in marketing his produce decides the success of all hiswork. Marketing is thus a matter of primary importance to thefarmers, and it is therefore not surprising therefore that allover the world farmers have tried for years to gain control ofa function so vital to their existence, by organizingthemselves into cooperatives to direct and expand the sale oftheir produce.

Without the benefits of co-operative marketing, the farmersremain dependent on commercial distributors, who are in aposition to dictate conditions. Cooperative marketing alsobenefits the consumers, by imposing responsibility on theproducers for supplying their produce, helping them to handle

25

their produce efficiently and regulating its flow to differentparts of the country.

Another important aim of cooperative marketing is to promotethe long-term interests of its members. One of the mostimportant factors in this is to relate prices to quality.

Israel farmers have realized the value of cooperative marketingyears ago and their degree of organization is high.Cooperative marketing covers 80% of local sales and an evenhigher proportion of agricultural exports.

The young states of Asia and Africa are based very largely onagriculture, and cooperative marketing of their produce istherefore important to make them independent of commercialinterests, and to assist their development in every aspect."

8. The Production, Marketing and Export Boards

One of the most important marketing institutions, and one whichexists in the vast majority of the world's countries, are theproduction and marketing boards. This is a central marketingorganization serving a specific industry (a specific product),which is intended to achieve a higher efficiency and orderlymarketing. The board is defined as an essential organization,influenced and directed by the producers, set up by theauthorities, with the purpose of intervening in the variousstages of marketing [48].

Most production boards in developing countries are involvedwith the producers' interests. The first boards, which wereset up towards the end of the 20's, sprung up as a result ofthe farmers’ struggle to increase their own bargaining powerand that of the cooperatives representing them, in theconfrontation with competitive intermediary outfits.

The overall trend was one of technological advance on the partof the small farmers, who consequently reached a state ofproduction surplus, and thus became more than ever dependent onthe various intermediary outfits. The farmers set up marketingcooperatives in order to protect their interests. Those

26

cooperatives were successful, and thus contributed to thestabilization of marketing conditions. This situation wasbeneficial also for farmers who were unwilling to join thecooperatives. The preservation of members' loyalty became amajor problem of marketing cooperatives. The cooperativesaccordingly turned to the government, requesting that it formproduction and marketing boards vested with the power ofenforcement [49].

The marketing boards have a monopoly on the marketing of aproduct or a number of products. The board buys goods from thefarmers through authorized agents at an agreed price, atofficial stations, and carries out the grading. The boardorganizes the necessary transportation. A monopolistic boardmay undertake a variety of functions including overseaspublicity, research of new strains, the improvement ofcultivation methods and transportation techniques, etc. Thenon-existence of competitors reduces marketing risks, reducesprices as well, and indirectly also reduces credit prices.Storage enables a better correspondence to be obtained betweensupply and demand, and it is also always possible to deal withsurplus produce. A monopolistic Board can divide the totalsupply between different markets so as to secure a higher meanprice than could be obtained by fixing one standard price forall markets. Moreover, the ability to pay the farmer anaverage price over a long time period makes it possible torestrain fluctuations in the farmers' income, and to exploitefficiently resources in the production process. The board hasa better access to marketing information and consumertendencies [50].

For example, in New Zealand, oranges are all marketed throughproduction and marketing boards. The function of such boardsis to acquire the entire local citrus crop and fix a price for96 it. The board according to grading of the marketed fruitfixes the prices. 14 days after the fruit is received, theboard must inform the grower of its grading, and have theprice to be paid. Payments to the grower are made on a monthlybasis. The board expenses are covered by deducting a certainpercentage from the value of the entire quantity marketed byeach producer [51].

27

Production boards in developing countries are governmentoriented. Most of them have been initiated by the governmentand are ruled by it. These are boards, which act as taxcollecting organizations, or as foreign currency controllers,and do very little in the way of marketing [52]. In Senegal,for example, the peanut marketing cooperative was practically astate monopoly for marketing of agricultural produce. Thesewere set up in such a way as to ensure political control, andin parallel to excise as much as possible from the farmers'income. The total income from peanut exports from Senegal wasdivided into three parts, which were the return to theproducer, various deductions and marketing expenses, and theupshot was that the producer did not get the maximum return[53].

It must be stressed that monopolistic production boards indeveloping countries, which were intended to be of benefit tothe producers as well as to the state, have in fact inflictedsevere damage on the national economy of their respectivecountries. We know of great many examples, and one of thefamous ones comes from Ghana, one of the largest coffee andcocoa producers in the world. Ghana has suffered from adistorted policy in regard to the production and marketingcouncils. A sizeable part of the annual coffee and cocoaproduce (some say as much as one-third) was smuggled into theneighboring countries and exported from them. The result was adecrease in foreign currency income to Ghana, and an increasein W this income to the neighboring states. In conversationswith people from Ghana, one hears it argued that the farmersare in fact to blame for this. None would entertain thenotion, at least not officially, that perhaps the governmentpolicy is to blame, in that it enforced an unrealisticexchange rate, relatively low prices, delayed payments, and theresult was very low profitability to the farmer. Such policyleaves no choice for the farmer, but to smuggle his producesomewhere else. Where he can obtain for it the highest return.

In other developing countries we encounter an inefficientinternal marketing system, inadequate transportation, producecollection, sorting and packing and no immediate payment to thefarmer, all leading up to the farmer eventually selling his 99produce to private middlemen, instead of to the government

28

marketing organizations. The farmer manages to get his income.I| but the entire system of guided agricultural credit isdamaged, because it is unable to collect cultivation creditswhich were extended to the farmers.

The researchers Izraeli and others suggested models of thedevelopment of production and marketing boards [54]. The modelpresents a system of marketing institutions, which starts withthe situation in which we find independent producers, whomarket their produce on their own and make their own decisions.Each of them has the authority to decide by himself and forhimself. So far as he is concerned, his authority is quiteextensive, his surroundings, however, he has very littleauthority. The alternatives are limited because his resourcesare limited, and he is subject to both horizontal and verticalcompetition. Next we pass to a situation in which a growingnumber of farmers cooperate in order to increase their powerrelative to non-member producers. A framework of formalrelationship is set up to that end between the members, and acooperative comes thus into being. Each of the producersgives up a part of his autonomy, and areas of joint operationare formed, whereby it is agreed that in these areas thegeneral decision must overrule the decisions of theindividuals. In this way the struggle of producers with oneanother is replaced by the struggle of producers of one sectorwith other sectors.

Further formation of establishments amongst the producers,including eventually other sectors, gives rise to neworganizations, in which the producers cooperate with thegovernment, with the various intermediary outfits, with thecultivation specialists, and also with representatives of theconsumers. Statutory recognition provides the impetus for theformation of the marketing boards. These belong at first toone productive sector. The process goes on, however, and givesrise to inter-sectorial production and marketing councils.When these councils are formed, people are still worried aboutthe possibility that weak sectors, such as the consumers, orsociety at large, are going to get hurt. In the final stage,production councils are established which have a socialinterest, with the government participating, and in whichnational welfare priorities are brought forward. In Israel,

29

this approach has been adapted in the establishment of variousproduction, marketing and export councils, whereby 50% of theirdirectorates are allotted to representatives of the varioussectors, and the remaining authority is in the hands ofgovernment, through representatives of various public sectors.

9. The Planning of Marketing in Traditional Rural Areas

The third world countries consist mostly of rural areas, andthe percentage of the population living in rural areas istypically between 70 and 90 percent. The villagers are mostlyfarmers, but this is subsistence farming, and cultivation,produce, credit and marketing are done after the traditionalfashion. The framework of society is traditional, as comparedto Western society, which is mostly urban.

One of the main goats of third-world countries is development[55]. Many development efforts were made over the last 30years, but not always with satisfactory results. One of themain goats of these countries was the development ofagriculture, the improvement of the level of food production,both for internal use and for export, and the improvement ofthe farmers’ standard of living. The agricultural developmentin general largely revolves around four main points. At thecenter we have the agricultural production processes.Production becomes possible when we supply to the farmersuitable credit, the possibility of obtaining cheap supplies ofinputs, and the possibility of marketing his produce in amanner satisfactory to him. In the traditional system,production is carried out by age-outdated methods, credit isexpensive, and interest is usurious. Inputs are expensive andscarce, and marketing exploitative and controlled by middlemen[56]. The efforts of developing the agriculture in traditionalrural areas revolve in fact around these four points. It turnsout, that when the deed is done property, a cooperative canindeed give a true and satisfactory answer to the problem ofdevelopment of traditional rural areas.

9.1 Productions and Marketing

30

We have seen in the first chapter that marketing which used inthe past to be production oriented, is today a system, whichfocuses on the diagnosis of the requirements of the targetedmarket and the means by which these requirements may besupplied. One may wonder if the traditional farmer, producinghis traditional goods, within the fabric of a system, whichdoes not allow much leeway or irregularity, would be capable ofadopting the marketing orientation of our times. In otherwords, when we build a marketing program, when we plan themarketing of the traditional farmer, or even of an agriculturalcooperative which is set up within a traditional village,should be construct a program based on production as it is, oron planned and improved production, which would endeavor todefine the optimum distribution of the target and increasingquantities turned out by improved production. On the otherhand, we can come to the traditional farmer and tell him: Weare going to focus on establishing the market requirements; andbased on the market requirements, we are going to lay out aproduction program for you which wilt answer thoserequirements.

The dilemma presented above is very important. Modern marketingliterature is in fact concerned with the presentation ofsolutions according to the second formula. Is this formulaapplicable in the framework of a rural traditional society? Twoexamples from Israel may perhaps provide an answer to thisquestion. The first example relates to the grapes of a Moshavcalled Lachish. This Moshav was founded towards the end of theend of the fifties in the Lachish region. The Moshav is basedon mixed farming, but one of the main production branches isgrapes for eating. The terrain is flat highlands, with soilsuitable for vine growing. The Moshav employed specialistsin the cultivation of vines, and succeeded in acclimatizing anew strain of edible grapes, which belongs to the Sultaninafamily - these are grapes without pits. The new strain provedto be resistant. And it gave very high yields per unit areas.It had introduced to the Israeli market. The problem was howto market the Moshav Lachish grape. In other words, thestarting point was that here the production was already a factof life and now the output should to be marketed. It was knownto the marketing planners at the Lachish grape had somesingular qualities – it ripens in the season in which the

31

competition Is relatively slight, and the supply may be as highas one-fifth of the total consumption of edible grapes inIsrael The program consisted in a publicity campaign, or amarketing program, which stressed the quality of the Lachishgrapes, and especially the fact that they had no pits. Thegrapes were packed in small transparent uniform plasticcontainers. They were given a trade name, and the Moshav hireda marketing specialist who took care of the produce salesthroughout the various markets in Israel. This campaign hasbeen very successful [57]. Here we have an example in which aprocluct1ve agricultural system sets up for itself a marketingapparatus, to assist it in selling its produce.

A somewhat similar story may be gleaned from interviewspublished 1n various newspapers, with Shimshon Wolner, themanager of the Ramat Hagolan vineyards. Many wine-grape vineswere planted in the Golan Heights towards the end of the 70’s.The volcanic soil of the Golan Hieghts favored the wine-bearinggrapes. At the beginning of the 80-s there were In Israel quitea few vineyards, which controlled the wine market and offeredto the consumer public a variety of wines at relatively verylow prices, and of course the quality was not very high. TheMoshavlm and kibbutzim of the Golan Heights understood thatthey must establish a vineyard of their own, otherwise theywould not be able sell all their produce, and the return wouldalso be very low. Such vineyards were duly and the winemanufactured. Shimshon Wolner applied a very clever marketingpolicy. He sold wine, admittedly of good quality, but at pricesthat were four or five times as high as prices, then, currentin the market. The quantity marketed was small at first, and hesold them mostly to hotels, tourists and prestige restaurants.In parallel he started a systematic campaign to spread around,as it were surreptitiously, the name of this precious qualitywine which was virtually unobtainable. The result of thiscampaign was extraordinary. The wine quantities marketed grewfrom year to year, and the demand for these wines increased inparallel, frequently exceeding the supply offered on themarket, and certainly at a much higher return to the producers.

Here we have an example demonstrating how a given agriculturalproduction forms the framework from which a marketing programis derived, which if successful establishes also the success of

32

the farmer. It should be noted that had a market survey beenperformed at the time, the current data would have indicatedthat the market was saturated with wine, with large stockpiles.The successful program of the Golan vineyards created new typesof demand, which had not existed before, and this made forgreat success. In view of all this, we ask ourselves oncemore: How should we construct a marketing program fortraditional rural areas. We shall try to answer this questionin the following chapters.

9.2 The Financial Structure of a Marketing Cooperative

The financial structure of a marketing cooperative is basicallysimilar to the financial structure of any other cooperative[59]. The basic conception is that the purpose of themarketing cooperative is one only - to offer the members thebest service that the cooperative can give. Any other goal setbefore it, any goal such as profit making, or even thedistribution of surplus, is unjustified, and in the long runwould lead to || failure of the marketing cooperative in itsfunction as a cooperative. What is the best service to themember? - The marketing cooperative is the organ, which sellsthe member’s produce, and hands him over the highest obtainablereturn. What is the structure of such a cooperative? - On theone hand, we have the producer/member who passes his produce onto the cooperative. The cooperative serves in fact as anagency, which keeps the produce for some time, and then passesit on to the consumer. The cooperative receives financialincome, which is the return paid by the consumers to thecooperative for the agricultural produce marketed. In fact,according to our above definition, the cooperative should passon all monies it receives to the farmer, deducting preciselythe sum required by the cooperative in order to exist and go onselling.

What are those expenses made up of? In the first place, wehave the direct operational expenses. These are the expensesinvolved in running the cooperative. They include wages,current expenses, maintenance, insurance, marketing losses, andany other expense necessary for the upkeep of the system. Inaddition, we have to deduct from the return also the indirectexpenses, the price of financing the founding of the

33

cooperative. Many cooperatives all over the world recover theprice of investment in the cooperative by deducting a certaincommission from any sale by the cooperative. This gives riseto very serious problems. Take for example a cooperativedairy, which must market the produce of two members. Suppose,for the sake of argument, that in this cooperative there arejust those two members. The cooperative has a dairy, whichtakes care of the conveyance of milk produced by the twomembers. A certain sum has been invested in -the dairy, whichenables each member to market as much as he produces. Thedairy price is deducted and is gradually returned within fiveyears. Out of every liter of milk passing through the dairy, acertain sum is deducted, in order to return the investment. Inour example, over five years, one farmer markets 1.000 liters aday. While the other farmer only markets 100 liters a day. Theresult is that in effect one member contributes to the returnof the investment ten times as much as the other member. Whenafter five years, the entire investment has been repaid, andthe members are now free of indirect expenses, since these haveall been paid off, the second member may step up his milkproduction, let us say to 500 liters a day. And then make useof a facility the investment in which has been largely paid bythe first member. This is flagrant injustice.

In my opinion, the financing expenses of the cooperative mustbe entirely disassociated from the operating costs. Thefinancing expenses must be paid by all members equally, orequitably, but definitely in a manner totally disassociatedfrom the operating system of the cooperative. That process, inwhich a fixed commission is imposed on the member's produce,which also covers the indirect expenses of the cooperative, iswrong. When it is applied in a marketing cooperative, whichincludes many members, by way of deduction of commission, or,by investments out of surplus, we in fact create two kinds ofequity. The one is small, it belongs to the members, who mayhave paid for a minimum membership share, while the other isenormous in extent, and cannot be attributed to any member.The result is a feeling on the part of the members that theyare cut off from the cooperative, and sometimes they becomeindifferent to what goes on there.

34

The price of service given by the cooperative must thereforeonly include the direct expenses, plus a certain safety margin,intended to cover unexpected expenses over certain timeperiods. This sum is in fact the surplus of the cooperative.This sum belongs entirely and absolutely to the members, andmust be split up between them in proportion to the use theymake of the cooperative services. In fact, a good marketingcooperative will deduct from members the lowest possible sumsas coverage of unexpected expenses, and will hasten to returnthem as soon as possible, in order not to let them be devaluedby inflation. 9.2.1 Management of the Marketing Cooperative

The marketing cooperative manager should be employed on thebasis of the formula of wages proportionate to productivity.The cooperative manager should receive some kind of low basicsalary, and on top of it a fixed remuneration, which is to workout according to his success in marketing the cooperativeproducts. He should receive a certain small payment, whichmust be worked out in each case separately of course, againstevery volume unit or weight unit which is passed through andsuccessfully marketed by the cooperative. The interest of themanager, which will provide an -incentive for him - do his jobwell, is of course the desire to earn more money. Goodmanagement of the cooperative would be expressed in increasedsales of products brought to the cooperative. The more hesells, the more money he makes. The more he succeeds inreducing the cooperative expenses, the more competitive theprice he will be able to offer on the market. In this way bothparties are going to benefit. The members will have acooperative, which sells their produce well, increases theirincome and has a manager who makes a lot of money, but managesthe cooperative efficiently, and is not distracted by thoughtsof how to embezzle its funds.

9.2.2 Marketing Cooperatives in Developing Countries

In most of the world's countries there is little understandingof what a cooperative really is. In many countries, acooperative is commonly regarded as something set up in order

35

to provide profit and income. Such cooperatives do not servetheir members at all. Managers who look for ways of showing aprofit, raise the operating expenses of the cooperative, andthus injure the members, as well as the consumer public. Thecooperative becomes a place in which you can employ familyrelatives, without regard for the cost of such action to thecooperative. Most cooperative members are unable to monitor andcontrol the activities, which go on, suffer from bad managementand from corruption of the organizations which run thecooperatives.Many cooperatives are founded by decree of high authority, andnot by the members themselves. The cooperatives serve as anexcellent financing instrument in the framework of the so-called economy of affection and the political clan [60]. Forvarious politicians, and only seldom provide efficient serviceto their members.

Figure 3.

36

9.3 Marketing Planning

Let us restate our problem. We are discussing a traditional|village, in which there lives a community subsisting bytraditional agriculture. We wish to develop this village.Our task is to prepare the village a program, which enables itto develop. The peasant who lives in this village is engagedin agriculture, grows traditional crops, cultivates his fieldin the traditional way and obtains low yields. His annualincome is low. His daily output is very low indeed, and so isthe production output per unit area of the plot he cultivatestogether with his family.

The first phase of our program will consist in preparing forthe peasant a farm plan, which will increase his income, raisehis productivity, and reduce the extent of disguisedunderemployment in which he lives. The farm plan takes intoaccount such factors as the free working days throughout theyear of the farmer and his family members, the cultivated plotat his disposal, the crops he is able to grow, how many workingdays are required for each type of crop, and what is thefinancial return per working day for each type of crop. Based

37

on all these data the peasant prepares an optimum plan, whichwill enable him to keep himself and his family members employedto the maximum possible extent throughout the year, as well asto grow crops which will give him a higher financial return, tocultivate a larger plot, and to obtain a higher income perworking day.

It is obvious that this situation is what every peasantdesires, especially in the traditional village, but such asituation does not exist in isolation. Any change at theproduction stage depends by close reciprocal link on the threefactors mentioned above - credit, inputs supplies, andmarketing. In the traditional system, the marketing wasusually done by a series of middlemen, who left very littlereturn in the peasant's hands and in his pockets. In adevelopment system one must give the peasant an answer, whichwill let him market his produce, and receive the maximumreturn. One of the efficient ways of doing this when it isproperly executed is the cooperative way. In order to produce,the peasant needs suitable credit to acquire the necessaryinputs. The peasant also needs a channel through which tomarket his produce with the maximum efficiency.

9.3.1. Present and Expected Production Plan

The first body of data we have to assemble, of course, is theproduction plan, which is being applied at present, and how theproduce is being marketed. In an investigation conducted in arural area in Benin, it was found that only 35% of the producehas been sold, and the remainder was consumed by the peasantand his family [61]. Certainly, we must know, after learningthe farming plan presented by the peasant, what are hisproduction expectations. Another component, which we have towork into the plan, is the survey of the market capacity forabsorbing what we are about -to produce. In -the first, placewe examine what -this market receives, and then how could 1-tabsorb what. We are about to produce. The next step in ourmarketing plan would be the marketing cooperative. It is thecooperative, which has to come into contact with the peasant,when the produce is ready for sale. From this moment on, thecooperative is responsible for the produce, its marketing andsale. The cooperative should check if the agricultural produce

38

can be stored and for how long. In many developing countriesthe peasants sell their produce immediately after the harvest,when the market is glutted and the prices are low, because theyneed the money to repay their debts. After a few months, inthe off-season when supply becomes shorter on the market, theprices go up. A traditional peasant who lacks any storagecapability is the loser, while the trader makes a profit.

9.3.2. Processing of Agricultural Produce

The second component of the marketing plan is the processing ofagricultural produce. Would it be possible to process theagricultural produce? - Taking an example from Israel, we findthat in the past the Moshav farmer used to sell his turkeyalive, by weight, to the trader. Later on, cooperativeslaughter houses were set up in which the fowls wereslaughtered, and marketed as clean frozen meat. The nextdevelopment was processing. Instead of selling the turkeyswhole, they were sold in parts, cut up and with the choice cutsseparately packed, as well as in a variety of processed meatproducts. All these processes raised the return to the farmer.In the developing countries it is possible to process thecassava into gari or into tapioca, just to mention things beingdone already, and then to get for them a higher price.

9.3.3. Packaging

The third component is a suitable packaging for a suitableproduct. A proper, standardized package of standard weight andsuitable quality will bring a higher return to the farmer. A|description of the sale of corn in Benin [62], which resemblesthe manner of doing this in other African countries, relateshow the trader is the one who brings the empty sacks to thepeasant, after threshing, to fill them up. The sack issupposed to weigh 100 kg when full, and here the trader appliesvarious tricks to get more corn into the same number of sacks,to the peasant’s loss. Even when the quantity sold ismeasured out, the buyer makes use of all kinds of methods tochange the standard measure to his advantage, and the peasantcomes out the loser again.

9.3.4. Transportation and Delivery

39

The next component of the marketing plant is transportation.The ability of the cooperative to transport its produce on itsown is generally considered a great advantage. The cooperativecan choose the most suitable means of transportation, thetransportation capacity employed as well as the direction oftransportation according to its needs and capabilities. Wefind that many cooperatives in developing countries assume thatthe development of the transportation function withinthe cooperative framework means that the cooperative mustpurchase the vehicles, but this is incorrect. It turns outthat the purchase of a truck by the cooperative is donewithout conducting the necessary economical examination.It is generally the case that the truck capacity is not putto full use most of the year, except at harvest time. And thenit is often insufficient. An additional problem is truckmaintenance. In most cases the cooperative hires a driver, andsuch drivers receive a very low pay in most countries of theworld. This driver will in most cases lack an incentive to dohis work. The driver s job carries a heavy responsibility.The vast majority of roads in rural areas are in very badrepair. Responsible driving on the part of the driver willprolong the life of the truck. A driver, who receivesinsufficient wages, will not care at all if the truck is goingfrom bad to worse, and will not maintain it properly. Thecooperative might save a little on the driver s wages, butstands to lose a fortune when the truck if finally wrecked. Wefind in many countries throughout the world so calledcemeteries of trucks and mechanical equipment, and in mostcases this is a result of a policy offering no incentive and nosuitable remuneration to the managerial and operationalpersonnel. Such a driver should be paid by the mileagedriven, and in accordance with the capacity transported, driverknows that a well kept truck in good mechanical condition willenable him to transport more and earn more. The cooperativemust adopt in principle a policy of acquiring transportationservices at the cheapest possible outlay, either by acquiring atruck, or by renting the transportation capacity, which existsin the vicinity.

9.3.5. Trade Name

40

Trade names sell agricultural products. In Israel we arefamiliar with "Lachish" grapes, "Golan” wines, or "Hatzeva"watermelons. These are trade names of agricultural producecoming from specific regions, or specific moshavim. It turnsout that a trade name is a good promoter of sale ofagricultural produce especially in markets saturated with thesame produce. Carmel is a trade name of Israeli agriculturalproduce on the European markets, which helps the Israeli farmerto obtain higher returns for his produce. Israeli persimmonswere introduced to the European market under the trade name"Pri-Sharon” and with great success. At Elsmeer, theNetherlands, the flower exchange clock-indicators assign higherprices to flowers sent in by a certain grower than to flowersfrom another source, and sometimes the flowers are bought evenbefore the clock-indicators are set, and of course, at a higherprice. All these are examples, which demonstrate the importanceof the trade name for sales of agricultural produce.

9.3.6. Marketing Contracts

The Israeli export system of agricultural produce functions bymeans of marketing contracts. The organs responsible foragricultural exports sign marketing contracts with the farmers.The signing of supply contracts of sorted and gradedagricultural produce, on pre-determined dates, and at setquantities, enables these marketing organs to plan theirmarketing campaign in the export market with very highefficiency. On the other hand, the farmer knows that once hehas signed the contracts, his risk is very considerablyalleviated. He can turn his power, attention and energy toproduction, knowing that a great deal of his troubles has beensettled. He knows that he has to devote himself to his work inorder to succeed. Now he can immerse himself more in hisprofessional activities. The signing of the contract enablesthe farmer to obtain advance payments for cultivation. Thiskind of credit is usually cheaper, and it is repaid upon themarketing of the produce.

9.3.7. Credit to the Farmer

41

As mentioned above, the farmer can only produce when hereceives credit. In the traditional system he used to getcredit from the local moneylender. Such money generally costsvery much and the farmer is damaged as a rule. Developmententerprises in third world countries have set themselves a goalof providing suitable credit to farmers participating invarious projects in general and cooperatives in particular.For example, the coffee growers of the Ivory Coast receive acredit from the national agricultural development bank in thiscountry. This credit is intended to enable the farmer to passthe agricultural season without resorting to the services ofmoneylenders. The credit is intended to cultivate theplantations. The problem used to be the repayment of thiscredit. The Ivory Coast Government, operating through itsbank, or through other organizations, did not provide anefficient marketing system for the coffee, which should havestarted with the farmer and ended at the export harbor. Somestages were left out, which the farmer had to undertake on hisown, but the farmer was not organized to do this, or organizedby inefficient outfits. The farmers eventually found theanswer themselves. They sold the coffee, for cash, at theirplantation gates, to private traders. In this way, theymanaged to obtain for their produce the highest return possibleso far as they were concerned. The Ivory Coast Government, inadopting a policy of extending credit without linking ittightly with marketing, and without offering to the farmerefficient marketing solutions accessible and satisfactory tohim, was left practically without any means of recovering thiscredit, which had to be considered lost credit [62]. Asimilar situation exists also in other West-African countries.

An additional problem is the result of the lack ofunderstanding by policy makers of the subject of agriculturalcredit, in all its aspects. The farmer receives advances andcultivation loans, which help him to pass the agriculturalseason without resorting to the services of moneylenders. Thisis the basic assumption of the makers of credit policy invarious places in the world.However, the farmer has family, children and a wife. He mustfeed them and provide for them also in the months in whichplantations bear no crop. And his cash flow is negative. Allthose project managers have foreseen no problem here, and have

42

not taken care to provide the farmer with short-termsubsistence advances. The farmer must find a financial sourceto that end, and naturally he turns to the source, which isalways at his disposal, the moneylender. At harvest time, whenthe crop is ready for sale, the very first name on the list,and the most pressing for repayment is the money lender, whichin most cases is also the marketing middleman, and he is theone who receives the produce for sale, not the project nor thecooperative. Again, the cooperative does not sell the produceso that it has almost no possibility of recovering the creditextended.

9.3.8. Terms of Payment

When does the marketing cooperative pay the cooperative memberfor his produce, and what prices should be paid? - In thecooperative operational system we have in fact a conflict ofopposites. On the one hand the members wish to obtain fortheir produce the highest possible price, paid in cash ifpossible. On the other hand, the cooperative must first sellthe produce to obtain money for the member, and to that end itmust compete on the market so as to obtain the best possibleresults. A method of payment, which is practiced by manymarketing cooperatives, is the commission method. The returnis passed on to the producer, following the sate, and after thededuction of the commission which consists of a certainpercentage of the total sale value, and which is intended tocover the cooperative expenses. This method has advantages,because it does not involve the cooperative in any risk, and itenables the cooperative to specialize. The method has alsosome drawbacks. It does not answer to the wishes of the smallfarmer, who prefers to sell his produce to the cooperative andto receive cash payment in return. It is difficult formarketing cooperatives to compete with the private traders, whopay cash. Therefore, many marketing cooperatives have resortedto the same method, that is, they buy from the farmer at thefull price, and pay cash. This method is applied in the caseof small farmers in traditional rural areas [63]. Cooperativesgenerally prefer to be an organ that transfers quantities forsate. The cooperative assures a steady supply, acceptance,payment and making out of invoices [64].

43

It is most difficult for marketing cooperatives to sell on acommission basis fresh vegetables and fruits produce, andindeed in many countries the percentage of marketingcooperatives in this field, including Israel, is relativelylow.

Another problem bound up with this subject is that of minimumprices. The minimum prices assured to the farmer, mostly thetraditional "Farmer, help to overcome his apprehensionconcerning unexpected turns for the worse. On the other hand,minimum prices lead in cases of a market dumped with theagricultural produce in question to a financial burden on thecooperative, which is sometimes unbearable. It is importantfor the cooperative to receive support on that issue from anexternal organization, such as the Government, that will ensureit, and thus offer it security in cases it is forced to pay.A cooperative unable to withstand this financial burden, andwhich does not turn for support to an external organization, isliable to find itself in a difficult crisis, which willultimately injure the members, and lead to a failure of thecooperative.

9.3.9. Financial Structure of the Marketing Cooperative as aPart of the Marketing Plan.

The marketing plan must also include an appropriate financialstructure of the cooperative. The fourth internationalcooperative principle states that part of the cooperativesurplus may be employed to finance future investments in thecooperative. This is a fundamentally misleading principle,which causes the distortion of the cooperative capitalstructure [65]. This principle results in the formation inthe cooperative of two kinds of equity. This is also the casewith Tnuva in Israel. This is an unhealthy situation, whichleads to disassociation between the members and thecooperative.

Moreover, the cooperative and its management, knowing that thesources for future investments are going to be found in thesurplus, and not directly be provided by the members, will doall they can to build up the surplus, by paying less to themembers in return for their produce. A lower pay to the member

44

gives rise to dissatisfaction of the member as a result ofwhich he may turn to private marketing.

The financial structure of the cooperative must be made up ofinvestment capital, which is divided equally or equitably amongthe members. The shares of all the members add up to the sumtotal of investments in the cooperative. Every increase in thecooperative investments must be divided entirely between themembers, and not be taken out of the surplus. Such policy willlead to a direct and deeper financial involvement of the memberin the cooperative, and as a result the member will care moreabout what goes on in his cooperative.

The cooperative’s direct expenses must be divided among allmembers, according to the member's degree of participation inthe cooperative business, that is, according to the quantity ofproduce he markets through the cooperative. This policy, whichremoves from the marketing price the burden of financingexpenses, in effect reduces the marketing price, and creates anincentive for members to market more and more through theircooperative. Indeed, the more the member markets through thecooperative, the greater the reduction in price of each unitmarketed. The member must bear the financing costs, which area constant factor- therefore, the more he markets, and the lessfinancing costs per unit marketed.

Such a policy achieves more Justice amongst the members,encourages members to take part in the doings of theircooperative, and raises their commitment to the success oftheir cooperative. It shou1d be added and stressed, that thecooperative must be run by the formula of remunerationaccording results obtained, in order to secure for the memberthe maximum return he deserves.

9.3.10 Cash Flow

This is an important part in every marketing plan. We have toknow what is our financia1 status in the cooperative. We haveto know if our operation is profitable or are we losing money.We have to plan our actions ahead of time, and we have tomaintain a system of controls, which would allow us to checkourselves at each step during the year.

45

A marketing cooperative must prepare for itself a system ofcash flow, which should include all the elements making up thefinancial structure of the cooperative. This system mustinclude an estimate of cash flow for each and every member ofthe cooperative, based on expected production during the year.Another component are the departments of the marketingcooperative. To this we must add the various financing cost,and the general expenses of the cooperative. The cash flowsystem should be laid out in tables, which will display in fulldetails various activities of the cooperative, month by month,and on a seasonal and annual level.

9-3-11- Cooperative Educations and Instruction (Extension)

Setting up marketing cooperative in traditional rural areas isa very difficult operation. The difficulties are many andvaried but in front of them all on the scale of difficulties wehave the most important factor, which is the member himself.The cooperative is the member, and depends on its members forits existence. When the members do not understand and do notknow what the cooperative is, what are its function, what it iscapable of giving to the member, and what one may not expectfrom it there is no chance for the existence of this with thiscooperative. Side by side with this, we must remember that wewould like to introduce a variety of components in thecooperative, as described in the foregoing. The vast majorityof these components represent processes of modernization andinnovation, and they are designed for members who are in facttraditional peasants, who live in traditional villages.

The failure of many development programs in developingcountries was due to the fact that they have not made withintheir framework the necessary provision for appropriateInstruction programs, programs designed to modify the behaviorof the traditional peasant, and to prepare him to accept,understand and apply -the transition to more modernagriculture. A suitable instruction program, which wouldinclude the components of the activity of the changing agent,that is, the agricultural extension officer, who works indirect contact with the traditional peasant inside his village.The instruction programs should include the chapters concerning

46

the introduction of production programs, extension of credit,provision of inputs, and marketing planning. The culminationof the instruction program should be the introduction ofthe cooperative, as a possible and beneficial solution for thetraditional peasant, a solution that if properly carried out,will secure the maximum possible return to the traditionalpeasant.

The instruction program should focus, within the framework ofthe marketing plan, on making people realize the importance ofmarketing information. Marketing information is a powerfulinstrument, both in the hands of a farmer who is about to drawup his annual production plan, and in the hands of thecooperative manager, who is about to decide on his marketingpolicy for each and every separate product passing through thecooperative.

10. Conclusion

Our central problem here was how to set up marketingcooperative in a traditional village, located in thetraditional rural areas of the developing countries all overthe world. Let us remember that the marketing system isgenerally a system intended to pass on the produce of theproducer in the most efficient manner on to the consumers. Themarketing system in traditional rural areas is a system, whichexploits as far as it cans both the producer and the consumer.This system pays to the producer the very lowest price it can,while to the consumer it sells at the very highest prices itcan obtain. The system includes a great many intermediarystages, and each stage in the system takes its toll. In thetraditional system we are familiar with farmers going out andwaiting at the roadside with their produce for customers tocome and buy whatever they need directly. We have here asituation in which the farmer sells directly to the consumer,without any middlemen. Both parties benefit. In Israel we arefamiliar with the phenomenon of sates stores being opened bykibbutzim and moshavim at the roadside, where they sell theirproduce directly to a consumer passing by. This is another caseof direct sale from the producer to the consumer withoutintermediate stages.

47

The goal of the marketing cooperative in traditional ruralareas is to do whatever it can in order to reduce the number ofstages to the necessary minimum. The cooperative must endeavorto have its produce sold to consumers with less and lessmiddlemen intervening, and if it makes it this will be ameasure of its great success.

References:1) Hornik, Jacob: Marketing Management: Systems, Theories andStrategiesEveryman's University Press. Tel Aviv 1985 Vol. I P.P. 31-362) Maynard. H.H. and Beckman, T.N.: Principles of MarketingThe Ronald Press Company - New York Fifth Edition - 1952 P. 263) Locley. C.L. and Dirksen. C.J.: Cases in MarketingAllyn and Bacon Inc. N.Y. (4th Printing) 1956 P.34) Chaturvedi, J.N.: The Theory of Marketing inUnderdeveloped CountriesKitab Mahal Publishers. Allahabad. 1959. P.35) Ottenson, F.S. Panchar, W.G. and Patterson, J.M.:Marketing the Firms ViewpointThe Macmillan Company, N.Y. 1966 P.826) Definition of R.A. King introduced in footnotes on page85 in: Ruttan, V.W. "Agricultural Product and FactorMarkets in Southeast Asia" in:Anschel. K.R. and A1 (EO): Agricultural Cooperatives andMarkets in Developing Countries Praeger special studies in international economy anddevelopment New York 1969.7) Mathur. B.S.: Cooperation in IndiaSahitya Bhawan. Agra-3 1971 P. 3448) Agrawal, G.R.: Institutions for marketing by womenasspecial groups' problems and required improvements.Centre for economic development and administration,Tribhuvan University, Kirtipur, Katmandu 1984, P.I9) Abbot, J.C.: Marketing Problems and Improvement ProgramsF.A.O. Marketing Guide No. 1. Rome 3rd Printing 1966 P.4210) Ibid. P. 45-4611) Chaturvedi. ibid. P.P. 6-912) Maynard. Ibid P.3713) Mathur. Ibid, P.34514) Galor Zvi: "Introduction to Cooperation"

48

International Institute for Development, Cooperation andLabour Studies (Afro-Asian Institute). Tel Aviv 1982 Ch. IV.15) Forman. S. and Riegelhaupt "Market Place andMarketing System: Towards a Theory of Peasant EconomicIntegration" -Joint reprint series No. 36. School of African and Asianstudies and Institute of Development Studies at theUniversity of Sussex. Taken from Comparative Studies inSociety and History Vol XII No. 2 April 1970 P. 114. 16) ibid. P.P. 189-193 17) Mathur, ibid, P. 34618) ibid. P.P. 347-348. See also: Agrawal. ibid. P.P. 18-19,Abbot, ibid. P.P. 50-115, and Wall David: "The InternationalBanana Market"Journal of Economic Studies Vol III NO. 3-4 Dec 1968 P.P. 54-61 19) Galor. Z. (1982). ibid20) Ottenson. ibid. P.P. 82-8621) For another discussion on Marketing Mix see: Matcom (ILO):Marketing of Agricultural ProduceInternational Labour Organisation. Geneva 1982, Topic 322) International Federation of Agriculture Producers:Improving Marketing and Farm Inputs Supply in DevelopingCountries: A Plan of Action for Farmers' Organizations FarmLeaders' Seminar, Bonn, Federal Republic of Germany. April1986. P.P. 3-423) Galor, Z (1982), ibid. ibid24) Definitions brought by Mathur. ibid P.P. 349-35025) Galor. Z (1982), ibid. ibid.26) Hardis. I.W.: "Cooperative Theory and MarketImplications:A selected review". P. 49 In: Anschel, ibid.27) Whetham. E.M.: "A Comparison of Marketing StructuresAgriculture Produce In Developing Countries". P.P.26-27 In Digby. M. and Mccready, K.J. (Ed): Book of AgricultureCooperatives 1970 Basil Blackwell, Oxford. 1970 28) Hyden. G: "The struggle for success -in cooperation:Kabuku Noan-i UJamaa Cooperative Society. Tanzania". P.P.212-213

49

In Webster. F.H. (Ed): Year Book of AgriculturalCooperation, 1977 Parchment. Oxford, 197729) Andreou. P. et Islam, M.M.: "La commercialisationcoop Bangladesh".Revue des etudes cooperatives No. 199 Paris 1980 P.P. 111-115!30) Patel, M.S.: “ Cooperative Marketing in India”Review of International Coopearation. Vol. 69, No. 2 1976. P.52.31. Galor Z. "Towards the Cooperative Development TraditionalRural Areas". IIDCLS. Tel Aviv 198532) Further discussion on problems in marketingcooperatives, see: - - Callar. D: The Social andCultural Factors Involved in Production by Small Farmers inWedza Communal Area, Zimbabwe, of Maize and Its Marketing.Unesco. Paris. RRD 17. Dec 1982 P. 61- Vinyor. T.R.: Les facteurs socioculturels qui oriententla production et la commercialisation de certainesdenrees alimentaires par les petits fermiers dans les petitsfermiers dans la Republique populaire du Benin Unesco, Paris. RRD16. Aout 1982 P.P. 64-69 i- Semana. A.R.: The social and cultural factors involvedin small scale farmers food crop production and marketing inMalawi Unesco. Paris. RRD 20. August 1983. P. 15 - Macbailey. F.E.: The social and cultural factors involvedin production by small farmers in Cameroun of plantain andcassava and their marketingUnesco, Paris, RRD 21, Sept. 1983 P. 41 1983 P. 4133) Tayeh. A.K.: "Cooperative Olive Oil Processing andMarketing in Jordan". P.P. 67-68In: Digby. M. (Ed): Year Book of AgriculturalCooperatives 1969 Basil Blacwell. Oxforrd1969.34) Andrew, P.: "The Cooperative Marketing of CarobsinCyprus". P. 233In: Webster. F.H. (Ed): Year Book of AgriculturalCooperatives 1976 Oxford, 1976See also: Paris, A: "Une enquete sur les cooperativesCypriotes de commercialisation des agrumes et autres fruitsde tables" Revue des Etudes Cooperatives Paris. NO. 183. 1976. P.P. 45-54

50

35) Granier, J.C.: "La Commercialisation des fruits etlegumes en Algerie:Revue des Etudes Cooperatives Paris, No. 194 1978. P.P. 69-8836) Galor, Z. (1985), ibid37) Preuss, W.: Cooperation in Israel and the WorldRubin Mass. Jerusalem, 1960, P. 23538) Verlinsky. N.: "Tnuva. The Cooperative MarketingSociety for Cooperative Produce"Afro-Asian Institute (N.D. - Around the Sixties) PP. 4-539) Vitels, H.: A History of the Cooperative MovementIn Israel Book Six: Central Agricultural CooperativeValentine Mitchel, London. 1970 P. 33940) Verlinsky. ibid. P. 641) Vitels. ibid. P. 29342) ibid. P. 34443) Verlinsky. ibid. P.P. 11-1244) Preuss. ibid. P. 23745) Verlinski. ibid P.P. 13-1446) Farm's Leaders Seminar: ibid. P. 1647) Verlinsky. ibid. P. 1848) Izraeli, D. and a1.:"Marketing Boards andSocietal Marketing:In: Journal of Rural Cooperation Vol IV NO. 2 1976. P. 10549) ibid, P. 10750) Whetham. ibid. P.P. 27-2851) McGhie, A. T. S. : "Recent Development In ProducerMarket-ingLegislation in New Zealand" P. 159In: Year Book of Agricultural Cooperative, 1964 BasilBlackwell. Oxford. 196452) Izraeli, ibid. P.10853) Storm, R.: "Government-Cooperative GroundnutMarketing in Senegal and Gambia"Journal of Rural Cooperation Vol. V No. 1. 1977. P. 3054) Izraeli. ibid P. 11055) Galor Z.: "Man and Development" Published by IIDCLS. TelAviv. 1986.56) Galor, 1986. ibid.57) Interview with Asa Oren, member of Moshav Lachish. 198859) Galor, Z. "Interest and Surplus in the Cooperative". Tobe published in International Cooperative Review December. 198960) Galor. 1986. ibid.

51

61) Vinyor. ibid. P. 6862) ibid. P. 6963) Interview with Mr. Kouassi from the B.N.D.A. of IvoryCoast. done in Israel. 198864) Mathur. ibid. PP. 366-36765) Fualdes, J: "Les commercants et leurs cooperatives"Revue des Etudes Cooperative Mutualistes et Associ ati ves.Paris, No. 22 1987, P. 1966) Galor. 1989, ibid.

52