A cooperative that regulates markets

A cooperative that regulates markets

René Mendoza V.,

With Sulma Y. Leiva, Rigoberto Martínez and Ruperto Mejía[1]

It is easy to stop one person, but difficult to stop 100.

 When people discover the power of community and the transformative force of Christianity, nothing can stop them. Héctor Gallego


Many cooperatives in Latin America tend to end in three ways. Some are stillborn, the result of external decision making, organized by the State or international aid. They last as long as there is an injection of external economic support. Others turn into businesses, implementing the social aspect like something similar to “Corporate Social Responsibility”, that is, charity to provide good publicity for the company. And others are privatized by small elites and managed at their whim. In these three cases, the member families end up affected, their dream of accessing better markets (for products and capital), of being trained and cooperating to resolve problems, falls apart. In the face of this reality, the Hope of the Peasants Cooperative in Panama seems to express a real hope. This article summarizes what this cooperative is and explains the secrets behind its success.

What is the novelty behind this cooperative? It is an organization that is 47 years old and has 1,235 members, the only one in Central America that manages commerce through a distributor, 2 supermarkets and 5 branch supermarkets within a network of more than 20 groups, among them other cooperatives. It is also the only cooperative in Central America with a coffee roaster that is processing 100% of the coffee it collects under two brands (Café Tute and Café Santa Fe). It is a cooperative that redistributes 40% of its earnings through social policies, and 60% directly to the members. And it is a cooperative that has influenced the market in a district of 16,000 people, made the weighing of the products bought and sold more fair, and instituted the idea that being a business person is selling products at low prices. In other words, we are in the face of a cooperative that is regulating the market in the interests of its members and the communities of Santa Fe of Panama.

What are the secrets to the success of this cooperative? Said figuratively, there are three codes that interact to “open” the “lock box” to the success of this cooperative; codes that “open” in a context of adverse power relations and in a place with a history of resistance – the indigenous in the face of the Spanish invasion, and the Tute Mountain uprising with the rebellion of the students against the Panamanian Guardia. This trilogy of codes are the internalization of values expressed in the mission, the counterweight and social cohesion mechanisms that accompany the smooth running of the cooperative, and the sustainability of the cooperative and its members.

The sense of mission happened during the gestation and birth of the cooperative, under the influence of the priest Hector Gallego, who was disappeared after three years in 1971. Jacinto Peña recalls that precise moment when the cooperative began in 1969:

We woke up to the injustice of the wages, the fraud that the stores pulled off with the weighing of the products and their prices. So we decided to form a cooperative. But how could we start a cooperative if we did not think we had any resources? So Fr. Hector threw out a 5 cent coin in the middle of where we were seated, and asked, “How many pieces of candy can we buy with that coin?” “Five!” we responded. Others present looked in their pockets for a 5 cent coin. And others as well. The priest held up 10 coins and said that we had enough for 50 pieces of candy and sent a young boy off to buy them. It was 12 noon, we were all hungry. That same boy passed out the candy to the 50 who were present. The priest asked us again, “what does it taste like?” Someone shouted, “it tastes like heaven!” The priest concluded, “that is how cooperativism is done.” The next week a group from Pantanal bought 1 quintal of salt to sell, and in El Carmen each person began to save 10 cents a week. That is how the hope of the peasants got started, our cooperative.

This gestation was the connection between the institution of cooperativism (something external) and the transformational religious institution (something internal) in a group of small producers (something local). Facing an adverse context of large producers paying them low salaries, and stores cheating them with weighing and prices, they woke up and saw opportunities in national lands that they could work and having stores on the basis of their own resources. Learning, discovering the hidden side of things, made them change: the poor can save and can work on their own land; they can come together and share the force of their faith to build justice. This is then their mission.

Throughout the history of the cooperative, in the good times and the bad times, the counterweights and group cohesion have been important to them. The Board of Directors, the Oversight Board and the Assembly function, addressing strategic decisions and taking care of one another; while 92 workers on the business side are responsible for the operational part. They are not judge and jury; the management cannot decide for the board nor viceversa. In addition there is a group of the founders of the cooperative who, whether they hold posts or not, remain vigilant over the course of the cooperative. There is high rotation among the board members, while the founding leaders remain. There is a lot of cohesion among the 92 workers, which is incentivized by a pretty equitable difference in salary, the distance between the highest salary and the lowest is 2 x 1, when the rest of the institutions and organizations tend to have a gap of approximately 10 x 1 and even higher. The interaction between the associative side (bodies) and the business side of the cooperative generates mutual oversight for the smooth running of the cooperative, something that has allowed it to overcome various administrative crises over the years.

The sustainability of the cooperative and its members completes the trilogy. The sustainability of the cooperative has been achieved following the two principles of Fr. Hector: “overflowing measure”, which is giving more in weight instead of giving less; and maintaining low prices for the sale of products “because no popular organization should steal from the poor.” In terms of the sustainability of the members, the cooperative uses 40% of its surplus for scholarships, aid and incentives for the producers, and the remaining 60% is directly redistributed to the members, according to the amount that they have bought from the cooperative. In other words, the general population buys from the cooperative because of the low prices, and the members benefit not only from the prices, the loans and the incentives, but also from the surplus. This nourishes the sense of ownership that the members have over their cooperative. Recalling the biblical phrase that “where your treasure is, there your heart will be”, the heart of the members is in their cooperative.

With this foundation, the cooperative faces the market dangers that stalk it daily. What are they? The fact that the business side, in a country like Panama based on a service economy – money for money – might take over the associative side of the cooperative; that the centralization of decision making and the concentration of resources, that has so many times eroded other cooperatives in Latin America, might seduce the new generations; and that the logic of external subsidies and subsidies from the cooperative itself, instead of the Law of the Talents (Matthew 25), might be raised up as the social part of the cooperative. These are dangers that the cooperative has known how to deal with, regulating markets to the benefit of human beings, something it has done throughout its 47 years.

This reminds us of the distinction that Brafman and Beckstrom (2008) make in their book, “The Starfish and the Spider: The Unstoppable Power of Leaderless Organizations, precisely about the difference between the spider and the starfish. They both are similar in the sense that their arms are attached to a central body; but they are different. If you crush the head of a spider, you kill it. While you cannot find the head of the starfish. If you cut it in half, it becomes two starfish; if you cut off its arms, they produce even more. Dark forces believed that by disappearing Fr. Hector they would do away with the peasant movement of Santa Fe. The Hope of the Peasants Cooperative is like the starfish, it reproduces itself and multiplies itself by 10 times 100. The more decentralized it is, the closer it is to its mission, and the more it recovers its formation and character as a peasant movement, the more it will be like a starfish, the hope of the peasants of Latin America.

[1] René (rmvidaurre@gmail.com) has a PhD in development studies, is a collaborator of the Winds of Peace Foundation (http://peacewinds.org/research/) and an associate researcher of IOB-Antwerp University (Belguim). Sulma is the president of the “La nuez de oro” Cooperative, and Rigoberto and Ruperto are from the Mangle Association of El Salvador.

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