All posts by Mark Lester

CEO, Winds of Peace

“The snowball is starting to roll downhill” but still “swimming against the current”

“The snowball is starting to roll downhill” but still “swimming against the current”

WPF has been involved with farming cooperatives in Nicaragua for over 20 years. In 2011 WPF undertook an extensive study of cooperatives in Nicaragua, and we continue to learn and work with them. When I think about where our work with cooperatives is at now, a couple of mixed metaphors come to mind: we are definitely swimming against the current, but it seems like we are just getting to the point that the snowball might roll downhill.

THE CURRENT:

While Nicaragua is the Central American country with the largest number of cooperatives (5,000+), we have discovered that often those cooperatives were not founded by the initiative of their members, but by an external actor- frequently the State or foreign aid agencies– as a way to channel support to the peasantry. As a result of these origins, most of the members´ commitment to the cooperative is linked to its ability to offer them “projects”, i.e. externally funded benefits.

Furthermore the great majority of them essentially function using management styles more appropriate to single-owner businesses. This type of governance structure does facilitate communication with these external agents. But is not effective in protecting assets held in common, nor does it tap into the rich human resources that the many worker/owners represent. So even though cooperatives have the potential advantage of having dozens of owners all with diverse experiences, connections and talents at their disposal, they typically only rely on the knowledge and abilities of one or two people.

For most of the rural population their unconscious mental model for leadership comes from generations working on the hacienda, where a single owner ensures control over his/her assets through the use of a limited number of foremen. These foremen do have intimate knowledge of all stages of the production process, and thus ensure the process works to protect and enhance the interests of the owner. But in this system the only information the workers need to know is about their specific task. In fact, knowledge of the larger processes by the workers is seen as a negative, a distraction to the “real” work of the field-hands.

However, when this leadership style is used in the structure of a cooperative, it is at best a gross underutilization of the wealth of talent, experience and potential of its multiple members, and not infrequently results in crises linked to corruption. This is because the sole-leader system is not effective in safeguarding the assets when the wealth belongs not to one leader, but to the group.

SWIMMING AGAINST THE CURRENT:

Instead, a structure is needed that provides group control over group wealth, i.e. effective cooperative governance bodies: administrative council, oversight board, credit committee, education committee. In a context where the owners are many and they are also the workers, such a management structure also is capable of unleashing the potential of the many owners to improve their business. But to release that potential, they all need to be informed, not just about their specific task as a worker, but also the processes of their business as the owners that they are, so they can continually improve on those processes.

This is the type of ongoing reflection on the cooperative model that Rene Mendoza, as head of our cooperative initiative, has been facilitating with cooperatives since doing the study mentioned above.

WPF´s history is intimately linked to a transition to a 100% employee owned business. Most of WPF funding came when Harold and Louise Nielsen sold their factory (Foldcraft) to their workers under an Employee Stock Ownership Plan (ESOP). At that point, it went from having one owner, to having 300+ worker/owners. The first CEO of that 100% ESOP company, Steve Sheppard, realized early on that the traditional single leader structure was not appropriate for a worker-owned business. So he began to seek out methodologies that would empower the Foldcraft worker/owners, and train all of them in the tools needed to enable their effective participation, so that they collectively could manage and continuously improve their business.

On retiring from his post at Foldcraft, Steve became the CEO of WPF.

So in the last several years in Nicaragua, while continuing to nourish ongoing reflection on the cooperative experience among its members, we have also attempted to introduce to the cooperative movement in Nicaragua some of these management tools Foldcraft found useful .

René Mendoza has been the director of the orchestra in this effort. He and his team at COSERPROSS accompany the cooperatives in their ongoing reflection on their situation and problems throughout the year. In addition once a year, in an alliance with the Center for Global Education and Experience at Augsburg University, and The Institute of Development Policy at Antwerp University, he leads a weeklong Certificate Program on Cooperativism for WPF. Some 50 or so cooperative leaders spend a week together reflecting on their reality, sharing experiences, and learning some tools that empower worker/owners, specifically Open Book Management and LEAN. Steve Sheppard has frequently led the training effort himself, and also brought in experienced specialists in the use of  these instruments.

 

Open Book Management (OBM) and LEAN help these governance bodies to be more effective. Instead of one person knowing “the business”, reflecting on the results and looking for improvements, all the members learn the business, reflect on its performance, and seek improvements.

STARTING THE SNOWBALL ROLLING…

But to get to that point in this context requires first breaking with a mentality reinforced over centuries: that only a few have a right to know, and the rest do not have “ideas”, much less ideas worth sharing. It is a quantum leap when the members of cooperatives awaken to the importance and value of their ideas, and then change begins to happen.

This past June 9-15 WPF held the 4th edition of the Certificate Program with a mix of people, some new to the ideas of OBM and LEAN, and others who had participated in previous programs who were able to share their experiences using these tools in their organizations. Others shared their experiences taking specific steps to assert their ownership over the process of their cooperative, the fruit of their ongoing reflections. These steps are difficult and frequently involve conflict, as they collide with how “things have always been done” up to now. But they are beginning to open up previously untapped potential.

Going from a field-hand mentality that relates to the cooperative as an NGO, to becoming an empowered member of a joint enterprise that values the wisdom and experience of each member, is not the kind of change that happens overnight. It is good for organizations who have chosen  this path to remind themselves that they are facing a strong counter current, and that without continual effort and reflection, they can easily be swept off the course they have set for themselves. Progress is only possible by taking daily steps toward change. But the reward is that each consciously taken step that builds on the previous one, makes the next step easier, and generates the kind of momentum needed to successfully fight the “current” and open up new horizons for their family, cooperative and community.

 

 

Drinking coffee as an act for peace

Drinking coffee as an act for peace in times of polarization

Nicaragua is once again extremely polarized. It is enough to compare different posts on our nica-update to see diametrically opposed views of the ongoing crisis. We post them not to imply that each perspective is equally true, but rather to recognize that important segments of the population hold contradictory views of what is happening and its underlying causes. Even more important are its implications for the future governability of Nicaragua –for any government to be sustainable, it will need to find a way to incorporate the interests of those holding the opposing viewpoint, no matter how “mistaken” they may be judged to be. We certainly learned this lesson at the end of the “contra war” in the early 1990s.

To contribute to the development of this understanding of the conflict, our close ally in Nicaragua, Augsburg University´s Center for Global Education and Experience, has developed an online course that delves into those two perspectives. The Crisis in Nicaragua: U.S. Destabilization or a Democratic Movement?

For our part, given that our major focus for the last few years has been accompanying Nicaraguan cooperatives, we have redoubled our efforts to support their economic and social enterprises in spite of the risks in these times of crisis, because we see them as potential oases of peace. Cooperatives generally have members of different political and religious perspectives who come together to achieve economic and social benefits for their members. By nature, they have to negotiate the accomplishment of common goals with members from different viewpoints.

Furthermore, the history of Nicaragua is full of examples where political violence starting in urban areas ends up claiming many more rural lives, as both sides recruit peasants by offering to meet their historic demands when they come to power. But consistently, after the conflicts end, while a few might end up benefitting, the effective political power of the peasantry remains largely unchanged, in spite of the many promises.

We see our contribution in this context to be helping cooperatives be successful economic and social enterprises in these difficult times. Because when successful, they contribute to the sustainability and stability of their territories, and thus lessen the attractiveness of purveyors of violence.

The problem is that because of increased country risk, credit to the countryside from both banks and microcredit organizations has largely dried up. No access to credit severely cripples the ability of cooperatives to play this role in their communities.

Since 1997, WPF has lent $3.7 million dollars directly to cooperatives and grassroots rural organizations, and has lent another $7.5 million to national microcredit institutions founded to support the rural sector. Even though these numbers show we are a small overall player, we intentionally set out to lend to groups that had never before managed a loan, precisely to help them establish a credit history, and thus open up other sources of credit to them. As a result, a number of cooperatives, and one now very large rural microcredit organization, have “graduated” to the point where they have “outgrown” the amounts we can provide, and now receive much larger amounts from a variety of lenders.

But as a small, private foundation (i.e. one that does not receive donations from the public), we cannot survive very long if those loans are not repaid. Correspondingly we have an overall loan loss rate of only 3.59% in this same period.

Even in this time of crisis, WPF has made loans to grassroots cooperatives worth just under $168,000 in this 2018-19 coffee cycle. But the risks only increase with this next coffee cycle, as economists point out Nicaragua now faces macroeconomic instability. Economic actors continue to send dollars outside the country, and international reserves continue falling. Specifically, this raises the specter that even though we make loans to grassroots coffee cooperatives, and they are able to export their coffee, once the payment for their coffee enters the country, the government may not allow those dollars to leave, thus making payment impossible.

The only way around this problem is to “triangulate” the loans, i.e. include the international buyers in the loan contract, where the buyers, once they have received the coffee, agree to transfer the amount of the loan and interest directly to WPF´s account in the US, sending the remainder to the account of the cooperative. That way the cooperative does not lose access to an international lender for not being able to make a transfer of dollars to the US.

We have already used this mechanism with a number of cooperatives. But given the new risks, we realize it has to be required for all our loans. The problem is in this last coffee cycle the number of contracts between cooperatives and international buyers actually dropped precipitously, while the number of contracts with “local buyers” increased to a similar degree. This strategy would not work with local buyers, because their payment to us would still have to overcome the hurdle of sending dollars outside the country during a possible ban.

Yet our research has shown that these local buyers are actually exporting all the coffee they buy. Given the uncertainty, it appears that previous direct international buyers are working through these intermediaries to source their coffee. This means that in this time of crisis, cooperatives are getting even less value for their coffee, as these intermediaries take a chunk of the money that previously went directly to them. Just when cooperatives need to be supported to promote local stability, they are even more hobbled by the new buying methodology.

WPF for some time now has been working with a team that accompanies some 50 cooperatives. Even before the crisis our team had been working with the cooperatives on issues of internal organizational effectiveness, equity, transparency, and effective member participation.

Now as a contribution to peace, we are willing to continue lending to these cooperatives, in spite of the risks. We want to form an alliance with coffee and cacao buyers interested in making a concrete and real contribution to peace in the countryside by buying directly from grassroots producer cooperatives. This is particularly important for this next coffee cycle.

We would not expect buyers to buy anything less than quality coffee, and the cooperatives we work with, in addition to providing the normal samples required by buyers, could also provide them with abundant information about their members, as many of them have done internal surveys, and even facilitated their member families developing their own “Family Investment Plans”.

Such an alliance would provide quality coffee to buyers, and would provide important income to coffee producers, thus enabling them to be oases for peace in their territory. In this sense, drinking coffee coming from such an alliance would effectively be an act for peace in Nicaragua.

Buyers and roasters interested in contributing to peace in this way in Nicaragua can contact us at marklest@gmail.com. We would also appreciate support from any readers in helping us make contacts with coffee buyers and roasters.

 

 

 

Message of Appreciation

On March 1 Steve Sheppard retired as CEO of the Winds of Peace Foundation, but will remain as President of the Board.  Words are inadequate for expressing my deep appreciation for Steve´s leadership in these 13 years, and how grateful I am that he is continuing on as President of the Board.

He has significantly moved the Foundation forward on the path that Harold charted. For that I think Harold would feel very proud – and to tell you the truth, lucky – that a person like Steve took up what Harold had started and moved it ahead under very challenging circumstances.

Harold was very much a “hands on” kind of person, and so was very involved in the direction of the foundation. A lot of the places we work today Harold himself visited on one of his many trips – from Jalapa, near the border with Honduras, all the way to Waslala, just into the Northern Autonomous Atlantic Region, and many places in between. The focus on small scale farmers, the lending we are doing, the focus on women and education all come from Harold and Louise.

But Harold had a lot of irons in the fire at the same time. Yes, he was getting older, but that was not so much a factor until near the very end. Well into his 80s he was still traveling here, involved in making the thrift shop financially self-sustaining, working on similar issues with the Children´s Home in Mexico and income generating initiatives with the Quixote Center. He was on Foldcraft´s Board. He was supporting a group called ISLA that was doing health work in Nicaragua. I am sure there were more, but these are only the things I remember hearing him talk about during my occasional trips to Kenyon for meetings.

But when Harold asked Steve to be the CEO, there was no temporary hesitation in the progress of the foundation, waiting for the new CEO to get up to speed. Steve´s experience as Director of Foldcraft, and involvement in the ESOP movement, meant he immediately perceived the organizational challenges the cooperatives were facing. With insight accrued from the Foldcraft experience, he was able to add completely new elements of analysis and tools to the work.

Steve has always been very conscious of the differences between the realities Foldcraft faced in the US context, and the realities small farmers face in Nicaragua. His blog posts provide an eloquent record of his reflections on this topic. His way of communicating about these “new” concepts and tools is a unique combination of a patience born of that reflection, and a profound respect for the cumulative experiences of the cooperatives and the WPF team. The result is a message that is able to take root in the soil in which it is planted, understandable to men and women peasants in rural Nicaragua, some who cannot read and write, and others with some university training. But all of whom nod in understanding.

But as important as the concepts are – and in spite of a language barrier- Steve communicates a real interest in each person, respect for their work, and confidence and enthusiasm in their ability to be a force for change in their cooperatives and communities. This more important message is one that cannot effectively be expressed by words, and therefore has never needed any translation.

That same message Steve communicates to us the team in Nicaragua. It is a message that motivates, imbues hope. Perfect remedy for trying times. Thanks, Steve, these are big shoes to fill (and I am glad you are not going anywhere).

Mark