Category Archives: Innovation

“Open book management” in cooperatives”

May 24, 2015 René Mendoza 2 Comments

“Open book management” in cooperatives”

René Mendoza, Steve Sheppard and Mark Lester*

Two sailors were at sea. A storm blew up. The boat was rocking. One of the sailors hurried to tie things down, while the other just watched and moved with the storm. The first said, “if we don´t save the boat we will die.” The second replied, “it is not my boat.” Will they save themselves?

In the article “open book innovation in business” we summarized its central points and we considered that companies in Latin America can adapt it creatively. In this article we think that the cooperatives could even more easily adapt this innovation. Because they are organizations composed of members, and the cases where they have personnel (workers and/or employees), there is openess to their joining, their identity is being associative and being an enterprise, and they have a democratic organizational structure based on cooperative principles. But, even though the cooperatives emerged, like the corporations in the US, for the good of society, like the corporations that have moved away from the original idea of their founding, a good part of the cooperatives were also co-opted by elites. Our thesis is that the cooperatives have rules and a democratic organizational basis for the “associative” part of their identity, and not for their “business” part, which has made them controllable and eroded their associative side. Consequently, we argue that the innovation of “open books” could be the key piece for that “business” side of the cooperatives, and that energizing the associative side, would put the cooperatives back on the path to contributing to the transformation of our socieites. That is what this article deals with.

Cooperativism, founded 250 years ago, has general principles and rules that are found in the Cooperative Law in each country, and in the statutes of each cooperative. This is mostly for its “associative side”, where each member is one vote. While its “business side” is another game and requires specific rules that start from the economic contributions (amount of money) of each member, where “you earn in accordance with your contributions”. This combination of the associative and the business provides each member the path for organizing, learning by scaling up through the different bodies of the cooperative and through getting actively involved in the work of the business in which their organization participates.

A member contributes to the success of the cooperative (improving quality, lowering costs and developing products and services that no one else has) only to the extent that that member knows their organization: each member must understand how the cooperative makes (or loses) money through each of its processes. First, with the participation of all the members they define their objectives, goals and collective incentives for each year, the deals to include, the amount to produce and sell, amount of savings and loans, and incentives for meeting and/or surpassing the goals. Secondly, they also define their processes and standards in each area, for example, if the cooperative is a coffee or cacao coop, the members in the production area define their steps of production, set their standard of productivity to reach (qq/mz), the harvest collection area sets the % of the total production of its members to collect, the area of processing sets the % of yield (of wet coffee to sun dried, of cacao pulp to dry cocoa), the credit area sets the % of recovery and percentage in arrears, the administrative area sets the % costs/member, and the commercialization area sets the % of product placed in niche markets; and each area constructs their standardized costs. Third, members of each area report on their profits and losses, and in doing so see the effect of their work on the balance statement of the organization; each piece of data is evaluated in terms of the objectives, goals and standards set for the year. This review allows transparency of where problems may be occurring. Fourth, this process is systematic, reported monthly, so when there are losses or lack of fulfillment in certain areas, it gets resolved among all, without waiting for the end of the year when corrections may be too late. This is possible because everyone knows that the more they learn about each step of their business, the more they can see, the better they can perform, the more their cooperative earns, the more return there is on their economic contributions, and the more their communities improve.

This seems necessary and possible, if the mentality and current institutionality of the cooperatives changes. Myths that currently govern the lives of the cooperatives are seemingly “written in stone”: “an illiterate person does not understand the numbers”, “the fieldhand does not speak in the presence of the patron”, “not even the mother of the manager should know the information about exports”. This mentality of centralizing information in an elite, complemented by members with a “fieldhand” mentality, like that of the second “sailor” in the story at the beginning of the article, has led to systematic administrative crises and to the death of the cooperatives. Nevertheless, “what is written in stone” could be “filed down” implementing what is described in the previous paragraph, that there is no one person capable of knowing more than all of the people together, and that each person knows and can contribute – as Edmundo López, a cooperative leader says, “The illiterate person is not the one who cannot read letters, but the one that cannot read their reality.” If a member receives profits in a cooperative in accordance with their contributions, the member will want to know about all the activities of their cooperative, will increase their contributions, and will contribute to the balance sheet of their organization.

This change in attitude requires an organizational change in the cooperatives. Informal institutions have governed the economic side of the cooperatives, and from there its associative side. “The board has the responsibility, the rest are followers”, “we always need a patron”, “some of us are born to be in charge, and others to obey orders,” “if I leave my post others will ruin the principles of the cooperative”. With this basis, the technocratic-administrative elite, faithful to their interests, understood that “information is power”. The structure of democratic organization from the associative side can be a reality if the business side functions under the modality of a circular rather than pyramid organization: owners (members), board and management, communicating openly and together, involved in meeting collectively defined objectives and goals. There the key is that the grassroots cooperatives be the first to move, because of those below improve, those above will have no other option but to improve.

Taking as a reference “open books management”, the innovation is in changing as cooperatives and in being a means for their owners to improve their lives and contribute to social, environmental and gender equity. It is important that cooperatives know that there is a means of achieving this open book status, through training and practice. They can do it as first and second tier cooperatives, as part of the fair trade chain, or from other forms of integration. It requires the members to be like the sailor who hurried to save the boat, aware that their lives depend to a large extent on saving cooperativism.

If you want to get a harvest in two months, plant beans, if you want to harvest in five years, plant avocados, and if you want to harvest your whole life, plant a transparent and participatory cooperative.

* René (rmvidaurre@gmail.com) has a PhD in development studies, is a collaborator of the Winds of Peace Foundation (WPF) (http://peacewinds.org/research/), associate researcher of IOB-University of Antwerp (Belgium) and the Nitlapan-UCA Research and Development Institute. Steve, the current director of WPF, was manager of the Foldcraft corporation bought by its 350 employees. Mark is director of WPF in Nicaragua and of the Central for Global Education and Experience at Augsburg College.

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Dear Jack

May 18, 2015 Steve Sheppard Leave a comment

Jack Stack, Author of The Great Game of Business

Dear Jack:

It’s been a long time now since you authored the book, The Great Game of Business, back in 1992. I remember reading it entirely in one afternoon, I was so excited about what it described! You folks at SRC were actively doing what we at my company had only dreamed about: creating a business of owners. Your impact on our company made a tremendous difference in the worklives and outside lives of lots of people. And I’m writing now to tell you that I’m seeing the possibilities once again. This time, it’s in the rural communities of the second-poorest nation in the Western Hemisphere, Nicaragua.

If I was excited to come across your book in ’92, then I felt positively ecstatic a few years ago to discover that it had been translated into Spanish. We immediately acquired copies and began the advocacy for open books as a means to cultivate long-term, sustainable development. We shared the idea with established coops, with development agencies, a national association of cooperatives and anyone else who would listen.

But the reaction tended to be the same as that which you originally experienced when first sharing the notion with companies here in the U.S.: leaders saw it as a threat, managers could not accept the possibility of broad-thinking peasants, and in our case, there may have even been some nationalism at work as Nicaraguans may have doubted the applicability of a North American business invention. So we simply continued to reference the concept with groups as we interacted with them, we continued to tell the story of the transformational potential of open books, and hoped that the seeds which were planted might take root.

Then, last month, I think we may have achieved a breakthrough of sorts. Winds of Peace Foundation provided the major underwriting of a “certificate program” for cooperatives. The participants were mostly rural producers and members of cooperatives, with some development people, as well. Some of them had heard us talk about open books previously, but only in a generic way. This time, they were exposed to more detail and actually performed some exercises to illustrate the process. By going slowly and with care, many of them seemed to warm to the belief that they could and should “know their numbers” and the processes behind them. (Their excursion into open books has even been written up by researcher and certificate program developer Rene Mendoza, in the magazine, “Confidencial.”)

I wonder if you knew back in 1992 that the idea of open books contained as much transformational power as it has proven to hold. You wrote about empowering people and changing their lives at work through open books, you wrote about companies harnessing resources that were previously dormant, you even wrote about the intrinsic impacts that this kind of participation engenders. But could you have foreseen entire cultural shifts that could result? Did you contemplate what it might mean in changing the dynamics between the “gatekeepers” of knowledge and the producers who often naively relied upon them? Having the book translated into other languages constituted a step of faith in that direction, but did you actually anticipate that rural cooperative members- often uneducated and inexperienced- could take control of their organizations that had long been under the influence of other voices?

In Nicaragua, some of our partners are beginning to rethink the cultural norm of autonomous leadership that has existed for generations. They have begun to experience a confidence in both their need and ability to know the critical equations of their businesses. I know that you might identify with the feelings I had when visiting one cooperative, exploring with them the reasons for their success when so many of their neighbors were struggling. The reasons were many, but when they reported having read your book (which we had earlier placed with them) and having implemented some of its lessons, I knew that the magic of the game was as real in Nicaragua as it has been in the U.S. More importantly, they did, too. If you really did anticipate the universality of open books, then you are, indeed, prescient.

As with any methodology that shakes up the status quo of authority, knowledge and position, this process will take time, repetition and success in order for it to take hold as a new way of life. You have preached that reality continually from your own experiences. Winds of Peace will need to stand with the early adopters of open books and provide the necessary resources for continued training and access to experienced voices. But if the commitment is there, we will be, too.

I can only hope that the cooperatives who show interest in embracing open book management can create the kind of network among themselves that you were able to create with open book organizations in the U.S. That opportunity for organizations to come together and share their experiences, their difficulties and their solutions have really helped to expand the open book reality. Those networks have made it easier to deal with problems and false starts before they become too big to handle. Being available to one another is not only a help to those who are struggling, but also to those who are succeeding, still wanting to achieve more.

So thanks again. Your idea worked for my former company over the years and now stands the chance to work transformations once again, this time in a more difficult context. But great ideas have a way of surviving even the most challenging circumstances, and my belief is that one of your many future site visits just might include a stop in Central America, to see the Nicaraguan version of Le Gran Juego de los Negocios….

Best Regards,

Steve

Climate Change

Against the Current

May 14, 2015 Steve Sheppard Leave a comment

The salmon are one of our best teachers. We watch the salmon as smolts going to the ocean and observe them returning home. We see the many obstacles that they have to overcome. We see them fulfill the circle of life, just as we must do. And if the salmon aren’t here, the circle becomes broken and we all suffer.
-Leroy Seth, Nez Perce Tribe

It’s a truth for many creatures of this earth that progress and success must be forged in the face of great currents. As with the salmon of the Pacific Northwest, and the Native American peoples who relied upon them, their histories define the very idea of struggling against the tides. And like their distant North American cousins, rural Nicaraguans have found themselves fighting against undercurrents from both within and outside of the country for generations. Like the salmon, Nicaraguans have experienced swimming upstream as a way of life. But unlike the salmon, Nicaraguans clearly see the possibilities in navigating a different way.

So when the plan was created late last year to have Winds of Peace Foundation underwrite a cooperative certificate program in Nicaragua, we readily endorsed the idea. The notion of developing an holistic, best practices curriculum for rural producers engendered immediate enthusiasm because -maybe for the first time- a peasant cooperative population was being offered a menu of topics befitting any progressive North American business enterprise. In addition, this program would consume an entire week of the participants’ lives, a block of time that by definition signaled a serious commitment to learning. That willingness, along with the logistical reality of dormitory-style living quarters, suggested that the attendees felt the urgency and importance in making an offering such as this a seminal event.

Not least of importance, the developers of the program were proven leaders in their knowledge of both the materials and the

participants. Dr. Rene Mendoza is a Nicaraguan researcher, teacher and writer, a co-founder and former director of the University of Central America’s well-known NITLAPAN research and development institute. For the past several years he has visited and counseled with scores of rural cooperatives in exploring their viability and sustainability in the face of global and national economic change. He continues to present much of his research in the form of articles posted to this website.

Edgar Fernandez is a broadly-experienced rural development practitioner, a frequent collaborator with Mendoza and also a co-founder of NITLAPAN.

Edgar Fernandez (with Abemelet Rodriguez)

An exceptional analyst of organizational strength and weakness, Fernandez readily connects with and engenders confidence in rural Nicaraguan producers.

Ligia Guitierrez is a psychologist and “firebrand” for helping rural populations-

especially Indigenous communities- to recognize their cultural heritage and powers of influence and self-destiny. In the face of growing economic disparity and marginalization of large sectors of the population, her lessons of personal integrity and self-esteem resonate with those who fear losing hope.

But participant readiness and facilitator expertise are only parts of a successful learning equation. The other essential ingredient is a content that is both worthy of the interest and useful in its application. Here, the magic of a week’s investment was evident from the earliest iterations of the agenda.

The modules of the week’s activities might have been copied from an advanced leadership training prospectus: Day 1- An important historical context for the current state of cooperatives; Day 2- Organizational innovations (including open book management and Lean process improvement) from a North American employee-owned company; Day 3- Gender and the loss of relationships and resources; Day 4- Climate change impacts, current and future; Day 5- Spirituality in work; Day 6- Individual and organizational health. (I may have more to say about any or each of these in future essays, but for now it is sufficient to recognize the scope of the program.)

In between the content-rich plenary dialogues, breakout discussions and creation of action plans, the days offered important opportunities for relaxing the difficult work of introspection and self-analysis. There were songs sung, dance and music performances by participants and visitors, and an awe-inspiring hike to the topmost reaches of Peñas Blancas. We tossed a ball to introduce ourselves to each other, threw wadded up paper at speakers and each other to stay positive in the face of the enormous challenges and laughed endlessly at one participant’s

uncanny ability to sound exactly like a crying child! Indeed, all of the intellectual, social, emotional, spiritual, occupational and physical aspects of our collective and individual wellness were fully in play during the entire week. This was an exceptional educational event.

By addressing all of the components of the Nicaraguan cooperative circumstance, this program and its presenters managed to identify and contextualize Nicaraguan realities and prospects in an important and unique way. For perhaps their first time, cooperative members were able to behold their organizations, their mutual responsibilities to one another, the economic elements which are truly beyond their control and those which are within their influence, the nature of transparent and collaborative work and the research that underscores all of that. The lessons were difficult. The truths were uncomfortable. The currents undoubtedly prompted some to consider turning around and swimming away. But the integrated view of their cooperative lives and an inherent drive to surmount obstacles like “it’s the way we’ve always done it,” or “we can never understand” allowed transformations to take place over the week.

Time will reveal which of these possible innovators will succeed in fighting the stream of status quo and in what ways. Maybe like the salmon, there exists sufficient and innate will to complete the journey to which their lives are called, to fulfill the most basic needs for work and sustenance and dignity. In a very real sense, without that chance the circle of their lives becomes broken, and we all suffer….

ESOP

“Open Books” innovation in business

May 13, 2015 René Mendoza Leave a comment

“Open Books” innovation in business

René Mendoza, Steve Sheppard y Mark Lester*

Information should not be a tool of power, it should be a means of education

Jack Stack

Jack Stack,[i] and hundreds of employees turned into the owners of the Springfield Remanufacturing Corporation, innovated in 1980 the “the Game of Business”, known as “open books management.” This novelty was disseminated to thousands of economic organizations of different types and sizes, in and outside of the United States, particularly to many corporations in that country whose workers became the owners of their corporations. What does this innovation entail? Can it be adapted to enterprises in Latin America?

Every game has rules for scoring and winning, and the team that knows and practices how to score better than others wins. So it is in soccer or in cricket, the team that plays better, scores goals or runs. So it is also in businesses, whose staff are the players, the more they know the rules and play as a team, the more scoring they do, the more money they make, and the more cash they generate. The motivation for this comes from the desire to harness all of the resources possible for success, as well as understanding what a business means for their family and community, from looking beyond the specific job and its pay, and from feeling proud of being part of an enterprise whose numbers – both overall, as well as for each area of the business – they understand: sales, profit and losses, daily production, balance statement…If the company is a coffee exporter, their areas include coffee buying-harvest collection, dry milling, credit, commercialization, administration…Knowing the moves, they know who is on offense, on defense, or in midfield in the business, and they know that they should make an effort based on their “critical numbers” (standards or goals) like sales, cost of raw materials, productivity or cash flow.

This novelty clashes with the myths of traditional businesses (“only the accountants understand the numbers”, “the manager has all the answers”, “the staff should only be concerned about their job”), and proposes a different perspective: no one individual is more intelligent that all the people together; instead of one person who centralizes the information, let the personnel function as a team, generate information and be educated in this game. This allows for collective trust to be built, as well as credibility in the information. From here, if the staff of an area understand that their work is generating profits and losses, then that impacts the balance statement, and that that is connected to the financial rewards that everyone has set when certain goals are met as a company. Then he or she will understand that they are not “a tooth in the grinding wheel”, but an important contributor for the company, their family and society. The more the staff of your organization know, the better they perform, and consequently the company produces with lower costs and has the capacity to offer more unique products or services.

This innovation has been adapted by companies of all sizes and types, and especially by companies where the employees are also shareholders, and they have been successful. In the financial crisis in 2008 many of these companies continued growing, while more traditional firms were shrinking. It does not work in companies with a pyramid-shaped organizational structure, where the leader is on top and the staff down below, and that moves under the spirit of Taylor, separating brains and hands. It requires companies to move toward circular organizational structures (see Mendoza, 2014)[ii] among owners, board members and management, revolving around itself where everyone from the cleaning staff to the manager understand the rules of the game, objectives, goals, and rewards (incentives for all the staff, and not individual incentives, e.g. incentives of x percentage after achieving a 5% increase in earnings as a company), and regular meetings organizing the information of each area and evaluating it in light of their objectives and goals. In this context, when a certain area does not meet their goals, they identify the problems and the remedies, pressure and collaboration is expressed to solve them, because the success of their company and their rewards are in play. This is a model that comes in part from indigenous peoples in the US, the elders and leaders that would meet in circles, where each one expressed their data and perspectives to stay or move to another place, with the role of the chief being to seek consensus, and when there was none, based on what he had heard and his judgement, to make the decision.

This is a game that overcomes Hardin´s[iii] dilemma of collective action, of opportunism (free riding), and that of generating wealth by walking on top of others. It changes the mentality of “employees” to that of “owners.” It recovers the original idea in the US that corporations emerged for the good of the entire society. And it is a game with which businesses are achieving their puprose of making money and generating cash, of producing wealth and having an impact on its distribution.

Can companies and cooperatives of Latin America play this “game” of business? Obviously they can! Nevertheless for companies to achieve it they will have to also overcome other strongly institutionalized myths: “whoever provides information will be crucified,” “the rich are self sufficient,” “God made the poor and the rich, and he made me poor”, “the boss is always right”, “those who mix with business men are disrespectful”. There are businesspeople who would wait until hell freezes over before their staff would buy shares in their companies (“the two don´t mix”), and there are companies whose staff have shares, but continue functioning under a pyramid-shaped organizational structure, with centralized information, and therefore with a mentality of employees and bosses. The teaching that “open books management” left for companies of all sizes and types, is that if you play “the game of business” as a team, with all the players, they will learn more and will generate more wealth; and in the long term the staff that cultivates a mentality of “owners” will organize (incubate) other similar or more democratic companies than the mother-companies, and society will benefit more. Because our lives are brief, and needs and opportunities are infinite, will sign up to play this game?

[i] Stack, J., 1992, The Great Game of Business. USA: Doubleday

[ii] Mendoza, R., 2014, “Liderazgos colectivos y compartidos. Antídoto para una sociedad dependiente de patrones y jefes” en: ENCUENTRO, 99 http://encuentro.uca.edu.ni/pdf/e99/e99-art1.pdf

See English version at http://peacewinds.org/collective-and-shared-leadership-antidote-for-a-society-dependent-on-bosses-and-patrons/

[iii] Hardin, R., 1982, Collective Action. Johns Hopkins University Press. Baltimore.

Diversification, Indigenous, Nicaraguan Atlantic Coast, Perspectives

Autonomy and the Multiethnic Country in Decisive Moments

April 30, 2015 René Mendoza Leave a comment

Autonomy and the Multiethnic Country in Decisive Moments

René Mendoza Vidaurre, Nora Sánchez, Celia Benjamín, Jairo Zelaya. Klaus Kuhnekath and Alejandro Pikitle*

Mahoney (2001)[i] defines “critical juncture” as the moment of contingency in which a decision is made for one of various options, an institution that is self-reinforcing and that is challenged through the processes of reaction and counter-reaction, reaching new results. In terms of the Atlantic Coast we are watching two “critical junctures”, the first in the context of liberal policies of annexation of the Mosquitia Reserve in 1894; and the second, the autonomy law within the context of a war in 1987, resulting in a multiethnic Nicaragua. This process was reinforced in 2001 with the decision of the Interamerican Human Rights Commission (IHRC) in favor of Awastingni, and in 2003 with Law 445 for the titling and demarcation of communal lands. As a result, by mid 2014, 37,190 km² of Indigenous and Afro-descendent territory (31% of the national territory) had been demarcated, restoring the rights of 304 communities. Under this framework we argue here that the multiethnic country is facing a new “critical juncture” whose decision will mark the decades that follow.

Multiethnic territory under challenge

The titling and demarcation of territories has been preceded and accompanied by the advance of the agricultural frontier and the systematic extraction of natural resources by large businesses. Two cases illustrate something about this complex situation. The case of the community of Awastingni (AMASAU territory) with around 69,000 hectares, between 2001 and 2015 went from controling 95% of their area to less than 15%, and the mestizo families from controlling 5% to 85% (according to Larry Salomón Pedro, Mayangna leader, 92% “is invaded by settlers”, LP-25-07-2014 http://www.laprensa.com.ni/2014/07/25/nacionales/204699-piden-saquen-a-colonos); and that less than 15% is area divided up among Mayangna families. In practice there is no communal territory, except legally under the territorial title. And the case of the Miskitu communities of Saupuka, Ulwas and Bilwaskarma, with the change in the course of the Rio Coco caused by Hurricane Mitch (1998), with that river defined as the “dividing line between Nicaragua and Honduras” (http://www.laprensa.com.ni/2012/06/22/nacionales/105922-si-el-rio-se-mueve-se-mueve-la-frontera), they lost 4,400 hectares that have been occupied by Honduran landowners from Olancho.

The causes that led to these results are reduced to blaming the “mestizo invaders” and the natural phenomenon of Hurricane Mitch, and from within this framework “compensation” policies are proposed, that the State expel the mestizos and negotiate with the Honduran government so that the “dividing line” be where the river used to flow. In what follows we seek other explanations and then sketch out a proposal.

The weight of structures and actors

The history, production systems, markets and forms of organization explain the situation presented above. Concerning the former, Mayangna-Miskitu relationships have been tense historically, including expulsions from one territory to another, and even had to do with the change of name from Sumo to Mayangna. In reference to Awastingni in 1991 a group of Miskitus participated in an arrangement with the Solcarsa company to extract wood from Awastingni, the same happened in 2003 with Madensa, situations which led the Mayangnas to sue the State in the IHRC; in 2009, a year after the titling of the AMASAU territory, a group of Miskitus tried to take part of the AMASAU, were prevented from doing so with the support of mestizos that the Mayangnas called “human boundary stones”; and in 2010 the Mpinicsa wood company started an agreement with Miskitu groups to extract wood from Awastingni, which was resisted by the Mayangnas. These relationships, according to a Mayangna leader, created a sense that “the land is not going to be respected”, with this accelerating the Mayangnas taking the land and selling it to mestizos.

In the case of the Miskitu of Saupuka, Ulwas and Bilwaskarma, the “hacienda” institution has made itself felt; a good part of the areas today claimed by them prior to 1980 were a livestock ranch of a Creole family, and since 2006 claimed by ranchers from Olancho. The persistence of the hacienda, which many times caused confrontations with the Miskitu communities of Nicaragua and Honduras, is well known in Latin America for its economic, social and political despotic relationships. In other words, with or without the change in the course of the river, most of these areas have been governed by the haciendas.

In terms of the production system, the Mayangna families have their yamak where they plant beans (and plaintains), a yamak that annually rotates from one place to another, and that has responded to their consumption needs, while they have looked for money in cash to buy their salt or clothing by working in the banana fields and in mining (1950-70s), for the State (1980s), and for wood companies, mestizos, international aid and the State (1990-2015). The Miskitu from the 3 communities (Saupuka, Ulwas and Bilwaskarma) differ somewhat from the Mayangnas, they have their insla on the other side of the river which the ranchers permit, they plant beans and rice for their own consumption and part of that to buy their salt or clothing, they also receive pay for working on the haciendas, and get some resources through the sale of wood. Most of the indigenous historically have had annual crops, which along with the grazing fields of the ranching haciendas contributed to the change in the course of the river, because it is harder for a river to change course when it is bordered by trees and permanent crops. There are also some Mayangna and Miskitu families with permanent crops who produce and sell their products. Our hypothesis is that not producing for both purposes, consumption and to purchase products, has contributed to the fragility of their economic system and to the sale or loss of their lands.

The markets have hardened these practices of production just for consumption, and getting money through other ways. Awastingni in the last 20 years has enjoyed financial resources, having probably received millions of cordobas from wood companies (Madensa 1993-1998, Amerinica 2000-2003, Mpinicsa 2010-2011 and Dusa 2015-2020), the sale of land to mestizo families, that according to indigenous leaders includes a little more than 50% of the total area (with the rest of the area considered to be invaded by mestizos), and international aid or State projects. In Saupuka most of the wood extraction is happening between Waspam and Bilwaskarma illegally, which is why only a part of the small scale timber merchants are paying Saupuka; this situation has increased tensions, for example, between Bilwaskarma and Saupuka, expressed as a “dispute over property boundaries”; and given that the families of Saupuka are in a better economic situation than Awastingni, 6 km from the municipal capital of Waspam, companies like Curacau and Gallo mas Gallo leave them goods and equipment on credit with usurious interest rates.

Because of these 3 factors, the government structure in both cases has become pyramid-shaped and weak. Mayangna leaders and families sold their land, providing “possession documents” as the proof of the sale, and in many cases selling the same area 2,3 and even 4 times to different meztizo families; correspondingly, there is a leadership that operates more around external resources (mestizos, companies and organizations), with weak counterweights in the community that would help them to be transparent and use the resources well. In Saupuka the organizational structure, even though divided and with a certain level of community beligerancia, is surpassed by the hacienda institution. Overtime the organizational structures were shaped more around external resources and “freed” from those who had named them, a process fed by the external actors themselves (organizations, companies, mestizos) that just connected with the leaders, generally bypassing the communities.

In the face of a third “critical juncture”

With these elements, a tense relationship between the Mayangnas and Miskitus, intra-ethnic conflicts, Mayangna-Mestiza relations, the influence of companies and organizations, and a governance structure without internal and external counterweights, 31% of the territory of the country was able to be demarcated in the name of Indigenous and Afro-descendent communities, and that in practice this is in dispute given that the mestizos population in the Coast are more than 76% of the population (Gonzalez, 2014[ii]). Given this, we think that multiethnic Nicaragua is on the verge of its third critical juncture. Three paths are visible: one, complete imposition of the ranching hacienda institution (more than peasants), and of mega extractive companies with their multiple economic, social, political and environmental effects; two, indigenous self-government that includes respect for collective and individual property and respect for nature; and the third, a inclusive, multiethnic society with historical and grassroots alliances, accompanied by a model – as Polanyi would say – of “societies with markets”. We think that the first two paths are in conflict with one another, the former moved by the “domino effect” (Mendoza, 2004 [iii] ) with unfortunate consequences, and the second – even though it is more just and legal – is more and more reduced, which is why working pragmatically on the third path is urgent.

What would this third path consist in? First, that the indigenous families would promote diversified production systems that would combine forest, agriculture (annual and permanent crops), and ranching, ensuring their consumption and staggering their income. Secondly, weaving endogenous alliances between Mayangna families and mestizo families of peasant origin with diversified systems and agreements of possessing less than 100 mzs of land per mestizo or Mayangna family, combining respect for collective and individual properties, and an alliance between the Miskitu of Nicaragua and of Honduras; in both cases with the capacity of making the ranching hacienda institution withdraw beyond the border. Third, that the territorial and communal government structures would develop internal counterweights (e.g. commissions for administering external resources and rethinking their diversification strategies) and external counterweights (e.g. microfinance institutions of the Coast to protect the resources of the communities, and the Moravian Church, because of its historic connections with indigenous populations of the Coast, cultivating bonds with the Honduran side, concretizing its Gospel of spirituality, solidarity and training. Fourth, the BICU and URACCAN universities, in collaboration with institutions like Nitlapan-UCA, would reinvent their conflict mediation institutions based on participatory research to overcome the discourse of “invaders” and “victims” and glimpse the limitations and possibilities of collaboration behind the confrontations.

In conclusion, in light of the third path as a realistic option within the current “juncture”, the problem is not the lack of financial resources, but of administering them; it is not lack of land and of laws, but of working respecting the national and international laws; and it is not a scarcity of leaders, but of an institutionality with counterweights above and below, with the participation of women in those structures, recovering the circular origin of the functioning of indigenous structures, and with the support of organizations that are connected with leaders and the population itself. Nicaragua in 1987 broke ground in Latin America with autonomy law; Nicaragua can once again break ground in the continent based on a strategic indigenous-peasant strategy for a multiethnic society, with an inclusive and sustainable development institutionality.

* René (rmvidaurre@gmail.com) has a PhD in development studies, is a collaborator of the Winds of Peace Foundation (http://peacewinds.org/research/), associate researcher of IOB-University of Antwerp (Belgium) and of the Nitlapan-UCA Research and Development Institute (Nicaragua). Nora is a professor of BICU and researcher of Nitlapan-UCA. Celia, Jairo and Alejandro are researchers of Nitlapan-UCA. Klaus is an associate researcher of Nitlapan-UCA.

[i] Mahoney, J., 2001, “Regime Change: Central America in Comparative Perspective” en: Studies in Comparative International Development 36.1

[ii] Gonzalez, M., 2014, “Autonomía Costeña, 27 años después” en: Revista Confidencial

[iii] Mendoza, R., 2004, “Un espejo engañoso: imágenes de la frontera agrícola” en: ENVIO. Managua: IHCA-UCA, No. 265. 2004. http://www.envio.org.ni/articulo.php?id=2069

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Very Cooperative

March 28, 2015 Steve Sheppard Leave a comment

Winds of Peace Foundation has committed a great deal of time and resources to the study and development of cooperatives in Nicaragua. Over the past five years alone, WPF has supported more than thirty coops; underwritten the cost of a half-dozen cooperative workshops for rural participants; commissioned studies about their history, makeup, the effects of climate upon them, and the context of coffee; and now partially sponsored an entire cooperative certificate program to continue teaching and to provide a tangible marker of achievement. We’ve even pitched the idea for the creation of a “Synergy Center,” whereby WPF might partner with a North American university to share its wealth of experiences and findings and provide a destination for students and delegations wanting to know more about the realities of Central American neighbors.

We’ve had some amazing successes. We’ve also experienced some unexpected and disappointing defaults. We’ve come to know a lot about Nicaraguan coops and what makes them work. Yet, at the same time, we’ve had one organization- not even a cooperative in structure- that models the cooperative methodologies and successes as well or better than almost any other partner. Yes, I’ve had another visit with ANIDES.

ANIDES has been guiding women of the rural communities of Matagalpa in the creation of small community banks in recent years, creating financial literacy, sustainability, independence and savings accounts for its participants. The impact upon the lives of its members is palpable, not only in terms of financial strengthening, but also in quality of life and family. WPF has admired the motivations and results of this group for years. And now, ANIDES is proud to be reporting that these small community banks are becoming formally-registered cooperatives, with ten of the current thirteen banks in the registration process. The objective is to eventually form a union of cooperatives once all registrations are complete.

These coops offer strengthened opportunities for their members to establish outlets for their small enterprises: crafts, bread-baking, small services and other commercial ventures. These entrepreneurial efforts have created the financial wherewithal to “feed” the community banking enterprise. The resources generated by these small enterprises often are used to fund significant events, such as the addition of indoor plumbing to a home, a water softener for cleaner drinking and washing water, or education opportunities for members’ children, a dream that might otherwise seem very out-of-reach for these same families.

The legal cooperative status confers some technical advantages for the women members: they will have access to joint banking accounts, easier accessibility to those accounts, greater security for deposits, cooperative education to further their understanding of collaborative advantages, opportunities to learn from one another. The plan is to conduct monthly meetings among the cooperative delegates to consistently share experiences, problems, concerns, financial lessons and to celebrate what has been and promises to be a continuing success story in the rural countryside of Matagalpa.

The real value of these fledgling cooperatives, however, may not be in the technical or legal characteristics that registration will confer. The bigger impact just may be on the lives and attitudes of those who have been willing to risk moving out of their comfort zones and into positions of learning and financial responsibility. For most, it’s an act of faith. (By comparison, imagine yourself voluntarily signing up for a quantum physics class as a forty-something year-old, when you barely understand arithmetic.) But such is their determination for improving their families’ circumstances, to work in some form of solidarity. It also underscores a deepening sense of self-respect: in discussing a request for possible funding, they have specified for the first time in our work together that the funding be in the form of a loan, to be fully repaid. (I truly wish I could convey the sense of pride on the faces of the women as they specified a loan.)

They are taught and they understand the basic finances of their banks. They assume positions of leadership, likely for the first time in their lives. They make decisions among themselves. They establish and attend meetings of their banks, sometimes walking for miles to be present. They create celebrations of their work and themselves. In short, these women do the things that successful cooperatives- successful organizations of any sort- must do in order to endure.

As WPF imagines new ways of bringing together organizations to model best practices and to learn from one another, ANIDES might very well need to be part of the mix, even though they aren’t growing coffee, beans, rice or raising cattle. What they are raising is their quality of life, their knowledge and their self-esteem, and being very cooperative about it….

Education, Education, Education, Education, Education, Entrepreneurship, Entrepreneurship, Entrepreneurship, Entrepreneurship, Entrepreneurship, Entrepreneurship, Interdependence, Interdependence, Interdependence, Interdependence, Interdependence, Leadership Succession, Visioning, WPF partners, WPF partners, WPF partners, WPF partners, WPF partners

Iguanas on the Wall

March 23, 2015 Steve Sheppard Leave a comment

With the emphasis on education during my recent visit to Nicaragua, we had the pleasure of re-visiting the Association of Women Builders of Condega (AMCC). AMCC is a non – profit organization whose main purpose is to promote economic, political and ideological empowerment processes to young and adult women from Northern Nicaragua, to enhance the basic conditions for the exercise of their full citizenship. It’s quite an undertaking when one considers the context of the education, the circumstances of most of the students, the nature of a very patriarchal Nicaraguan society and cryptic attitudes about women, their roles and their capacities.

“Young women are better off staying at home.”

And, oh yes, at the same time the school is providing a very hands-on technical education for their students, teaching practical construction and building skills and demonstrating the latest technologies in use of earth materials. And their results are stunning in both attractiveness and quality. A visit to their site and walk through the grounds where the students work hands-on provides a clear picture of what these very young students can achieve.

“Women don’t do well in trades work like carpentry or electricity.”

In addition to receiving practical vocational training, these students are also immersed in the science of environmentalism. They are taught concepts in the making and use of earth building materials, installation and use of solar energy, efficient land use and building projects that are adapted into the AMCC campus after their completion. My own preconceptions about the use of adobe as a construction material have changed rather dramatically since my visits here!

“Earth materials like adobe aren’t durable enough or attractive enough for serious construction.”

But as is nearly always the case in Nicaragua, the greatest values are to be found in the people engaged in the process. In some cases, it’s the presence of students in a curriculum that they likely never dreamed about for themselves. Sometimes it’s the story of a student who excels in a field of study to the extent that she remains at AMCC as an instructor to other young participants who can identify with her easily, and from whom young women are at ease in following her lead. And there is always the guiding presence of the founding generation, those whose vision and persistence and passion have blended together in a force of determination on behalf of young people’s lives throughout the area of Esteli and city of Condega.

“Young Nicaraguans today have little ambition or drive to succeed.”

OLYMPUS DIGITAL CAMERA — Collaborative Work

AMCC is helping their young students to recognize who they are, what they can become, that they are a part of their environment, and that they are stewards of those surroundings. Regardless of what may be said by “others.”

Working within the education arena of Nicaragua, we find that there is much to worry about with regard to student development in the country. Student access, student retention, availability of materials and adequate teacher training are just some of the challenges facing the country, which has slipped during recent years in comparison with the other Central American nations. But there are also islands of hopefulness in this great sea of needs, and walking the grounds at the AMCC campus offers a rare glimpse of what could be….

Announcements, Announcements, Creativity, Creativity, Creativity, Creativity, Making An Impact, Making An Impact, Making An Impact, Making An Impact, Making An Impact, Organizational Development, Organizational Development, Organizational Development, Organizational Development, Organizational Development, Organizational Development, Organizational Development, Ownership, Ownership, Ownership, Ownership, Ownership, Ownership, Peasant Agriculture, Peasant Agriculture, Peasant Agriculture, Peasant Agriculture, Peasant Agriculture, Poverty, Poverty, Poverty, Poverty, Reflections, Reflections, Reflections, Reflections, Reflections, Reflections, Reflections, Research, Research, Research, Rural development, Rural development, Rural development, Rural development, Rural development, Rural development, Rural development, Rural development

The urgent need to re-invent the “fair trade movement”

March 12, 2015 René Mendoza Leave a comment

The urgent need to re-invent the “fair trade movement”

René Mendoza Vidaurre

The Fair Trade movement (FT) started in 1964 within the framework of the United Nations Conference on Trade and Development (UNCTAD). Since then a number of European countries promoted the UNCTAD stores, selling products from developing countries. Then the “solidarity store” chain got started. In 1973 FT coffee began with coffee from Guatemalan cooperatives under the brand “Indio Solidarity Coffee.” In the decade of the 1980s the volume of products increased, as well as their quality and design; the solidarity stores sold blended coffee, tea, honey, sugar, cocoa, nuts, bananas, flowers…In 1988 “Fair Trade Labelling” began in Holland, and in 1997 the International Fair Trade Organization was formed – FLO for its acronym in English. Since 2012 decisions in FLO are made with 50% of the votes of organizations from three continents (Latin American Coordinator of Fair Trade from Small Producers, Fair Trade Africa and the Network of Asian Producers) that represent 800 organizations and 1 million small producers from 60 countries in Africa, Asia and Latin America, and the remaining 50% of the votes from 21 national brands.

What has happened with this large FT movement? Here, focused on coffee for didactic reasons, we present its innovative character, its later deterioration, and a path to reinvent itself.

The novelty of fair trade

The biggest obstacle for getting out of poverty is the intermediation network that combines usury, low prices and deception in the weighing and quality control of the product, and the lack of organization of the producers. FT responds to this challenge with three elements (see Figure 1). First, the member families receive credit through their first and second tier cooperatives, capital that comes from the social banking sector (9% interest rate), and from FT organizations. A good part of them pre-finance 50% of the value of the product at 0% interest, so that the producers can avoid usury and ensure product. Secondly, FT sets a minimum price of US$1.40/lb when the international prices are less than $1.40/lb, provides an additional bonus of US$0.20/lb above the market price, and for organic coffee a premium of US$0.30/lb. Thirdly, compliance with the agreements and policies for organic coffee is assured by the certifiers: FLO does it for the bonus and good operations within the cooperatives, in both cases in situ, erecting long term relationships.

This combination of commerce, financing and multinational organization of counterparts leads to the families improving their production, their lives in the family and in the community, with the FT network being a space for learning and social, economic and environmental transformation.

The deterioration of fair trade

After a half century of FT, what has happened? First, the prices to the producer in terms of the final value of coffee in the decade of the 1930s was 33% (Wickizer, 1943, The world coffee economy), 27% in the decade of the 1970s (Clairmonte and Cavanagh, 1988, Merchants of Drink), 15-20% in the decade of the 1990s (Pelupessy, 1999, Coffee in Cote d’Dvoire and Costa Rica), 10% in 2001 (Mendoza y Bastiaensen, 2002, Fair trade and the coffee crisis in the Nicaraguan Segovias) and 12% in 2009 (Mendoza, 2012, Gatekeeping and the struggle over development in the Nicaraguan Segovias); in other words, it went from 33 to 12% over 8 decades. When we compare both chains, the prices to the producer in relative terms (%) is smaller in the FT chain than in the traditional chain, even though in absolute terms it is a little bigger; in other words, the FT coffee price to the consumer is higher, while its distribution through the chain is similar to the traditional chain. Secondly, credit gets to the member families in an unequal manner, some get nothing, no one gets it at an interest rate of 0%, others get some amount at interest rates between 12-18%. Third, the FT bonus gets to the families in an unequal manner, some get nothing, others get US$0.5/lb and others get a little more. Fourth, the complaint is that the yield (humidity and quality of the coffee) is worse than in the traditional buyers. Fifth, it is estimated that 30% of the total coffee that the members produce is sold through FT, while the export cooperatives are increasingly buying coffee from “third parties” (not members of the cooperative) who come in through the traditional commercialization network. From here, the challenge of ending usury, accessing markets and doing it through a multinational alliance is being rolled back.

The first two elements of FT were weakened, and the third is controlled by elites in the FT chain, attracted in turn by the logic of the market. FLO audits, and analysis of the social banking sector and verifications of the organic certifiers are reduced to formal elements (review of financial data, minute books and written records); in some cases without understanding that the social structures absorbed the FT chain, in other cases understanding these structures, but blocked from reporting and taking measures out of fear of financial losses, and in general keeping quiet when facts like the pre-financing that comes from the stores of Europe or the loans from the social banking sector do not get to the producers, yet they are the ones who have to pay them.

Figure 2 expresses the concentration of power (capital, positions, information and contacts) from where the entire chain is managed, and the privatization of the FT brand. Seen from the region, the second tier cooperatives concentrated investments based on a good part of the bonuses, premiums and earnings, and are the “door” to the certifications, the banks and the markets. The Delegates of the first tier cooperatives to the second tier cooperatives, as well as their board members, are eternal. The administrative personnel run the second tier cooperatives, and many of them are named by national and international organizations as the representatives of their cooperatives in their organizations. The rotation and renovation of the leaders is vetoed, because it would affect their financial income, the control of the administrative staff of the cooperatives, and the circuit of transnational power; and if that veto conflicts with the statutes of the cooperatives, the statutes are reformed.

As that power got consolidated, most of the first tier cooperatives hollowed out; they are not doing savings nor credit, some are not even collectors of coffee and their board members do not meet monthly, even though their “minutes” exist. Under these conditions these cooperatives cannot have an impact on the second tier cooperatives; if they try to, they face another wall: “FLO and the bank say that you cannot change me, because my signature is on the contracts”; if there is a change in management of someone who was a favorite of FT: “If you change the manager, we are not going to buy your coffee.” If a cooperative dares to save and manage itself: “you do not have the FT certification nor organic coffee certification and I am not going to give it to you, if you insist it will end up being very expensive financially.” If independent researchers seek information in FLO, “we only give information to the cooperative.” And, if in spite of these walls, there are first tier cooperatives that are able to get out of this power circle, their bonuses and premiums more frequently get to their members, and their credit to their members has lower interest rates.

The FT chain expresses the “law of oligarchy” that Michels in 1911 found in democratic organizations, and the logic of the markets (importers, roasters and distributors increase their control over the value of coffee, and the FT staff act out of financial interests – and over wanting to earn more Fair Trade USA and FLO separated), within a framework of mutual complicity and exclusive transnational legitimation. The paradox, a movement that got started to fight traditional commerce was absorbed by that very logic, even though in the name of the poor.

Toward the second generation of fair trade

Clark and Doersam (2000, open space community) say that organizations are born, grow, mature, decay and die or they change. Deterioration is the death of FT. To avoid death, we argue that FT should reinvent itself, responding to the producer and consumer families, expanding and strengthening the relationships and democratizing the FT chain. First, Solidarity Stores and first tier cooperatives should construct a space for direct communication (SS-C), including the possibility that one be a member of the other; SS-C be supported from studies coming from an alliance between a development studies institute in the north and another in the south; SS-C become a space for learning about prices, credit, distribution mechanisms for the bonus and the premium, the democratization of the FT chain…; SS-C, to the extent that it learns, influences FLO so it is transparent and shares with the public its audits and reports, transparent to businesses, certifiers, banks and cooperatives, getting beyond the myth that “the enemy will take advantage of our information”. Secondly, FLO and the certifiers respond to SS-C, their audits and verifications contribute to good practices within the FT organizations: e.g. veto the permanance of board members and delegates as leaders for more than two periods in the cooperatives and international organizations, regardless of the reformed statutes and tricks of the elites; the FT seal and organic coffee certification is only for the coffee of the members. That the FT and organic certification be for first tier cooperatives, and at prices agreed upon with SS-C to prevent the first tier cooperatives from being excluded. Third, that the first tier cooperatives develop savings and loan services, and decide about the use of 100% of the bonus and the premium, while the second tier cooperatives specialize in coffee processing, facilitate the connection of the first tier cooperatives to markets, and support groups of cooperatives to develop services depending on the opportunities around them and their capacities.

Based on these three elements, the model would be “I support you so that you might commercialize your excellent coffee”, instead of “I buy your coffee to sell it”; the producers would recover their faith and turn in 100% of their coffee to FT, and the consumers would appreciate that they are really drinking organic coffee and that the added price that they pay is working well; systematic corruption would be avoided that is impoverishing producer families; the social banking sector would recover their loans at less cost. This route could be a way of getting beyond Michels Law and building “societies with markets” instead of “market societies”, and with this the FT mechanism would really help people get out of poverty.

René Mendoza has a PhD in development studies, is a collaborator of the Wind of Peace Foundation (http://peacewinds.org/research/), an associate researcher for IOB-University of Antwerp (Belgium) and for the Nitlapan-UCA Research and Development Institute (Nicaragua). rmvidaurre@gmail.com