Agroindustrial project analysi

112 AGROINDUSTRIAL PROJECT ANALYSISbags to the farmers; and to provide consumer credit that wouldfree the farmers from store owners and other middlemen.In this case it was the government that developed a marketingsystem for the small farmers, but the processing plant could havedone it. The Anand Cooperative, a producer-owned milk-processingplant in India, successfully incorporated hundreds of smallfarmers and landless rural dwellers as suppliers. By providing technicalproduction inputs, a guaranteed market outlet, and fair pricespaid upon delivery, the cooperative doubled the income of thelandless laborers who comprised one-third of its members. 23These examples introduce a final aspect of procurement organizationthat merits consideration: a producer's forward vertical integration.Up to this point, this study has focused on the processor'sintegrating backward toward the producer. If, however, the farmersthemselves integrate vertically forward to the processing stage, theycan become the owners and operators of an agroindustry. Larger,wealthier, and more managerially sophisticated producers are morelikely than small farmers to integrate vertically forward. Yetsmaller farmers are not excluded from entering the processingstage; combining their efforts to form a cooperative or corporation,as discussed above, can lead to this integration. Producer cooperativesin the process of integrating vertically forward, however,frequently encounter managerial problems. An agroindustrial operationis different from farming, and the analyst advising such cooperativesshould ensure that the producers have had adequate training,receive technical assistance, or obtain contracted, externalmanagement. A poorly managed agroindustry can become an economicburden to farmers if their production profits are only consumedby processing losses. Successful producers' cooperativesexist, but they generally have developed over time. The effectivefruit-marketing cooperatives of Taiwan, for example, took thirtyyears to evolve. 2423. Michael Halse, "Operation Flood: An Introduction to the Study Paperson the Indian Dairy Development Program," Case Study no. 3-577-100 (Cambridge,Mass.: Harvard University, Graduate School of Business Administration,1976).24. Wen-fu Hau, "Development of Integrated Cooperative Export MarketingSystem for Bananas in Taiwan," Seminar on Marketing Institutions and Servicesfor Developing Agriculture, September 10-12, 1974 (Washington, D.C.:The Agricultural Development Council, Inc., 1974).