IDEAS home Printed from https://ideas.repec.org/a/sae/millen/v12y2021i3p367-389.html
   My bibliography  Save this article

Pitfalls of External Institutional Facilitation of Farmer Organizations: Insights from Farmer Companies in Sri Lanka

Author

Listed:
  • H. S. R. Rosairo
  • M. Esham

Abstract

Farmer companies (FCs) were a form of farmer-owned firms established in Sri Lanka during the mid-1990s. These have been facilitated by state institutions. Maximization of returns through commercial agriculture has been the main objective of FCs. However, no FCs were operating by the year 2010. This article explains that the institutional facilitation is a strong ingredient in the establishment of FCs in Sri Lanka. This article explainfs how the institutional and governance arrangements of FCs were influenced by the facilitating institutions during the institutional facilitation. It also suggests that institutional facilitation affected the performance of FCs. Six failed FCs were studied. Strategic facilitation was responsible for the performance and sustainability of FCs while operative facilitation provided the basis for direction and operations. Results indicate that poor performance and failure of FCs were due to institutional facilitation that has introduced weak institutional and governance arrangements. There was non-shareholder influence on the Boards of Directors; geographically restricted shareholding; democratic voting rights; and shareholder rights not linked to equity or patronage. Governance problems included voting by the raise of hand; managers not reporting to the Boards directly; shareholders did not elect all the directors. Institutional facilitation of FCs in Sri Lanka has been done by the state facilitating institutions. They have been excessively authoritative on their respective FCs. Therefore, changing the label from cooperatives to companies would not result in better performance. Some recommendations are that facilitating institutions empower FCs through capacity-building; participatory approach in facilitation; remove the geographical restriction in shareholding; install variable shareholding; build capacity of managerial staff; use secret ballots at voting, and practice proportional voting. Understanding the role of facilitating institutions and the dynamics of facilitation would be useful to promote farmer collectives in smallholder farmer dominant developing countries.

Suggested Citation

  • H. S. R. Rosairo & M. Esham, 2021. "Pitfalls of External Institutional Facilitation of Farmer Organizations: Insights from Farmer Companies in Sri Lanka," Millennial Asia, , vol. 12(3), pages 367-389, December.
    • Handle: RePEc:sae:millen:v:12:y:2021:i:3:p:367-389
    DOI: 10.1177/09763996211060772
    as

    Download full text from publisher

    File URL: https://journals.sagepub.com/doi/10.1177/09763996211060772
    Download Restriction: no
    File URL: https://libkey.io/10.1177/09763996211060772?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Wijerathna, Deeptha & Varma, Samyuktha, 2006. "A farmers’ company for better price: The case of Chandrika Wewa Farmer Company, Sri Lanka," Conference Papers h039279, International Water Management Institute.
    2. Hendrikse, George W. J. & Veerman, Cees P., 2001. "Marketing cooperatives and financial structure: a transaction costs economics analysis," Agricultural Economics, Blackwell, vol. 26(3), pages 205-216, December.
    3. Evans, Lewis & Meade, Richard, 2005. "The Role and Significance of Cooperatives in New Zealand Agriculture, A Comparative Institutional Analysis," Working Paper Series 3847, Victoria University of Wellington, The New Zealand Institute for the Study of Competition and Regulation.
    4. Nuwan Abeywardana & Brigitta Schütt & Thusitha Wagalawatta & Wiebke Bebermeier, 2019. "Indigenous Agricultural Systems in the Dry Zone of Sri Lanka: Management Transformation Assessment and Sustainability," Sustainability, MDPI, vol. 11(3), pages 1-22, February.
    5. Lyne, Michael C. & Collins, Ray, 2008. "South Africa’s new Cooperatives Act: A missed opportunity for small farmers and land reform beneficiaries," Agrekon, Agricultural Economics Association of South Africa (AEASA), vol. 47(2), pages 1-18, June.
    6. H. S. Rohitha Rosairo & Michael C. Lyne & Sandra K. Martin & Kevin Moore, 2012. "Factors Affecting the Performance of Farmer Companies in Sri Lanka: Lessons for Farmer‐Owned Marketing Firms," Agribusiness, John Wiley & Sons, Ltd., vol. 28(4), pages 505-517, September.
    7. Michael E. Sykuta & Michael L. Cook, 2001. "A New Institutional Economics Approach to Contracts and Cooperatives," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 83(5), pages 1273-1279.
    8. Zuhui Huang & Vijay Vyas & Qiao Liang, 2015. "Farmer organizations in China and India," China Agricultural Economic Review, Emerald Group Publishing Limited, vol. 7(4), pages 601-615, November.
    9. Ortmann, Gerald F. & King, Robert P., 2007. "Agricultural cooperatives II: Can they facilitate access of small-scale farmers in South Africa to input and product markets?," Agrekon, Agricultural Economics Association of South Africa (AEASA), vol. 46(2), pages 1-26, June.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Sparks, Garreth D. & Ortmann, Gerald F. & Lyne, Michael C., 2011. "PR - An Analysis Of Cooperative Biodiesel Production By Smallholders In Kwazulu-natal, South Africa (p444-462)," 18th Congress, Methven, New Zealand, 2011 345597, International Farm Management Association.
    2. Lyne, Michael C. & Collins, Ray, 2008. "South Africa’s new Cooperatives Act: A missed opportunity for small farmers and land reform beneficiaries," Agrekon, Agricultural Economics Association of South Africa (AEASA), vol. 47(2), pages 1-18, June.
    3. Amiquero, K. (Katty) Sanchez & Wubben, E.F.M. (Emiel) & van Dam, Y.K. (Ynte) & Trienekens, J.H. (Jacques), 2023. "Success and failure factors in agricultural cooperatives," International Journal on Food System Dynamics, International Center for Management, Communication, and Research, vol. 14(01), January.
    4. Franken, Jason & Cook, Michael L., 2022. "Cooperatives’ Role in Farm Risk Management," 2022 Annual Meeting, July 31-August 2, Anaheim, California 322116, Agricultural and Applied Economics Association.
    5. Szabó G., Gábor & Bárdos, Krisztina, 2007. "Szerződéses kapcsolatok az élelmiszer-gazdaságban. A tejellátási lánc empirikus kutatása [Contract relations in the food economy. Empirical research into the milk-market supply channel]," Közgazdasági Szemle (Economic Review - monthly of the Hungarian Academy of Sciences), Közgazdasági Szemle Alapítvány (Economic Review Foundation), vol. 0(5), pages 459-480.
    6. Evans, Lewis, 2009. "Capital Market Integration: The Structure of the New Zealand Economy and its Capital Markets," Working Paper Series 4035, Victoria University of Wellington, The New Zealand Institute for the Study of Competition and Regulation.
    7. repec:vuw:vuwscr:19137 is not listed on IDEAS
    8. Evans, Lewis, 2009. "Capital Market Integration: The Structure of the New Zealand Economy and its Capital Markets," Working Paper Series 19137, Victoria University of Wellington, The New Zealand Institute for the Study of Competition and Regulation.
    9. Evans, Lewis & Meade, Richard, 2005. "The Role and Significance of Cooperatives in New Zealand Agriculture, A Comparative Institutional Analysis," Working Paper Series 3847, Victoria University of Wellington, The New Zealand Institute for the Study of Competition and Regulation.
    10. Rousselière, Damien & Joly, Iragäel, 2011. "A propos de la capacité à survivre des coopératives : une étude de la relation entre âge et mortalité des organisations coopératives agricoles françaises," Review of Agricultural and Environmental Studies - Revue d'Etudes en Agriculture et Environnement (RAEStud), Institut National de la Recherche Agronomique (INRA), vol. 92(3).
    11. Mohamed Esham & Hajime Kobayashi, 2013. "Farmer Companies in Sri Lanka: Lessons from Agricultural Cooperatives in Japan," Millennial Asia, , vol. 4(2), pages 117-133, October.
    12. Damien Rousselière, 2019. "A Flexible Approach to Age Dependence in Organizational Mortality: Comparing the Life Duration for Cooperative and Non-Cooperative Enterprises Using a Bayesian Generalized Additive Discrete Time Survi," Journal of Quantitative Economics, Springer;The Indian Econometric Society (TIES), vol. 17(4), pages 829-855, December.
    13. Bachev, Hrabrin, 2022. "Как Да Оценим Управленческата Ефективност На Българските Земеделски Стопанства [How to assess the governance efficiency of Bulgarian agricultural farms]," MPRA Paper 113590, University Library of Munich, Germany.
    14. Gabor G. Szabo & Krisztina Bardos, 2005. "Vertical Coordination by Contracts in Agribusiness - An Empirical Research in the Hungarian Dairy Sector," CERS-IE WORKING PAPERS 0515, Institute of Economics, Centre for Economic and Regional Studies.
    15. Bachev, Hrabrin, 2024. "Economic framework for studying and assessing agrarian contracts," MPRA Paper 121504, University Library of Munich, Germany.
    16. Chao-Chien Chen & Hsiu-Ping Yueh & Chaoyun Liang, 2016. "Strategic Management of Agribusiness: Determinants and Trends," Journal of Entrepreneurship, Management and Innovation, Fundacja Upowszechniająca Wiedzę i Naukę "Cognitione", vol. 12(4), pages 69-97.
    17. Jean Marie Codron & Zouhair Bouhsina & Laure Bonnaud, 2013. "Collective action and allocation of decision rights in pesticide safety risk management: the case of tomato producer organizations in France," Post-Print hal-02748504, HAL.
    18. Kulasinghe, Tharindu Nuwan & Dharmakeerthi, Randombage Saman, 2022. "Effects of land use type and tank components on soil properties and sustainability of tank cascade system in the Dry Zone of north central Sri Lanka," Agricultural Systems, Elsevier, vol. 201(C).
    19. Imami, Drini & Valentinov, Vladislav & Skreli, Engjell, 2021. "Food safety and value chain coordination in the context of a transition economy: The role of agricultural cooperatives," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 15(1), pages 21-34.
    20. Francesconi, Gian Nicola & Wouterse, Fleur, 2011. "The renewed case for farmers' cooperatives: Diagnostics and implications from Ghana," IFPRI discussion papers 1129, International Food Policy Research Institute (IFPRI).
    21. Sujith S. Ratnayake & Lalit Kumar & Punchi B. Dharmasena & Harsha K. Kadupitiya & Champika S. Kariyawasam & Danny Hunter, 2021. "Sustainability of Village Tank Cascade Systems of Sri Lanka: Exploring Cascade Anatomy and Socio-Ecological Nexus for Ecological Restoration Planning," Challenges, MDPI, vol. 12(2), pages 1-23, September.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:sae:millen:v:12:y:2021:i:3:p:367-389. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: SAGE Publications (email available below). General contact details of provider: .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.