Written by: Enkhtuya Boldbaatar, Dairy Specialist, EMIRGE Mongolia
Just like any business group or SME seeking to grow and expand, cooperatives often have to come together and make important decisions regarding the type and size of investment necessary to increase their production and improve member livelihoods. But, it is not always the case for various producer groups in Mongolia who are constantly faced with external and internal challenges, leading to ineffective decision-making processes around investment.
In my experience, I have seen SME support programs or NGOs provide equipment or machinery at no cost to cooperatives and producer groups, along with very limited training on how to effectively operate and use them to grow and expand. This form of support ends up being counterproductive, as the equipment or tools end up being underutilized, sometimes rusting in a member’s back yard or even never used at all because the equipment requires further investment. Other types of ineffective investment I have witnessed are mainly due to: (1) lack of coordination among the members to assess their specific needs before acquiring inputs or equipment, and (2) lack of proper training on best operational practices. Here are some cases of failed investments I have personally encountered:
Example 1 - Fodder cutter:
In August of 2017, Members of a local cooperative in the Darkhan-Uul province borrowed a fodder cutter from another group, which obtained the equipment for free under the Disaster preparedness project and never used it. By the time the members of the cooperative tried to use the equipment, they realized that it was not actually a fodder cutter, but instead a grain mill. Furthermore, the equipment did not have any power input socket.
Example 2 -Sprinkler irrigation:
A sprinkler irrigation system was given to a local cooperative under the Markets and Pasture Management project in 2015 and was kept without use. After planting green fodder plants such as oat and peas in early July in the group’s fodder field, the members attempted to install the system to irrigate the land; but when they tried to connect the system to a well, it was discovered that many small parts such as fans and hoses were missing. The group members spent a great deal of time and effort to put together missing parts and get the system to operate. However, the system did not work properly and was not good for further use. They had to replace it in early August.
Example 3 - Distillation equipment:
The senior management of a local cooperative made an incorrect assessment of the conditions and opportunities of the group, and invested resources in the acquisition of distillation equipment. However, due to improper planning, lack of communication with the coop members, and lack of training and experience in using the equipment, the cooperative has not been able to use it for over two years now.
Under the EMIRGE program, partner cooperatives have received capacity building in their specialization, business advisory services and market linkages that are tailored for their daily activities, and have enabled them to make smart decisions for their own investments. Cooperatives have learned how to make investment decisions around important products and inputs such as irrigation systems for greenhouses or small farm fields, small tractors, milk cans, curd dryers, and lactoscans. Our partner cooperatives are now able to vocalize their needs to supporting organizations for additional equipment, parts, or tools that are needed for their daily operations. This approach lowers the risk of aid reliance for the farmers, which is always in short supply and not always matching their actual needs. Our results on the EMIRGE program have demonstrated that choosing agribusiness training over donations are well-paired with the objectives of our partner cooperatives and groups.
For instance, Devjikhuguuj group, one of the program partner cooperatives, approved and implemented a decision to invest in an irrigation system to protect crops from drought, and increase harvest. This turned out to be a solid investment as the group was able to double their harvest compared to the planned quantity. Many other partner cooperatives are also working with great enthusiasm to expand their businesses in the coming years by: (a) applying investment best practices, (b) learning and developing their ability to acquire and utilize new equipment and technology, and (c) generating new business ideas and initiatives.
Smart investments are key to development.
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