Cooperatives in El Salvador

A fair, viable alternative to globalized market capitalism

This blog post for the Mesoamerica Peace Movement (www.discover-peace.org) serves as the final paper for the course EMP 3625 Peacebuilding and Spirituality in El Salvador as agreed.

Introduction

The cooperative movement has roots in the 1830s, when farmers and other workers sought greater control over their produce and to offer a fair and viable alternative to market capitalism. While the current expression of globalization tends to benefit high-income, powerful countries at the expense of the wellbeing of workers in lower-income countries, several economic models offer viable alternatives to globalized market capitalism. One such model is the cooperative model where workers, suppliers, and/or consumers own and control the business operations.

The Occupy movement highlighted the perils of a global economic system that concentrates wealth in the hands of business owners. Shrinking middle classes, increasing personal and national debt loads, political disenfranchisement, increasing individualism, and growing distrust for neighbours and communities seem to be natural outcomes of the capitalist model that privileges domination and competitiveness. In a nod to the potential for cooperatives to reverse these trends, the United Nations declared 2012 the International Year of Cooperatives to “raise public awareness of the invaluable contributions of cooperative enterprises to poverty reduction, employment generation and social integration.”[1] Furthermore, Elinor Ostrom was the first woman to receive the Nobel Prize for economics for her work that undergirds cooperative economics theory.[2]

The Mesoamerica Peace Movement is further interested in co-operatives as an expression of Jesus’ teachings. Jesus subverted the violent and powerful Roman Empire and disrupting structures that concentrate power and wealth. He did so non-violently and motivated by love. Other sacred texts offer similar teachings that focus on community building, hospitality, cooperation, and equity. Co-ops offer a fair, non-violent, and viable alternative to modern expressions of empire that concentrate power and wealth into the hands of very few.

How do they work?

Co-ops serve diverse needs in diverse ways so each one works a little differently. A producer co-op generally pools produced resources to market them for the best rate for the producers. A consumer co-op generally purchases goods in bulk for the best rate for consumers. A worker co-op generally arranges itself to create the best working conditions for employees. Finally, a multi-stakeholder co-op will combine elements of the other three to create the best outcome for all members. Some co-ops offer patronage dividends, whereby surplus revenue is distributed to members based on each member’s use of the co-op (rather that the number of shares a member owns). Other co-ops invest all surplus revenue into the co-op itself.

Co-ops operate under seven guiding principles, as confirmed at the 1995 General Assembly of the International Co-operative Alliance:[3]

1. Voluntary and open membership: Any person willing to accept the responsibilities of membership may join a co-op

2. Democratic member control: Members guide their co-ops either by voting directly on resolutions (as in the case of primary co-ops) or by electing representatives

3. Member economic participation: Members control and contribute equitably to the co-op’s capital

4. Autonomy and independence: Co-ops are controlled only by their members; other organizations may not buy or control a co-op

5. Education, training, and information: Co-ops provide training relevant to the co-op and on co-ops in general for members, employees, and the general public

6. Co-operation among co-operatives: Co-ops offer other co-ops support and trade opportunities

7. Concern for community: Members guide co-ops according to the best outcomes for the member community and the broader community

Governing structures vary among co-ops depending on the purpose of the co-op and the laws to which businesses are subject.

Who participates in a cooperative?

Any individual willing to assume the responsibilities of the co-op’s membership may participate. Every co-op requires membership, the price of which is set by members themselves or elected representatives. Some co-ops require members to provide labour; other co-ops require members to provide goods; other co-ops require no participation beyond purchasing a membership. Consumer and producer co-ops employ non-members as well as members. Worker co-ops generally invite employees into membership after a probationary period. Consistent with the first principle above, co-ops are expected to make membership accessible to all without discrimination.

What is the history of cooperatives in El Salvador?

El Salvador has a unique history in terms of cooperatives. Spanish colonialism left no land under the control of the indigenous Mayans and, ultimately, all of El Salvador was governed by an oligarchy of fourteen families (known as “las catorce”) until the end of the 1970s. A pro-land reform government took control in 1979 and seized land to ostensibly redistribute El Salvador’s land wealth. The land reforms were designed by University of Washington professor Roy Prosterman, whose land reform ideas in Vietnam were seen as an effective non-military counter-insurgency intervention and were expected to do the same in El Salvador. The plantations and haciendas that were seized were converted to co-ops, but members received little or no training in running a co-op. In a short time, all but 2 of the 260 land-based co-ops had failed and many saw the failure as a pre-ordained attempt to disprove the viability of land reform. Coffee, which was steadily growing in economic importance, was excluded from the land reform initiative and the fincas—ranches held by the wealthy—were also excluded. The land eventually reverted the control of the wealthy oligarchy and the workers were no better off. Several co-ops in El Salvador have been controlled by wealthy individuals with little opportunity for those living in poverty to participate. In short, the land reform that birthed the co-op movement in El Salvador left a bitter taste in the mouth of its participants, and El Salvador is recovering from that legacy.

What is the current state of cooperatives in El Salvador?

Many of El Salvador’s co-ops participate in the coffee market. Co-ops also play a role in El Salvador’s agriculture and other sector. The following profiles do not represent endorsement, but rather provide brief snapshots of different co-operative activities in El Salvador.

The Bajo Lempa Group began as the civil war was ending and grew out of an assets-based approach. Among its assets were fertile land and the Lempa River. The group now grows and markets fair trade, organic food such as coffee, tropical fruit, cashews, cheeses, and cane sugar. It also markets water filters, and offers banking and vision care services to its members.[4] The women’s cattle cooperative Mujeres Ganaderas is also based in Bajo Lempa and offers training, financial advice and services, and veterinarian support to its members. It also runs a small store.

Las Marias 93 is a coffee co-op that originated out of the 1992 Peace Accord that brokered an end to the civil war. Its founding members were combatants who were at high risk of social and economy ostracism for their role in the war. Their cooperation has enabled the 60+ members to pool their resources and purchase and commission more efficient depulping machines, which reduce water and electricity use and, thereby, increase production efficiency.[5]

Cooperativa Los Pinos is a 100+ member coffee producers co-op situated on the slopes of El Salvador’s Cerro Verde volcanoes on the shores of Lake Coatepeque. Los Pinos markets its fair trade coffee around the world, while emphasizing community development within its vicinity and is emerging as an ecotourism destination.[6]

The Network of Coastal Organizations of Ahuchapan-Sonsonate (RIOCMAS) is a 10-year-old umbrella organization that supports nascent co-ops that presently lack the skills or expertise necessary for an autonomous co-op to thrive. Four of RIOCMAS’ 28 member organizations have succeeded in registering their own co-operative while the others receive training and leverage RIOCMAS’ legal status and experience to market their products. RIOCMAS’ partners include forestry enterprises, agricultural operations, and handicraft artisans.

How is the Mesoamerica Peace Movement involved with cooperatives?

The Mesoamerica Peace Movement is a strong supporter of cooperatives in principle. It is deciding how best to connect potential co-op members with existing co-ops or experts and/or develop internal capacity to offer training for new co-ops.

References

Author Unknown. Definition and Principles of a Co-operative. Creating a Co-operative. Date Unknown.

Badzinski, Charish. "The Cooperative Spirit in El Salvador's Lower Lempa". http://rollerbaggoddess.blogspot.ca/2012/03/cooperative-spirit-in-el-salvadors.html (accessed 16 August 2013).

Cooperativa Los Pinos. "Cooperativa Los Pinos". http://cooperativalospinos.net/cooperativa/ (accessed 10 August 2013).

Cooperative Coffees. "Las Marias 93 - El Salvador". http://www.coopcoffees.com/what/trading-partners/las-marias-93 (accessed 11 August 2013).

United Nations. "International Year of Cooperatives 2012". http://social.un.org/coopsyear/ (accessed 12 August 2013).

Walljasper, Jay. "The Victory of the Commons". Yes! Magazine, 27 October. http://www.yesmagazine.org/new-economy/the-victory-of-the-commons (Accessed 12 August 2013) 2009.

[1] United Nations. "International Year of Cooperatives 2012". http://social.un.org/coopsyear/ (accessed 12 August 2013).

[2] Walljasper, Jay. "The Victory of the Commons". Yes! Magazine, 27 October. http://www.yesmagazine.org/new-economy/the-victory-of-the-commons (Accessed 12 August 2013) 2009.

[3] Author Unknown. Definition and Principles of a Co-operative. Creating a Co-operative. Date Unknown.

[4] Badzinski, Charish. "The Cooperative Spirit in El Salvador's Lower Lempa". http://rollerbaggoddess.blogspot.ca/2012/03/cooperative-spirit-in-el-salvadors.html (accessed 16 August 2013).

[5] Cooperative Coffees. "Las Marias 93 - El Salvador". http://www.coopcoffees.com/what/trading-partners/las-marias-93 (accessed 11 August 2013).

[6] Cooperativa Los Pinos. "Cooperativa Los Pinos". http://cooperativalospinos.net/cooperativa/ (accessed 10 August 2013).

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