Farmers' cooperatives have proved effective in poverty alleviation in China, becoming an important "internal power" that can mobilize local resources in a more flexible and sustainable way.
Small loans issued by the government can work better in helping families out of poverty if they cooperate with such groups. Poverty-stricken families often lack the capacity to use money effectively in business, but the cooperative has that ability. If farmers invest the loans they get into a cooperative, the money can be more efficiently used. While they can get a dividend, they can also work for the cooperative.
The Yunfeng cooperative in Changchun, Jilin province, for example, has been doing well in the local government's targeted poverty alleviation campaign by helping 27 poverty-stricken families. With the cooperative's credit guarantee, each family received a 50,000 yuan ($7,284; 6,800 euros; 5,969) loan from the government. The families then invested the money in the cooperative for raising pigs and focusing on ecological agriculture. With the money, the cooperative built five hog houses. For pigs alone, each family can receive a dividend of 3,500 to 7,000 yuan annually.
Small loans issued by a rural development association, which was established in 1996 in Yilong county, Sichuan province, have also proved effective in relieving families in financial difficulty. Each member of the association invested 400 yuan in a cooperative fund. Each investment was matched by 400 yuan from an international NGO. Many poor households need money in dozens of small businesses they run every year and the fund meets the need well. The association has made almost 200,000 small loans in the past 20 years.
The risk can be high for small loans issued by commercial banks with government support. The cooperative, however, can solve that problem. In the Yilong association, it's farmers who are managing the fund, which means lower cost as the association only needs to pay the farmers' subsidies.
The natural societies in the rural areas help avoid bad loans to a great extent because all farmers live under "neighborhood pressure". If someone refuses to pay, other association members will press them. Thus, the bad debt rate can be very low for small loans issued by cooperatives, but high for those issued by commercial banks.
Cooperatives have also proved effective in other areas. In addition to small loans, for example, the Puhan cooperative in Yongji, Shanxi province, provides poor families with services in agricultural technology, supply chains and sales. The families can make handicrafts for the cooperative, and the cooperative will help them sell their products.
The cooperative creates some job opportunities for low-income families as it improves the villagers' environment and sanitary conditions. It also promotes community services for the elderly. Most of the cleaners and those who serve seniors are from low-income families. Each can make several thousand yuan a year from the work, which may not require high skill and can be done in a very flexible way. Many of those who serve seniors are women in their 50s or 60s. Two women may offer services to one senior on rotating shifts if they don't have time to be involved full-time in the job.
The cooperative can effectively target poor families by mobilizing human resources, funds and materials available in a village with tailor-made and sustainable services. Village committees can also mobilize local resources, but they often lack the knowledge required to run a businesses; and in many villages, only disadvantaged groups are left, so it can be hard to make progress on poverty alleviation.
After the government enacted a regulation on farmers' cooperatives in 2007, growth has mushroomed. As of July 2016, about 1.67 million cooperatives had been established. Though some of them may be shells, experts believe 20 to 30 percent have good economic strength. If the number stands at 30 percent, it means about 500,000 cooperatives. If all of them could work as well as Yunfeng cooperative does, they could help raise up more than 30 million poor.
All resources from outside the villages, including those from government and public-service organizations, could come into play using the cooperatives as a platform.
It can be hard to keep officials or members of public-service organizations in villages focused for the long-term if they perceive their anti-poverty efforts as unsustainable. While it can be effective to have village committee officials lead the local poverty-relief campaign, the involvement of farmers' cooperatives can be even better, as they are more closely-connected with the people. In many regions, especially in poverty-stricken ones, cooperatives are economically stronger than local collective economies.