| Livestock Research for Rural Development 29 (2) 2017 | Guide for preparation of papers | LRRD Newsletter | Citation of this paper |
The dairy sector in Tunisia is suffering from a lack of coordination and cooperation between the stakeholders. This study suggests cooperatives as a solution to better manage the supply chain. The analysis is based on the social networking paradigm to understand the structure and conduct of the dairy value chain with a focus on trust as key determinant of coordination between stakeholders. Two groups in one region and with different institutional arrangements were investigated. One group is composed of stakeholders organized into a cooperative, while the second was composed of unorganized stakeholders.
Using a Participatory Rural Appraisal (PRA) approach we find evidence that cooperatives help stakeholders build trust, be better connected and reduce conflicts and problems among actors in the dairy value chain.
Key words: sustainability, trust
In recent years, there has been strong interest in the dairy sector in Tunisia and national strategies were put in place to improve the overall competitively of the sector. Our review of these successive strategies shows that problems are recurring like feed and milk quality, low productivity and lack of organization. The focus however has been on factors related to technology development and adoption, with no regard to the underlying issues of institutional and socio-economic processes. This in turn has contributed to the low rates of adoption of technology and the overall performance of the dairy value chain.
The large number of actors in the dairy value chain (farmers, collection centers, dairy plants, service cooperatives, input suppliers, etc) and the lack of cooperation and trust usually give rise to opportunistic behavior and lead to the dysfunction of the dairy value chain. The lack of integration, "horizontal" or "vertical", has contributed to the failure of local value chains. Such integration is enhanced by factors related to the development of social relations, local history and the environment (Jarosz 2008). Social networks as an effective institutional innovation can contribute to building trust and cooperation between the value chain actors. A well-established cooperative would facilitate the access to information, the transfer of innovation and the communication (Tatlonghari et al 2013).
The purpose of this paper is to analyze the influence of the type of institutional arrangement on the performance of the dairy value chain. We assume that cooperatives and trust are important to improve the performance of the dairy value chain. A cooperative is expected to reduce conflicts and influence positively the quality of interactions between stakeholders. A Participatory Rural Appraisal (PRA) approach was used as a tool to study the interactions between the different actors and to carry a comparative study of two different institutional arrangements. The paper is organized as follows: after this introduction, we provide a conceptual framework (Section 2) and a methodology (Section 3). Results are presented and discussed in section 4, followed by the main conclusions (Section 5).
Networks are generally considered as a kind of organizational framework that allows for the interaction of a variety of institutional actors (e.g., firms, universities, government bodies) in the pursuit of common goals (Ceglie et al 1999). The creation of networks in value chain helps stakeholders to avoid constraints related to many factors such as coordination and cooperation. In fact, cooperation in networks can facilitate the access and the exchange of information and knowledge (Marques et al 2005). In networks, stakeholders are more able to accept new techniques or products, materials and process more than stakeholders no organized. Their role is also identifying problem solving knowledge and procedures (Rycroft et al 2004). In fact, coordination is needed because of the mutual dependencies (or interdependencies) between different activities and different transactions in the value chain.
Coordination requires gathering and processing of information, making decisions and communicating these decisions (Jos Bijman et al 2008).
Social structure has been acknowledged as an important factor for the success of collective action (Ostrom 1994 1999), for the efficiency of community governance (Bowles and Gintis 2002; Hayami 2009), and for the value creation and cost reduction effects of social networks (Coleman 1988; Burt 2000; Borgatti and Foster 2003).
The activities of the value chain influence the role of the collective action. The network can be linked to a value chain both vertically (buyer-seller relationships) and horizontally (inter-firm coordination, linkages to services providers and to policy makers). Indeed, collective action contributes to the success of the networks including all intervenient in the dairy value chain. This is can be explain by the adaptation of collective action can reduce transaction and coordination cost (Williams 2005, Marques et al 2005).
When successful collective actions in value chain take place, the social dynamics enhance the capacities of farmers, since collective action makes it possible for participants to collect and share knowledge and information, also with other rural stakeholders and landholders that together utilize their knowledge, skills and institutions (Hodge et al 2007). The concept of collective action itself is usually based on state intervention but also to look at the public/private partnerships and those innovative institutional arrangements which involve different levels (Vanni 2014).
Arrangements like cooperatives are usually characterized by a strong horizontal linkages among user groups at the same level of organization, but also by vertical linkages between different levels, for example between local stakeholders and central governmental agencies (Berkes 2009).
Many organizations, especially cooperatives, do also provide finance and business services to their members. Alternatively they can help in linking up to existing financial institutions and business service providers to collectively get a better deal for services provided to members.
In Tunisia, to join a cooperative is a voluntary act and a democratic power is exerted by members. In fact, cooperatives are autonomous and independent. They provide training, information and facilitate cooperation among members in the community.
Organization theory poses that in value chains in which sequential transactions are highly connected; more centralized decision making is required (Jos Bijman et al 2008). Coordination is needed because of the mutual dependencies (or interdependencies) between different activities and different transactions in the value chain. Coordination has been defined as managing dependencies between activities (Malone et al 1994).
Cooperatives can have an important role in providing and sharing information along the value chain and supporting members in complying with them. Such horizontal activities have a strong potential to reduce transaction costs and create economies of scale. The key role of the collective action includes grouping together to increase small producers´ bargaining power and therefore, strengthening their position in the value chain. Joining forces can result both in a more stable and profitable relationship with intermediary buyers as well as help producers getting access to cheaper inputs when by pooling their purchasing power and buying in bulk (ILO 2009).
If one actor in the value chain seeks its own interest, the other actor will suffer from the consequences (Lusch et al 1996). Where cooperatives will decrease this behavior, organize the different relationships between actors and reduce conflicts of interest that arise because of opportunistic behavior.
In the study area of this paper, farmers are afraid that milk is rejected by the collection center, which is responsible to ensure not only the quantity but also the quality of milk being delivered. The milk transporter as well respects the milk hygiene conditions. All these conditions require trust between the different actors. Cooperation, therefore, requires the presence of trust which is defined as the perception of reliability, credibility and goodwill of a partner (Johnson et al 1996; Morgan et al 1994). Trust grows in a partnership when the partners exchange act reliably and fairly, not taking advantage of the other, and are devoted to mutual commitment and a long-term orientation (Dyer et al 2003; Poppo et al 2002).
The exchange theory further predicts that trust relates positively with cooperative behavior (Anderson et al 1990; Heide et al 1992; Morgan et al 1994). According to these authors, trust helps promoting flexibility, solidarity and exchange of information and goods between the different agents. In addition, cooperatives are subject to risks; which could be reduced when confidence is high (Poppo et al 2002).
The collector plays an important role in dairy transactions. The implicit nature of the contractual relationship also makes difficult the application of sanctions for deviant behavior. Similarly, as Corniaux (2005) pointed out, changes in consecutive rules to the establishment of a collecting structure are reversible. In fact, these rules are based on tacit agreements and are not formalized. An important issue in the case of the collection system concerns the guarantee of transactions between the different actors of trade.
Trust must be built gradually. This is especially true in value chains, where trust is slowly developing positive social interactions that must be carefully nurtured by the hosts. These leaders must have the legitimacy and the expertise to conduct this market-driven innovation process, and must "pull" good ideas shared between stakeholders (Bernet et al 2006).
Given the low level of trust in many chain markets, it is particularly important to establish good leadership. Leaders of the value chain must help build an enabling environment of trust to innovations sought. Since dysfunctional chains tend to suffer from horizontal and vertical competition between players, the trust building needs to meet these two different dimensions of competition in an explicit way (Bernet et al 2006).
The following figure shows the case where a dairy value chain is characterized by an opportunistic behavior, deceit, low quality of milk, and uncertainty before the development of collective action. Once a cooperative is established the situation would change to a case there trust, cooperation and sharing of information and goods which would improve the overall performance of the system. (Figure 1)
At this stage, the diagnosis of the value chain starting from the dairy characteristic, the external environment, the institutional arrangement, coupled with the group characteristics and networking would allow cooperation among stakeholders and build trust between them. In this case, our output is a better and sustainable production of milk. We use focus group sessions to understand these characteristics and analyze the social networks to predict the acceptability of the cooperative solution and arrangement.
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| Figure 1. Conceptual model |
The study considers two different focus groups in the region of Bizerte in Tunisia: Group1 is composed of unorganized farmers, while the second involves a group of farmers being organized into a cooperative. We adopted the Participatory Rural Appraisal (PRA) which uses a set of participatory techniques, essentially visual, and assess the resources of the group and the community, identify the problems and hierarchically classify and evaluate strategies to solve from a focus group.
The focus group interviews are a form of group interviews that address a specific topic confronting a group. It contains fifteen people and a facilitator that discuss the topic in details. The focus group is the most appropriate technique to extract information from a basic level for a specific problem or action. This type of discussion reveals the perspectives, attitudes, understandings and reactions of stakeholders.
In fact, in PRA, people are more encouraged to enter in a participation and discussion group. The information to be processed is also collected by group members themselves since it uses the graphic expression, usually outdoors or on the ground, through images, symbols and materials found on site. Once expressed and the information is transparent rather than hidden - all members can comment on it, revise it and criticize it. This allows auditing and comparing the data collected.
There is a general impression that getting data is a complicated process such as formal surveys, questionnaire, analysis etc. Although there is some truth in this statement, data can be also collected from simple methods such as talking to people, walking through the community, observation…(Bhandari 2003). There is many ways to collect data. In our case, we adopted the participatory rural appraisal as an approach to study the dairy value chain including the different stakeholders.
There are five key principles that form the basis of any PRA activity no matter what the objectives or setting (Cavestro 2003):
· Participation - PRA relies heavily on participation by the communities, as the method is designed to enable local people to be involved, not only as sources of information, but as partners with the PRA team in gathering and analyzing the information.
· Flexibility - The combination of techniques that is appropriate in a particular development context will be determined by such variables as the size and skill mix of the PRA team, the time and resources available, and the topic and location of the work.
· Teamwork - Generally, a PRA is best conducted by a local team (speaking the local languages) with a few outsiders present, a significant representation of women, and a mix of sector specialists and social scientists, according to the topic.
· Optimal ignorance - To be efficient in terms of both time and money, PRA work intends to gather just enough information to make the necessary recommendations and decisions.
The focus group helps to assess behavior and decision making of the different actors from a structured focus group involving stakeholders from the milk value chain. Focus groups are used to evaluate and determine a common interest based on the perceptions and ideas between actual or potential actors. Indeed, the focus group can understand the habits of the players with regard to certain situations and evaluate marketing concepts and strategies of actors.
To get good results, the focus group should be well planned. First, it must be clear what information is needed and who should be invited to participate in interview sessions. This may require a qualitative research prior to discussion groups, to specify the various stakeholders in the value chain.
In our case, we are working with small and medium dairy farmers, collectors, collection centers, the dairy industry support organizations, input suppliers and financial organization. The purpose of the focus group is to identify constraints, the categorization of constraints and to analyze the links between stakeholders.
Indeed, the focus group addresses the following topics:
• The constraints that actors meet with dairy policy, research, education, extension and training. Participants are asked if they have an idea and opinion on key issues related to programs and livestock development strategies, structural and systemic problems.
• The problems related to the different administrative levels (national, regional eg district) and proposals to address these issues.
• Participants discuss the various constraints they encounter throughout the milk value chain.
•Participants evaluate links and interaction between each other according to several factors.
For the group 1, the focus group took place in the farm of a breeder which is localized near to other farmers and stakeholders of the dairy value chain of this region to allow to them to be present in this focus group. We choose this farmer because he has a good reputation and farmers trust him, so we guarantee that actors can feel comfortable during this session.
For the group 2, the focus group took place in a meeting room at the cooperative. Gathering participant in this case was easier than in the case of group 1; the reason is that farmers here are used to meet in occasions such as to discuss a new technology or to make a decision about collective actions. Participants came from farmers, milk collectors, collection centers, representatives of the livestock and pasture office, extension, and input suppliers, as shown in Table 1.
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Table 1. Number of participants in the focus groups |
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|
Participants |
Number of participants / group |
|
|
Group 1 |
Group 2 |
|
|
Farmers |
23 |
12 |
|
Collectors of milk |
1 |
1 |
|
Collection center |
1 |
1 |
|
Representatives of the Office of Livestock and Pasture (OEP) |
3 |
4 |
|
Representatives of the territorial extension centers (CTV) |
1 |
0 |
|
Feed supplier |
0 |
1 |
|
Veterinary |
1 |
0 |
|
Dairy factory |
0 |
1 |
During the focus groups, participants were asked to rank the constraints they are facing when performing their activities by level of importance and determine the problem and the proposed solution. In a second step, we evaluated the quality of links between players following the focus group interactions during the following socio-economic indicators clearly defined.
To study these interactions, we identified key factors that can influence relationship between actors: distance, existence of a link, contracts, trust and satisfaction of the links (Table 2). We assume that trust is a principal determinant of coordination and cooperation between stakeholders. This factor is determined from the interviews with the participants of focus groups with direct and indirect question to have the adequate response without influence from other stakeholders present in the session.
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Table 2. List of the variables and their nature |
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Variable name |
Type |
Scale and code |
|
Average frequency of meetings per year |
Numeric |
|
|
Inside or outside the village |
Dummy |
0= Outside
|
|
Distance of the actors in village |
Numeric |
0= Non functional
|
|
Links |
Dummy |
0= Non functional
|
|
State |
Dummy |
0=Inactive in the region
|
|
Contracts |
Dummy |
1=Formal
|
|
Trust |
Dummy |
-1= Distrust
|
|
Satisfaction |
Dummy |
3 = Good
|
The Figure 2 and 3 show the constraints that are facing the different stakeholders as revealed by the two focus groups. The major problem for farmers of group 1 is the asymmetric information. This problem is related to a lack of communication between the various stakeholders in the milk value chain. Farmers are facing information problems with regard milk quality and acceptance norms mainly during the high lactation period. There are also problems related to extension and other related information. In addition, the refusal of milk by the collection centers is considered a big problem for these farmers. We also notice that these problems are interrelated to each other’s. The asymmetry of information is related to the dispersion and the isolation of farmers. Rejection of milk which happens mainly during the high lactation could be also linked to the lack of adequate refrigeration and storage facilities for collectors and at the collection centers. As a result, milk quality is a big issue which is the result of the lack of facilities but also to fraud and misconduct. The role of OEP and CTV (the extension services) is essential to deal with these issues but these latter actors are as well lacking human resources and other required means such as transport and these factors hinder their efforts to help the participants in the chain. Veterinarians are also complaining of lack of cooperation and means of transportation which affect negatively the interaction and cooperation along the value chain.
 |
| Figure 2. Constrains of stakeholders in group 1 |
In the case of group 2 (Figure 3), the existence of the cooperative has removed the problem of asymmetric information, since all communications among members of the cooperative are guaranteed and secured through regular meetings. This group did not mention a problem of milk rejection by the collection center, but stressed the declining role of state especially in extension, training, and subsidies. The farmers in this group seem to have more links (by requirement of the cooperative) with veterinarians, inseminators and feed suppliers and they complain mainly about the high costs. Rejection of milk, on the other hand is issue with collection centers and collectors. The cooperative has a strong role in extension in the absence or weaknesses of the state extension services.
 |
| Figure 3. Constrains of stakeholders in group 2 |
Venn diagram
To show organizations and key actors within a community and their relationships and importance in decision making, we present the following Venn-diagrams (Figures 4-5).
 |
 |
| Figure 4. Venn diagram (Group1) | Figure 5. Venn diagram (Group 2) |
These diagrams are designed to facilitate understanding of the relationships between stakeholders. They demonstrate the extent or overlap in decision making and collaboration. This chart is very useful to identify collaborative partners in the value chain. The source of information is the focus group discussion.
Using observations of interactions between actors and the appreciation of the actors themselves from their relationships, we could draw these diagrams. This shows schematically how the decision of a certain actor is influenced by others. In this case the central player is the farmers.
For group 1, there is contact between farmers, collectors, OEP and CTV. We noticed a small overlap between farmers and the veterinary. This means that farmers take into account the help of veterinaries, to some extent, during the decision-making. In addition, there is a significant overlap between farmers and collectors. Therefore the collectors affect heavily the decision making of farmers.
The overlap between all stakeholders of group 2 shows that the decision of a certain actor is influenced by others. Only CTV is isolated from the rest. The breeders are organized in a cooperative (SMBSA), so the decision is made collectively which shows the high overlap between them. Similarly the collection center is a part of the SMBSA. We noticed also that breeders don’t have a direct relationship with the feed providers which explain the distance between them. In fact, feed providers have contracts with the SMBSA.
To understand the logic of decisions made by stakeholders in the value chain, we analyzed the links and relations especially between firms and other actors.
The following social maps (Figures 6-7) show the network of actors present in the focus groups. These maps are based on stakeholder analysis matrix and observations during the focus group discussions. Each actor in the network is simulated to a node that links other stakeholders in the network. Each link is determined from the analysis of the actor’s matrix. The length of the links is not significant but the thickness of the link expresses the weight of the interaction.
The grouping of stakeholders around a given node makes him a master node. The actor represented by this node indicates a state of high integration in this network.
 |
 |
| Figure 6. Social map for group 1 | Figure 7. Social map for group 2 |
Following the various indicators of the analysis of social networks, we can show and explain the differences in the design of the two social maps.
Table 3 displays the degree of centralization for the two groups. We note that the farmer node is the centralized one in the map since it is linked to all stakeholders. The degree of centralization of collectors is relatively high showing the importance of this actor in the value chain. The nodes of the CTV and the collection center are not as important as the previous two nodes of the actors in value chain network. The feed supplier’s node although has intense interaction with breeders is found to be isolated from other actors. The social map of actors in group 2 shows farmer’s node as the main node, with a degree of 0.7 as it linked to all other players. The majority are linked to each other intensively and especially with the cooperative (SMBSA). The latter is found to be the most important node in the network of actors in the case of Utica milk value chain.
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Table 3. Degree of centralization of nodes |
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|
|
Group 1 |
Group 2 |
|
Farmers |
1 |
0,7 |
|
Collectors |
0,6 |
0,3 |
|
Supplier of concentrated |
0,16 |
0,2 |
|
Veterinary |
0,3 |
0,2 |
|
Collection center |
0,3 |
0,5 |
|
Industry |
0,2 |
|
|
CTV |
0,5 |
0,2 |
|
OEP |
0,3 |
0,2 |
|
SMBSA |
0,4 |
|
|
UTAP |
0,1 |
|
For group 1: ND = 10/7*2 = 0,7
For group 2: ND = 15/10*2 = 0,75
These measures mean that the more connected are the stakeholders, the higher would be the density in the network. As such, the results show that the group of farmers being organized in a cooperative has higher network density than group 2, which is composed of unorganized farmers. This emphasizes the fact that cooperatives help stakeholders be better connected than those is a group which is unorganized.
Applied to the two group networks, as shown by the network maps, the higher degree of betweeneness is that of the center of collection and the middlemen (intermediary). This results shows the important role that plays these two stakeholders in the connection between other actors of the chain.
In the case of group 2 social map, it is found that the cooperative (SMBA) is playing the role of a coordinator between farmers, intermediaries, collection center and the processing company. The role of the cooperative is to improve coordination and therefore reduce transactions costs among stakeholders in the network.
The social maps showing the network of different players is based on the stakeholder’s analysis matrix and observations during the focus group discussions. The link strength between two stakeholders is expressed in the function of the thickness of the link. In the case of farmers of the group 2 who are grouped into a cooperative, relations between the different actors are rigid except the case of the extension agency CTV, since in this type of arrangement the State has lower intervention. This can be explained by the fact that the cooperation and coordination mechanisms are more effective than among farmers of group 1.
One of the important indicators of social networking is trust. Cooperatives has been key to build such trust and made the network stronger. When participants of Group 1 were asked to join an existing (or establish a new) cooperative or association, they showed negative attitude as a sign an opportunistic behavior. This behavior can be explained by the fact that the experience of cooperatives in the country has failed in different fields. But successful ones such as the case of group 2 may significantly contribute to promote this kind of arrangement. The whole value chain would benefit from these institutional arrangements.
This research forms part of the multidisciplinary and interinstitutional research program funded by the Institution of Agricultural Research and Higher Education (IRESA). This program provided the opportunity to study the dairy sector in the region of Bizerte (Tunisia). Additional support is provided by the Livestock and Pasture Office (OEP).
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Received 9 December 2016; Accepted 15 December 2016; Published 1 February 2017