The financing of rural producer co‐operatives: A case study

Abstract

The article attempts to address the lack of empirical data in literature on South African producer co‐operatives. A detailed analysis of the financial results of a rural producer cooperative over a twelve‐year period is used to evaluate the project's start‐up phase and long‐term viability. The results generally expose weaknesses well documented in the international literature. Due to the poverty of the membership, the co‐operative was dependent on loans for its foundation. In the long run, the co‐operative survived, increasing not only the number of members, but also their wages. It has been weakened, however, by a lack of reinvested earnings, which was due to repeated withdrawals of revenues as wages and slow‐growing sales due to a lack of marketing effort.

Notes

Department of Economics, University of Natal, Pietermaritzburg