Agricultural cooperative development in Kazakhstan and Ukraine

The agricultural service cooperative is a means for incorporating small farmers into value chains that include larger downstream middlemen, processors, markets and grocery chains. This chapter describes the development of agricultural service cooperatives in the large wheat producing countries of Kazakhstan and Ukraine, and analyses the reasons for the lagging development there, with a review of policy alternatives for development of the cooperative movement. While there appears to be widespread recognition by both governments of the usefulness of agricultural service cooperatives, support policies focus on subsidies for input purchases and subsidized loans, thus breeding a class of false cooperatives that are established only for the purpose of gaining access to cheap money with no regard for cooperative principles. Neither government has succeeded in creating a supportive business environment for service cooperatives, with tax disincentives as an important barrier to their development. Neither of the governments of Kazakhstan or Ukraine has informed the rural population adequately on the cooperative idea and its benefits.