Inclusive Investment in Agriculture: Cooperatives and the role of foreign investment.

This policy brief by the International Institute for Sustainable Development examines agricultural cooperatives as a model for inclusive investment. It details the different types of cooperatives, their benefits for smallholder farmers, the role of foreign investment in these structures, and the necessary legal and governmental frameworks to support their success.

• Agricultural cooperatives significantly impact national economies and food security, with examples including Brazil, where 37 percent of agricultural GDP is produced through cooperatives, and India, where 12 million farmers in dairy cooperatives provide 16.5 million litres of milk daily.
• Cooperatives are categorized into production cooperatives, where farmers operate on jointly owned plots, and service cooperatives, which are more common and provide members with resources such as machinery, processing, transport, and marketing.
• The cooperative model provides numerous advantages to small producers, including the ability to collectively negotiate better prices and contract terms, improved access to financing and markets, and social integration for youth, women, the elderly, and people with disabilities.
• Cooperatives face several weaknesses, including the demand for high member participation, potential lack of technical knowledge, and inadequate management skills. Small cooperatives specifically struggle with reduced collective bargaining power against other actors in the agricultural value chain.
• Foreign investment is attracted to well-organized cooperatives because they create economies of scale and lower the perceived risk for investors by providing reliable partners and suppliers. Investors may engage by contracting with cooperatives to simplify logistics or by making capital investments in the cooperative itself.
• Government success in supporting cooperatives is highest when they provide an enabling environment—such as registration, legal enforcement, and human resource development—rather than interfering in internal affairs. Bottom-up initiatives are generally more successful than government-created programs.
• Effective legal frameworks for cooperatives vary from general social economy laws (as seen in Spain and Finland) to specific cooperative codes (as seen in India, Canada, and the Philippines). Comprehensive laws generally provide greater legal security, though some countries like Denmark and Ireland have succeeded without specific cooperative laws.

APA

International Institute for Sustainable Development (n.d.). Inclusive Investment in Agriculture: Cooperatives and the role of foreign investment. https://www.iisd.org/system/files/publications/inclusive-investment-in-agriculture-en.pdf

Chicago

International Institute for Sustainable Development. Inclusive Investment in Agriculture: Cooperatives and the role of foreign investment. n.d. https://www.iisd.org/system/files/publications/inclusive-investment-in-agriculture-en.pdf.

Wikipedia

{{cite report |author=International Institute for Sustainable Development |title=Inclusive Investment in Agriculture: Cooperatives and the role of foreign investment. |url=https://www.iisd.org/system/files/publications/inclusive-investment-in-agriculture-en.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{internationalinstituteforsustainabledevelopmentndinclusive, author = {{International Institute for Sustainable Development}}, title = {{Inclusive Investment in Agriculture: Cooperatives and the role of foreign investment. }}, institution = {International Institute for Sustainable Development}, url = {https://www.iisd.org/system/files/publications/inclusive-investment-in-agriculture-en.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }