Manual on Community Based Approach to Local Development Project – Phase 2 (стр. 14 )

PROMOTING LOCAL ECONOMIC DEVELOPMENT[17]

	Main Activity	Sub-Activities
1	Preparing small business promotion manual	1	Review existing literature and successful sites
2	Develop business promotion manual
2	Selection of demonstration sites	1	Select oblast and rayons for participation
2	Select target area
3	Implementation of SBP activities	1	Sensitise target population
2	Develop agricultural/service cooperative
3	Conduct participatory planning and priority setting
4	Prepare business promotion project
5	Support business project implementation
6	Handover and sustainability mechanism

Small households in rural Ukraine are not able to reap proper return from their small holdings and micro-level agro-activities. Like big producers, they do not have chance to enjoy economy of scale. Factors like small holding, lack of suitable infrastructure (e. g. irrigation facility), small production, far located input/output market, lack of capital and access to credit make them vulnerable. Being small, they do not have bargaining power either. CBA experience offers solution to this problem by promoting community action. Here community means community of small producers (e. g. vegetable, fruit, dairy etc.) living on a defined territory such as one or more settlements in the same village council or neighbouring village councils in the same rayon. On a limited scale, CBA II will support small economic initiatives of rural communities. The main focus is on promotion of collective actions that could lead to income generation and employment creation. Purpose is to enable small farmers to get access to market, create positive effect from economy of scale, redirect money to the primary production side, ensure system of supply with higher effectiveness and to develop local production and consumption environment that render bargaining power in favour of the small farmers.

The description below is very tentative and will require further improvement before application. Therefore, RIU team must wait for final version before they could plan to go for action on economic component.

6.1 Preparing Small Business Promotion Manual

6.1.1 Review existing literature and successful sites

PMU will initiate expert review of exiting literature on cooperatives (especially agricultural cooperatives and service cooperatives) in Ukraine. The involved expert will also make visit to successful sites in rural Ukraine (especially the experiment of UNDP/CIDP in Crimea) and analyse the situation and knowledge so as to replicate in CBA-II environment.

6.1.2 Develop small business promotion manual

Based on analysis of findings from existing literature and success cases a SBP manual will be prepared within the framework of CBA-II. This manual will be helpful to RIUs in undertaking economic component. It will explain necessity and process of cooperative formation, undertaking of various economic activities through the cooperative.

6.2 Selection of Demonstration Site

6.2.1 Select oblast and rayons for participation

CBA will call for competition to look for potential oblasts (ARC excluded due to implementation of this component by CIDP), which face severe unemployment challenge in rural areas, has high potential for improving agro-based economy and shows high commitment to support agro-based small businesses in rural areas through promotion of cooperatives. From among the oblasts asking for this component, five oblasts will be selected representing regional cluster – east, west, south, north and central.

By token of the same criteria for competition, two partner rayons per oblast will be selected from among all rayons applying for this component. The two rayons must be CBA partners (during CBA-I and/or CBA-II).

However, more oblasts and rayons could be covered should the budget of economic component permits.

6.2.2 Select target area

RIU, with support of appropriate rayon departments and local chamber of commerce, will make a feasibility study of the agro-production, processing and marketing features and delineate feasible areas involving one or more adjoining village councils that could be most promising for action. In all cases, one of the village councils ought to be CBA-I/CBA-II partner as a centre of the activity while the adjoining will get associated. Based on criteria mentioned in section 6.2.1, one area will be selected with one reserve.

6.3 Implementation of SBP Activities

6.3.1 Sensitise target population

·  Distributes info-materials in the villages of selected VCs. The material also must contain due date, time and place when RIU team will visit for dialogue;

·  Hold dialogue with the villagers and verify that the villagers are facing economic problem and realise the need of action to resolve the problem. Explains terms and conditions under which CBA-II can assist them (i. e. if they opt for cooperative based action, which will be strictly for small farmers only);

·  Hold this kind of dialogue in each settlement to ensure that most of the small farmers are aware about the proposal;

·  Ask each village to select 4-5 active persons to form initiative group for that village. Explain that the active persons should meet the criteria of genuine leadership.

·  Organise orientation for initiative group to familiarise them with conceptual and procedural details of cooperative development and additional info materials;

·  The initiative groups undertake additional awareness campaign among target households in their respective village

6.3.2 Develop agricultural/service cooperative

·  Collect a list of interested CO-members and other households that are interested for collective action to boost local economy;

·  Hold dialogue with them (at more than one locations as convenient) to verify their interest and their awareness about cooperatives and re-iterate the terms and conditions associated;

A cooperative could be of production type (e. g. vegetable producers), processing type (e. g. fruit drying, cheese making etc.), marketing type (sale of local products in bigger market centres), supply type (buy inputs from market and supply to the farmers), service type (own equipment/machinery and rents services to the members), multiple type (doing more than one activity)

·  Assist the aspiring community members to (a) develop proper statute as per vision of the co-op members and that of CBA – ensuring that the statute incorporates elements of good governance and institutional sustainability mentioned in the section of CO-formation and (b) register cooperative of that fits their need the best. The cooperative registered thus should also be enrolled with respective village council(s) so that it will be easier to seek support from local authorities in future.

·  Organise training for executive members of the cooperative in administrative, financial, planning marketing and conflict management areas and other areas as necessary. Where possible, organise study visit to successful sites.

·  Over time village level cooperatives may develop tendency to federate at rayon level to attain higher economy of scale and bargaining power. In a natural growth such vertical growth do take place and should be facilitated

6.3.3 Conduct participatory planning, priority setting and resource mobilisation

·  Conduct 2nd dialogue with the coop-members to familiarise them with norms of participatory planning and method of need prioritisation. The activity which offers highest economic effect along with meeting the criteria of feasibility, equity, productivity etc. ought to be on the top followed by subsequent lower effective activities.

·  Explore if the priority could be linked with bigger private sector (such as a dairy factory in case of milk collection centre), which would be interested to co-finance a part of the cost.

·  Explore if cooperative could get access to credit from a bank (note that it is often difficult for a cooperative to get access to credit at a rate that could make the business profitable!). If not, then alternative capital window should be explored as an option.

·  Explore if the cooperative members are willing to contribute 5% or more of the cost while CBA will contribute maximum up to 70% of the cost not exceeding 20,000$ equivalent. CBA support will be for community/cooperative object (e. g. water supply for micro-irrigation, milk chilling vat, produce collection shade, business information centre, small agro-machinery/equipment etc.)

·  Share the coop-plan with concerned local council(s) and submit it for debate at the LDF meeting so as to seek possible resource mobilisation from local budget and other supports.

Box - XXI: Various Types of Co-op Activities ­  Markets of fresh products for retail and wholesale commerce – involves collection, sorting and supplying to markets with additional costs; ­  Centers for collection, storage and sorting of fresh products (e. g. vegetable, fruits, milk) – widely popular in Europe; tied with cooperatives or group of producers; could serve as marketing information service centre; ­  Processing activity (e. g. convert local milk into cheese, bird processing, various products from local herbs/flowers, handicrafts etc.); ­  Input supply e. munity micro-irrigation, tractor service, harvesting/threshing service, spraying service, fertiliser supply etc.

6.3.4 Prepare business promotion project