Aquaculture farmer organizations and cluster management: concepts and experiences

Strong relationships with the private sector
The success of an FO depends very much on its ability to integrate into the wider 
economy and participate effectively in the relevant market chain or chains. As 
Vorley and Proctor (2008) suggest, market inclusion is not just about market access. 
Sustained market inclusion is much more difficult and requires stronger linkages 
between producers and consumers and other actors in the market chain, along with 
responsiveness to what the market wants and may require. A good business rationale 
based on commercially viable activities and strong relationships with the private 
sector are key for FOs to succeed in achieving their economic and market-related 
objectives. In a review of FOs, Hussi
 et al.
(1993) concluded that FOs must be treated 
as private enterprises. All of the aquaculture FOs reviewed for this study have put 
great emphasis on commercial viability and developing relationships with private-
sector input suppliers for feed and seed, processors, retailers and buyers, and the 
Samroiyod Cooperative in Thailand and the NaCSA’s farmer societies in India have 
become successful partly through their strong relationships with the private sector 
and their chain vision. Donors and NGOs are also focusing more and more on FOs as 
commercial enterprises and promoting linkages with the private sector, whereas before 
there was a lot more suspicion of private enterprise.
An enabling institutional environment
Many of the issues discussed above regarding sound governance and management and 
internal and external relations are affected by the institutional environment in which 
FOs operate. As mentioned in Chapter 2, the institutional environment (including 
both informal and formal rules) will affect an FO’s ability to function successfully. 
Informal rules based on custom and tradition may be difficult to change; however, 
formal rules such as government policies can be designed in ways that can enhance FO 
activities and the chances of achieving their objectives. 
Most countries have legislation in place for governing FOs, mainly related to 
formally registered cooperatives
16
but also affecting other legally registered FOs such 
as associations. Well-designed and properly enforced laws can help promote good 
governance, protect the interests of FO members and encourage participation. However, 
badly designed laws can suppress FO development. According to Shah (1995), laws 
must give cooperatives and other FOs greater autonomy from state regulation, allow 
the employment of professional managers, separate day-to-day managerial functions 
from the policy-making functions of the board of directors, enhance democratic 
16
Many cooperative laws were designed when cooperatives were still tools of state development planning 
and had little autonomy. The situation cooperatives face now is very different. They need to be flexible 
enough to respond to increased competition, commercial pressures and changing market conditions. 
Thus, cooperative law needs to be reformed, and this has been taking place recently in some countries 
(Stockbridge, Dorward and Kydd, 2003).

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Aquaculture farmer organizations and cluster management – Concepts and experiences