Co-Operation Brings New Life to a Village: Case Study #1

Backgrounder

Don Doo is a small village of 55 households in northeastern Thailand. It suffered drought for three years. During that time, more than half the households had no rice harvest. The head of the family–sometimes the entire family–had to move from the village to find jobs just to survive. Old people and children were left to take care of the farms.

Things got so bad that many families had to sell their possessions to buy food. Some borrowed money or bought rice on credit from local stores.

The people of Don Doo tried to work together to overcome the rice shortage. They shared a plot of land and grew rice on it. They lent the rice to the people who needed it most. But the community plot was only one and a half hectares. It could never yield enough rice to meet the growing demand.

Finally, the villagers got in touch with a local development organization called GRID – G-R-I-D. The letters stand for the organization’s full name, Grassroots Rural Integrated Development Project.

The people of Don Doo asked GRID to help them explore ways to overcome the rice shortage. GRID gave them a one-word answer:  “Co-operation.”   What the village needed was a co-operative rice bank.

People have been operating rice banks in Thailand for 20 years. They work like any other kind of bank but, instead of dealing in money, rice banks deal in rice. They store it until the rice is needed, and then they lend it out.

GRID asked a group of university students from Bangkok to visit Don Doo and see what the villagers needed. The villagers asked the students to do two things. They said: “Will you help us build a rice barn?  And will you help us start a rice bank?”   The students said they would.

Starting the rice bank: GRID offered 500 dollars to get the rice bank started. Part of the money would be used to buy rice for the bank. The rest would be used to buy fuel for a water pump. During dry periods, the pump would send water into the field the village shared.  Rice harvested from that field would also go into the bank.

But 500 dollars was not enough. The villagers needed to find another way to get more rice for their bank. They knew that other villages built up rice stores during the traditional Buddhist ceremony called “Thod Pha Pa”. In this ceremony, villagers gain spiritual merit by giving food and other basic necessities of life to monks. The monks agreed that any rice they were given could be put into the Don Doo rice bank.

Building a granary: The student volunteers returned to Don Doo with building materials. Together, the villagers and the students built a granary, which they are still using.  It can hold seven metric tonnes of rice. It has a wooden floor, four by five metres, and wooden walls one and a half metres high. It stands a metre or so above the ground on nine concrete posts. The roof is corrugated zinc. There is only one room and one door. Wooden steps lead to the door.

Rules of the rice bank: Each rice bank has its own rules. The Don Doo rice bank works like this. It has two parts. In one part, seed rice is stored until planting time. In the other part, food rice is stored until villagers need to borrow it.

Every villager belongs to the bank, and every family contributes rice to it. They also work as a group on the community plot. The whole village turns out to plough, transplant seedlings, and harvest the yield of that plot. Then that rice goes into the bank too.

In the first year, the people of Don Doo contributed 300 kilograms of rice to the bank from their own harvests. Four years later, the co-operative has two rice barns holding ten metric tonnes of rice. Much of it is circulating among the members.

The bank lends rice to the co-op members at good interest rates. Each family can borrow up to 150 kilograms of rice at a time. There are two times of year when loans are usually made–just before the rainy season, and soon after transplanting.

The co-op sets the interest rate. Recently, the members agreed that 20 per cent would be a fair rate. This means that if a family borrows 150 kilos of rice before a harvest, then after the next harvest they must pay back the 150 kilos they borrowed plus 30 kilos of interest–a total of 180 kilos.

The rice bank co-operative is managed by a working committee. The five members of this committee are elected by the community. They consider loan applications, distribute the rice loans, and collect the repayments after the harvest. They do the accounting and report to the members at a general meeting held each year before the loans are distributed.

There is also an advisory committee of four members. They oversee the operation of the rice bank.

The women’s savings group: The villagers of Don Doo have not stopped with the rice bank.  They also formed a women’s savings group. A few women observed savings groups in two other villages and decided they wanted to start their own. They wanted to encourage women to save money and help each other out in hard times. Fifty-nine women joined the Don Doo women’s savings group. Only women were involved because everyone felt that the women were much better at managing money. The men agreed that the women had the right and the skills to run this co-operative.

To join the group, the women had to pledge between 50 cents and five dollars each month. They could borrow up to 50 dollars every three months. Four women were elected to the management committee.  They collected the members’ monthly payments. They kept the accounts. And they reviewed loan applications to decide who would get the loans and how much they would get. The committee determined this based on the applicant’s needs and the money available in the fund. The woman they elected president could not read, but because she had good business sense she was ideal for the job.

Every month, a representative of the management committee collected the pledged savings from the members and took them to the president’s house. The treasurer recorded the deposits. The interest on loans from the savings co-op was 10 per cent for a three-month period. Regular loans had to be paid back with interest in three months. Emergency loans had to be paid back in one month, with no interest. Usually the women borrowed money to pay for food, medicine, and their children’s schooling. The loans were not big enough for investment in agricultural or other production. After about four years, the members received dividend payments based on the contributions they had made to the fund.

The savings group had one problem early on. Some members used other members’ names to borrow money. The co-operative solved this problem by making a new rule that loan applicants had to meet with the committee in person when applying for a loan.

By working together the people of Don Doo have made great progress in fighting the many problems they face. And, as the drought persists, they will be challenged to keep the rice bank and the women’s savings group operating. The people of Don Doo still struggle to survive, but with co-operation, they are winning the battle.