Village Cooperatives and the Illusion of a Solution
The government places great hope in the Village Cooperative programme (KDMP). This initiative is projected to become a driving force for the village economy, shortening distribution chains while strengthening community welfare. On paper, the idea sounds promising. Cooperatives have long been recognised as economic instruments that prioritise mutual cooperation and collective ownership.
However, a more fundamental question needs to be asked. Are the problems of the village economy truly caused by the absence of cooperatives? Or are cooperatives merely being used as an instant answer to issues that are, in reality, far more complex?
I tend to see the problem as the latter.
Villages in Indonesia are not actually poor in potential. They possess agricultural land, livestock, fisheries, forest products, crafts, and a vast number of micro-enterprises. The persistent problem is not the absence of shops or business entities, but rather the weak economic structure supporting village community activities.
Farmers still sell unhusked rice at low prices because they lack storage and processing facilities. Fishermen remain dependent on middlemen because access to capital and distribution is very limited. Micro, small, and medium enterprises struggle to expand their markets because the marketing chain is controlled by larger players. Meanwhile, village products often lose out in competition with mass-produced goods from large industries.
These problems are not automatically resolved simply by establishing a cooperative.
Ironically, various reports indicate that many village cooperatives are built without adequate market studies. Some are established merely to chase programme targets. Others are in less strategic locations. In several regions, the goods sold by cooperatives are even sourced from the same distributors that supply modern retailers.
This is where the paradox lies.
How can a cooperative be said to strengthen the local economy if its supply chain still depends on large distribution networks? How can a cooperative be said to side with village farmers if local products are not prioritised? If the business model is the same as a modern minimarket, the only difference is the signboard.
Yet the village economy needs more than just a new outlet. What is needed is a change in its economic structure.
A cooperative is not the end goal. It is merely one instrument. An instrument will only work if the system supporting it is healthy. Without changes to the production, distribution, financing, and market access systems, a cooperative will only become a new building standing atop old problems.
This is where the state’s role becomes decisive.
The state must not stop at merely encouraging the establishment of cooperatives. The state must ensure farmers have access to productive land, affordable production inputs, adequate irrigation, and fair prices. The state must also protect fishermen from exploitative trading practices, strengthen village-based processing industries, and build a distribution system that favours small producers.
As long as the economic structure allows the largest profits to be enjoyed by lengthy trading chains, cooperatives will only become small players in a system that was never designed to favour the people.
From the perspective of a just economy, the state has a mandate to ensure that wealth does not only circulate among certain groups. The state is not merely a regulator that allows the market to operate on its own, but also a guarantor of equal economic opportunity for all citizens. Favoring the weak is not an act of charity, but a prerequisite for the wheels of the economy to turn healthily and for the benefits of development to be felt more widely.
Therefore, village economic development must not stop at institutional formation. What is far more important is building its ecosystem.
Agricultural cooperatives should become hubs connecting farmers with harvest processing, storage, financing, and marketing. Fisheries cooperatives must strengthen the bargaining position of fishermen, not just sell daily necessities. Village cooperatives must also become homes for local products so that added value continues to circulate within the village, rather than flowing out.
Another equally important matter is governance. Many cooperatives fail not because the idea is wrong, but because they are managed haphazardly. Administrators are chosen based on social proximity, not competence. Transparency is weak. Accountability is low. As a result, cooperatives lose the trust of their own members.
If this pattern continues to repeat, new cooperatives will only replicate the failures of old ones with more magnificent buildings.
We certainly hope the KDMP does not end up as an administrative project bustling during its inauguration but deserted in economic activity. Its success is not measured by how many buildings are constructed, but by how much farmers’ incomes increase, how many local products are absorbed, and how strongly the village economy can stand on its own feet.
Ultimately, villages do not need solutions that appear quick but are fragile. Villages need policies that touch the root of the problem, strengthen production, improve distribution, and present the state as a protector of the people’s interests.
Cooperatives can be part of the solution. However, cooperatives will never be the solution if the economic system surrounding them continues to allow inequality to proceed as usual. For what needs to be built is not just the cooperative itself, but the economic justice that forms the foundation upon which the cooperative stands.