Cooperativa Primavera Case Study

Monday, October 10, 2016

Julio Diaz needs to identify an effective strategy, for how to intervene in Cooperativa
Primavera administration, in order to address the various accusations of corruption and foul
play against its own cooperative members.
Julio was the former manager of Cooperativa Primavera from 1994 through 2001, when he
left to try and replicate with other cooperatives, the success he was able to attain in
Cooperativa Primavera. He has great relationship with local and international groups,
through which he was able to leverage his influence, in order to adapt Cooperativa
Primavera processes, create MoralvarCoffe and organize CrediPrimavera, which resulted
in greater coffee production yields, better quality, higher prices and wholesome
microfinancing opportunities for the communities working with Cooperativa Primavera to
optimize their production and improve their stander of living.
But currently things have change, Cooperativa Primavera is now lead by Miguel Montes,
son of one of the cooperative members and who, thanks to the support of the cooperative,
had recently finished his studies in business administration in the Moralvar capital.
Miguel has shift the focus of the Cooperative strategic plan from a means of driving
sustainable social development for the region, to a mere focus on fictitious accountability
reports that the cooperative presented to the INGOs and certification bodies. In order to
maintain the JustoFair certification and keep the funds from donors and international nongovernmental organizations flowing in, as well as their market premium coffee prices. Yet
the common producer members and the community are not experiencing the positive
impact which the cooperative reports indicate.
It is now imperative that Julio Diaz, who born in a coffee producing family and father was
one of the founding members of Moralvars first cooperative, develop a way to resolve the
issues in Cooperativa Primavera and attend to the concerns of the cooperative members,
while ensuring everybodys physical wellbeing and the long-term image and credibility in
this business model he so industriously developed. As this matter not only has strong
emotional - family ties to him, but more so, if word of these malpractice became public, it
will hinder the image of Moralivar cooperatives and impact the efforts he is carrying
forward to replicate this once successful business model.

Now in making an initial analysis, biased by a solution purely build around the rules of
formal markets, one may say that Julios predicament is simple and should be address
through the legal system. But as Julio understands, this is a highly informal market
environment, where social ties and influence supersede the law and is characterized by
corrupts - fractured government institutions, which lack execution and much less can be
trusted with such delicate and serious accusations.
Cooperativa Primavera is a hybrid organization, having strong relations with informal
markets, from which they source the coffee. And also strong ties to formal markets, where
the coffee is certified and commercialized, and additionally have key relations with donors
and INGOs, that help finance CrediPrimavera, base engine of the Cooperative activities and
Julios initial mission. So understanding he is dealing with a social enterprise, the matter of
building a robust mechanism to balance the needs and expectations of both formal and
informal actors, in midst of resolving this complex situations, becomes of paramount
priority.
Yet, as dire as this scenario with which Julio is confronted may seem, he is also surrounded
by various positives elements that he can leverage in his behave. He has the trust of many
of the cooperative members, so much so that they trusted him enough to present their
complaint to him, assuming the risk of the known Cooperatives administration retaliations
if they found out. Mr. Diaz also had direct relations with several INGOs and most
importantly he had the prestige of being the architect and builder of Cooperativa
Primaveras successful business model, so at least he will have people ears, if he suggested
ways to create additional value.
Therefore, taking in account the root and motivation behind the demise of Cooperativa
Primaveras institutional fortitude and its social mission, which is the greed for money,
resulting in corruption and other malpractices. Julio will need to sale to Moralvar coffee
business community, a plan that will help them make more money, but also disguisedly
start taking away power from the cooperatives management, through added visibility of
administrative documents and the social impact that cooperative are having. For which I
recommend Mr. Julio Diaz to follow the action plan here detailed:

Julio should meet with Miguel in an informal setting, and let him know that it has
come to his attention that some administrative and reporting activities in
Cooperativa Primavera have various areas of improvement as well as their
community programs. And that he is letting him know, because he trust that he is
capable of fixing these issues in a timely manner and additionally will like to ask
Miguel to join him on a country wide initiative to replicate the Primaveras business

model in other cooperatives, with additional funds he will collect through a new
NGO.
o Julio should suggest if he would like to join him full time in developing and
promoting this plan, and Miguel may decide to quit his position.

Set a meeting with donor and INGOs to create a fund, administered by a non-profit
organization, led by Julio and four additional influential members from Moralvar
coffee industry, who he trust and align with his vision for social enterprise
cooperatives.

The objective of the new Moralvar NGO will be to raise greater funds, through the
presentation of a united and greater scale visibility off all of the great
accomplishment that are possible with business models such as Cooperativa
Primaverss.
o They would have the monopoly of all non-commercial funds designated to coffee
related activities and will distribute them accordingly.
o NGO will have robust process to administer founds including a real time visibility
of their internet website of all incoming fund and distribution. Additionally every 2
years board members except Julio will be replaced.

Set a meeting with MoralvarCoffee leadership to get their buy in for this new NGO
which will be govern independently, but function under the MoralvarCoffee brand
name, as their public relations and marketing support agent.
o Ideally one of the MoralvarCoffee leadership team members will be on the
NGO board.

Meet with all coffee cooperatives and sale them the idea behind the new NGO and
the fund rising power they will be to continue developing the coffee business,
producers and communities.
o To continue or start receiving funds the will have to provide monthly
accounting and administrative reports. Be opened to unannounced audits.
o NGO will conduct quarterly follow up of community programs.

Partner with government institutions, local and international media and organization
to launch a global campaign in regards to the sustainable coffee business model and
the existing and new opportunities that will be offered to cooperatives, producers
and surrounding communities.
o Campaign will spot light new interviews every 6 months, of random selected
cooperative members, producers and community members.

Build interdependent system with the roasting and packing companies, so they
provided reception data and additionally with sales volumes and prices reported by
MoralvarCoffee the NGO will validate the data provided by the cooperatives
included in there program.

Any cooperative whos administrative, accounting or social report is found to be

inconsistent, will be notified and provide with 15 days to amend or explain the gap.
If after 2 opportunities there is no clear answer and an action plan is not in place, the
NGO inconformity finding will be published and all support will be cut and the
cooperative will not be able to commercialize their product through
MoralvarCoffee.
o If the cooperative is not able to resolve the inconsistency, but are willing to
accept external consulting from the NGO and implement all
recommendations, there will be no corrective actions enforced.

Although the suggested curse of action will take some time, if implemented, Julio will be
able indirectly resolve the issues at Cooperativa Primavera and future matters of the same
sort, while further developing his dream of replicating this social enterprise business model.
By adding international visibility to Moralvar coffee business, he will be able to ensure the
creation of shared value as the producers will have greater funds to develop their farming
activities and communities, and the cooperatives will be more lucrative as more producers
join, they have higher yields and they are able to guarantee premium prices in the
international markets.