Adding Value Through Experience: The Growth of Herder Cooperatives in Qinghai Province

A cooperative member tending to her livestock on the eastern edge of the Tibetan Plateau

This spring will begin  a busy period for all TBF partner cooperatives as members tend to livestock, prepare for the collection of pastoral products, and connect to larger networks of buyers. As the new cooperatives of Sichuan Province explore their potential, TBF’s earliest cooperative partners—Mintang Herder Cooperative and Drugyu Herder Cooperative of Qinghai—will begin another season of building upon valuable experience. Their accomplishments together with the lessons they’ve learned are helping them to address challenges, bringing greater benefits to their larger communities.

Members of Mintang Herder Cooperative holding their first board election in 2007

“The grassland is your capital,” a local Tibetan expert reminded cooperative members during a recent study tour. Mintang Herder Cooperative (MHC) of Qinghai’s Golok Tibetan Autonomous Prefecture, TBF’s first and longest-running partner cooperative, is demonstrating how the value of their community’s grassland is best realized through collaborative effort. What began as a pilot project in 2007 has steadily grown into a model for both TBF-partner cooperatives and other aspiring herder community businesses across the Tibetan Plateau. MHC was established with a membership of 53 families and has since increased to a total of 75, some 450 individuals. United by the cooperative, this substantial community has as many as 10,000 yak and the ability to present China’s markets with large quantities of high quality pastoral products. MHC’s members are now utilizing the skills and market knowledge they have acquired to raise the earning power of their community.

Weighing in a member family’s butter stock at Mintang Herder Cooperative

Within a few months of its formation, MHC was able to utilize its enhanced ability to transport greater quantities of products further distances. At the end of 2007, they were able to sell 3, 850 kilograms of cheese processed by cooperative members to Hezuo Cheese Factory in Gansu Province, a distance of 427 kilometers from Mintang, making a profit of over 6,000 Yuan, or roughly 700 Euro. Through this sale the cooperative was able to earn 1.6 Yuan per kilogram more than when limited to surrounding markets. That same year, MHC sold a total of 6200 kilograms of butter to a dairy merchant in Aba Prefecture, a distance of 167 kilometers from Mintang, making a profit of 3100 Yuan, or close to 350 Euro. This sale allowed cooperative members to earn .5 Yuan more per kilogram than would have been possible in their local marketplace.

“The Mintang Cooperative not only transported local products farther distances, they also brought products needed by local people back to Mintang from distant markets,” explains a member of the TBF project team. The cooperative took full advantage of their new ability to reach larger trading centers and purchased a bulk supply of such staple products such as barley and wheat flour. By purchasing from these markets, the cooperative was able to secure a better price for such staples and pass these savings on to members by making them available for sale at below-local-market prices. MHC continues to utilize its ability to supply its community with vital staple goods. The following year, MHC transported 10,000 kilograms of wheat flour, 3,000 kilograms of barley and 1,850 kilograms of cooking oil from distant markets, saving members 10 Yuan for each 50 kilograms purchased of these products.

MCH’s initial business connections in new, more competitive markets were made during the first market research tour organized by TBF shortly after the cooperative’s formation. Through TBF’s support of further training and study tours and the cooperative’s experience in the marketplace, MHC has continued to expand its networking abilities and has established links to further buyers. Coupled with increased production, MHC’s business achievements continue to grow. In 2009, MHC collected 12,144 kilograms of butter from both cooperative members and Mintang’s greater pastoral community. They were able to transport their butter 3,000 kilometers to the markets of Lhasa, taking home close to 70,000 Yuan in profits, or nearly 8,000 Euro. And the production of valuable pastoral goods continues at a steady pace. In fall of 2010, MHC was able to collect close to 12,000 kilograms of butter and 8,000 kilograms of cheese from its community for sale in its new network of markets.

Members arriving at Mintang Herder Cooperative’s community facility to submit their products

The experience of MHC is demonstrating the many benefits cooperatives can offer pastoral communities: increased income and the ability to access larger trading networks, as well as added security. MHC has proven its ability to obtain top buying prices for its members’ products, protecting them from the volatility of local markets and being undersold by wholesalers. Tsepal, MHC’s board director, described the recent experience of a cooperative member. A local merchant had approached the member about her dairy products and offered her a price that in the past would have been low but acceptable, as there were formerly too few buyers to be selective. But the opportunities afforded to her as a member of the cooperative made it possible for her to refuse. “I am not going to sell to you at the price you’ve given me,” she said to the prospective buyer. “We have a cooperative and they come to our home to collect our products with a much better price.” The facilities of MHC, which now include not only an office and meeting room but communal storage facility, also give members the ability to store their pastoral products safely for longer periods. This keeps their goods secure and allows them greater flexibility with their sale.

Members of the survey team interviewing a yogurt merchant

Now quickly approaching its fourth year of business, MHC is utilizing its market knowledge and experience to expand in new directions. With MHC’s ability to produce large quantities of high quality milk it will soon begin the production of yogurt for sale in China’s wider marketplace. In the summer of 2010, an extensive market survey was completed with a domestic marketing expert. The survey team travelled widely through Qinghai and Gansu Provinces to assess consumer demand and market trends. A 40-page market survey outlines the data produced from 397 interviews and the findings of visits to regional yogurt factories. MHC has gained an in-depth understanding of regional market demand including insights into ideal retailers and price points, consumer taste preferences, and marketing design. The next step will be the completion of a yogurt cost analysis. The site of the yogurt factory is established and MHC is enthusiastic about their potential in this new, promising market.

A cooperative member presenting a business plan during the business skills training in Xining, Qinghai

As the partner cooperatives of Qinghai grow, TBF continues to offer strategic capacity building training and support in areas ranging from business strategy and grassland management to improved literacy. In December of 2010, board members from both Mintang Herder Cooperative and Drugyu Herder Cooperative completed ‘Start Your Own Business’ training in Xining. The six-day training included the drafting of business plans by each participant as well as lecturers on enterprise management and consumer product development in Tibetan areas. Instructors introduced participants to concepts and tools to aid in the steady  development of their cooperatives and the strategic planning of their new ventures.

Like Mintang, Drugyu Herder Cooperative is taking advantage of its rich dairy resources and ability to produce large quantities of high quality milk. Drugyu Herder Cooperative has formed an alliance with Drugyu Dairy Factory (DDF), a local business with significant regional reach that provides cooperative members with a steady business. The relationship that has formed has proved beneficial for both sides: staff from DDF have taken part in TBF-supported business and financial management trainings and, in turn, DDF gives cooperative members the opportunity to learn from their experience in business, welcoming cooperative members to presentations on DDF’s business cycles and the running of dairy-production facilities. Drugyu Herder Cooperative is also assessing their local resources to find entry-points into new, larger markets. TBF has supported market research tours that have allowed key members of the cooperative to visit some of the most competitive markets in China. One such tour included Baoding in Hebei Province, reputed as the largest processor of raw pastoral materials in the world. Members of the cooperative were also able to visit the leather and fiber markets of Liushi, an important site where materials from across Central Asia are traded, fetching prices much greater than in local Qinghai markets. “The business trainings and study tours opened our mind and broadened our view” said Tsewa, Drugyu Herder Cooperative’s Board Director. This new way of looking at Drugyu’s resources in relation to the greater marketplace has been extended to such local products as mushrooms and silverweed cinquefoil, a root prized in traditional Chinese medicine.

Members of Drugyu Herder Cooperative have remained commited to the development of their community’s business despite particularly difficult challenges. Drugyu is located in Yushu Tibetan Autonomous Prefecture, the site of the devastating earthquake of 2010. Focus on earthquake relief has been paramount but confidence from the surrounding community in the cooperative remains high. The cooperative now stands at a total of 64 member families and in 2010, eighteen additional families applied for membership.

A member of Mintang Herder Cooperative busy at work in his summer pasture

As the cooperatives of Qinghai and Sichuan Provinces continue to grow, TBF will provide crucial capacity building training to support its partners through the various stages of their development. TBF has also put new monitoring and evaluation systems into place to track increases in income and the impact of cooperative membership on herder livelihoods. Ultimately, cooperative members will be able to adapt to challenges through the better utilization of their skills and local resources. The experience of TBF-supported cooperatives is quickly proving the earning potential of herding communities and demonstrating that their  pastoral heritage remains their greatest asset.

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