The benefits of the inclusion of small farmers in the South and their associations in global production networks are still contested. The rules governing the behaviour of actors, decision-making and the distribution of benefits form a system of governance that actors build in relation to the local and global productive sector, their position in the production process and their power base, among other factors. This governance system defines the income of small farmers in developing countries, which is usually a fraction of the price at which the final products reach consumers in developed countries. While some authors claim that the inclusion of small producers in global production networks is an effective method to reduce poverty (Humphreys, 2008), others believe that it is simply another form of exploitation that increases the vulnerability and dependence of small farmers (Ponte, 2008). Recent research shows a myriad of intermediate outcomes, which depend on the conditions in which small producers are integrated in the chains of international buyers (Helmsing 2011). The collective action of small producers and farmers in associations, unions and other organizations studied by the economics of participation are crucial to capture a larger share of revenues, although a number of these organisations fail to strengthen their capacities and survive the challenges posed by actors with more power and resources. Collective action is crucial to increase the income of small farmers, so it becomes critical to understand under what conditions these organisations and associations are able to develop their “local agency”, defines as the capacity to understand a current situation and act upon it, as defined by Long (1990). Local agency may facilitate the provision of credit, representation, technical assistance, and marketing services, among others. The proposed article seeks to investigate the problem of generating local agency by studying the case of the Nicaraguan association People for Community Action (PAC), which managed to restructure some of the economic relations of the local production network. PAC began as a rural microcredit project of the international NGO World Relief in 1986 and turned into an association formed exclusively by Nicaraguan small farmers with professional management, democratic decision-making by assembly, and the capacity to self-finance its operations of small credit, technical assistance, marketing and community enterprises. The study explores the conditions that enabled PAC to achieve these results, the challenges encountered and the solutions tested over a process of trial and error that spans over 25 years and continues today. A review of secondary data was done first, including project evaluations and previous research collected by international cooperation agencies in the Netherlands. After several interviews via Skype, two periods of fieldwork were conducted in one of the coffee growing areas of Northern Nicaragua in 2010 and 2013. The research found that the effectiveness of PAC to increase the income of small farmers is related to: a) the process by which World Relief withdrew from PAC when it became independent, b) the gradual professionalization of its leadership, c) complex financial mechanisms to generate resources to support itself, and d) the construction of a web of formal and informal interests in the local production system that tie up divergent interests.

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Persistent URL hdl.handle.net/1765/103835
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Gómez, G.M. (2014). The Nicaraguan farmers’ association PAC: from providing international aid to reorganizing the local production system. Retrieved from http://hdl.handle.net/1765/103835