Globalization with a human face:
In Nicaragua, Worker Co-ops Triumph
By Michael Woodard
For more than ten years the Jubilee House Community (JHC) has
worked in Nicaragua, focusing in five general areas: sustainable agri-
culture, appropriate technology, sustainable economic development, health
As the Nicaraguan economy has continued to suffer from "free
market" globalization through the 1990s and into the twenty-first
century, JHC’s work has focused more and more on providing alternatives
to Nicaragua’s current role in the neo-liberal global economy.
Today, JHC works with five worker-owned cooperatives to provide workers
with jobs and control of the workplace. The five co-ops include one
service co-op, three industrial co-ops, and an agricultural co-op that is
actually eleven production cooperatives and a second-tier marketing
The agricultural co-op includes approximately two thousand subsistence
farmers who produce a variety of organically certified products, such as
sesame, peanuts, coffee, cotton and honey. Unfortunately, due to Nicaragua’s
dismal economic situation, there is no internal market for organic
products, so ninety-nine percent of them are exported to the US and
The farmers are not allowed to take land out of production of local
foodstuffs. Nor are they allowed to clear forested land for organic
planting. Nicaraguan credit policy is to loan to large agricultural
producers, not to small farmers. So, due to lack of credits for small
farmers, there is plenty of abandoned, arable land in Nicaragua. Organic
production creates the conditions for credits and reintroduces this
abandoned land into a sustainable productive cycle. Because organic
products bring a price premium, and because organic products are
considered "non-traditional" here in Nicaragua, there are
credits available for such production even on a small scale.
Finding domestic and export markets
The service co-op is a collective of security providers. Due to
increasing poverty and the resulting disintegration of societal norms, a
high rate of petty crime in Nicaragua has led to increased demand for
security guards. Both JHC and the co-ops they work with were employing an
outside security company to provide those services. When a theft occurred,
the company paid off the claim by docking its workers’
pay three times the amount of the claim.
JHC helped the workers file a claim with the Ministry of Labor, which
the Ministry ignored. Despite this, we then helped them form their own
cooperative. Now they do the same job, but, working for themselves, are
paid almost double the salary they had been making.
The three industrial cooperatives include a construction materials
co-op that produces block, paving stones, and prefab posts and slabs;
a ceramics co-op that makes cheap, effective ceramic water filters;
and a women’s sewing cooperative that specializes in clothing
made from certified organic cotton.
While the construction materials and ceramic co-ops sell their products
locally, the sewing co-op – again due to the lack of any market for
organic goods in Nicaragua – is focused on exports.
In April, 2004, the co-op registered to become the world’s first
worker-owned free trade zone, allowing it to compete on an equal footing
with sweatshop companies, while providing just pay, fair working
conditions, and worker control of the workplace.
Making membership meaningful
Based on an analysis of cooperatives in Nicaragua during the 1980s and
early ‘90s, membership has been made intentionally hard to obtain. In
the 1980s the Sandinista government promoted cooperatives by giving easy
credit, cheap equipment, and a guaranteed market. When the Sandinistas
lost power in the 1990 elections and the government turned against
cooperatives, many co-ops collapsed with the notion of "easy come,
easy go". To offset this attitude:
A prospective member must work for a year in the co-op first, and
complete forty hours of training in cooperativism and another forty hours
in business management;
At the end of the trial year, the pre-member is evaluated by fellow
workers, who either issue an immediate or a conditional invitation to join
(the latter highlighting areas that need improvement and a stated period
of time to demonstrate that), or deny membership.
Members pay a buy-in fee in cash or sweat equity depending on the
circumstances of the co-op at the moment. A member’s buy-in fund draws
interest, and profits – when not distributed in cash – are added to
the fund. This creates a financial package that is available when a member
leaves the co-op. Meanwhile, the co-op can borrow from the fund at below
market interest rates when in need of capital.
Access to credit completes the loop
To assure adequate financing for the cooperatives, JHC operates a
revolving loan fund that makes capital available to the co-ops at
interest rates one-sixth the market rate of thirty-six percent.
In the case of the agricultural co-op, access to affordable credit has
many advantages. It puts production costs within the means of the farmer.
Also, farmers can receive payment for crops at harvest rather than waiting
until the goods are delivered, which can sometimes be two months or more
after harvest. Finally, it makes funds available to process commodity
crops, bringing a higher "value-added" price to the farmer.
In the case of the construction materials and ceramic co-ops, the
revolving fund assures credit for raw materials and capital improvements.
Providing funding for timely capital improvements is essential in a
country where equipment is normally allowed to completely deteriorate
before being replaced, with the resulting lost productivity and decline in
Access to credit has allowed the women’s sewing cooperative to change
from a cut-and-sew operation, which furnishes almost no profit margin, to
a full-package provider that offers a finished product for a premium
price. Full package service also attracts many more clients: in the first
three months of 2004, production soared to 116 percent – and gross
income to 140 percent – of the previous year’s
Supporting the creation and development of worker-owned cooperatives is
not easy work. There are many obstacles, both internal and external, to
the co-ops’ success. However, as these Nicaraguan enterprises reveal,
the model does provide a truly viable alternative to the neo-liberal model
of treating workers as just another commodity.
Michael Woodard is a founding member of Jubilee House
Community (JHC) and its Center for Development in Central America. JHC is
a non-sectarian, faith-based community that has focused on service
ministry since 1979. FMI: www.jhc-cdca.org
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