Collective action is essential for agricultural risk management and rural development. The role of farmer organisation has received increasing attention in recent years, both from governments and donors. To lower coordination and transactions costs in markets, smallholder farmers should operate in an organized manner. However, such processes are not easy to achieve.
Coordinated action, in whatever form, will encounter inherent tensions caused by possible opportunistic behaviour by individual farmers towards the group, and/or opportunistic behaviour by the group towards the group members.
Especially when a group is organized around economic of financial activities there is a need to establish rules, trust and discipline. Collective action to improve risk management in agriculture is impossible without a good internal organisation of groups. Innovative insurance systems, appropriate storage facilities, better market information systems and advocacy for better policies, may all fail when the group does not find the right balance between the interests as a group versus individual interest of member or subgroups of members.