Scotiabank Impact Story: Building a Cooperative Future in Peru: the Manantial de Vida (Spring of Life) Dairy Co-op

The town of Cabeza de Toro sits about five hours south of Lima, in the agricultural heart of Peru. For the past decade, this agricultural center has been home to the Manantial de Vida (Spring of Life) Dairy Services Cooperative. Today, this farmer-owned cooperative produces and collects milk to feed Peru’s growing population, while simultaneously providing dairy farmers in the region with a viable income.

Kate Otiniano, a Social Responsibility Specialist at CrediScotia Peru, has worked closely with the co-op as it has expanded its capacities over the years. “Today those who work with the co-op are better off than they ever have been before,” she says. “But it wasn’t always this way.”

Challenges

Before establishing the Cooperative, dairy farmers had one option to get their product to market: sell their milk to intermediary collectors. This arrangement allowed collectors to take advantage of the dairy farmers, often forcing them to sell their product at prices that were well below market. At times, farmers would even have to throw away milk — the source of their livelihood — simply because someone had forgotten about them on the collection route.

Formalizing business

In 2013, a CARE Peru/CrediScotia joint endeavor helped members of the dairy farmer community receive financial training and learn entrepreneurial skills necessary to grow their business.

Through the program, these farmers recognized the need to create a formal business in order to enact change. Only as a unified group could they have enough collective power to ensure that their prices and products would be respected. Kate explains, “A high percentage of businesses in our country continue to be informal. Through capacity building and support in formalizing their businesses, they have the opportunity to grow with their businesses, and they in turn contribute to the growth of Peru's economy.”

The birth of a co-op

The Manantial de Vida Dairy Cooperative was created in 2013. However, learning how to start and operate a business — forming a business plan, investing in new equipment, ramping up production — was a challenge for the dairy farmers.

“Participants quickly applied the things they learned in the training workshops about business plans and financial education,” remembers Kate. “By teaching business management in the real-life context of their lives, the program made it easy for them to learn.”

CrediScotia further enabled the cooperative by providing members with access to seed capital. Thanks to the training that co-op members received, they could see that using credit to accomplish clear business objectives is a fundamental part of financial growth. The cooperative used the money from these loans to greatly increase their alfalfa sowing — which is vital for feeding livestock and strengthening livestock with vitamins. As a result, daily milk production increased, along with the co-op’s revenue.

Helping customers become better off

Today, the cooperative has become an essential part of Cabeza de Toro’s local economy. The co-op now contains 38 formal members as well as 150 other small dairy farmers in the region who now sell their milk to the Cooperative. It has even begun facilitating health and educational campaigns for members and their families. “The benefits of the co-op are being felt by the entire community. Other dairy farming families no longer have to be concerned about where they will sell their milk.”

The story of the Manantial de Vida Dairy Cooperative testifies to the power of entrepreneurship. We can truly create a win-win situation where we benefit entire communities by helping businesses grow and succeed.