Cooperatives in India:

An overview
Speaker:
Deepak Singh
MBA-Agribusiness
 “I know of no other instrument so
potentially powerful and full of social
purpose as the co-operative
movement” -
Smt. Indira Gandhi

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 CO-OPERATION
Derived from Latin word
Co - “Together”
Operari- “Working”
It is a sort of association of persons,
joined for common purpose which they
can not achieve separately.

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Definition

A co-operative is an autonomous
association of persons united voluntarily
to meet their common economic, social
and cultural needs and aspirants
through a jointly owned and
democratically controlled enterprise.

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Values
 self help,
 self responsibility,
 democracy, equality and solidarity.

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Principles

Voluntaryand open membership.

Democratic member control.

Member economic participation.

Autonomy and independence.

Education, Training and Information.

Co-operation among cooperatives.

Concern for community

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Cooperatives in INDIA

The first known mutual aid society in India was
probably the ‘Anyonya Sahakari Mandali’
organised in the erstwhile princely State of
Baroda in 1889

The seeds of cooperation in India were sown in
1904 when the first Cooperative Credit
Societies Act was passed.

Cooperative Societies Act in 1912 to strengthen
non credit cooperatives.

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The cooperative credit system has the largest
network in the world and cooperatives have
advanced more credit in the Indian
agricultural sector than commercial banks.

1956- National Cooperative Development &
Warehousing Board.

1963-NCDC

1967- VAMNICOM

2002- Multi-State Co-operative Societies
Act
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Current status

580,000 cooperatives of all types;

400 million individual members;

375,000 agricultural cooperatives;

280 million farmer-members

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Important Segments of Indian
Cooperatives

Cooperative education and training

Agricultural credit cooperatives

Non agricultural credit cooperatives (urban
banks)

Cooperative marketing

Tribal cooperatives

Fertilizer cooperatives

Consumer cooperatives

Weaver cooperatives

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Contd………

Sugar cooperatives

Cooperative spinning mills

Industrial cooperatives (non weavers)

Dairy cooperatives

Fisheries cooperatives

Housing cooperatives

Labour cooperatives

Poultry cooperatives
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Market Share

In fertilizer production and distribution the
Indian Farmers Fertilizer Cooperative (IFFCO)
commands over 35 percent of the market.

In the production of sugar the cooperative
share of the market is over 58 percent and in
the marketing and distribution of cotton they
have a share of around 60 percent.

The cooperative sector accounts for 55
percent of the looms in the hand-weaving
sector.
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Cooperatives process, market and distribute
50 percent of edible oils.

Dairy cooperatives (70% milk share)operating
under the leadership of the National Dairy
Development Board and through 15 state
cooperative milk marketing federations has
now become the largest producer of milk in
the world.

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Deepak Singh Cooperatives in India 14
Dairy Cooperatives
First Milk Producers Cooperative Union: Kaira- Gujarat- 1946

Number of Dairy Cooperatives : 121,180

Membership Total (in Million) : 12.95

Women Membership (in Million) : 2.96

(Millions US$)

Share Capital : 83

Working Capital : 465

Assets : 413

Turnover (Total) 2004-05 : 1206

Total Milk Procured by Coops (Mill It.) : 7325

Liquid Milk Marketed per day (Mill It.) : 15

Balanced Cattle feed Production : 1.09 million tns

Data Source: NCUI: Indian Co-operative Movement – A Profile 2006.

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Sugar Cooperative
First Cooperative Sugar Factory: Parwara Maharashtra – 1948

Number of Cooperative sugar mills : 316

Membership Total (in Million) : 5.14

Growers Membership : 92.5 %

(Millions US$)

Share Capital : 716

Turnover (Total) 2004-05 : 285

Total cane crushed (Mill tns.) : 44

Total Sugar Produced (Mill tns.) : 7.8

Data Source: NCUI: Indian Co-operative Movement – A Profile 2006.

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National Cooperative Union of
India (NCUI)

Apex body in India which represent all
the segments of Indian Cooperative
Movement.

It was established in 1929 as All India
Cooperative Institutes Association.

Was rechristened as National
Cooperative Union of India (NCUI) in
1961.

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Functions of NCUI
 Promotion and Strengthening of Cooperative
Movement
 Cooperative Education and Training
 Development of Inter-Cooperative Relations
 Collection and Dissemination of Co-operative
information
 Promotion of International Co-operation and Co-
operative Trade
 Voicing of Co-operative Opinion and views
 Provides 100% grant in aid for “Intensification of co-
operative education in co-operatively under developed
states”.
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Cooperative Credit
Organization

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State Cooperative Bank(SCB)

Members : DCCB & PACS

Link between RBI & PACS

Help State Govt. in formulating
Development plans regard to co-op.

Banker’s to DCCB, supervise, control &
guide

Normal banking operations

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District Central Cooperative
Bank(DCCB)

Members : individuals & societies

Guide, Supervise & inspect PACS

Non credit activities : supply of seeds,
fertilizers & other consumer goods.

Provide requisite funds to the societies

Accept deposit both from public &
societies.

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Primary Agricultural
Cooperative Societies(PACS)

Minimum number required is 11;

Members buy shares;

PACS raise money from district banks
for lending to members for purchase
of farm inputs – fertilizer, seeds, farm
chemicals, farm implements, land
improvement, agro-processing,
warehousing etc.

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Farmer Service Society (FSS)

FSS introduced in the country in 1973
on recommendation of National
commission on agriculture (NCA).

A commercial bank or central
cooperative bank can launch a FSS.

A FSS initially covers around 8 to 10
villages and then subsequently the
whole block.

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32 State Cooperative Banks;

850 District/Sub-district Banks; with12600
Branches;

1.12 lakh PACS

World’s largest agri credit system;

Central financing through NABARD;

8% lending rate [2% subsidy by Govt];

PACS major users for agri production;

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Credit status

7 SCBs & 143 DCCBs do not comply
with minimum share capital requirement

More half of the PACS & more than 500
PCARDBs are incurring losses

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Reasons for failure os
Cooperative Credit Societies

Increasing no. of commercial banks in
rural areas

Fraud & Corruption

Financial Crises

More political intervention

Lack of Training

Lack of technology

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 National Agricultural Cooperative
Marketing Federation(NAFED)

Estd 2nd October 1958

To facilitate, coordinate and promote the
marketing and trading activities of the
cooperative institutions in agricultural and
other commodities, articles and goods

Total internal trade Rs. 408045.96 lakh

Total International trade Rs. 98458.88 lakh

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National Cooperative Housing
Federation (NCHF)

Set up in 1969

4 tier structure – housing coop, distt.
Federation, State fed, & national.

26 state level federations

92,000 housing cooperatives with6.6 m
members

3 million dwelling upto 2008

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Issues

Heavy erosion in their democratic and autonomous
functioning.

Most of the grassroots co-operatives are not self-reliant
and heavily dependent on Government Assistance.

Management not responsive to the needs of the members
and not truly accountable to them.

Sickness is increasing resulting in large number of defunct
/ dormant societies.

Co-operatives are not well equipped to face the challenges
of open and competitive market oriented economy. As a
result, they are not only loosing ground in their traditional
areas of activities but also unable to enter into new
ventures

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Constraints

Elections are not held regularly.

Supersession of Board of Directors and appointment of
Administrators for undue longer period.

General Body meetings are not held regularly.

Audit is not professional. It is also not conducted in time.

There is undue and unnecessary political interference and
bureaucratic control even in their day-to-day affairs.

Unprofessional management leading to high operational cost
and delayed delivery of services to members.

Lack of member participation.

Poor system of monitoring and inadequate checks and
balances.

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Problems

The products are neither popular among
customers nor profitable to the institution
themselves.

Stiff competition from private

Poor participation of members

Weak financial base of societies

Absence of professional management

Ever growing corruption and frauds, etc

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Suggestions
1. Cooperative Reforms

Simplified procedure for registration

Removal of unwanted govt.
interferences

Members of non political background

Defined rules & procedures

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2. Administrative Reforms

Debureaucratisation

Professional Management & staff

Skill building/ skill upgradation of staff

Adoption of uniform accounting
procedures.

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3. Business Reforms

After scanning environment
development plan should be made

The plans should be quantifiable &
measurable with specified time frame
for achievement.

Empowered monitoring scheme.

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Some Success Stories

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 AMUL-Anand Milk-
producers Union Limited
• Formed in Dec,1946, & started a dairy
cooperative movement in India under the
leadership of Varghese Kurian.
• It is a brand name managed by an apex
cooperative organisation, Gujarat Co-operative
Milk Marketing Federation Ltd. (GCMMF),
started with 2 village having 250 lt/day milk
which today is jointly owned by some 2.8
million milk producers in Gujarat, with milk
collection average of 10 million litres/day
• It is also the world's biggest vegetarian
cheese
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AMUL………
13 : District coop. milk producers' Union
2.8 million : Milk producing members
12,792 : Village Societies
10 million liters : Daily(avg) milk collection
60 percent milk : Converted to value added
594 Mts. : Daily milk drying capacity
2640 Tns/ day : Cattle feed manufecturing
1.05 Billion US$ : Annual Turnover
28 Million US$ : Exports

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 • Automatic Milk Collection System units
(AMCUS) at village societies were
installed in the first phase to automate
milk producers logistics.
• AMCUS facilitated to capture member
information, milk fat contents, volume
collected and amount payable to each
members electronically via a plastic
card for identification.
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Now officials at AMUL are planning to
upgrade the plastic card to SMART cards to
facilitate farmers to withdraw money from
ATM’s

Initiatives have been taken for online order
placement for AMUL’s products as a result of
which AMUL is today exporting products to
West Asia, Africa and U.S.A.

AMUL also planning to double the production
by 2020 to fulfill the future demand.
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Indian Farmers Fertiliser Co-
operative Limited (IFFCO)

Indian Farmers Fertiliser Co-operative
Limited (IFFCO) was registered on
November 3, 1967 as a Multi-unit Co-
operative Society at Kandla.

The number of co-operative societies
associated with IFFCO have risen from
57 in 1967 to more than 38,155 at
present, undertaking distribution of its
fertiliser through these co-operative
societies.
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Suguna Poultry

Suguna's Success of an Extraordinary Vision Incorporated
as a company in 1994

The success of Suguna is a glorious testimony of the power of
human visionary zeal, innovation, determination and co-
operation.

“Poultry Integration” is a concept introduced and achieved by
Suguna.

Suguna has been successful in the integration of tens of
thousands of farmers, thereby enhancing their life-styles.

Suguna has steadily and positively grown on its core ideals of
Total Quality Management, constant Innovation, impeccable
hygiene and understanding Customer needs.

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Mission

25% Market share in India

20% Annual Income from Exports

Switch over consumers from Live Bird to
Processed Meat

25% income from Suguna’s branded products

Recognizing human values

Social commitment

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Conclusion
Cooperative have a unique place in
growth of the rural India, this is the only
tool by which the problem of scarcity of
resources can be eliminated. But there
is a need to revamp the cooperatives’
structure & status to achieve the full
fledged benefits of it.

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"In cooperatives, men and women have in
their hands the tools to fashion their
own destiny."
Murray D Lincoln

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