Agriculturai Cooperatives Key to Feeding the World

8/9/2019 Agriculturai Cooperatives Key to Feeding the World

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AGRICULTURAL COOPERATIVES: KEY TO FEEDING THE WORLD

Dr. Narayan G. Hegde

BAIF Development Research Foundation, Pune

he !ooperative movement in India is one o" the largest movements in the #orld, #ith a

legacy spanning over a century. he !ooperative movement #as introduced in the country

primarily to "ree the "armers "rom the clutches o" money lenders. hus the "irst !ooperative

!redit $ocieties Act o" %&'( #as passed #ith a "ocus on "reedom "or "armers "rom de)t

)urden. he thrust #as to esta)lish primary credit societies. *nder the Government o" India

Act o" %&+, !ooperatives #ere categorised under the provincial su)-ect and the ulti/unit

!ooperative $ocieties Act #as enacted in %&(0. !ooperative #as ta1en as the $tate su)-ect in

the !onstitution o" India and it assumed greater importance "or economic progress, a"ter

independence.

Boost to Cooperaties t!ro"#! Natio$a% Dee%op&e$t P%a$s

!ooperatives )ecame a part o" the National Development Plans "rom %&'. he First Plan

2%&%/34 recommended the training o" personnel involved in cooperative development and

setting up o" cooperative mar1eting societies. In %&(, the All India Rural !redit $urvey

!ommittee recommended an integrated approach to cooperative credit and highlighted the

need "or e5panding its role "or diversi"ication into various )usiness operations. he $econd

Plan proposed to e5pand the activities under the cooperatives #ith speci"ic emphasis on

storage and #arehousing services. In %&6, the National Development !ouncil prepared a

National Policy on !ooperatives. he hird Plan proposed to involve the cooperatives in

processing o" agricultural commodities such as sugarcane, cotton, mil1, etc. and ta1e up other

agro/)ased activities such as spinning and #eaving. A !ooperative raining !ollege #asesta)lished in Pune #ith many regional centres to )uild capa)ilities o" the sta"", o""ice )earers

and "armer mem)ers. he Fourth Plan emphasised on the consolidation o" the cooperative

systems. he Fi"th Plan "ocused on reorganisation o" mar1eting and consumer organisations

to support agricultural development. he $i5th Plan aimed at trans"orming village primary

societies into multipurpose societies and to e5tend the activities to "ood processing, "ishery,

poultry, dairy "arming and other "ields. he $eventh Plan emphasised on people7s

participation to achieve the )asic o)-ectives, #ith a "ocus on employment generation and

poverty alleviation.

hus since its introduction, the cooperative movement in India has )een considered more as a

product o" Government Policy rather than a people7s movement. Nevertheless %''8 villagesand 98 o" the rural population in India are serviced )y the cooperatives today. It is

estimated that there are .( la1h cooperatives "unctioning #ith 0.+3 crore mem)ers and a

#or1ing capital o" Rs. +(,''' crores, #ho have made signi"icant contri)ution to the

development o" institutional in"rastructure, "ormation o" private capital, distri)ution o"

agricultural inputs, and processing and mar1eting o" the produce, #hich are the 1ey

components o" value chain development. !ooperatives have also )een active in the areas o"

land development, #ater resources management, "arm machinery services, po#er

distri)ution, la)our supply and many other sectors. !ooperative organisations had several

advantages such as easy access to "inancial and administrative support "or developing critical

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: 0'%+. Agricultural !ooperatives. ;ey to "eeding the #orld. Pu)lished in Indian Farming. <anuary.

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in"rastructure and services re=uired to )oost agricultural production and to replicate on a

#ider scale. Ho#ever the disadvantage #as lac1 o" active participation o" all the "armer

mem)ers, as "ormation o" cooperatives #as ta1en as a mandatory target o" the ongoing

development schemes launched )y the Government, #ithout any a#areness "or the mem)ers

and clear cut o)-ectives. his has led to ine""iciency and dominance )y a small num)er o"

mem)ers to ta1e undue advantage o" the institutions, ending up in "ailure. >verstretching o" the capa)ilities o" the institutions #ithout ade=uate technical, administrative and monitoring

support could )e the other reason "or poor per"ormance o" many o" the cooperatives. he

time is no# ripe to analyse the current status o" agricultural cooperatives and identi"y the

"actors #hich can ena)le them to improve their capacity to )oost agricultural production in

the country.

Ro%e o' Cooperaties a$( t!eir Pro#ress

Di""erent types o" cooperative societies operating in India #ith di""erent activities can )e

grouped into the "ollo#ing "our categories?

• Production !ooperatives #hich deal #ith agricultural and industrial production, such

as Farming !ooperatives, Industrial !ooperatives and Processing !ooperatives.

• ar1eting !ooperatives #hich are engaged in mar1eting o" agricultural produce, such

as Agricultural ar1eting $ocieties and !onsumer !ooperatives.

• $ervice !ooperatives #hich provide services necessary "or their mem)ers, such as

!ooperative !redit $ocieties and !ooperative Ban1s and also Housing !ooperatives,

•

Allied $ervice !ooperatives #hich are dealing #ith activities necessary "or daily li"eand )usiness o" the agriculturists, artisans, etc.

Far&i$# Cooperatie So)ieties: Development o" "arming sector #as given ma-or emphasis

a"ter independence, "or ensuring "ood and employment security in rural India. @hile various

land re"orms #ere en"orced to ensure e=uita)le distri)ution o" natural resources,

consolidation o" small and "ragmented holdings #as considered necessary "or improving

agricultural production. Hence concept o" !ooperative "arming #as mooted )y the Planning

!ommission to pool the land o#ned )y small "armers "or -oint management. he proposed

approach #as either to retain individual o#nership o" the land and lease to the cooperative or

trans"er land o#nership to the !ooperative and collect shares #orth the value o" the land.

he !ooperative could then pool the holdings "or land improvement and intensivecultivation, using modern technologies. hese "arming cooperatives #ere supported #ith

"inancial resources to develop land and #ater resources.

By %&/3, there #ere over %''' cooperative "arming societies #ith %.& la1h mem)ers,

mostly in Pun-a), Bom)ay and *tter Pradesh states. he Government o" India had provided

Rs.' la1hs "or promoting these societies. By %&3'/3%, the num)er o" cooperative "arming

societies increased to 3,+0 #ith +.' la1h mem)ers. hese cooperatives had )rought +.

la1h ha under cultivation. he num)er o" "arming cooperatives increased to &,(9+ in %&9%,

#ith 0.9 la1h mem)ers and (.66 la1h ha. >ut o" these ,'9' #ere -oint "arming

cooperatives and (,('+ #ere collective "arming societies. he programme #as intended to

assist small and medium "armers to come together "or -oint "arming operations. As theconcept #as ne#, ideally, the Government should have planned to esta)lish a "e# model

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"arming cooperatives "or demonstrating the )ene"its. In the a)sence o" such models, slogans

and speeches could not convince the illiterate "armers a)out the economic advantage o"

cooperative "arming. Hence the response #as very poor. hese societies could neither )oost

agricultural production nor sustain the interest o" the mem)er "armers. a-or reasons "or

limited success o" !ooperative Farming in India #ere lac1 o" educated and enlightened

leadership in rural areas, lac1 o" social consciousness among lead mem)ers, over/emphasison mem)ership rather than on =uality, "ailure to create con"idence and enthusiasm among

"armer mem)ers, preponderance o" a)sentee land o#ners as mem)ers, lac1 o" cooperative

spirit in the village li"e, lac1 o" transparency in the schemes #hich #ere launched )y the

Government "or promoting cooperative "arming and delay in releasing $tate "unds to the

societies.

A#ri)"%t"ra% Pro)essi$# Cooperaties: T!e "irst processing cooperative society #as

esta)lished in India "or setting up o" a ginning "actory in %&%9. $u)se=uently, cooperatives "or

sugar processing, paddy milling, groundnut decorticating, copra and oil seed crushing,

processing o" "ruit, vegeta)les, tea and -ute #ere esta)lished. hese processing cooperatives

#ith individual "armers, cooperative mar1eting societies and local service cooperatives asmem)ers, are regulated )y cooperative rules and )y/la#s.

Farmers in India have )een gro#ing sugarcane "rom time immemorial )ut the "irst sugar plant

#as esta)lished )y a French group in >rissa in %60(. he "irst vacuum pan process sugar

plant #as set up in Bihar in %&'(. By %&+0, there #ere +% sugar "actories, all in the private

sector, producing %. la1h tons #hile the annual consumption #as a)out %0 la1h tons. Hence

India had to import sugar mainly "rom Indonesia. @ith "avoura)le policies, there #as a

sudden spurt in the esta)lishment o" sugar "actories. By %&++/+(, there #ere %%% sugar

"actories #ith (.3 la1h ton production, #hich "urther increased to %(6 "actories #ith %% la1h

ton capacity )y %&('/(%, all in the su)/tropical regions o" North India. Ho#ever, sugar #as in

short supply and the production #as unsta)le due to heavy "luctuation in the supply o"

sugarcane. he private sugar "actory o#ners #ere e5ploiting sugarcane "armers and the

Government had to ta1e various measures to protect sugarcane gro#ers.

ean#hile, sugarcane gro#ers in other states engaged in -aggery production #ere a""ected )y

the glut in the mar1et and e5ploitation )y moneylenders. Hence, there #ere many initiatives

to esta)lish sugar cooperatives and the "irst cooperative #as esta)lished in Andhra Pradesh

during %&++/+. Although sugarcane #as not a principal crop, the gro#ers #ere )adly

a""ected )y the violent "luctuations o" the -aggery mar1et. Hence, they decided to set up

cooperative sugar "actories at ti1oppa1a, hummapala and uyyuru. Ho#ever, due o"

initial teething pro)lems, lac1 o" managerial a)ility and scarcity o" "unds, hummapala anduyyuru had to )e sold o"" to private enterprises. ti1oppa1a !ooperative $ugar Factory

survived )ecause o" good leadership, strong )ac1ing o" the !entral !ooperative Ban1, and

payment o" higher cane price. During %&++/+, another cooperative sugar "actory #as set up

in *ttar Pradesh, )ut sold o"" to a private enterprise.

In %&(6, the Government o" India passed the Industrial Policy Resolution, "ollo#ed )y the

Industrial Act, %&3, #herein the principle o" !ooperation #as assigned an important role "or

the economic development o" the country, particularly "or industries )ased on agricultural

produce. *nder this policy, the Government o" India gave pre"erential licences to ne# sugar

"actories in the cooperative sector. his created an opportunity not only to esta)lish

cooperative sugar "actories, )ut also to esta)lish irrigation "acilities to )ring arid areas under sugarcane production, #hile generating huge employment opportunities all round the year.

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In aharashtra too, there #ere many private sugar "actories #ho #ere e5ploiting sugarcane

gro#ers. he private "actories #ere a)le to invest in irrigation pro-ects to increase the

sugarcane yields, #hile the villagers in the neigh)ourhood #ere helplessly struggling to even

to gro# drought tolerant millets. Realising this opportunity, the "irst sugar cooperative #as

"ormed )y ithalrao i1he Patil in %&', )y )ringing together sugarcane "armers o" ((

villages around Pravaranagar in Ahmednagar district o" aharashtra. his #as AsiaCs "irstcooperative sugar "actory. he Pravara cooperative sugar "actory introduced many "eatures

"or social, educational and cultural development o" the local communities. @ith #ell

managed net#or1 o" schools and pro"essional colleges, Pravara $ugar !ooperative inspired

"armer leaders not only across aharashtra )ut also in the $tates o" Gu-arat, Haryana,

;arnata1a, amil Nadu, *ttar Pradesh and Pun-a) to esta)lish hundreds o" cooperative sugar

"actories. As more and more cooperative sugar "actories #ere )eing set up, the need "or an

ape5 organisation at the $tate level to mediate #ith the $tate Governments and guide them in

all respects #as "elt. his led to the "ormation o" $tate level Federations o" !ooperative $ugar

Factories and the National Federation o" !ooperative $ugar Factories td. 2NF!$F4 at the

national level.

oday, #ith +%3 cooperative sugar "actories, India is the second largest producer o" sugar in

the #orld and the cooperative sector is responsi)le "or a)out (6 per cent o" the total

production. he sugar industry has a huge annual turnover o" Rs. ,''' crores, ensuring

livelihood "or over "i"ty million sugarcane gro#ing "amilies and a large mass o" agricultural

la)ourers. Presently, 9.8 o" the rural population o" India is dependent on the sugar industry.

Ho#ever, the e""iciency o" the sugar cooperatives has eroded drastically over the years.

any sugar cooperatives have no# turned sic1. here are some $tates #here the cooperative

sugar "actories are managed )y Government/appointed Administrators. a-or pro)lems "aced

)y the cooperative sugar sector are a)sence o" decision/ma1ing process, unpro"essional

management and lac1 o" "oresightedness. hese cooperatives are also )eing e5ploited )y the

political leaders "or their personal gains. $ugar cooperatives in India have no# )ecome a

per"ect e5ample o" a s#eet dream turning sour, #hich calls "or immediate corrective

measures.

Dairy cooperative is another success story in India. o prevent the e5ploitation o" marginal

mil1 producers )y the private dairy, "armers o" ;aira district in Gu-arat approached Sardar

alla)h)hai Patel and he advised them to "orm a cooperative to supply mil1 directly to

the Bom)ay il1 $cheme. In %&(3, the mil1 producers #ent on a stri1e, #hich led to the

setting up o" the ;aira District !ooperative il1 ProducersC *nion td. in Anand.

*nder this *nion, cooperatives #ere "ormed at every village to collect surplus =uantities o"

mil1 "rom small producers and a modern dairy #as esta)lished to process the mil1 locally.he products #ere sold under the )rand name Amul since %&. he success o" this dairy

soon spread across the neigh)ouring districts o" Gu-arat. o support these Dairy Federations

and to e5pand the activities, the Gu-arat !ooperative il1 ar1eting Federation, an ape5

mar1eting )ody #as set up in %&9+. o replicate the success"ul Anand pattern o" dairy

cooperatives, the National Dairy Development Board 2NDDB4 #as "ormed. he

Government o" India "urther protected the cooperative dairy sector, )y restricting the mil1

processing e5clusively to cooperatives. Presently, %9' il1 ProducersC !ooperative *nions

and % $tate !ooperative il1 ar1eting Federations are involved in mil1 processing.

Ho#ever, many o" these dairy "ederations could not "unction success"ully, in the true spirit o"

a people7s movement, )arring a "e# states. Nevertheless, the dairy cooperatives account "or

the ma-or share o" processed li=uid mil1 mar1eted in the country. During 0''(/', there #ere%0.& million mem)ers o" dairy cooperatives #ho sold mil1 and mil1 products #orth Rs.++0'

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http://en.wikipedia.org/wiki/Gujarat

http://en.wikipedia.org/wiki/Vallabhbhai_Patel


http://en.wikipedia.org/wiki/Cooperative

http://en.wikipedia.org/wiki/Kaira_District_Co-operative_Milk_Producers'_Union

http://en.wikipedia.org/wiki/Anand,_Gujarat

http://en.wikipedia.org/wiki/National_Dairy_Development_Board

http://en.wikipedia.org/wiki/Gujarat



http://en.wikipedia.org/wiki/Cooperative

http://en.wikipedia.org/wiki/Kaira_District_Co-operative_Milk_Producers'_Union

http://en.wikipedia.org/wiki/Anand,_Gujarat

http://en.wikipedia.org/wiki/National_Dairy_Development_Board



crores. Dairy !ooperatives have )een instrumental in trans"orming the rural economy on the

lines o" cooperative sugar "actories.

$everal agro/processing cooperatives have also )een set up in the country, )ut the progress

has )een slo#. $ome o" the cooperatives #ere success"ul in esta)lishing rice mills, dal mills,

oil mills and processing o" vegeta)le and plantation crop produce. Ho#ever, in the a)senceo" special protection, these cooperatives had to "ace sti"" competition "rom private

entrepreneurs, not only due to delay in decision ma1ing )ut also due to un"air trade practices.

For promotion o" agricultural production, processing, mar1eting, storage, e5port and import

o" agricultural produce, the Government o" India had esta)lished the National !ooperative

Development !orporation 2N!D!4, under the inistry o" Agriculture.

A#ri)"%t"ra% *ar+eti$# So)ieties: sta)lishment o" mar1eting cooperatives #ere

encouraged to provide mar1eting "acilities to small "armers. he anticipated advantages #ere

increase in )argaining strength o" "armers, removal o" intermediaries and direct interaction

#ith consumers. here #as also scope "or availing credit and cheaper transport, storage

"acilities, grading and processing o" agricultural produce to "etch )etter prices. Based on thegovernment policy, t#o types o" cooperative mar1eting structures #ere promoted in India.

>ne #as a t#o tier system #ith primary societies or andi at the local level #ith the $tate

level ape5 society. he second type #as a three/tier system, #ith andi or primary society at

the village level, !entral ar1eting $ocieties at the district level and $tate ar1eting $ociety

at the state level, #hich are operational in many states.

$tate level mar1eting cooperative societies e5panded their activities till 0''0/'+.

$u)se=uently, the operations #ere slo#ed do#n due poor per"ormance, inade=uate #or1ing

capital, in"luence o" traditional methods o" mar1eting, lac1 o" technical support, lac1 o"

processing "acilities, untrained personnel, high operational cost, etc.

Indian Farmers7 Fertiliser !ooperative imited 2IFF!>4, #as esta)lished to produce and

distri)ute "ertilisers through cooperatives. Presently, over (',''' cooperative societies are

engaged in this programme. he National Agricultural !ooperative ar1eting Federation o"

India td. 2NAFD4 #as esta)lished in %&6 "or promoting cooperative mar1eting o"

agricultural produce. NAFD has )een procuring "oodgrains, pulses, oilseeds, spices, cotton,

tri)al produce, -ute products, eggs, "resh "ruits and vegeta)les "rom "armers through its

cooperative net#or1 in selected areas #henever "armers "aced pro)lems o" mar1ing their

produce. he advantages o" cooperative mar1eting #ere increased )argaining strength o"

"armers, direct dealing #ith consumers, credit availa)ility, cheaper transport, storage, grading

and processing "acilities and mar1et intelligence.

A#ri)"%t"ra% Seri)e Cooperaties: !ooperatives play a very important role in

dis)ursement o" agricultural credit. hese cooperatives have )een aiming at increasing

agricultural production through credit supply to agricultural producers, agricultural la)ourers,

artisans, supply o" agricultural inputs, arranging storage, mar1eting and processing o"

agricultural produce, arranging ra# materials "or industries and providing technical guidance,

#hile promoting social and economic #el"are. here have )een cooperative land

development )an1s, #hich provide long term loans to cultivators "or land development and

capital investments.

he Primary Agricultural !ooperative !redit $ociety at the village level is the )ase "or manyo" these activities. hey "ederate into !entral !ooperative Ban1 at the district level and #ith

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ape5 )an1 at the $tate level. he loans advanced )y the cooperative )an1s increased "rom

Rs. crores in %&'/% to Rs.(6,0'+ crores in 0''/'3. At the same time, outstanding loans

also increased to a large e5tent "rom Rs.0' crores to Rs.+&,&&3 crores. Presently, the rural

cooperative credit institutions are "acing several pro)lems such as lo# resource )ase, high

dependence on re"inancing agencies, lo# recovery, huge accumulated losses, lac1 o"

diversi"ication, etc.

A%%ie( A#ri)"%t"ra% Cooperaties: hese cooperatives cover activities li1e dairy "arming,

poultry, piggery, etc. Among them, poultry #as a ma-or activity #ith over (,693 cooperatives

#ith (.( la1h mem)ers in 0''+/'(. Ho#ever, most o" the mem)ers #ere not poor. here

#ere %(,++& "ishery cooperatives in 0''+/'(, )ut many o" su""ered "rom inade=uate "inancial

and technical support and lac1 o" coordination )et#een production, storage and mar1eting.

here #ere (9%( "orest la)our cooperatives #ith 9(''' mem)ers #ith a )usiness turnover o"

Rs.009.0+ crores in 0''+/'(.

hus, almost all the support services re=uired "or )oosting agricultural production in the

country #ere promoted through the cooperatives. ost o" these activities #ere planned )ythe e5perts o" the Government o" India. here #ere rigid rules and regulations. Ho#ever,

due to lac1 o" a#areness and ignorance o" small "armers, the "unctioning o" most o" the

cooperatives #ere -eopardised )y vested interests. As a result, cooperative institutions have

)een losing their e""iciency and credi)ility. In this process, the in"rastructure and services

re=uired "or supporting agricultural production have )ecome non/"unctional, a""ecting the

production and pro"ita)ility o" Indian "armers. It is there"ore necessary to analyse the current

status o" the cooperative organisations and ta1e corrective measures on priority.

C"rre$t Stat"s o' A#ri)"%t"ra% Cooperaties

he cooperative movement #hich emerged in the late Fi"ties, as a po#er"ul tool to )oost

agriculture #ith diversi"ied activities reached the pea1 in the Nineties. It #as mainly )ecause

o" "avoura)le policy, "inancial support and protection against the private sector that the

activities #ere spread across the country. By and large, the entire design o" the cooperative

movement #as a top to )ottom approach #ith rigid conditions, #hich provided very little

scope "or articulation at the local community level. Nevertheless, "armers #ere compelled to

)ecome mem)ers o" these cooperatives, as most o" the "inancial support "rom various

development schemes #ere lin1ed to the cooperatives. hus, e5cept "or some sectors, li1e

sugar and dairy, particularly in a "e# progressive states, the cooperatives remained as a stage

sho# managed )y the Government o""icials and politicians.

Primary cooperative credit societies esta)lished at the village level to dis)urse loans "or crop

production, could not meet the total credit re=uirement o" small "armers, including their

household needs. hus, the "armers diverted the amount to meet their domestic priorities,

instead o" investing in agricultural production. @ith inade=uate "inance and delay in

dis)ursement, poor "armers could not neither enhance their agricultural production nor could

they repay their loans. hey received "urther encouragements "rom their political leaders not

to pay )ac1 the money. his not only hampered the operations o" the credit societies )ut also

made the "armers de)t ridden de"aulters, not eligi)le "or availing any )an1 loan in the "uture.

Along #ith )ad de)ts, the credit cooperatives also su""ered "rom lac1 o" ade=uate s1ills to

maintain the )oo1s o" accounts and misuse o" "unds )y po#er"ul o""ice )earers. any

primary cooperatives responsi)le "or dis)ursing loans #ere compelled to manage other activities such as distri)ution o" agricultural inputs, "oodgrains under pu)lic distri)ution

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system, supply o" "arm implements under Government schemes, etc., #hich created "urther

)urden, leading to mismanagement.

he cooperative land development )an1s, intending to provide medium and long term loans

"or land and #ater resources development and purchase o" "arm machinery, could not reach

the #ea1er sections o" the society due to inade=uate resources and undue pressure "rom political po#ers. ac1 o" monitoring on "und utilisation and non/repayment o" the loan

compelled the Government to discontinue this programme. Agricultural input distri)ution

programme launched )y the cooperatives #as hampered mainly due to poor =uality inputs,

delay in distri)ution, lac1 o" credit "acilities lin1ed #ith input supply and high administrative

cost. In the a)sence o" #ell =uali"ied )usiness managers, these cooperative could not

compete #ith private traders. $imilarly, very "e# cooperatives #ere success"ul in gathering

"arm produce "or processing and mar1eting at a competitive price. he mar1eting o" the

agricultural produce re=uired up/to/date mar1et intelligence and prevalent price in di""erent

mar1et yards and decision ma1ing po#er at crucial moments. For instance, there are large

"armers #ho cultivate high value vegeta)le crops and send truc1 loads o" produce to di""erent

mandis depending on )etter price. hese "armers decide on the mandi to )e sent, dependingon the prevailing price, at the last moment, #hile the produce is )eing loaded onto the truc1.

he cooperatives could not ta1e such initiatives and ris1 on )ehal" o" the mem)ers. he

reasons )ehind the "ailure o" most o" these cooperatives #ere lac1 o" transparency among the

o""ice )earers, lac1 o" e5pertise in managing the )usiness e""iciently, lac1 o" "le5i)ility to

change the plans and decisions as re=uired under local conditions, inade=uate decision

ma1ing po#ers to ta1e instant decisions, poor connectivity #ith technical and commercial

organisations and o"ten, inade=uate resources.

In the a)sence o" alternative in"rastructure to replace the ine""icient cooperatives, the "arming

communities had to come up #ith ne# initiatives. For instance, in the a)sence o" cooperative

credit societies, )irth o" micro/"inance institutions too1 place. he "armers, particularly

#omen #ere organised to "orm their sel" help groups and #ere lin1ed #ith micro credit

institutions 2FIs4. hese FIs recognised the need o" "armers and remained "le5i)le to

serve them #ell in time. @hile this #as a )oon to receive money easily even to meet the

domestic "inancial needs, high rate o" interest #as a )ig )urden. It is e5tremely di""icult "or

any "arming enterprise to earn good pro"it, #ith the )orro#ed capital at an interest rate o" 0(

to +'8. Ho#ever, there are no via)le alternatives to provide credit support small "armers.

$ugar cooperatives #hich had assumed e5emplary leadership in the early years #ere misused

)y the po#er"ul mem)ers "or )uilding their political )ases. As a result, many "actories have

)ecome outdated, sic1 and non/"unctional. oo1ing to the disappointing per"ormance o" these sugar cooperatives, many mills have )een esta)lished )y the corporate sector. @ith

regard to mil1 cooperatives, the Government o" India has realised the dra#)ac1 o" the

cooperatives to manage the operations e5clusively and modi"ied the policy to permit private

entrepreneurs to invest in dairy sector. he National Dairy Development Board, #hich #as

esta)lished to promote cooperative dairy Federations across the country, has no# shi"ted its

stand to promote ne# institutions. any "armers7 groups along #ith voluntary organisations

have esta)lished producer companies "or procurement, processing and mar1eting o"

agricultural produce. $everal e5periments have )een conducted success"ully )y the private

enterprises to colla)orate #ith cooperative "ederation to procure and process agricultural

produce. >ne good e5ample is a cooperative dairy "ederation in Pune district o" aharashtra

entering into an agreement #ith a private mil1 processing unit "or processing o" mil1 intohigh value products. @hile the cooperatives managed mil1 collection the dairy "irm

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processed #ith modern technologies and mar1eted in India and a)road. $imilar initiative #as

ta1en )y the aharashtra Grape Gro#ers7 Federation, #hich colla)orated #ith a mar1eting

enterprise to e5port grapes all over the #orld. hese cooperatives #ould not have ta1en such

progressive steps in the natural course. ean#hile, they have ac=uired )argaining po#er to

negotiate #ith their counterparts. >n the other hand, many in"ormal groups o" "armers have

entered into contact #ith agri/)usiness companies to produce vegeta)le and other commodities, as there is no demand "or the produce in local mar1et. $uch agreements have

)een attractive in the initial stage )ut "ailed either due to e5ploitation )y the private

enterprises or due to deterioration in the =uality o" the produce. hus, relia)le mar1eting is

critical "or )oosting agricultural production. $imilarly, timely supply o" agricultural inputs is

needed )y small "armers to improve their crop yields. In the a)sence o" a relia)le institution,

traders #ill charge %/0'8 commission, #hich #ill increase the cost o" production and

reduce the pro"it margin. Hence, e""icient in"rastructure is essential to protect small "armers.

Wa, For-ar(

Presently, #ith a)out ('8 o" the population living in poverty, livelihood security "or the rural poor continues to )e a cause o" concern in India. As a ma-ority o" the rural population is

dependent on agriculture "or their livelihood, increasing agricultural production through

active involvement o" the poor and #ea1er sections o" the society is the most appropriate

solution. $mall and "ragmented land holdings, heavy soil erosion resulting in depletion o" soil

productivity, ine""icient use o" #ater resources, out/dated agricultural production

technologies, un/availa)ility o" agricultural credit and lac1 o" in"rastructure "or post/harvest

management and mar1eting o" agricultural produce, are responsi)le "or lo#er yield and

income. ivestoc1 is another source o" income "or small "armers. Ho#ever, over 98 o" the

animals are uneconomical due to severe genetic erosion, inade=uate "eeding and health care.

@ith lo#er crop and livestoc1 productivity, the employment opportunities in the "arming and

other related sectors are reduced "urther, leading to reduction in "arm #ages, seasonal

employment, malnutrition and migration. @ater is a critical input "or "ood production and

)etter =uality o" li"e. Neglect o" #ater resources #ill not only a""ect the agricultural

production and employment opportunities, )ut also a""ect the supply o" clean pota)le #ater.

$carcity o" #ater leads to unemployment, ill/health and hardship "or #omen. his vicious

cycle can )e )ro1en through improvement in agricultural production.

It is necessary to address the a)ove challenges, particularly to improve the productivity crop

yields o" lo# productive non/irrigated areas, o#ned )y small and marginal "armers, #hich in

turn can improve the purchasing po#er o" the poor. his calls "or a value chain development

approach, #here small "armers are supported "or )ac1#ard and "or#ard integration toimprove production and add value to the produce. here are many initiatives across the

country #here small and marginal "armers and tri)al "amilies, have e5celled in "ood

production in spite o" small holdings, poor =uality soils, limited resources and poor access to

modern technologies, #hen they #ere assisted "or esta)lishing )ac1#ard and "or#ard

lin1ages.

In an initiative promoted )y BAIF in !hi11anaya1anahalli )loc1 in um1ur district in

;arnata1a, several "armers cultivated vegeta)les, adopted organic "arming on a small area o"

0'' / 0''' m0 and earned su)stantial income in the range o" Rs. %',''' to Rs. (,'''.

;ariyamma, a #oman "armer #ith '.( ha land cultivated lea"y vegeta)le Amaranthus on '.%

ha land and earned Rs.%',''' )y selling it in the local mar1et. $he li1e many other participant "armers developed her o#n techni=ues, using locally availa)le resources. $he has

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!ooperatives #or1ing at the village level can mo)ilise their mem)ers and help them to

organise their )usiness. Ho#ever, cooperatives need additional support to monitor the

#or1ing and ensure e=uality among all the mem)ers. here is also a need to loo1 at the rules

and regulations o" the cooperative to "acilitate "le5i)ility to suit the local re=uirements and

promote various activities re=uired "or developing an e""icient value chain. !ooperatives

need to )e connected #ith e5ternal agencies "or )ringing ne# technologies and to lin1 #iththe mar1et. his can )e done )y involving reputed and committed civil society organisations

2NG>s4 as "acilitators or associates. hey can also help small "armers to )uild their

capa)ilities through regular mentoring. he NG>s can coordinate the activities o" the value

chain partners to play their role optimally. $uch association o" cooperatives #ith other

organisations such as producer companies, input suppliers and retailers "or mar1ing their

produce, #ill )e a)le to ta1e care o" the pit"alls o" the earlier cooperative movement and help

the country to ensure "ood security. As India is one o" the largely populated countries,

dependent on agriculture "or livelihood security and hosting over 08 o" the #orld7s poor,

any success"ul agricultural development activity in India #ill )e a role model "or other

developing countries "or #ider replication. Hence, a success"ul cooperative movement in

India #ill not only ensure "ood security in India )ut #ill also help to "eed the #orld.

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Agriculturai Cooperatives Key to Feeding the World