Formation of Cooperative marketing and processing societies

-

Formation and Functions of Cooperative Marketing and Processing Societies

Cooperative marketing and processing societies have evolved to address the challenges faced by farmers and rural producers. Originating in India with the Co-operative Societies Act of 1912, these societies aim to facilitate collective marketing, reduce malpractices, and stabilize agricultural prices.

Evolution of Cooperative Marketing Societies

  • Historical Background:
    • Early Initiatives: The Kumbakonam Agricultural Society (1913) was among the first to supply agricultural inputs and market products collectively. Subsequent societies, like those in Hubli (1915) and Gadag (1917), focused on improved cotton cultivation and collective selling.
    • Expansion: The South Canara Planters Co-operative Society (1918) was established for joint sale of areca nut, marking the beginning of specialized cooperative marketing for different crops.
  • Nature and Governance:
    • Voluntary Organization: Cooperative sales associations are voluntary, member-governed organizations designed to market farm products collectively for the benefit of their members.
    • Democratic Principles: Members, who are the owners and operators, benefit directly from the society's savings. There are no intermediaries who profit at the expense of others.

Functions of Cooperative Marketing Societies

  • Purchase and Sale of Produce:
    • Bulk Transactions: These societies buy produce from members and sell it in bulk, reducing marketing costs and ensuring fair returns.
  • Distribution of Agricultural Inputs:
    • Input Supply: Co-operatives provide seeds, fertilizers, and other inputs at reasonable prices, sometimes on credit, helping members reduce production costs.
  • Providing Storage Facilities:
    • Storage Solutions: They offer storage facilities, either through their own godowns or hired spaces, to manage produce until it can be sold.
  • Supply of Agricultural Implements:
    • Rental Services: Co-operatives provide agricultural equipment such as tractors and power sprayers on a rental basis, aiding production.
  • Financial Assistance:
    • Credit Facilities: They offer advances up to 75% of the market value of the produce as security, helping members manage their finances.
  • Processing of Produce:
    • Value Addition: Some societies engage in processing to enhance the value of produce and secure higher prices for members.
  • Providing Transportation Facilities:
    • Collective Transport: Arrangements are made for transporting produce from villages to markets, reducing costs for members.
  • Providing Market Information:
    • Information Dissemination: Co-operatives offer updates on production techniques and market prices to help members get better prices for their produce.
  • Stable Prices:
    • Price Stabilization: By adjusting supply according to demand, co-operatives help stabilize prices and protect farmers from seasonal fluctuations.
  • Participation in Foreign Trade:
    • Export Opportunities: Co-operatives engage in export trade, expanding market opportunities and potentially increasing prices for growers.

Need for Cooperative Marketing

  • Eliminating Malpractices:
    • Combatting Exploitation: Co-operative marketing addresses issues such as arbitrary price deductions and manipulation of weights and measures by intermediaries.
  • Establishing Appropriate Rewards:
    • Fair Returns: By reducing the 'price spread' between producers and consumers, co-operative marketing ensures fairer compensation for producers.
  • Integrated Program Development:
    • Support for Credit: Co-operative marketing societies support the functioning of co-operative credit societies, contributing to an integrated development program.
  • Stabilizing Agricultural Prices:
    • Market Regulation: Co-operatives help stabilize prices by mitigating the effects of speculation and hoarding.

Structure of Cooperative Marketing Societies

  • Primary Cooperative Societies:
    • Local Operations: These societies operate at the grassroots level (e.g., taluka or block) and focus on direct marketing and providing essential services to producers.
  • Central or District Level Societies:
    • Regional Coordination: These societies, also known as federations or marketing unions, cover larger areas and coordinate the marketing efforts of primary societies.
  • State Marketing Societies:
    • Statewide Coordination: At the state level, these apex bodies coordinate activities across districts, handle inter-state trade, and provide financial and expert support.

Membership and Financing

  • Membership Types:
    • Ordinary Members: Individual farmers and co-operative farming societies with rights to participate in decision-making and profit-sharing.
    • Nominal Members: Traders who deal with the society but do not participate in decision-making.
  • Sources of Finance:
    • Share Capital: Contributions from members and the state government.
    • Loans: Borrowing from co-operative and commercial banks.
    • Subsidies: Government support for equipment and managerial costs.

Principles and Governance

  • Service Motto:
    • Member Services: Co-operatives are focused on providing services rather than maximizing profits.
  • One Man, One Vote:
    • Democratic Governance: Each member has one vote regardless of shareholding, reflecting democratic principles.
  • Open Membership:
    • Inclusive Membership: Open to all eligible producers with a simple entry and exit process.
  • Reasonable Reward to Capital:
    • Equitable Returns: Capital investment is rewarded reasonably, reflecting a balance between profitability and service.
  • Teaching Cooperative Principles:
    • Education and Awareness: Co-operatives promote principles of mutual help and self-reliance.
  • Self-Government:
    • Member Management: Managed by its members, embodying democratic practices.
  • Distributive Justice:
    • Profit Sharing: Profits are distributed based on member contributions, ensuring fairness.

Cooperative marketing and processing societies play a crucial role in supporting rural economies by enhancing efficiency, reducing costs, and improving the economic status of farmers.