ROLE OF CO-OPERATIVES IN AGRICULTURE

Module-1:
Dear students welcome to this lecture on Role of Co-operatives in Agriculture Module-5,
State and Agriculture-1. Agriculture is an important industry and co-operatives also one
of the important instruments for agriculture development. With out co-operatives
sustainable agriculture is very difficult. When understanding the co-operatives system co-
operative movements definitely helpful to the farmer, when understanding the co-
operative movements when learning the co-operatives movement say the experiences and
learn the new things and shoot out the agricultural problems and the traditional
agriculture to modernization. In depth we are discussing role of co-operatives in
agriculture we are discussing that.

OBJECTIVES:
1. Co-operative Movement or history of Co-operative Movement
2. Genesis and growth of Co-operative sector
3. Agricultural Co-operation in India
4.Problems and prospects of Co-operation Institutions

INTRODUCTION:
The concept of co-operation has been put to practice in India since time immemorial.
The sprit and the way of living of the village community were quite like co-operatives.
The village community still working together in almost all fronts and walks of life. The
Co-operative Movement in its modern form stated in India only in 1904. The Co-
operative Movement in this country got tremendous support from the writings and
leadership of eminent personalities like Tagore, Gandhi, Nehru, Morarji Desai,
particularly Varghees Kurian to name only a few of them. It is indicating that how much
importance has been taken by co-operatives an instrument of development of economy in
general and agriculture in particular. Co-operative societies have provided to farmers at a
cheap rate since 1954. The co-operative credit societies are meeting increasingly the
requirements of farmers more than 60 per cent of the credit seeds of farmers are met by
the co-operative societies.

GENSIS AND GROWTH OF CO-OPERATIVE SECTOR:

With the active support of various co-operative leaders and scholars, the Co-operative
Movement took a lead in attempting to improve the conditions of the Indian people in
various sectors. Indian Co-operative Movement was basically organized against the
exploitation of moneylenders to exonerate the farming community from the web of
poverty and indebtedness. The government of India took a lot of measures to improve
the conditions of the farming sector. The most important among them were the Deccan
Agriculturists Relief Act of 1879, the Land Improvement Loans Act of 1883, and the
Agriculturists’ Relief Act of 1884. Beside these, the government promoted co-operative
credit societies after following reports from Fredric Nicholson, Co-operative Societies
Act of 1904, Act of 1912, Maclagan Committee 1915, Co-operative Reforms Act of
1919, Royal Commission of Agriculture 1929, Agricultural Finance Sub-committee
(Prof. D.R. Gadgil, 1945), All India Rural Credit Survey Committee 1954 (A.M.
Kushro), Choudary Brahma Prakash Committee on Model Bill on Co-operative 1991.
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Thus, various committees and commissions recommended various measures for
development of co-operatives. However, still a lot have to be done, especially because
the government is often found dragging its feet in implementing the recommendations.
For instance, maintenance of the public distribution system through co-operatives has put
most co-operatives under heavy losses due to system leakages and too much of
dependence of co-operatives on the Civil Supplies Department.

Module: 2
AGRICULTURAL CO-OPERATION IN INDIA:
The Co-operative Movement has been in existence in India more than 160 years. The
movement was introduced with high hopes and lofty expectations. It was expected to
provide a lasting solution to the problems of rural economy in general and agriculture
sector in particular. The Co-operative Movement is now a mammoth organization. Most
of the States in India is covering 100 per cent of the villages and about 70 per cent rural
households particularly maharastra some of the states. The Co-operative Movement has
become one of the most important institutional agencies for the provision of credit for
agricultural production and for undertaking other allied activities, may be the marketing,
may be the processing, may be the storage, may be the other things but so co-operative
movement percolated the every field even the milk, milk in the Co-operative Movement
is very dominant, in the milk sector Kurian also done excellent job for promoting the co-
operative movement in particularly in the field of milk and dairy form. But, as per
critics, the movement is an utter failure and should be scrapped. The movement has done
nothing to abolish poverty of the rural masses, did not contributed to increase agricultural
production, to establish better marketing conditions, better living, etc. The All-India
Rural Credit Survey Committee (1954) headed by A.M. Kushro stated that “Co-operation
has failed, but co-operation must succeed”.

Since then, with the Government and Reserve Bank of India taking active interest, the
Co-operative Movement has made great progress. The various achievements and benefits
of the Co-operative Movement in India can be summarized under the following heads.

Module-3:
The various achievements and benefits of the Co-operative Movement in India can be
summarized under the following heads. We are discussing the benefits of the co-
operative movement, broadly they are 4 types:
1. Agricultural benefits or economic benefits
2. Social and moral benefits
3. Educational benefits
4. Political benefits

I. BENEFITS FOR AGRICULTURE OR AGRICULTURE BENEFITS:

1. Cheap credit:
2. Better use of credit:
3. Freedom from clutches of Money Lenders:
4. Popularizing Modern Inputs:
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 5. Rural Entrepreneurs:
6. Developing Banking Habits:
1. Cheap credit: One of the most important achievements of the Co-operative Movement
in India has been that it is providing cheap credit to the agriculturists. There has been a
decline in the rates charged by private agencies in parts of the country and that an
important reason for this is the competition offered by co-operative credit at relatively
low rates of interest. In the institutional set up, primary agricultural cooperative credit
societies contributed 19.6 percent of total credit in rural areas and reducing poverty.

2. Better use of credit: The co-operative institutions are educating the farmers and are
now largely providing credit for productive purposes. This has substantially increased
the income of the farmers in rural areas.

3. Freedom from clutches of Money Lenders: This is the very important aspect in the
co-operative movement. The Co-operative Movement has liberated millions of our
farmers from clutches of moneylenders who dominated since long for providing
agricultural credit to the farmers with high interest rates. The cooperatives have been
successful in many regions in freeing the peasant from the moneylenders system and
making him development oriented.

4. Popularizing Modern Inputs: Modern inputs is the very essential; we cannot

understand how to use the modern inputs in agriculture, may be the fertilizers, may be the
modern inputs, may the pesticides, whatever is that but the co-operative movement is on
of the best instruments to understand that how to use the modern inputs for agriculture
particularly small and marginal farmers.

The Co-operative Credit Societies are playing very useful role in popularizing the use of
various modern inputs such as fertilizers, improved seeds, new implements, pesticides,
etc., and realizing “better farming, better business and better living”. Thus, the co-
operatives are helping in their own way in bringing about “Ever Green Revolution” in our
economy. Ever Green Revolution is very essential if you want to cross the whatever the
present growth rate in agriculture, this 2 to 3 percent may not be sufficient for making
your food security laws or your sufficient food available to all the rural mass, all the rural
people more than 121 crores, in future also if same population is growing, this type of
growth rate may not be sufficient for providing agricultural goods to the farmers, that’s
why we want to not only green revolution, green revolution definitely convert to the
“Ever Green Revolution”or “Rainbow Revolution”, we have to promote, strengthen the
agricultural production through co-operative movement.

5. Rural Entrepreneurs: This is very important; so much of unemployment problem is

there, they are only waiting for the government jobs, but plenty ofopportunies are
available Co-operative processing societies are increasingly becoming a wide base for
rural industrialization. The co-operative sugar factories, grape gardens and processors,
mutual aided co-operative societies, rice millers co-operative societies, co-operative
marketing, weavers co-operatives, dairy co-operatives are increasingly becoming focal
points for development of agro-industrial complex.. in rural area.

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6. Developing Banking Habits: The co-operation has done great in spreading the
banking habit and popularizing cheques and demand drafts.

II. SOCIAL AND MORAL BENEFITS

The Co-operative Movement has also brought about a number of social and moral
benefits to the people as follows:
1. It is making people to live harmoniously on a community basis with a sense of
brotherhood and corporate feeling.
2. Co-operation fosters a sense of responsibility, integrity and diligence because it relies
on a character of the members.
3. The Co-operative Movement is bringing about social-economic changes in the society
without resorting to undesirable methods and violence.
4. Due to co-operation, the idle man becomes industrious, the spend thrift thrifty, the
drunkard reforms his ways and becomes sober, the illiterate learns to read and write.

Module: 4
III. EDUCATIONAL BENEFITS OR AWARENESS BENEFITS
A good co-operative society is continuous source of education for the members, e.g., a
credit teaches the proper use of money, a consumer co-operatives trains the members in
what to buy and the true value of the goods, a marketing society educates the producers
in better methods of production.

Indiscriminately we are using the pesticides or fertilizers other unwanted inputs what type
of soile is available what type of pesticides we required what type of fertilizers we
required we can learn from the co-operative movement naturally awareness will be
increases deffinently production will increase simultaneously reducing the cost of
production so always farming is become economically viable.

IV. POLITICAL BENEFITS

1. Co-operation is educating people in self-government as the running of the co-
operative institutions gives them sufficient training in running democratic
institutions.

2. The Co-operative Movement is also playing a useful role as a most suitable

medium for the democratization of Economic Planning. By making the Plans
popular, it will create a better atmosphere needed for its execution voluntarily.

3. It is encouraging local leadership and also helping to produce better citizens who
are honest, dedicated and who are prepared to make sacrifices.

4. A co-operative society develops the responsibility in all the people and teaches
respect for elected members.

CAUSES OF POOR PERFORMANCE OR WEAKNESSES OF THE

MOVEMENT:

1. Non-viable Units:
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 2. Domination of vested interests:
3. Lack of knowledge of co-operative Principles:
4. Loans for productive purposes only:
5. Lack of Funds:
6. Lack of Spontaneity:
7. Lack of People Participation:
8. Lack of leadership:
9. The Attitude of the Government:
For the poor performance of the Co-operative Movement a number of causes have
explained by various committees and commissions. Briefly the following are the major
weakness and causes for the poor performance of the Co-operative Movement in India.

1. Non-viable Units: Most of the primary societies in India are non-viable units. All
India Rural Credit Review Committee has stated, “A large number of primary
agricultural credit societies are neither viable nor even potential and must be regarded as
inadequate and unsatisfactory agencies for dispensing production oriented credit”.
Primary co-operative societies are mostly non-viable, indifferent to increasing
membership of small farmers, faction-ridden, deprived of the services of trained
managers and burdened with over dues from willful defaulters. The credit disposed by
them was inadequate to meet the genuine requirements of the farmers.

2. Domination of vested interests: The most disturbing trend, however, is that the Co-
operative Movement is increasingly slipping into the hands of politicians and vested
interests. The leaders of the Co-operative Movement, by and large, are busy politicians,
traders, moneylenders and ex-jagirdars, many of whom are not genuinely inspired by the
co-operative ideals. Unfortunately, in many of our village institutions and co-operatives
at various levels, certain vested interest took deep roots.

3. Lack of knowledge of co-operative Principles: An essential condition for the success

of the Co-operative Movement is that every member should have knowledge of the
principles of co-operation. Many of them hardly realize that the strength of the society
rests on the honesty, fair dealing and mutual trust of the members. Most of the members
do not take any interest in their affairs. In many cases members do not understand and
appreciate the aims and objectives of the Co-operative Movement.

4. Loans for productive purposes only: The co-operative credit societies did not help
the farmers in meeting all their credit requirements. They gave loans only for agricultural
operations. But in actual practice, farmers required loans to meet many of their other
requirements also for these purposes; the farmers have to depend upon the money
lenders.

5. Lack of Funds: This was the basic weakness of the Co-operative Movement. The
members themselves save and deposit their savings and thus contribute a large share to
working capital of the societies. The Central and State co-operative credit societies could
not attract as much deposits from the general public as was anticipated the same position
continues today also.

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6. Lack of Spontaneity: The Co-operative Movement in India did not spring from the
people themselves. The movement was not voluntary and the people did not come
forward to organize societies to satisfy their needs on the other hand, the movement took
the form of a government department.

7. Lack of People Participation: In India, people have been largely illiterate, ignorant
and extremely conservative. The principles of unlimited liability, which was the basis of
the village credit societies, prevented the better farmers to join the movement. Co-
operation cannot succeed unless there is willing and complete co-operation from the
people and also their active participation.

8. Lack of leadership: The failure and liquidation of many societies in rural areas was
directly due to the defective management and leadership. The village economy is
dominated by the landlords. These landlords did not take much and genuine interest in
promoting the welfare of the farmers.

9. The Attitude of the Government: The Government was correct in encouraging the
Movement in all possible ways. But it made the mistake that to convert co-operatives
into a government department with all the rigidities and short sightedness associated with
the government department.

PROSPECTS OF CO-OPERATIVE MOVEMENT

The Co-operative Movement is key answer to over populated developing country like
India. The character of economic development in out country provides a vase scope for
the co-operatives. The can play a significant role in the creation of a self-reliant and self-
sustaining economy and can become instruments by which we can bring about peaceful,
nevertheless, significant changes in our social and economic structures the co-operative
system postulates the possibility of co-ordination of two different ideas. It combines the
best of the two words of individualism and collectivitism. The co-operation has been
accepted and recognized as powerful instrument to transform the economy of the country
and to establish economic democracy. Economic democracy implies that all citizens
possess the necessary means to satisfy the bare minimum needs of food and clothing and
shelter and that there is no economic exploitation, economic inequality or imbalance
development.

Module: 5
SUMMARY:
From a review of the experiences of Co-operative Movement, it is evident that the vast
network of co-operatives, in general, and agricultural co-operatives, in particular has not
delivered the desired level of credit and benefits to its members. Strengthen the co-
operative societies though providing sufficient funds to meet the credit requirements of
farmers. Promote the professionalism and control bureaucratic attitude, political
interference. Improve the leadership qualities and management skills through training to
co-operative societies functionaries in general, primary agricultural societies in particular.
Motivate the people, particularly small marginal farmers to participation in Co-operative
Movement for its success. With timely measures through legislation and policies with
democratic principles will leads to golden era or golden age of co-operation.
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QUESTIONS:

1. Explain the contributions of co-operative to the financing of agriculture in India.

2. Examine the role of co-operative credit institutions in the provision of agricultural

finance in India. How far do you think these institutions have successful.

3. “Co-operation has failed, but co-operation must succeed”. Discuss this statement In the
background of agricultural finance in India.
4. Point out the defects of Co-operative Movement in India. Discuss the measures taken
by the government to remove them.

5. Critically examine Co-operative Movement in agricultural credit and suggest the

suitable measures?

6. Explain the problems and prospects of Co-operative Movement in India.

REFERENCES:
1. S.S. Acharya & N.L.Agarwal: Agricultural Marketing in India OXFORD & IBH
Publishing CO. PVT. LTD, New Delhi – 2006.

2. Sadhu & Singh, “Fundamentals of Agricultural Economics”, Himalaya Publishing

House, New Delhi -110002, 2004.

3. S.S.Sinha: Agricultural Marketing and Indian Agricultural Marketing.

Ludhina – 141008, 1996.

4. S.S.Acharya State of the Indian Farmer,A Millennium Study, Volume 17,

Agricultural Marketing.

5.Report of Export Committee on Strengthening and developing of Agricultural

Marketing, Ministry of Agriculture, Government of India.