LECTURE – 10

AGRICULTURAL COOPERATION –
MEANING, BRIEF HISTORY OF
COOPERATIVE DEVELOPMENT IN
INDIA, OBJECTIVES, PRINCIPLES
OF COOPERATION, SIGNIFICANCE
OF COOPERATIVES IN INDIAN
AGRICULTURE
Meaning of co-operation
 Co-operation is voluntary association of
persons for achieving a common goal.

 It generally means working together for

a common goal

2
Definition
 According to Huber Calvert “Co-operation is a
form of organization, where in persons
voluntarily associate together on the basis of
equality for the promotion of common economic
interest of themselves”

 According to Sir Horace Plunkett, “Co-operation

is self - help made effective by organization.”

 The motto of co-operation is “Each for all and

all for each.” 3
Principles of Cooperation
 Principle of open and voluntary association
 Principle of Democratic organization
 Principle of service
 Principle of self-help and mutual help
 Principle of distribution of profits and surpluses
 Principle of political and religious neutrality
 Principle of Education
 Principle of thrift
 Principle of publicity
 Principle of honorary service 4
1. Principle of open and voluntary
association
 The admission and membership into a co-operative
society is open to everybody irrespective of caste,
religion, any social and political affiliations.
 It does not allow any discrimination.
 The membership is open as well as voluntary
 Once an individual joins as a member, there is no
compulsion on him to continue as such.
 At any time he has every freedom to withdraw
from the society. 5
2. Principle of Democratic
organization
 Co-operatives are organized and managed based on
the principle of democracy.

 Each member is given equal right to vote

irrespective of his share capital in the society.

 “One man one vote” is the important principle of

cooperation.

 The elected board of management will work based

on the acts, rules and laws guiding the matters of
co-operation. 6
3. Principle of service
 Co-operatives main aim is to cater to the
needs of its members.

 Unlike business organizations, the

cooperatives are more service - oriented
rather than profit - oriented.

 This spirit of service invokes loyalty

among the members. 7
 4. Principle of self-help and mutual
help
 The funds of society are contributed by the members
in the form of share capital.
 In co-operatives generally, the members are
financially weak.
 The society can barrow required capital from different
financial sources at lower interest rates and offer the
same to the members for productive purposes.
 This may not be possible at individual level. Hence, in
co-operatives, the principle of self-help and mutual-
help can work for the welfare of the members.
8
5. Principle of distribution of profits
and surpluses

 Co-operatives are not interested in making

profits like business organizations.

 But, they are also required to run on same

minimum profits through efficient working.

 In co-operatives a certain amount of profits i.e.

25% will be kept back as reserve fund and the
remaining 75% can be distributed among the
members based on their contribution to the
share capital. 9
6. Principle of political and religious
neutrality
 The important strength for growth of the
cooperatives is the unity among the members
and non-interference of political parties.
 The members of the cooperatives should
continuously work for the growth of the society
with harmony, integration and un-biasedness
towards any religion or political party.
 The political and religious differences of the
members should be kept away for the smooth
running of the cooperatives. 10
7. Principle of Education
 If the members in cooperative society are illiterate,
their participation is poor in running the
cooperatives and they cannot understand what is
going on in the society.

 Hence, first such type of illiterate members should

be made literate.

 For promoting awareness and efficiency in the

operations of cooperatives, education to members
and training to office bearers and executives is
necessary. 11
8. Principle of thrift
 The cooperatives must aim at inculcating the habit of
thrift i.e. “propensity to save” among the members.

 Thrift and service are part and parcel of cooperation.

 The members who save their money with

cooperatives should get incentives.

 Thrift is very much basis of self-help, but it must

precede credit. It implies that in sanctioning of
credit, a priority should be given to the members
who save. 12
9. Principle of publicity
 The cooperatives should make sincere
efforts to tell their members about the
society and all the dealings of the
society should be made public.

13
10. Principle of honorary service

 The honorary personnel will simply supervise

and direct operations of cooperatives.

 But to have efficiency in the society, trained

secretaries with salaries are needed.

 But if the societies are started with poor

members, it is better to have honorary office
bearers, because such societies cannot
afford to pay salaries to such office bearers.14
Maxims of co-operation
 The founder of Irish co-operative
movement Sir Horace Plunkett sums up
cooperation in three famous maxims.

15
1. Better Farming
 It means helping the farmer to realize a better
production in the farm business through
adoption of requisite technology.
 The farmers’ objective of achieving higher
production and productivity will be realized
only when the resources are available in
adequate quantities and at right time.
 For this necessary capital for the farmer also
should be provided by institutional agencies at
right time. 16
2. Better Business
 Farmers should get a better deal in buying the
inputs as well as disposing the products.
 The efforts of the farmer will be fruitful only when
an efficient marketing system is accessible to him.
 Farmers as a group enjoy better bargaining power
when compared individually.
 Hence co-operatives should provide inputs needed
by the farmers at reasonable rates and arrange for
the disposal of produce at favourable prices.
17
 3. Better Living
 This implies that the cooperative societies should
supply consumer goods to the consumers at
reasonable rates.
 This helps the consumers to pay less than what they
pay in open market.
 A good and successful cooperative help in preventing
marketing middlemen (as minimum as possible)
especially private traders from taking undue
advantage.
 Thus co-operatives help in getting favorable prices to
producers for their products and providing the same18
products for consumers at reasonable prices.
History of Cooperative
Movement in India
 Pre-Independence Era
 Post – Independence Era
Pre-Independence Era:
 The cooperative movement in India
during pre-independence era can be
divided in to four phases viz.,


 Initiation phase (1904-1911)

 Modification phase (1912-1918)
 Expansion phase (1919-1929)
 Restructuring phase (1930-1946)

20
Initiation phase (1904-
1911)
 The revolts found in Poona and Ahemadnagar areas of Maharashtra
attracted the attention of government. Immediately the
government passed three acts viz.,


 Deccan Agriculture Relief Act (1879)

 Land Improvement Loan Act ( 1883)
 Agriculturists Loan Act (1884)


 In 1892, the Madras government appointed Federick Nicholson to

study and examine the village banks organized on cooperative lines
in Germany. After coming from there Nicholson submitted a report
and raised a slogan “Find Raiffeissen”.


 During 1901, Indian Famine Commission and another committee

headed by Sir Edward Law recommended the formation of credit
societies on Raiffeissen model. These recommendations resulted in
the enactment of Cooperative Credit Societies Act (1904). 21
Important/salient features of 1904
Cooperative Credit Societies Act:.

 Classification of cooperative societies into

rural and urban was made.
 Both the organization and control of these
societies was to be done by Registrar of
cooperatives.
 Loans could be extended to the members on
personal and collateral security.
 The principle of “one man one vote” was
22
specified in the Act.
Modification phase (1912-1918):

 Cooperative Societies Act of 1912 was enacted for

rectifying the shortcomings of 1904 Act.
 Important features of 1912 Cooperative Societies
Act:


 It provided legal protection to all types of cooperatives

 Liability is limited in the case of primary societies and
unlimited for central societies.
 As this act of 1912 gave provision for registration of all types
of cooperative societies, it led to the emergence of rural
cooperatives both on credit and noncredit fronts. But this
growth was uneven spatially i.e. localized in some areas only.
23
Expansion phase (1919-1929):

 This phase was considered as “Golden Era” for the

cooperative movement in India.

 Cooperative movement got impetus as the cooperatives

became a provincial subject under Montague Chelmsford
Act of 1919.

 The economic prosperity during the period 1920-1929 also

contributed to the growth of cooperative movement.


 During the same period, the birth of Land Mortgage Banks

(LMBs) took place first in Punjab (1924) subsequently in
Madras (1925) and in Bombay (1926). 24
b) Post-Independence
Era
 Planning commission was established in March,
1950, prepared first five year plan (1951-1956)
in 1951 under which main objectives with
regard to cooperatives were:


 Involvement of cooperatives in rural development

programmes.
 Development of well organized credit system.
 Extending cooperatives to the fields of farming,
industry, housing, marketing etc.
 Training of higher level personnel engaged in
cooperatives. 25
 Under Second five year plan (1956-1961)
 National Cooperative Development and Warehousing
Board (NCDWB) was established

 During Third five year plan (1961-1966)

 National Cooperative Development Corporation
(NCDC) was established in 1963 and also National
Federation of Cooperative Sugar Factories (NFCSF).

 In the year 1967, Vaikunth Mehta National Institute of

Cooperative Management (VAMNICOM) was started in
Poona. 26
 Fourth five year plan (1969-1974)
 Indian Farmers Fertilizer Cooperative Limited
(IFFCO) was established at Kandla, Gujarat.

 Fifth five year plan (1975-1979)

 new fertilizer projects were initiated

 Sixth five year plan (1975-1979)

 National Bank for Rural Development (NABARD)
was established for providing credit to
agriculture and allied activities 27
 Seventh five year plan (1985-1990)
 (a) Organizing of special cooperative loan
recovery camps; (b) Strengthening of
National and State Consumer Federation
(NSCF); (c) Introduction of single window
system of credit in Andhra Pradesh.
 Eighth five year plan (1992-1997)
 emphasized replication of Anand Pattern of
cooperatives for milk and strengthening of
processing cooperatives.
28
 During Ninth Five Year Plan (1997-
2002)
 Finalization of a new Multi State
Cooperative Societies Bill to replace the
existing Multi State Cooperative Societies
Act, 1984

 Tenth Five Year Plan (2002-2007)

 study of the role of the cooperatives and
challenges to be met in the wake 29 of
globalization of Indian economy