The word “cooperation” literally designates the association of a number of people of small or limited

means who organize themselves for self-help and mutual benefit from an enterprise. A cooperative does
not aim to earn benefit like other type of organizations but is only to render service to its members.
Cooperative societies can help farmers with such a facility at affordable cost and ensure better
economic returns.

Definition of co-operation

Late Shri V.L. Mehta preferred to express its non-profit and selfless characteristics by describing
cooperation as voluntary association of individuals having common needs who combine towards the
achievement of common economic needs.” In a similar tone,

Mr. H. Calvert who defined cooperation “as a form of organization wherein persons voluntarily
associate together as human beings on a basis of equality, for the promotion of the economic interests
of themselves”

Objectives

The basic objective of cooperation is to provide services through self-help and mutual help which
eliminates exploitation of consumer by trader, the workers by the employer, the borrower by the lender
and tenant by landlord.

Principles of co-operation

The first to state the co-operative principles were the Rochdale Pioneers. The principles include:

open membership; democratic control; limited interest on capital; distribution of surplus to members in
proportion to their transactions; political and religious neutrality; cash trading; and promotion of
education. But these principles were formulated mostly from the point of view of consumers co-
operatives whereas cooperative movement is now working in the context of wide range of socio-
economic conditions operating in various countries. The International Co-operation Alliance, on the
request of the International Co-operative Congress held at Bournemouth in 1963, appointed a
Commission to formulate the fundamental principles of co-operation. The Commission which was
headed by Prof. D.G. Karve, recommended that the following should be considered as essential for
genuine and effective co-operative practice.
1. Voluntary and open membership;

2. Democratic control;

3. Limited interest on share capital;

4. Patronage dividend;

5. Promotion of education; and

6. Mutuality Voluntary and open membership

Voluntary and open membership;

Co-operative institution is essentially a voluntary organization and there is no

compulsion on any one to join a co-operative society or having once jointed it to
continue as such. While the society should follow the principle of open
membership, there should be no objection to its prescribing certain qualifications.
Similarly, some restrictions can be imposed on a person withdrawing from
membership.

Democratic Administration

The management of this organization is fully democratic where all members are
treated equal for voting and participation in decisions affecting their societies.
The individuals are not distinguished on the basis of property and status. It is now
fully recognized that supreme authority in a co-operative society vests in its
general body of members.

Limited interest on share capital & patronage dividend

A co-operative society is organized to enable the members improve their
economic condition by helping them in their business. This, however, does not
mean that the societies should run on “no profit – no loss” basis. Efficiently
managed society will, of necessity, earn some profit to meet unforeseen losses, if
any, at a later stage. It has become an accepted principle of cooperation that the
share capital given by the members should receive only a limited return.
Promotion of Education

The Commission remarked that “all co-operative societies should make provision
for the education of their members, officers and employees and the general
public in the principles and techniques of co-operation, both economic and
democratic.” In order to secure intelligent participation of the members in the
working of societies it is necessary that continuous system of education be
evolved and members kept informed of the decisions and 4 activities of the
society. The Rochdale Pioneers laid great stress on the continuous education of
the members and even began to set aside a fixed sum out of the surplus for
education purposes.

Mutuality

The principle relates mostly to the mutual co-operation among the co-operatives
for organizing resources on the basis of mutual help and for sharing benefit.
Cooperation implies an enterprise of those who are financially weak individually
and can not derive material advantage which rich people with all their resources
and connection can. In order to convert their weakness into strength the
members pool their resources and work together for mutual benefit. The mutual
aid is, in fact, a means of self help.
Functions:

In pursuance of the most cherished objective of improving agricultural

production, the service/primary agricultural co-operatives were established to
perform the following functions:

1. To provide short-term credit required for the purchase of farm requirements

and medium-term loans for other agricultural purpose.
2. To arrange the supply of farm requirements such as improved seeds, fertilizers
and insecticides etc.

3. To provide household requirements such as sugar, kerosene oil, etc.

4. To raise funds mainly through savings of members.

Large-sized Primary Credit Societies

On account of their small size, inadequate finance, and lack of competent

personnel, the multi-purpose societies remained an ineffective agency to meet
the multiple needs of members. The Rural Credit Survey Committee found neither
the small societies nor the multi-purpose societies as a suitable pattern for the
development of credit co-operation at the primary level. The committee
recommended that large sized primary credit societies inbetween the multi-
purpose and single-purpose societies be developed which may have the following
features:-

1. A large membership drawn, if necessary, from more than one village.

2. Limited liability and State partnership.

3. Emphasis on the grant of crop loans and medium-term loans.

4. Meeting of consumption needs through chit funds.

5. Building up a link between co-operative credit and co-operative marketing. 6.

Emphasis on larger deposits

Kinds of Co-operative Farming:

The Co-operative Planning Committee classified cooperative farming into
following four types:-

(i) Co-operative tenant farming: It refers to a system in which a society

consisting of a number of farmers procures a large tract of land either by
purchase or in lease which is divided into smaller holdings and then
leased to individual members of the society. The society provides
facilities of credit, seed, fertilizers and implements and undertakes
marketing of members’ produce. Every member pays a fixed rent for his
holding but the produce of his holding is his own and is entirely at his
disposal. Though the society undertakes to supply credit, seeds,
manures and costly inputs but it is optional for the members to utilize
these facilities.
(ii) (ii) Co-operative collective farming: It implies the type in which
members surrender their land irrevocably after which it becomes
property of society where members loose their ownership. Land,
livestock and other equipment are joint, work is common and the
management is generally through an elected council. Under this system
of farming, every person gets, apart from his wages, a share in the
surplus produce of the farm. The collective farm is a large-scale farm
and is highly mechanized.
(iii) (iii) Co-operative better farming: It implies the system in which some or
all the farmers in a village join together for the purpose of improved
methods of farming. The members retain ownership of their land but
agree to follow a plan of cultivation laid down by society. In this type of
farming every farmer is independent, can put his land to any use he likes
 and does not lose his title to land. The joint cultivation is not mandatory
and each member cultivates his own land and takes his profits.
(iv) Co-operative joint farming: It implies pooling of land on the part of
small cultivators whose separate holdings are not large enough to
permit economic cultivation. The plots are pooled into one unit and the
cultivation is joint, though every farmer retains ownership of his land.
Joint cultivation is done on pooled land in accordance with the
programme decision taken by committee elected. All operations of
purchase, sale and cultivation are done jointly where each member gets
wages for daily labour. The produce is disposed of collectively and part
of profit is transferred to reserve fund.

Co-operative marketing

1. to market produce to their best advantage;

2. to provide credit facilities to members on the security of their produce;

3. to arrange for transport and storage of member’s produce;

4. to provide the facility of grading of produce;

5. to introduce the system of pooling so as to require a better bargaining power;

6. to export member’s produce so as to bring in better returns for the producer;

Women co-operatives India’s dairy co-operative societies have traditionally been
run by men but this is gradually changing because about twenty per cent of co-
operative members are now women, and nearly 2500 all-women cooperatives are
functioning in the country. Over 1,000 women in Gujarat’s Surendranagar district
have proved that modern technology can ameliorate the worries of poor rural
women. Surendranagar now has nine dairy cooperatives – with a turnover of 9.8
million in the past year – run entirely by women. Gujarat, in fact, spearheaded the
‘Operation Flood’ movement in the 1970s, which sought to maximize milk
production and profits through scientific techniques and attempted to free milk
producers from the tyranny of middle persons. This was an initiative by Dr
Verghese Kurien, Chairperson of the Gujarat Cooperative Milk Marketing
Federation (GCMMF) and architect of the Gujarat dairy 18 cooperative
movement. The GCMMF is the apex body under which all the 12 district
cooperative unions in Gujarat function. According to ‘Dairy India’ – a publication
on the dairy industry – at present, of an all-India total of 9.2 million co-operative
members, 1.63 million (18 per cent) women cooperatives are functioning in the
country. Several NGOs are now working to change this scenario to be more
inclusive of women. The Self-Employed Women’s Association (SEWA),
Ahmedabad, Gujarat was the first one to start the concept of all-women dairy
cooperatives in the Banaskantha district. This is a dry area with limited fodder
reserves, and so SEWA has been actively working on fodder security. This scheme
is implemented by women members of SEWA, now organized into the
Development of Women and Children in Rural Areas Association. SEWA has also
revived some defunct dairies in Santhalpur and Radhanpur talukas. Apart from
NGOs, governmental organizations like the National Dairy Development Board
have also organized special training programmes for women in modern livestock
management

Weaknesses of the co-operative movement In spite of enormous scope and

relevance of cooperatives, the progress of this movement has been far from
satisfactory. The All India Rural Credit Survey Committee as well as many
individuals and committees have brought out the various weaknesses of the
movement in India and have suggested methods for improving and reorganizing
the movement.

(i) Lack of spontaneity: The co-operative movement in India did not spring
from the people themselves. The movement was not voluntary in the
real sense and the people did not come forward to organize societies to
satisfy their needs. The government officials who ran the movement
were ignorant of the ideals of co-operation. They were neither properly
trained, nor were they aware of the needs of the farmers.
(ii) (ii) Lack of funds: A basic weakness of the co-operative movement has
been the lack of funds and these do not command adequate resources
in the form of share money and deposits. The central and the sate co-
operative credit societies could not attract as much deposits from 19 the
general public as was anticipated. On account of weakness in financial
working of credit societies the overdue rises to 40-45 per cent of the
loan.
(iii) (iii) Loans for productive purposes only: The co-operative credit societies
did not help the farmers in meeting all their credit requirements. They
 give loans only for agricultural operations. But the farmers require loans
to meet many of their other requirements also for which they have to
depend upon the money-lenders and thus farmers do not become full
supporters of the cooperative movement.
(iv) (iv) Provision of credit only: The co-operative societies provided loans to
the farmers but did not help the latter in any field of non-credit shares..
In certain areas different societies were started for different purposes.
But there is need to establish co-operative societies to meet all the
needs of the farmers.
(v) (v) Problem of overdues: The major problem faced by co-operatives is
mounting levels of overdue with a ratio of overdues to demand being 40
to 42 per cent. The total overdue of co-operative credit institutions is
estimated to be between Rs. 9,000 to Rs.10,000 crores. Lack of will and
discipline among cultivators to repay loan, defective landing policy and
apathy of management in taking quick action against defaulters created
such a situation. It has further been aggravated by frequent loan
waivers, concessions in various forms towards repayment of principal
and payment of interest, writing off the debts etc. It is disquisting to
note that out of 1,12,309 PACS with a membership of around 12 crores
in the country, 62 per cent are viable, 30 percent potentially viable and
eight per cent are either dormant, defunct or under liquidation. The
problem of overdues is a matter of serious concern as it affects the
recycling of funds and credit expansion on one hand, and economic
viability of cooperatives, on the other. Various suggestions to lower this
financial drain in co-operative sector have remained unimplemented at
 the levels of state governments. Some serious thinking is required to
remedy the situation at the higher level before the entire system of
credit supply to rural sector is crippled.
(vi) (vi) Competition from private agencies: From the very beginning, the
co-operative movement met with competition from powerful vested
interests. In villages, the moneylenders and traders worked for the
failure of the village societies.
(vii) (vii) Lack of co-operation on the part of the people: In India, people have
been largely illiterate, ignorant and extremely conservative. For one
thing, most of them did not understand the real meaning and objective
of co-operation. Co-operation can not succeed unless there is
willingness and complete co-operation from the people.
(viii) (viii) Defective management and leadership: The failure and liquidation
of many societies in rural areas was directly due to the defective
management and leadership. As mentioned earlier, the village economy
is dominated by the landlords. But these landlords did not care much
about the success of the co-operative movement.
(ix) (ix) The attitude of the Government: The Government was correct in
encouraging the movement in all possible ways. The mistake it made
was to convert co-operatives into almost a government department
with all the rigidities and short sightedness associated with a
government department. The tendency was to officialise the movement
too much and leave little to private initiative. 20
(x) (x) The nature of Indian rural society: Conditions in Indian rural society
did not promote cooperation among people. The average Indian farmer
is illiterate and ignorant and has not been able to understand the
significance and utility of co-operation. Even after a century of operation
of cooperatives people have not developed much faith in the movement
and still regard it as a government agency for the grant of loans and
other services