Cooperation: meaning, brief history of cooperative development in India, principles,

objectives of cooperation, significance in Indian agriculture

Meaning- the word cooperation is derived from Latin word ‘co-operari’, co- means with and
operari means work. It means that cooperation means working together with common
purpose.
Cooperative: It is defined as a form of organisation wherein persons voluntarily associate
together as human beings on a basis of equality for the promotion of economic interest of
members.
It may also defined as a form of association of people to work together in order to achieve a
particular end.
Cooperation involves following three basic elements
1. Coming together of individuals on voluntary basis
2. Equality among members irrespective of capital contributes (one member-one vote)
3. An honest economic and social objective
Objectives of Cooperation
1. To develop cooperation, self-respect, and self-reliance among the members.
2. To buy and produce quality goods, tools, equipment and raw materials to end
customers.
3. To associate with govt and other organizations of similar business
4. To undertake those activities that caters to the welfare and well being of the members
and society
5. To promote unity amidst the members and remove any sort of internal competition
6. To practice transparent and fair business dealings.
Significance of Cooperation in Indian Agriculture
Cooperation is important because it allows people and groups to work together to achieve a
common goal or derive mutual benefits. It allows participants to exchange valuable
information that helps both sides improve their knowledge and work in a time and resource
efficient manner.
Specific advantages of cooperatives are as follows
1. For higher profits of farmers- farmers are getting loans with limited interest and thus
reduces cost of production
2. Improved quality of products and services- as people are coming together strength
increases allowing providing quality services to its members.
3. Lower expenses on input supplies- as larger quantities of required inputs like seeds,
fertilizers, etc could be purchased with reasonable prices.
4. Larger markets and better competition- agro produce could be sold in bigger market
as large quantities of agro produce is available from their members. Middlemen could
be avoided as cooperatives can directly deal with purchasers
5. It helps in poverty alleviation, employment generation, food security and thus perform
good role in rural development, social securities.
6. It helps to reduce bureaucratic and political evils
 7. It creates conducive environment for small and cottage industries.
8. It has immense potential to deliver goods and services in rural areas where both the
state and private sector have failed.
9. It provides legal support to the farmers for performing different economic activities.
Principles of cooperation
According to International Cooperative Alliance (ICA), following are the principles of
cooperation.
a) Primary principles
1. Open membership/voluntary association- cooperatives should only comprise
persons who have joined it voluntarily. Cooperative organisation must be open to all,
who desires and able to employee their services, without any discrimination on
political, religious, and racial grounds.
2. Democratic control- one vote for each member irrespective of share). All members
must have same rights and be able to form and express their opinions freely.
3. Distribution of surplus (profit) on patronage dividend basis- i.e., in proportion
with their transactions with the society.
4. Limited interest on capital- to safeguard the non-profit character of cooperatives.
b) Secondary principles-
1. Political and religious neutrality- for smooth functioning of the organization
2. Cash trading- to make cooperative movement efficient and successful
3. Promotion of education/cooperative education- 2.5 % of surplus should be
devoted for cooperative education. Promotion of moral values is one of the aim of
cooperatives and not just economic interest.
4. Self-help through mutual help (each for all and all for each)- principle of thrift,
equality, service, unity and fraternity
Brief history of cooperative movement/ development of cooperatives in India
a) Pre-independence era
1. Initiation stage- (1904-1911)- madras govt has appointed committee in 1892 chaired
by Fredrick Nicholson to study rural banking on cooperative basis in Germany. Ha
has recommended formation of credit societies on Raiffesssen model of Germany.
Indian famine commission in 1901 also supported this idea and these
recommendations resulted into enactment of cooperative credit societies act 1904
which is treated as pioneer act of cooperative credit movement in India.
2. Modification stage- (1912- 1918) the shortcomings of act 1904 were modified by
enacting another act in 1912. Provision of legal protection to cooperatives including
central financing agencies and supervising unions. Sir Edward Maclagan committee
also suggested some changes in 1914 that leads to reforms act 1919.
3. Expansion stage (1919-29)- birth of cooperative land mortgage banks. Firstly, in
Punjab and then in Madras, Bombay etc.
4. Restructuring stage (1930-46) in early thirties, cooperative movement was collapsed
but taken momentum during period of second world war when there was rise in the
prices of agril. commodities. Agril. Finance subcommittee (headed by Prof. D. R.
Gadgil) appointed by govt recommended in 1944, the adoption of limited liability to
the cooperatives, assessing credit worthiness based on repayment capacity of the
 farmers etc. the cooperative planning committee in 1945, under chairmanship of R G
Saraiya attributed the limited progress of cooperatives to the state.
b) Post-independence era
1. 1950- planning commission was set up; first five-year plan was implemented in
1951. Main objectives of first five-year plan regarding cooperatives were
involvement of cooperatives in rural development program, development of well
organised credit systems, extending cooperatives to the fields of industry, housing,
marketing, farming etc and training of higher personnel engaged in cooperatives.
2. All India Rural Credit Survey Committee appointed by RBI in 1951 under the
chairmanship of Shri. AD Gorwala brought out that the cooperative credit was
unevenly distributed, inadequate and mostly lent to asset oriented large
cultivators. The committee recommended following remedies-
1. State partnership in cooperative institutions at all levels
2. Coordination between cooperative credit, marketing, and processing
3. Development of warehousing
4. Training of cooperative personnel at all levels
3. All India Rural Credit Survey Committee was formed in 1954
4. National Cooperative Development and Warehousing Board was established in
1956
5. Committee on cooperative credit under chairmanship of Shri. VL Mehta in 1959
suggested that membership should not be too large or area too extensive.
6. Committee on taccavi (short term) loans under chairmanship of Shri. BP Patel in
1961-62 felt that cooperatives should provide loans to farmers for agril.
Operations and land improvements.
7. National Cooperative Development Corporation (NCDC) was established in
March 1963
8. All India Rural Credit Review Committee was formed in July 1966 recommended
setting of Small Farmers Development Agency (SFDA), reorganisation of primary
societies.
9. IFFCO was established at Kandla in Nov. 1967
10. NABARD was established to strengthen credit for agriculture in July,12, 1982
11. 1991- Liberalisation, Privatisation and Globalisation was conceptualised.
cooperatives were considered as part of strategy of planned economic
development.
UNIT 5 Agricultural Cooperation in India- credit, marketing, consumer and multi-
purpose cooperatives, farmers service cooperative societies, processing cooperatives,
farming cooperatives, cooperative warehousing, role of ICA, NCUI, NCDC and NAFED
There are various types of cooperatives given as follows
A) Credit cooperative: a financial organization owned and controlled by its members,
who can borrow at low interest rates from an amount of money they have saved as
a group.
In India, structure of credit cooperatives is three tier/ levels as
1. Primary Agricultural Credit Societies (PACSs) at Village level- provides short
term credit to farmers. Around 98000 PACSs comprising 8 crore members
2. District Central Cooperative Banks (DCCBs) at district level. Around 371 banks
with 13327 branches. Provides loans to PACSc, medium term and long-term loans
to farmers.
3. State Cooperative Banks at state level. around 31 banks with 997 branches.
Provides loans to DCCBs.
B) Consumer cooperatives- A consumers' co-operative is an enterprise owned by
consumers and managed democratically and that aims at fulfilling the needs and
aspirations of its members.
At village level, primary agricultural cooperative societies are also undertaking
distribution or sale of consumer goods. In addition to this, there are central, state, and
national cooperative consumer federations.
C) Dairy cooperatives- A dairy cooperative is a collection of dairy farmers who work
together to bring milk and other dairy products to market. The dairy co-op is owned
and controlled by all members of the co-op equally. Dairy producer members share in
the profits and expenses of the co-op. Dairy cooperatives can range widely in size and
function. While some dairy cooperatives provide support in the marketing and sale of
milk, others like Cabot Creamery Co-op collect milk from each of its 800 family
farms to produce and sell award-winning cheese nationwide. around 1.45 lakhs
primary dairy cooperatives are exist in India handling around 25 million litres of milk
every day including 183 cooperative milk unions, 346 district cooperatives and state
cooperatives.
D) Agricultural processing cooperatives- there are two types of processing
cooperatives- 1. Those who are adjuncts of cooperative marketing societies such as
cooperative rice mills, oil mills, dairy etc. 2. Those are exclusively set up for
processing such societies are cooperative sugar factories, spinning mills.
They provide marketing and price support to the farmers. we have around 324
cooperative sugar factories (60 % of total sugar produced), 172 cotton ginning, grain
processing- 702, food processing 73, total cooperatives are 1689 (2011).
E) Marketing cooperatives- A marketing cooperative provides a sales outlet for the
products supplied to it by members. It is a cost-effective way for smaller farmers
to sell products at more advantageous prices than they could achieve alone,
especially when selling to large food companies.
Cooperative marketing is a process of marketing through a cooperative association
formed voluntarily by its members to perform one or more marketing functions in
respect of their produce.
At village level, there are PACSs which may be classified as given below based on
purpose.
 1. Single commodity cooperative marketing societies- marketing of only one
commodity. Eg. Cooperative sugar factories.
2. Multi commodity CMS- more number of commodities.
3. Multi-purpose multi commodity CMS- providing credit, supply of inputs, etc.
At regional or district level, there are central cooperative marketing
societies/federations. (378)
At state level, State Cooperative Marketing Federations (28)
At national level- NCDC, NAFED
F) Farming cooperatives-
When various farmers in a village pool their land together and agree to treat the pooled piece
of land as one big farm for the purpose of cultivation, purchase the necessary inputs for the
cultivation, and market the crops jointly, they are assumed to have formed a cooperative
farming society. Such a society, for its proper working elects its office bearers on the basis of
one member-one-vote.

The office bearers look after the proper cultivation of new farm that emerges after the land of
various farmers has been pooled. The ownership of the land still lies with the respective
members of the society and they withdraw from the society whenever they so like.

Cooperative farming mainly refers to farming practices where farming operations are
conducted cooperatively. These agricultural practices are conducted by individuals on their
holdings jointly with certain common agencies.
Features of cooperative farming
 Joining of the farmers in this system is voluntary;
 Farmers retain their right to land;
 Farmers pool their land, livestock and also other implements;
 The entire farm is managed as a single unit and management is elected by all the
members; 
G) Cooperative Warehousing- A cooperative warehouse is a warehouse that is owned
and run by cooperative organizations like a farmer or winery co-op. Both co-op
members and those outside the co-op can store goods at these facilities, though co-op
members benefit from reduced rates with these types of warehouses.
Co-operative store eliminates middlemen from the channel of distribution. It
purchases large volume of quality goods directly from producers and sells to its
members at reasonable price. This protects consumers from the exploitation of
middlemen. Buying economy is another major advantage of co-operative stores.

Warehousing
Warehouses are scientific storage structures especially constructed for the protection of the
quantity and quality of stored products.
Importance
 Scientific storage
The product is protected against quantitative and qualitative losses by the use of such
methods of preservation as are necessary.
  Financing
Warehouses meet the financial needs of the person who stores the product. Nationalized
banks advance credit on the security of the warehouse receipt issued for the stored products
to the extent of 75 to 80% of their value.
 Price Stabilization
Warehouses help in price stabilization of agricultural commodities by checking the tendency
to making post-harvest sales among the farmers.
 Market Intelligence
Warehouses also offer the facility of market information to persons who hold their produce in
them.
Types of warehouses
1. Based on Ownership
a. Private warehouses: These are owned by individuals, large business houses or
wholesalers for the storage of their own stocks. They also store the products of others.
b. Public warehouses: These are the warehouses, which are owned by the govt. and are
meant for the storage of goods.
c. Bonded warehouses: These warehouses are specially constructed at a seaport or an
airport and accept imported goods for storage till the payment of customs by the
importer of goods. These warehouses are licensed by the govt. for this purpose. The
goods stored in this warehouse are bonded goods. Following services are rendered by
bonded warehouses:
i. The importer of goods is saved from the botheration of paying customs duty all at one
time because he can take delivery of the goods in parts.
ii. The operation necessary for the maintenance of the quality of goods - spraying and
dusting, are done regularly.
iii. Entrepot trade (re-export of imported goods) becomes possible.
2. Based on Type of Commodities Stored
a. General Warehouses: These are ordinary warehouses used for storage of most of
foodgrains, fertilizers, etc.
b. Special Commodity Warehouses: These are warehouses, which are specially
constructed for the storage of specific commodities like cotton, tobacco, wool and
petroleum products.
c. Refrigerated Warehouses: These are warehouses in which temperature is maintained
as per requirements and are meant for such perishable commodities as vegetables,
fruits, fish, eggs and meat.
Warehousing in India
a) National Co-operative Development and Warehousing Board
            This board was set up on 1st September 1956 to perform the following functions:
            (i) To advance loans and grants to State Governments for financing co-operative
societies engaged in the marketing, processing or storage of agricultural produce, including
contributions to the share capital of these institutions;
            (ii) To provide funds to warehousing corporations and the State Governments for
financing co-operative societies for the purchase of agricultural produce on behalf of the
Central Government.
            (iii) To subscribe to the share capital of the Central Warehousing Corporation and
advance loans to State Warehousing Corporations and the Central Warehousing Corporation;
            (iv) To plan and promote programmes through co-operative societies for the supply of
inputs for the development of agriculture; and
            (v) To administer the National Warehousing Development Fund.
            In March 1963, the Board was converted into the National Co-operative Development
Corporation (NCDC), and its functions were limited to co-operative development.
b) Central warehousing corporation (CWC)
For more details
This corporation was established as a statutory body in New Delhi on 2nd March 1957. The
Central Warehousing Corporation provides safe and reliable storage facilities for about 120
agricultural and industrial commodities.
Functions
 To acquire and build godowns and warehouses at suitable places in India.
 To run warehouses for the storage of agricultural produce, seeds, fertilizers and
notified commodities for individuals, co-operatives and other institutions,
 To act as an agent of the govt. for the purchase, sale, storage and distribution of the
above commodities.
 To arrange facilities for the transport of above commodities.
 To subscribe to the share capital of state Warehousing corporations and
 To carry out such other functions as may be prescribed under the Act.
 The Central Warehousing Corporation is running air-conditioned godowns at
Calcutta, Bombay and Delhi, and provides cold storage facilities at Hyderabad.
 Special storage facilities have been provided by the Central Warehousing Corporation
for the preservation of hygroscopic and fragile commodities.
 The corporation has also evolved techniques for the storage of spices, coffee, seeds
and other commodities.
c) State Warehousing Corporations (SWCs)
Separate warehousing corporations were also set up in different States of the Indian Union.
The areas of operation of the State Warehousing Corporations are centres of district
importance. The total share capital of the State Warehousing Corporations is contributed
equally by the concerned State Govt. and the Central Warehousing Corporation.
Food corporation of India (FCI)
Apart from CWC and SWCs, the Food Corporation of India has also created storage
facilities. The Food Corporation of India is the single largest agency which has a capacity of
26.62 million tonnes.
Role of ICA
International Cooperation Alliance (ICA) is a non-profit international association
established in 1895 representing 318 cooperative federations across 110 countries (2018).
ICA works with global and regional governments and organisations to create the legislative
environments that allow cooperatives to form and grow.
1. It promotes importance of cooperatives values based on business model.
2. It publishes the world cooperative monitor- the index of world’s largest cooperative
and mutual enterprises.
3. It advocates the interests and success of cooperatives, disseminate best practices and
know-how, strengthen their capacity building, monitors their performance and
programs over time to time.
4. since 2014, ICA has been actively engaged in the business 20- a forum of business
leaders that makes recommendations to G20 governments for strong, sustainable, and
balanced growth in the global economy.
 5. In March 2016, ICA has partnership with European commission to bring the
cooperative model to the next level within international development policies and
programs.

Role of NCUI
National Cooperative Union of India is an apex organisation representing the entire
cooperative movement in the country, established in 1929 as All India Cooperative Institutes
Association and was reorganised as Indian Cooperative Union through the merger of Indian
Provincial Cooperative Banks Association with All India Cooperative Institutes Association
and later in 1961 as NCUI. It has 242 members (national level, state and multi state level
cooperatives). It collaborates with ICA, UNO, FAO, ILO, UNDP and other international
agencies involved in cooperative movement.
Activities-
1. Expresses opinion on matters of cooperative policy and acts as the accredited
representatives of the Indian Cooperative movement in the national and
international spheres.
2. Organises cooperative education and training programs and popularise
principles of cooperation.
3. Conducts research and analysis of cooperative’s problems and formulation of
projects for development.
4. Lends publicity to the activities of cooperatives through periodicals, journals
etc.
5. Convene and held conferences, seminars, meetings, exhibitions, etc.
6. To commemorate the occasion of International Cooperation Day, celebrated
on first Saturday of July every year, NCUI organises symposium on prescribed
themes.

Role of NAFED (National Agricultural Cooperative Marketing Federation of India)

It is an apex organisation of marketing cooperatives in India, established on 2 Oct.1958
having its HQ at New Delhi. State level cooperative marketing federations and NCDC are its
members.
1. It deals with procurement, distribution and export, import of selected agricultural
commodities.
2. It promotes inter state as well as foreign trades of agricultural commodities.
3. It looks after movement of essential commodities from surplus areas to scarcity areas.
4. It acts as nodal agency for price support operations.
5. It undertakes market interventions operating for horticultural products.
 6. It exercises healthy influence on market operations in stabilizing market prices for
favour of producers and consumers.
7. It encourages production and marketing of agricultural inputs, machineries,etc.
8. It carryout promotional activities like market research by experts, improvement in
market intelligence services, development of infrastructure, Conduct of market
surveys, training of market personnel,etc.
9. Setting up of scientific storage structures, cold storages, warehouses, etc.
10. Encourages processing of fruits and vegetables. (Unit at Delhi and Vellore)

Role of NCDC (National Cooperative Development Corporation)

It was set up in March 1963 having its HQ at New Delhi, for promoting, guiding, and
supporting rural economic activities on cooperative principles.
1. It aims for promoting programs for production, processing, and marketing of
agricultural products through cooperative activities.
2. It focuses on promoting, strengthening, and developing farmers cooperatives
for marketing, processing and storage of agricultural products as well as
supply of agricultural inputs and essential consumer goods in rural areas.
3. It provides financial assistance to cooperative societies through or on the
guarantee of the state governments.
4. It also provides financial assistance to state level cooperative marketing, agro
processing for establishment of new cold storages.
5. It also provides technical guidance to cooperatives.