An agricultural marketing cooperative is an association of farmers who voluntarily cooperate to pool their production for sale. That pooled production is marketed and distributed through the cooperative which is owned and controlled by the farmers themselves.
Structure
1. At Village Level: Primary Agricultural Cooperative Marketing Societies
2. At National Level: Commodity-marketing federations, National Agricultural Cooperative Marketing Federation (NAFED) and National Cooperative Development Corporation (NCDC)
Significance
1. Increased bargaining power: Cooperatives increase farmers’ bargaining strength, helping them avoid exploitation by intermediaries. Moreover, they act as pressure groups for positive influence on government policy on prices of agricultural inputs as well as procurement policies.
2. Direct market access: They facilitate direct dealings with final buyers, ensuring better prices for produce.
3. Provision of credit: Cooperatives provide credit facilities, enabling farmers to avoid distress sales and secure better prices post-harvest.
4. Better supply chain: They offer easier and cheaper transport and storage facilities, reducing costs and preserving the quality of produce. Cooperatives can efficiently handle grading and standardization, improving marketability.
5. Market intelligence: They provide market information, helping farmers make informed decisions. Strong cooperatives can influence market prices positively.
6. Input supply: They ensure timely and bulk supply of inputs like seeds and fertilizers at reasonable rates.
7. Processing facilities: Cooperatives can undertake processing activities, adding value to agricultural produce.
Challenges
1. Uneven development: The growth of cooperative marketing varies across states, with some regions showing strong performance while others lag. Maharashtra, Uttar Pradesh, Gujarat, Punjab, Karnataka, Tamil Nadu and Haryana together account for more than 80 per cent of the total agricultural produce marketed through co-operatives in the country.
2. Limited coverage: The actual coverage of cooperatives in terms of membership remains low, and their share in total marketed agricultural produce is minimal. Co-operative marketing societies are generally located in big markets/towns and quick and cheap transport facilities are not available for the carriage of the produce from the villages to the societies.
3. Financial performance: Many cooperatives face financial difficulties, with a number of incurring losses. Lack of internal resource mobilization forces cooperatives to rely on external credit sources as the societies do not act as banks for the farmers.
4. Storage issues: There is a lack of sufficient storage facilities with the societies. They, therefore, try to dispose of the produce soon after their arrival; a fact which results in lower prices for the farmers.
5. Management issues: Inefficient management and lack of professional expertise often hamper the effectiveness of cooperatives. The managers of the societies are often linked with local traders and become impersonal to the needs of a majority of small and marginal farmers. In some cases, rivalries among farmer-members result in indecision, which hampers the progress of the societies.
6. Political interference: Excessive government control and political interference can lead to inefficiencies and corruption.
Strengthening of Cooperative Marketing Societies
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- The area of the operations of the societies should be large enough so that they may have sufficient business and become viable. Most of the societies at present are not viable because of the small volume of their business.
- Co-operative marketing societies should develop sufficient storage facilities in the mandi as well as in the villages.
- The societies should give adequate representation to the small and marginal farmers in their organizational set-up.
- There is a need for bringing about a proper co-ordination between credit and marketing co-operative societies to facilitate the recovery of loans advanced by credit societies and make available sufficient finance for marketing societies.
- Co-operative marketing societies should diversify their activities. They should sell the produce and inputs and engage in the construction of storage facilities.
- Marketing societies, like the private traders, should provide accommodation and the drinking water facility for their members when the latter come to the mandi.
- The public procurement and public distribution programmes should be implemented through co-operative marketing societies to increase their business; and
- The cooperatives should be made free from government control.
