Meaning of Co-operation

Co-operation is the act of working together with others to achieve a common goal. It involves pooling resources, skills, or knowledge to benefit all involved. The cooperative model is particularly useful in sectors like agriculture, where collective effort often leads to shared success.

Detailed Definition of Co-operation

Co-operation can be defined as a voluntary association of individuals who come together to fulfill a shared purpose. This purpose could be economic, social, or even educational, but it always focuses on mutual benefit. Unlike profit-driven business ventures, co-operatives focus on enhancing the welfare of their members through joint effort.

• Huber Calvert defines co-operation as the joining of individuals or groups, voluntarily coming together for the common good, to achieve shared economic benefits.

• Sir Horace Plunkett describes co-operation as “self-help made effective by organization,” emphasizing that it is not merely about mutual support but about organized effort for a specific goal.

The motto “Each for all, and all for each” captures the spirit of co-operation, where no individual’s effort is isolated, and the collective success is paramount.

Brief History of Cooperative Development in India

Cooperative development in India has a long and varied history, dating back to the British colonial period, when the idea of cooperative societies was introduced as a means to improve agricultural and rural welfare. Over time, cooperatives evolved and played a significant role in supporting agricultural, financial, and industrial sectors.

1. Early Beginnings (19th Century)

• British Colonial Period: The concept of cooperatives was introduced to India during the British rule. The primary aim was to address the issues faced by farmers due to exploitative moneylenders and to promote agricultural credit. The first cooperative societies were formed in the 19th century in the context of agricultural credit and marketing.

• 1890s: The first cooperative legislation was passed in 1892 with the Indian Cooperative Societies Act, which aimed to promote the formation of credit societies. This Act laid the foundation for the cooperative movement in India.

• 1904: The Cooperative Credit Societies Act was introduced, further institutionalizing the cooperative movement, focusing on credit societies to provide financial assistance to farmers.

2. Post-Independence Developments (1947 – 1960s)

• First Five-Year Plan (1951): After India gained independence in 1947, the government recognized the potential of cooperatives for rural development. The First Five-Year Plan (1951-56) focused on improving agricultural production and poverty alleviation, and cooperatives were identified as an essential vehicle for this transformation.

• NABARD (1982): The National Bank for Agriculture and Rural Development (NABARD) was established to provide institutional credit for the development of agriculture and rural sectors, thereby supporting cooperative efforts in the rural economy.

3. Growth and Institutionalization (1970s – 1990s)

• Cooperative Movement Expansion: In the 1970s and 1980s, the cooperative movement expanded rapidly, especially in agriculture, dairy, and credit sectors. Amul, the dairy cooperative, became a national model for successful cooperative organizations, demonstrating how collective action could improve the economic status of farmers.

• Cooperative Banking: The establishment of State Cooperative Banks, District Central Cooperative Banks, and Primary Agricultural Credit Societies (PACS) in the 1970s significantly improved access to financial services for farmers.

• White Revolution (1970s-80s): Initiated by Dr. Verghese Kurien, this was a landmark development in the cooperative sector, particularly in dairy. The revolution was driven by cooperatives and led to India becoming the largest milk producer in the world by the early 1990s.

4. Recent Developments (2000s – Present)

• Rural Development and Microfinance: In recent years, cooperatives have increasingly contributed to rural development through microfinance, self-help groups, and rural enterprise development. Cooperatives in agriculture, fisheries, and small-scale industries continue to play an essential role in improving livelihoods and enhancing rural economies.

• Policy Support: The Indian government has continued to support cooperatives through policy initiatives and reforms. The Cooperative Societies Act (2002) and amendments to the Multi-State Cooperative Societies Act (2002) were significant steps towards improving governance and operational efficiency in the cooperative sector.

• Challenges: Despite significant progress, the cooperative sector in India faces challenges such as poor management, political interference, and outdated practices. Recent reforms focus on improving the governance and efficiency of cooperatives to meet modern economic demands.

Key Milestones

• 1892: Formation of the Indian Cooperative Societies Act, marking the beginning of organized cooperatives in India.

• 1904: The Cooperative Credit Societies Act aimed at addressing the financial needs of farmers.

• 1942: The creation of the National Cooperative Union of India (NCUI), which helps in promoting and protecting cooperative enterprises.

• 1951: The First Five-Year Plan incorporated cooperatives as a central element of rural development.

• 1970s: The launch of the White Revolution, with cooperatives like Amul becoming globally renowned.

• 1982: Establishment of NABARD, which provided a significant boost to cooperative finance.

• 2002: Reform of the Cooperative Societies Act and Multi-State Cooperative Societies Act to improve governance.

Objectives:

Cooperatives are organized to achieve several key objectives:

Economic Self-Sufficiency: Improve the financial status of members, especially in rural areas, by pooling resources.

Affordable Credit: Provide easy access to low-interest loans for farmers and small businesses, reducing dependence on moneylenders.

Supply of Goods and Services: Ensure fair access to essential goods like seeds, fertilizers, and consumer products.

Social Welfare: Enhance the well-being of members by offering services such as healthcare, education, and social security.

Democratic Governance: Promote democratic values with a “one member, one vote” system to ensure fairness.

Rural Development: Support agriculture and allied activities, promoting economic growth in rural areas.

Sustainable Growth: Encourage environmentally friendly practices and inclusive economic development.

Social Justice: Ensure equal opportunities for all members, reducing inequality.

Education and Training: Educate and train members to improve their skills and decision-making abilities.

Principles of Co-operation

Co-operatives are based on certain principles that guide their formation and operation. Here’s a detailed look at these principles:

Principle of Open and Voluntary Association

• • Co-operatives operate on the principle of open membership, meaning that anyone can join as long as they meet the basic conditions. This principle ensures that no one is excluded based on caste, religion, or social status. Membership is voluntary, and individuals can leave or join at will.

Principle of Democratic Organization

• • The democratic principle is one of the core values of co-operatives. Each member has an equal vote in decision-making, regardless of the amount of capital they have invested. This ensures equality among all members and aligns with the “one member, one vote” philosophy.

Principle of Service

• • The ultimate goal of any cooperative is to serve the needs of its members rather than to focus purely on profit maximization. The members’ needs—be it financial services, marketing support, or product supply—are at the heart of co-operative activities.

Principle of Self-help and Mutual Help

• • Co-operatives encourage members to help themselves by pooling resources and assisting each other in times of need. This principle fosters a spirit of mutual assistance, where everyone contributes to the collective good.

Principle of Distribution of Profits

• • Profits in a co-operative are not distributed based on the amount of capital invested but according to the level of participation of each member. This ensures that those who are actively involved in the co-operative’s success receive a fair share of the surplus.

Principle of Political and Religious Neutrality

• • Co-operatives should remain neutral in matters of politics and religion. This principle ensures that the co-operative remains inclusive, welcoming people from all backgrounds, and focusing solely on its economic objectives.

Principle of Education

• • Co-operatives are responsible for educating their members, particularly those who are not well-versed in the cooperative’s activities. Education helps improve the efficiency of the co-operative and encourages members to make informed decisions. This also includes training in financial literacy, governance, and management.

Principle of Thrift

• • Encouraging savings is a fundamental part of cooperative operations. Members are encouraged to save money, which in turn is reinvested in the cooperative for the benefit of all members. This not only strengthens the cooperative but also ensures financial stability.

Principle of Publicity

• • Co-operatives should operate transparently. Publicity is essential for building trust and credibility. It allows members to understand the cooperative’s operations and ensures accountability to the wider community.

Principle of Honorary Service

• • Many co-operatives run on an honorary basis, meaning that the office-bearers do not receive salaries. This helps keep operating costs low. However, larger cooperatives often employ professionals for efficiency and growth.

Significance of Cooperatives in Indian Agriculture

Cooperatives play a crucial role in Indian agriculture. They are particularly beneficial to small farmers, who are often unable to access resources, credit, or markets on their own. Here’s a detailed look at how cooperatives contribute to Indian agriculture:

1. Access to Credit
   • Agricultural cooperatives provide small farmers with much-needed credit at affordable interest rates. Farmers, particularly in rural areas, often face difficulties in securing loans from commercial banks due to lack of collateral. Co-operatives, however, are more flexible and focus on the welfare of their members.

1. Supply of Inputs
   • Co-operatives help farmers access agricultural inputs like seeds, fertilizers, and pesticides at subsidized rates. By buying in bulk and distributing inputs through the cooperative system, farmers get better prices, which enhances their productivity.

1. Marketing Support
   • One of the most significant challenges farmers face is access to markets and fair prices for their produce. Co-operatives help farmers by organizing collective marketing, reducing the role of middlemen, and ensuring better prices for their produce. AMUL, for example, revolutionized the dairy industry in India by organizing dairy farmers into cooperatives.

1. Storage and Warehousing Facilities
   • Co-operatives provide farmers with storage and warehousing facilities, which help reduce post-harvest losses. Farmers can store their produce and sell it when the market prices are favorable, preventing distress sales.

1. Promotion of Allied Activities
   • Agricultural cooperatives are not limited to crop production. They also promote activities like dairy farming, poultry, and aquaculture, which increase the income of farmers and contribute to food security.

1. Support for Small Farmers
   • Cooperatives are vital in ensuring that small farmers have access to resources like advanced farming techniques, machinery, and technology, which they might otherwise be unable to afford. By pooling their resources, farmers can make joint investments that improve productivity and reduce costs.

1. Encouraging Sustainable Farming
   • Cooperatives are increasingly promoting sustainable and organic farming practices, helping farmers reduce dependence on chemical inputs, protect the environment, and improve soil health.

1. Economic and Social Development
   • Co-operatives foster economic development in rural areas by providing employment, improving income levels, and encouraging self-reliance. They also promote social equity by empowering farmers, especially women and marginalized groups, through collective action.

1. Enhancing Food Security
   • Co-operatives contribute to food security by improving agricultural productivity and ensuring the availability of affordable food. They also work with government programs like the Public Distribution System (PDS) to make food accessible to low-income communities.

1. Poverty Alleviation
   • Co-operatives help alleviate poverty by providing affordable credit, improving income stability, and supporting entrepreneurship. They enable farmers to become more resilient to economic shocks and external market fluctuations.

1. Improvement in Rural Infrastructure
   • Cooperatives often play a role in the development of rural infrastructure. This includes building roads, irrigation systems, and providing access to healthcare and education services, thereby improving the overall quality of life in rural areas.

By organizing farmers and pooling their resources, cooperatives have become an integral part of India’s agricultural ecosystem, providing significant economic and social benefits. They ensure better access to resources, promote sustainable practices, and strengthen rural economies, ultimately contributing to national development.