You are on page 1of 10


Dr. Narayan G. Hegde

BAIF Development Research Foundation, Pune
The Cooperative movement in India is one of the largest movements in the world, with a
legacy spanning over a century. The Cooperative movement was introduced in the country
primarily to free the farmers from the clutches of money lenders. Thus the first Cooperative
Credit Societies Act of 1904 was passed with a focus on freedom for farmers from debt
burden. The thrust was to establish primary credit societies. Under the Government of India
Act of 1935, Cooperatives were categorised under the provincial subject and the Multi-unit
Cooperative Societies Act was enacted in 1942. Cooperative was taken as the State subject in
the Constitution of India and it assumed greater importance for economic progress, after
Boost to Cooperatives through National Development Plans
Cooperatives became a part of the National Development Plans from 1950. The First Plan
(1951-56) recommended the training of personnel involved in cooperative development and
setting up of cooperative marketing societies. In 1954, the All India Rural Credit Survey
Committee recommended an integrated approach to cooperative credit and highlighted the
need for expanding its role for diversification into various business operations. The Second
Plan proposed to expand the activities under the cooperatives with specific emphasis on
storage and warehousing services. In 1958, the National Development Council prepared a
National Policy on Cooperatives. The Third Plan proposed to involve the cooperatives in
processing of agricultural commodities such as sugarcane, cotton, milk, etc. and take up other
agro-based activities such as spinning and weaving. A Cooperative Training College was
established in Pune with many regional centres to build capabilities of the staff, office bearers
and farmer members. The Fourth Plan emphasised on the consolidation of the cooperative
systems. The Fifth Plan focused on reorganisation of marketing and consumer organisations
to support agricultural development. The Sixth Plan aimed at transforming village primary
societies into multipurpose societies and to extend the activities to food processing, fishery,
poultry, dairy farming and other fields. The Seventh Plan emphasised on peoples
participation to achieve the basic objectives, with a focus on employment generation and
poverty alleviation.
Thus since its introduction, the cooperative movement in India has been considered more as a
product of Government Policy rather than a peoples movement. Nevertheless 100% villages
and 75% of the rural population in India are serviced by the cooperatives today. It is
estimated that there are 5.45 lakh cooperatives functioning with 2.36 crore members and a
working capital of Rs. 34,000 crores, who have made significant contribution to the
development of institutional infrastructure, formation of private capital, distribution of
agricultural inputs, and processing and marketing of the produce, which are the key
components of value chain development. Cooperatives have also been active in the areas of
land development, water resources management, farm machinery services, power
distribution, labour supply and many other sectors. Cooperative organisations had several
advantages such as easy access to financial and administrative support for developing critical

2013. Agricultural Cooperatives. Key to feeding the world. Published in Indian Farming. January.

infrastructure and services required to boost agricultural production and to replicate on a

wider scale. However the disadvantage was lack of active participation of all the farmer
members, as formation of cooperatives was taken as a mandatory target of the ongoing
development schemes launched by the Government, without any awareness for the members
and clear cut objectives. This has led to inefficiency and dominance by a small number of
members to take undue advantage of the institutions, ending up in failure. Overstretching of
the capabilities of the institutions without adequate technical, administrative and monitoring
support could be the other reason for poor performance of many of the cooperatives. The
time is now ripe to analyse the current status of agricultural cooperatives and identify the
factors which can enable them to improve their capacity to boost agricultural production in
the country.
Role of Cooperatives and their Progress
Different types of cooperative societies operating in India with different activities can be
grouped into the following four categories:

Production Cooperatives which deal with agricultural and industrial production, such
as Farming Cooperatives, Industrial Cooperatives and Processing Cooperatives.

Marketing Cooperatives which are engaged in marketing of agricultural produce, such

as Agricultural Marketing Societies and Consumer Cooperatives.

Service Cooperatives which provide services necessary for their members, such as
Cooperative Credit Societies and Cooperative Banks and also Housing Cooperatives,

Allied Service Cooperatives which are dealing with activities necessary for daily life
and business of the agriculturists, artisans, etc.

Farming Cooperative Societies: Development of farming sector was given major emphasis
after independence, for ensuring food and employment security in rural India. While various
land reforms were enforced to ensure equitable distribution of natural resources,
consolidation of small and fragmented holdings was considered necessary for improving
agricultural production. Hence concept of Cooperative farming was mooted by the Planning
Commission to pool the land owned by small farmers for joint management. The proposed
approach was either to retain individual ownership of the land and lease to the cooperative or
transfer land ownership to the Cooperative and collect shares worth the value of the land.
The Cooperative could then pool the holdings for land improvement and intensive
cultivation, using modern technologies. These farming cooperatives were supported with
financial resources to develop land and water resources.
By 1955-56, there were over 1000 cooperative farming societies with 1.9 lakh members,
mostly in Punjab, Bombay and Utter Pradesh states. The Government of India had provided
Rs.50 lakhs for promoting these societies. By 1960-61, the number of cooperative farming
societies increased to 6,325 with 3.05 lakh members. These cooperatives had brought 3.5
lakh ha under cultivation. The number of farming cooperatives increased to 9,473 in 1971,
with 2.57 lakh members and 4.88 lakh ha. Out of these 5,070 were joint farming
cooperatives and 4,403 were collective farming societies. The programme was intended to
assist small and medium farmers to come together for joint farming operations. As the
concept was new, ideally, the Government should have planned to establish a few model

farming cooperatives for demonstrating the benefits. In the absence of such models, slogans
and speeches could not convince the illiterate farmers about the economic advantage of
cooperative farming. Hence the response was very poor. These societies could neither boost
agricultural production nor sustain the interest of the member farmers. Major reasons for
limited success of Cooperative Farming in India were lack of educated and enlightened
leadership in rural areas, lack of social consciousness among lead members, over-emphasis
on membership rather than on quality, failure to create confidence and enthusiasm among
farmer members, preponderance of absentee land owners as members, lack of cooperative
spirit in the village life, lack of transparency in the schemes which were launched by the
Government for promoting cooperative farming and delay in releasing State funds to the
Agricultural Processing Cooperatives: The first processing cooperative society was
established in India for setting up of a ginning factory in 1917. Subsequently, cooperatives for
sugar processing, paddy milling, groundnut decorticating, copra and oil seed crushing,
processing of fruit, vegetables, tea and jute were established. These processing cooperatives
with individual farmers, cooperative marketing societies and local service cooperatives as
members, are regulated by cooperative rules and by-laws.
Farmers in India have been growing sugarcane from time immemorial but the first sugar plant
was established by a French group in Orissa in 1824. The first vacuum pan process sugar
plant was set up in Bihar in 1904. By 1932, there were 31 sugar factories, all in the private
sector, producing 1.5 lakh tons while the annual consumption was about 12 lakh tons. Hence
India had to import sugar mainly from Indonesia. With favourable policies, there was a
sudden spurt in the establishment of sugar factories. By 1933-34, there were 111 sugar
factories with 4.6 lakh ton production, which further increased to 148 factories with 11 lakh
ton capacity by 1940-41, all in the sub-tropical regions of North India. However, sugar was in
short supply and the production was unstable due to heavy fluctuation in the supply of
sugarcane. The private sugar factory owners were exploiting sugarcane farmers and the
Government had to take various measures to protect sugarcane growers.
Meanwhile, sugarcane growers in other states engaged in jaggery production were affected by
the glut in the market and exploitation by moneylenders. Hence, there were many initiatives
to establish sugar cooperatives and the first cooperative was established in Andhra Pradesh
during 1933-35. Although sugarcane was not a principal crop, the growers were badly
affected by the violent fluctuations of the jaggery market. Hence, they decided to set up
cooperative sugar factories at Etikoppaka, Thummapala and Vuyyuru. However, due of
initial teething problems, lack of managerial ability and scarcity of funds, Thummapala and
Vuyyuru had to be sold off to private enterprises. Etikoppaka Cooperative Sugar Factory
survived because of good leadership, strong backing of the Central Cooperative Bank, and
payment of higher cane price. During 1933-35, another cooperative sugar factory was set up
in Uttar Pradesh, but sold off to a private enterprise.
In 1948, the Government of India passed the Industrial Policy Resolution, followed by the
Industrial Act, 1956, wherein the principle of Cooperation was assigned an important role for
the economic development of the country, particularly for industries based on agricultural
produce. Under this policy, the Government of India gave preferential licences to new sugar
factories in the cooperative sector. This created an opportunity not only to establish
cooperative sugar factories, but also to establish irrigation facilities to bring arid areas under
sugarcane production, while generating huge employment opportunities all round the year.

In Maharashtra too, there were many private sugar factories who were exploiting sugarcane
growers. The private factories were able to invest in irrigation projects to increase the
sugarcane yields, while the villagers in the neighbourhood were helplessly struggling to even
to grow drought tolerant millets. Realising this opportunity, the first sugar cooperative was
formed by Vithalrao Vikhe Patil in 1950, by bringing together sugarcane farmers of 44
villages around Pravaranagar in Ahmednagar district of Maharashtra. This was Asia's first
cooperative sugar factory. The Pravara cooperative sugar factory introduced many features
for social, educational and cultural development of the local communities. With well
managed network of schools and professional colleges, Pravara Sugar Cooperative inspired
farmer leaders not only across Maharashtra but also in the States of Gujarat, Haryana,
Karnataka, Tamil Nadu, Uttar Pradesh and Punjab to establish hundreds of cooperative sugar
factories. As more and more cooperative sugar factories were being set up, the need for an
apex organisation at the State level to mediate with the State Governments and guide them in
all respects was felt. This led to the formation of State level Federations of Cooperative Sugar
Factories and the National Federation of Cooperative Sugar Factories Ltd. (NFCSF) at the
national level.
Today, with 316 cooperative sugar factories, India is the second largest producer of sugar in
the world and the cooperative sector is responsible for about 48 per cent of the total
production. The sugar industry has a huge annual turnover of Rs. 55,000 crores, ensuring
livelihood for over fifty million sugarcane growing families and a large mass of agricultural
labourers. Presently, 7.5% of the rural population of India is dependent on the sugar industry.
However, the efficiency of the sugar cooperatives has eroded drastically over the years.
Many sugar cooperatives have now turned sick. There are some States where the cooperative
sugar factories are managed by Government-appointed Administrators. Major problems faced
by the cooperative sugar sector are absence of decision-making process, unprofessional
management and lack of foresightedness. These cooperatives are also being exploited by the
political leaders for their personal gains. Sugar cooperatives in India have now become a
perfect example of a sweet dream turning sour, which calls for immediate corrective
Dairy cooperative is another success story in India. To prevent the exploitation of marginal
milk producers by the private dairy, farmers of Kaira district in Gujarat approached Sardar
Vallabhbhai Patel and he advised them to form a cooperative to supply milk directly to
the Bombay Milk Scheme. In 1946, the milk producers went on a strike, which led to the
setting up of the Kaira District Cooperative Milk Producers' Union Ltd. in Anand.
Under this Union, cooperatives were formed at every village to collect surplus quantities of
milk from small producers and a modern dairy was established to process the milk locally.
The products were sold under the brand name Amul since 1955. The success of this dairy
soon spread across the neighbouring districts of Gujarat. To support these Dairy Federations
and to expand the activities, the Gujarat Cooperative Milk Marketing Federation, an apex
marketing body was set up in 1973. To replicate the successful Anand pattern of dairy
cooperatives, the National Dairy Development Board (NDDB) was formed. The
Government of India further protected the cooperative dairy sector, by restricting the milk
processing exclusively to cooperatives. Presently, 170 Milk Producers' Cooperative Unions
and 15 State Cooperative Milk Marketing Federations are involved in milk processing.
However, many of these dairy federations could not function successfully, in the true spirit of
a peoples movement, barring a few states. Nevertheless, the dairy cooperatives account for
the major share of processed liquid milk marketed in the country. During 2004-05, there were
12.95 million members of dairy cooperatives who sold milk and milk products worth Rs.3320

crores. Dairy Cooperatives have been instrumental in transforming the rural economy on the
lines of cooperative sugar factories.
Several agro-processing cooperatives have also been set up in the country, but the progress
has been slow. Some of the cooperatives were successful in establishing rice mills, dal mills,
oil mills and processing of vegetable and plantation crop produce. However, in the absence
of special protection, these cooperatives had to face stiff competition from private
entrepreneurs, not only due to delay in decision making but also due to unfair trade practices.
For promotion of agricultural production, processing, marketing, storage, export and import
of agricultural produce, the Government of India had established the National Cooperative
Development Corporation (NCDC), under the Ministry of Agriculture.
Agricultural Marketing Societies:
Establishment of marketing cooperatives were
encouraged to provide marketing facilities to small farmers. The anticipated advantages were
increase in bargaining strength of farmers, removal of intermediaries and direct interaction
with consumers. There was also scope for availing credit and cheaper transport, storage
facilities, grading and processing of agricultural produce to fetch better prices. Based on the
government policy, two types of cooperative marketing structures were promoted in India.
One was a two tier system with primary societies or Mandi at the local level with the State
level apex society. The second type was a three-tier system, with Mandi or primary society at
the village level, Central Marketing Societies at the district level and State Marketing Society
at the state level, which are operational in many states.
State level marketing cooperative societies expanded their activities till 2002-03.
Subsequently, the operations were slowed down due poor performance, inadequate working
capital, influence of traditional methods of marketing, lack of technical support, lack of
processing facilities, untrained personnel, high operational cost, etc.
Indian Farmers Fertiliser Cooperative Limited (IFFCO), was established to produce and
distribute fertilisers through cooperatives. Presently, over 40,000 cooperative societies are
engaged in this programme. The National Agricultural Cooperative Marketing Federation of
India Ltd. (NAFED) was established in 1958 for promoting cooperative marketing of
agricultural produce. NAFED has been procuring foodgrains, pulses, oilseeds, spices, cotton,
tribal produce, jute products, eggs, fresh fruits and vegetables from farmers through its
cooperative network in selected areas whenever farmers faced problems of marking their
produce. The advantages of cooperative marketing were increased bargaining strength of
farmers, direct dealing with consumers, credit availability, cheaper transport, storage, grading
and processing facilities and market intelligence.
Agricultural Service Cooperatives:
Cooperatives play a very important role in
disbursement of agricultural credit. These cooperatives have been aiming at increasing
agricultural production through credit supply to agricultural producers, agricultural labourers,
artisans, supply of agricultural inputs, arranging storage, marketing and processing of
agricultural produce, arranging raw materials for industries and providing technical guidance,
while promoting social and economic welfare. There have been cooperative land
development banks, which provide long term loans to cultivators for land development and
capital investments.
The Primary Agricultural Cooperative Credit Society at the village level is the base for many
of these activities. They federate into Central Cooperative Bank at the district level and with

apex bank at the State level. The loans advanced by the cooperative banks increased from
Rs.55 crores in 1950-51 to Rs.48,203 crores in 2005-06. At the same time, outstanding loans
also increased to a large extent from Rs.20 crores to Rs.39,996 crores. Presently, the rural
cooperative credit institutions are facing several problems such as low resource base, high
dependence on refinancing agencies, low recovery, huge accumulated losses, lack of
diversification, etc.
Allied Agricultural Cooperatives: These cooperatives cover activities like dairy farming,
poultry, piggery, etc. Among them, poultry was a major activity with over 4,876 cooperatives
with 4.4 lakh members in 2003-04. However, most of the members were not poor. There
were 14,339 fishery cooperatives in 2003-04, but many of suffered from inadequate financial
and technical support and lack of coordination between production, storage and marketing.
There were 4714 forest labour cooperatives with 74000 members with a business turnover of
Rs.227.23 crores in 2003-04.
Thus, almost all the support services required for boosting agricultural production in the
country were promoted through the cooperatives. Most of these activities were planned by
the experts of the Government of India. There were rigid rules and regulations. However,
due to lack of awareness and ignorance of small farmers, the functioning of most of the
cooperatives were jeopardised by vested interests. As a result, cooperative institutions have
been losing their efficiency and credibility. In this process, the infrastructure and services
required for supporting agricultural production have become non-functional, affecting the
production and profitability of Indian farmers. It is therefore necessary to analyse the current
status of the cooperative organisations and take corrective measures on priority.
Current Status of Agricultural Cooperatives
The cooperative movement which emerged in the late Fifties, as a powerful tool to boost
agriculture with diversified activities reached the peak in the Nineties. It was mainly because
of favourable policy, financial support and protection against the private sector that the
activities were spread across the country. By and large, the entire design of the cooperative
movement was a top to bottom approach with rigid conditions, which provided very little
scope for articulation at the local community level. Nevertheless, farmers were compelled to
become members of these cooperatives, as most of the financial support from various
development schemes were linked to the cooperatives. Thus, except for some sectors, like
sugar and dairy, particularly in a few progressive states, the cooperatives remained as a stage
show managed by the Government officials and politicians.
Primary cooperative credit societies established at the village level to disburse loans for crop
production, could not meet the total credit requirement of small farmers, including their
household needs. Thus, the farmers diverted the amount to meet their domestic priorities,
instead of investing in agricultural production. With inadequate finance and delay in
disbursement, poor farmers could not neither enhance their agricultural production nor could
they repay their loans. They received further encouragements from their political leaders not
to pay back the money. This not only hampered the operations of the credit societies but also
made the farmers debt ridden defaulters, not eligible for availing any bank loan in the future.
Along with bad debts, the credit cooperatives also suffered from lack of adequate skills to
maintain the books of accounts and misuse of funds by powerful office bearers. Many
primary cooperatives responsible for disbursing loans were compelled to manage other
activities such as distribution of agricultural inputs, foodgrains under public distribution

system, supply of farm implements under Government schemes, etc., which created further
burden, leading to mismanagement.
The cooperative land development banks, intending to provide medium and long term loans
for land and water resources development and purchase of farm machinery, could not reach
the weaker sections of the society due to inadequate resources and undue pressure from
political powers. Lack of monitoring on fund utilisation and non-repayment of the loan
compelled the Government to discontinue this programme. Agricultural input distribution
programme launched by the cooperatives was hampered mainly due to poor quality inputs,
delay in distribution, lack of credit facilities linked with input supply and high administrative
cost. In the absence of well qualified business managers, these cooperative could not
compete with private traders. Similarly, very few cooperatives were successful in gathering
farm produce for processing and marketing at a competitive price. The marketing of the
agricultural produce required up-to-date market intelligence and prevalent price in different
market yards and decision making power at crucial moments. For instance, there are large
farmers who cultivate high value vegetable crops and send truck loads of produce to different
mandis depending on better price. These farmers decide on the mandi to be sent, depending
on the prevailing price, at the last moment, while the produce is being loaded onto the truck.
The cooperatives could not take such initiatives and risk on behalf of the members. The
reasons behind the failure of most of these cooperatives were lack of transparency among the
office bearers, lack of expertise in managing the business efficiently, lack of flexibility to
change the plans and decisions as required under local conditions, inadequate decision
making powers to take instant decisions, poor connectivity with technical and commercial
organisations and often, inadequate resources.
In the absence of alternative infrastructure to replace the inefficient cooperatives, the farming
communities had to come up with new initiatives. For instance, in the absence of cooperative
credit societies, birth of micro-finance institutions took place. The farmers, particularly
women were organised to form their self help groups and were linked with micro credit
institutions (MFIs). These MFIs recognised the need of farmers and remained flexible to
serve them well in time. While this was a boon to receive money easily even to meet the
domestic financial needs, high rate of interest was a big burden. It is extremely difficult for
any farming enterprise to earn good profit, with the borrowed capital at an interest rate of 24
to 30%. However, there are no viable alternatives to provide credit support small farmers.
Sugar cooperatives which had assumed exemplary leadership in the early years were misused
by the powerful members for building their political bases. As a result, many factories have
become outdated, sick and non-functional. Looking to the disappointing performance of
these sugar cooperatives, many mills have been established by the corporate sector. With
regard to milk cooperatives, the Government of India has realised the drawback of the
cooperatives to manage the operations exclusively and modified the policy to permit private
entrepreneurs to invest in dairy sector. The National Dairy Development Board, which was
established to promote cooperative dairy Federations across the country, has now shifted its
stand to promote new institutions. Many farmers groups along with voluntary organisations
have established producer companies for procurement, processing and marketing of
agricultural produce. Several experiments have been conducted successfully by the private
enterprises to collaborate with cooperative federation to procure and process agricultural
produce. One good example is a cooperative dairy federation in Pune district of Maharashtra
entering into an agreement with a private milk processing unit for processing of milk into
high value products. While the cooperatives managed milk collection the dairy firm

processed with modern technologies and marketed in India and abroad. Similar initiative was
taken by the Maharashtra Grape Growers Federation, which collaborated with a marketing
enterprise to export grapes all over the world. These cooperatives would not have taken such
progressive steps in the natural course. Meanwhile, they have acquired bargaining power to
negotiate with their counterparts. On the other hand, many informal groups of farmers have
entered into contact with agri-business companies to produce vegetable and other
commodities, as there is no demand for the produce in local market. Such agreements have
been attractive in the initial stage but failed either due to exploitation by the private
enterprises or due to deterioration in the quality of the produce. Thus, reliable marketing is
critical for boosting agricultural production. Similarly, timely supply of agricultural inputs is
needed by small farmers to improve their crop yields. In the absence of a reliable institution,
traders will charge 15-20% commission, which will increase the cost of production and
reduce the profit margin. Hence, efficient infrastructure is essential to protect small farmers.
Way Forward
Presently, with about 40% of the population living in poverty, livelihood security for the rural
poor continues to be a cause of concern in India. As a majority of the rural population is
dependent on agriculture for their livelihood, increasing agricultural production through
active involvement of the poor and weaker sections of the society is the most appropriate
solution. Small and fragmented land holdings, heavy soil erosion resulting in depletion of soil
productivity, inefficient use of water resources, out-dated agricultural production
technologies, un-availability of agricultural credit and lack of infrastructure for post-harvest
management and marketing of agricultural produce, are responsible for lower yield and
income. Livestock is another source of income for small farmers. However, over 75% of the
animals are uneconomical due to severe genetic erosion, inadequate feeding and health care.
With lower crop and livestock productivity, the employment opportunities in the farming and
other related sectors are reduced further, leading to reduction in farm wages, seasonal
employment, malnutrition and migration. Water is a critical input for food production and
better quality of life. Neglect of water resources will not only affect the agricultural
production and employment opportunities, but also affect the supply of clean potable water.
Scarcity of water leads to unemployment, ill-health and hardship for women. This vicious
cycle can be broken through improvement in agricultural production.
It is necessary to address the above challenges, particularly to improve the productivity crop
yields of low productive non-irrigated areas, owned by small and marginal farmers, which in
turn can improve the purchasing power of the poor. This calls for a value chain development
approach, where small farmers are supported for backward and forward integration to
improve production and add value to the produce. There are many initiatives across the
country where small and marginal farmers and tribal families, have excelled in food
production in spite of small holdings, poor quality soils, limited resources and poor access to
modern technologies, when they were assisted for establishing backward and forward
In an initiative promoted by BAIF in Chikkanayakanahalli block in Tumkur district in
Karnataka, several farmers cultivated vegetables, adopted organic farming on a small area of
200 - 2000 m2 and earned substantial income in the range of Rs. 10,000 to Rs. 45,000.
Kariyamma, a woman farmer with 0.4 ha land cultivated leafy vegetable Amaranthus on 0.1
ha land and earned Rs.10,000 by selling it in the local market. She like many other
participant farmers developed her own techniques, using locally available resources. She has

now gained confidence to expand the area under organic vegetables. However, she is
exploring new markets in nearby towns, to prevent any glut in the local market. In another
project, promoted by another NGO Pradaan, the tribal families with marginal land holdings
in Sirohi district of Rajasthan, were able to cultivate tomatoes on 1000 m 2 using water from
their open wells and earn a profit of Rs. 40,000 to Rs. 50,000 in 6-8 months. This was
possible because the NGO could help them to collect and organise transportation to the
nearby town Abu Road. With supply of superior quality maize seeds and good production
practices, the yield was doubled. Under the tribal development programme of BAIF,
popularly known as Wadi programme, the migrating tribal families were able to establish
their own mango and cashew orchards in Maharashtra and Gujarat. Each participant family
was able establish orchard on 0.4 ha denuded land and double their foodgrain production as
intercrop, while the orchard started producing fruits and nuts worth Rs. 30,000 to Rs. 40,000
after 4-5 years. The project could be sustainable only because BAIF was able to motivate
them, build their capabilities, empower them to procure critical inputs and help them to
develop their cooperatives to collect the produce, grade, process and market them. In the
absence of such facilitation for value chain development, these tribals could not have
sustained their livelihood on their farms. They would have suffered due to lack of hand
holding and exploitation by the traders and other vested interests in the community. Tribals
in backward districts of Orissa produce excellent quality vegetables, using local resources
every year. Inspite of such success, they continue to be poor because they are heavily
exploited. Their vegetables are sold at throwaway prices, without leaving any surplus for
These success stories and failures indicate that inspite of small holdings, low soil
productivity, lack of irrigation and other resource constraints, small and poor farmers have
been able to take initiatives to improve their agricultural production successfully. However,
these initiatives require strong support. They require finance, good quality inputs, technical
know-how to adopt good practices and an organisation to collect, grade, process and market
the produce. In the absence of such infrastructure and facilitators to mentor these small
farmers, it will be extremely difficult to ensure food security in the country.
The task before us is to enhance the food production by ensuring the participation of the
small farmers and weaker sections of the society in agricultural production. For facilitating
enhancement in food production, there is a need for a suitable platform for coordination
among various stakeholders, who are involved in the value chain, particularly responsible for
backward and forward linkages. The stakeholders involved in increasing agricultural
production include agricultural research organisations, input producers, agricultural extension
officers, agro-engineering service providers, processing industries, marketing network,
financial institutions, etc. These organisations should be committed to farmers and should
work in close coordination with each other to support the farmers. There is a need for an
independent selfless organisation to facilitate the linkage between the farmers and the other
stakeholders, market outlets in particular. The primary step in this direction is to organise the
farmers into cohesive groups, either as producers groups or producers cooperatives. There
are no other organisations who can serve these farmers selflessly. While the self help groups
function well in the initial stage, in the absence of regular monitoring, the spirit of self help
becomes diluted and turns weak. They also have several limitations to expand their activities.
Hence, it is necessary to take a fresh look at the cooperatives and try to address the
weaknesses of these organisations.

Cooperatives working at the village level can mobilise their members and help them to
organise their business. However, cooperatives need additional support to monitor the
working and ensure equality among all the members. There is also a need to look at the rules
and regulations of the cooperative to facilitate flexibility to suit the local requirements and
promote various activities required for developing an efficient value chain. Cooperatives
need to be connected with external agencies for bringing new technologies and to link with
the market. This can be done by involving reputed and committed civil society organisations
(NGOs) as facilitators or associates. They can also help small farmers to build their
capabilities through regular mentoring. The NGOs can coordinate the activities of the value
chain partners to play their role optimally. Such association of cooperatives with other
organisations such as producer companies, input suppliers and retailers for marking their
produce, will be able to take care of the pitfalls of the earlier cooperative movement and help
the country to ensure food security. As India is one of the largely populated countries,
dependent on agriculture for livelihood security and hosting over 25% of the worlds poor,
any successful agricultural development activity in India will be a role model for other
developing countries for wider replication. Hence, a successful cooperative movement in
India will not only ensure food security in India but will also help to feed the world.