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According to RBI Co-operative Marketing is a cooperative

association of cultivators formed primarily for the purpose of helping
the members to market their produce more profitably,
than is possible through trade .
A marketing cooperative is set up in order to market and sell the
surplus produce of its members, being such a surplus, as they cannot
consume themselves. Marketing cooperatives generally sell agricultural
produce, but there are also those, which sell fish produce or handicrafts.
There are also other definitions of cooperative marketing. Margaret
Digby defines a marketing cooperative as a system in which a group of
farmers join together in order to carry out part or all of the processes
involved in bringing the produce from the producer to the consumer.
The Bank of India defines a marketing cooperative as a society of
farmers, organized for the purpose of helping the members to market
their produce, so as to obtain higher profits than is possible by way of
private marketing.
The reasons for the establishment of such cooperatives are:
When there is a surplus in production over the consumption.
In order to save expenses for middlemen who benefit from the producer
in various fields, such as: bad weight, very low prices and loans at high
rates of interest.
When the system in force is archaic, it does not meet the requirements
at all, involves many middlemen or compensates very weakly for the
producer's work. Thus, a marketing cooperative must offer its members
a more efficient service than that in force, so that its members obtain a
greater profit from their work.
When establishing a marketing cooperative, it is indispensable to study
various aspects and problems:
What products shall we produce and sell on the market? Whet,
experience in regard to production? What species are marketable every
season, quantities and qualities that are preferred? What are the
perishable items that can be stored and under what conditions? What is

the present marketing system? What system of payment is practiced for

the producers? Is any advance payments allowed just after the crop, or
will payments being effected only after the sale of the products? What is
the best marketing circle of the production? Does the product undergo
a process for its improvement? To have a sound knowledge of the
medium of the improvement.

To secure best possible market price for members products

To reduce the cost of marketing
To act as a powerful check upon the monopolistic power
To save farmers from exploitation
Protection of consumers interest

Need and Importance

Abolition of Middlemen
Collective Bargaining
Storage Facility
Standardization and Grading
Higher prices to members
Large and wide Infrastructure
Supply inputs & Consumer goods
Relief from illegal deduction
Provides easy and cheap credit
Offers Collective bargaining to farmers

Help reduce price spread

It links, integrate and streamline production, processing and
Guarantees of a fair return
Business Operations
Commission Business - The marketing society acts as the agent
between the farmers and the traders.
Outright Purchase - The marketing society purchases the farmers
produce outright by making them payments immediately.
Advance Against Stock - The marketing co-operative helps farmer
by allowing them to store their product with it for which they
receive advance payments.
Pooling - In this type, farmers produce is assembled and sold in
one lot instead of selling on an individual basis by the farmers.
Grading - The farmer is motivated to raise its product quality, for
which he is rewarded with better returns.

Processing - The marketing society take up the work of

processing the commodities and make them fit for consumption.

Procurement - On behalf of the government, the marketing

society may take up the procuring agricultural produce from the
farmers to ensure their products with the minimum support price
fixed by the government.
Supplies of Inputs to Agriculture - The members are provided
with the inputs necessary for better cultivation.
Distribution of Consumers Goods - the marketing society supplies
essential goods at reasonable prices, in areas where viable
consumer co-operatives do not exist.

Services - The marketing co-operative provides its members with

storage and transport facility.
Export - If there is foreign demand then the society arranges for
export through its higher marketing organization.
Business Operations
Commission Business
Outright Purchase
Advance Against Stock
Supply of Inputs to Agriculture
Distribution Of Consumers Goods
Co-operative Marketing in INDIA
The average farmer in India
is illiterate and poor
is prone to exploitation
does not have adequate storage facilities.
The transportation network in our country is not well developed.

Structure Of Co-operative
Marketing NAFED
State Co-operative Marketing Federation
District Marketing Co-operative Society
Primary Marketing Co-operative Society
Source of Finance
Marketing societies raise their finance by
Issuing Shares The State Govt. purchases half the number of shares.
Raising Loans Loans are raised from

The Central Co-operative Bank

The National Co-operative Development Corporation
The National Agricultural Co-operative Marketing Federation
The State Bank of India
The Marketing Board

Failure of Marketing Cooperatives in India

They do not have sufficient storage space.
The loaning policy has been faulty.
Their operational costs are high.
Their staffs are untrained.
Reasons behind Failure

Farmers are indifferent to Co-operatives

Marketing co-operatives do not have a well thought out
programme of action in regard to the conduct of different
marketing activities.
There is no proper link between Primary Marketing Cooperatives and State Marketing Federation, Primary Marketing
Societies and Primary Credit Societies.
The managing committees of most marketing societies do not take
keen interest in conduct of their business.
The marketing societies provide only few marketing services such
as processing, to the farmers.
Marketing societies suffer from lack of sufficient working capital
Measures for Improvement
Effective relationship between marketing and credit societies
Primary Marketing Societies should be member of the State
Marketing Federation
The marketing societies must work out the detailed plans best
suited to their local conditions
The management committee should be wisely elected to ensure
effective functioning
The Central and State Government must help the societies to
build proper storage places
Grading and standardization must be done by experts hired by
marketing society
The Government must offer adequate financial assistance to
marketing societies