Emergence of Cooperatives and Coops and

other organisations

MCE 2, Nov 14 -15, 2022

 Content
• Recap of last class
• Cooperatives emergence internationally
• Cooperatives in India
• Example of Totgar cooperative
 Kurien and Faith in Farmers
• Let us rediscover the truth that the unlettered villager is often the wisest of
teachers and that, without our guidance and direction, the villager survives
and even thrives in conditions we could not face. Every day the farmer
faces challenges and responsibilities far greater than ours. Why, then,
should we not place our faith in him and let him be responsible for his own
destiny? I have been an employee of farmers for forty years.
• It is a reflection of our lack of faith in our farmer’s ability to manage their
own affairs that the bureaucracy has so deeply penetrated and controlled
people’s organisations. In my opinion, to continue to justify and perpetuate
the hegemony of an insensitive bureaucracy by arguing that people cannot
organise and manage their own affairs and that they will not employ
professionals to do so is not only naive but reflects self-serving hypocrisy of
the worst kind. (Kurien, 1989)
 Theoretical foundatios of Cooperatives
• Safety Net perspective: (little people’s chance in world of bigness)
– Primary producers common disadvantage, rapid growth when chips are
down (pandemic), yardstick (farmers share of consumer rupee)
• Alternative forms of business organisation
– Operate in world of imperfections (markets, TC 0)
– Spontaneous act of human nature…building ethics
• As a broader form of organisation
– Means by which farmers get greater share of market channels… important
rural development (Banas…)
– Integral part of decentralised economic democracy
 Summary… Datta
• Coops are creations from a higher calling of mankind, they are not
automatic. They cannot be evolved, nor sustained in the absence of
conscious and painful efforts to observe, administer and preserve
certain processes.

• Not for everyone, not to take this form of organisation for granted
• Multiplicity and diversity of goals
• Failure of a co-operative form of organization is more natural than
the same for a more tightly defined and individually motivated
investor-oriented firms (IOFs)
 Are cooperatives different?
• Differences regarding objectives
• Differences regarding ownership rights
– Right to decision making (equal, patronage linked to participation in management) vs FB
– Right to residuals (the ratio of their patronage)
• Distribution of value
– limiting return on capital invested, a cooperative forces the people to generate wealth
more by their capacity to produce goods and services rather than gain from efforts of
others or by speculation.
• Differences in Goal and task orientation
– single objective function vs exercise a choice and achieve a balance in what it is trying to
maximise and consequently for whom
– balancing the multiple objectives and without compromising on principles of equity and
equality
EVOLUTION OF COOPERATIVES AS ALTERNATE
ORGANISATIONS
 Stages of Cooperative Development
1. 1800 – 1840s…Owen ‘Report on Poor”, Fourier “phalanxes”
2. 1844 – WW1 – Rochdale & spread, ICA 1895, consumer coop
domination
3. WWI to 1950s – cooperative communities (Kibbutz)… 1937, 7
principles, ‘coop sector’
4. 1950s- 1980s – growth of service and ag coops, competition,
growth in size, distinction lost
5. 1980s to present (1992)…Laidlow’s global study…greater focus on
food, workers & industrial coops (Mondragon) (Craig, 1992)
 Evolution of the Cooperative
Enterprise
• Owenite ideals – self-help and
cooperation
• 1800 took over management of New
Lanmark Mills,
– sold quality goods, Paid full wages to workmen
in 1806 even when mill stopped
– “8 hrs labour, 8 hrs recreation, 8 rest"
• The Co-operative Magazine 1826, The Co-
operator 1828 (William King)

Robert Owen 1771-1858 founder of

cooperative movement
 Traditions of Cooperatives in 1800s
5 distinct traditions
• Consumer cooperatives - Britain
• Workers Cooperatives – France
– 1st national federation 1884
• Credit cooperatives – Germany
• Agricultural coops – Denmark (Germany)
• Service Cooperatives – housing and health, many part of
industrial Europe
 Rochdale Principles
1844 Rochdale Society of Equitable
Pioneers
1. open membership,
2. democratic control,
3. limited interest on capital
4. trade only in goods of excellent quality,
5. patronage refund,
6. political and religious neutrality,
7. education and training of members, popular sympathy: government
and support and political
expediency helped the
8. trading by cash payment cooperative movement.
1852 Wholesale department
1860 membership of 4000 and a
turnover of over a million
 CO-OPERATIVE PRINCIPLES
1. Voluntary and Open Membership
2. Democratic Member Control
3. Member Economic Participation
4. Autonomy and Independence
5. Education, Training and Information
6. Co-operation among Co-operatives
7. Concern for Community
 Identity Statement
• “A cooperative is an autonomous association of persons
united voluntarily to meet their common economic, social and
cultural needs and aspirations through a jointly-owned and
democratically-controlled enterprise.” (ICA 1995)
Institutional Changes & Development of Coops
• Legal Framework: The society as a legal person not recognized
until 1852 Industrial and Providence Societies Act, allowed it to
sue and be sued.
• Federated Structures: Significant economies of scale if coops
could bulk-buy. Cooperative Wholesale Society (CWS) in 1864.
– Non-business activities: between liberals and Trade union movement.
Own lobbying. helped the cooperatives in training for the office
bearers, employees and members, and in promotion, publicity and
propaganda. (ICA part of that)
 Credit Cooperatives in Germany
• Delitze-Schulze (1808-83) the urban small entrepreneurs,
– most expensive component of small self-employed workers production was
interest on working capital
– Established banks, provided working capital to the artisans. guarantee of their
word of honour and surety of the group.
– Started 1850, very large by 1900, by 1914 the largest credit institutions in
Germany, ended with Nazi rule

• Rural credit unions started by Raiffessein (1818-88)

– one credit union for one village (1st in 1864), lending to a man for individual
worth not against collateral; group surety
– Forerunners of modern cooperative credit institutions for agriculturalists in many
countries
– The unions took up trading activity. They brought fertilisers, seeds, and other
supplies on behalf of the peasants.
 Agricultural Cooperatives in Denmark,
Holland and Sweden
• Heavy dependence on exports for dairy & animal products.
• Origin in old system of common processing of village milk into cheese. Cured cheese
apportioned in proportion of milk.
• Commonly owned creameries Holland, Denmark & Sweden. Paid on fat content.
Butter/ cheese exported to England.
• Opening of Americas invasion of cheap dairy & meat.
• Dutch and Swedish dairy farmers & cooperatives worked on quality norms,
federated enterprises for farmer benefit.
• Sweden coop dairies, meat packing plants started around the turn of 20th C,
Denmark and Holland somewhat earlier.
 Cooperatives in Canada
• Alphonse Desjardins and loan sharks, first credit union in 1900
to provide relief to working class
• 7 million members, largest cooperative financial group in
Canada, 31% of service outlets in sparsely populated areas
rd
• 3 most Socially Responsible financial institution according to
Maclean’s (2015 ranking)
• Ranked first in North America in Bloomberg’s World's 20
Strongest Banks in 2015
 Co-operatives globally

Source: ‘Statistical Information on the Co-operative Movement’ ICA.

http://www.ica.coop/coop/statistics.html, accessed 29 September 2011.
World Cooperative Monitor 2021
Bijman and Iliopoulos 2014, Farmers coops in the EU
EVOLUTION OF COOPERATIVE ENTERPRISE IN
INDIA: STATE AND BEYOND
 Cooperatives in India
• Origin in condition of peasantry in late 19th C
– Committee on Deccan riots against money lenders in Deccan 1875
• Rural indebtedness, chit funds and coops – shortage of agri credit
• 1901 Famine Commission recommends establishment of Rural Agricultural Banks
• Cooperative credit societies Act 1904 (J McNeill 1st ROC)
– Kanaginhal Agri Credit Coop Society 1st coop,
– loan to coops up to Rs 2000 based on thrift…
– By 1911, 300 societies, Bombay Central Coop (BCC) Bank
• Cooperative Societies Act 1912– Registrar of Coop Societies and registration for audit
• Maclagen Committee on Cooperation (1914)
– 4 tiered system – primary society, guaranteeing union (taluka), District Central Bank & Provincial
Bank
 Cooperatives in India
• Early focus on middle peasants…. more successful in irrigated areas than ‘dry’
with high indebtedness
• 1917 new rules to increase power of Registrars.. Vaikuntal Mehta manager of
BCC and others resist
• After 1919 Cooperation a provincial (state) subject
• 60,000 new cooperative enterprises, 28 lakh members, 68 crore capital by end
1920s….deceleration in 1930s
• 1928 huge arrears, registration of coops in Deccan stopped
• Royal Commission of Agriculture 1928 “If Cooperation fails, there will fail the
best hope for rural India”….official guidance and control
• Early history of coops history of contradiction of the colonial state trying to
develop a self-reliant peasantry”!
 Cooperatives in India
• All India Association of Cooperative Institutes in 1929
• GoI’s Multi-Unit Coop Societies Act 1942 (incorporation and winding up in more than one province)
• 1984 Comprehensive Multi State Coop Societies Act
– Coops integral part of 5 year plans (until 7th)
– Between 1950-51 to 1996-97 coops increased from 1.81 to 4.53 lakh, Membership 1.55 to 20.45 crores
– Self- reliant cooperatives defined as those which have not received any assistance from the Government in
form of equity, loans and guarantees.
• Committee on Cooperative Law for Democratization and Professionalization of Management in
Cooperatives in 1985
• Model Cooperatives Act, 1990
• Multi-State Cooperative Societies Act, 2002
• 2004 Vaidyanathan Committee revival of cooperative credit
• http://www.ncui.coop/history-coop.html
Indian Cooperative Movement at a Glance 2016-17
Percent Share of Coops in National Economy
 Cooperative movement – Pre-independence
• An ideal Indian village will be so constructed as to lend itself to
perfect sanitation. …. It will have houses of worship for all, also
a common meeting place, a village common for grazing its
cattle, a co-operative dairy, primary and secondary schools in
which industrial education will be the central fact, and it will
have Panchayats for settling disputes.
– Gandhi in Harijan 1937
Development Retold: Voices from The Field

• Character of development
• Quickest and most satisfying method of rehabilitation for
refuges would be self-help
– ICU set up “to help refugees help themselves”
• Gandhi’s suggestion on keeping away from Government
• “Doer” to “advocator”
1st women to be arrested in freedom movement,
contested in legislative assembly
Founded ICU, Crafts Council, AIHB, Cottage, NSD,
Sangeet Natak Academy, ICCR refused to be
President of India
 Indian Cooperative Union
• Kamladevi asks Jain 2 days after visit to camp;
– ICU discussed to work on the conditions of the landless agricultural workers
– Socio-economic survey or refugees were done
• Magistrate for labour for Mehrauli, Jain were looking to be owners not labourers
– Only way to occupy the land. Labourers asked for rations (6 months), 200 families moved out
with Jain
• “How can you profess socialism in one breath and recreate the zamindari system in the
other”?
• Occupy Chattarpur and agricultural cooperatives. The Sacchkand Multipurpose Cooperative
Society at Chattarpur
• Contractors vs refugees in building Faridabad township
– “ICU not a refugee rehabilitation organisation but a social body .. with faith in the cooperative
way of life and is striving not just to provide economic props to the community but more to forge
human relationships between man and man, and man and his vocation, through the cooperative
technique.”
 ICU
• Sensitive to people’s needs, rural community development; promotion of handicrafts
(CCIE) and launched Delhi’s Super Bazar
• Groups’ constant self-analysis and reconciling practice with ideology (research
section)
– “cooperation fails if it is reduced to a set of rigid and predetermined rules and procedures; if it
does not have the capacity to respect and to adapt itself to the special circumstances and the
special ethos of every community”
• KC’s combination of research, independent study and survey of whatever we were
undertaking was useful.
– We were not the mothers, we were the midwives. …We were there to promote self-help… that
was the cooperative union’s philosophy.
– “Don’t build dependence. Must not stay in a place for too long… “our business was to create
conditions in which people can do their business”.
Totgar Cooperative
 Totgar case discussion

• What does Totgar do for its members?

• How has this changed over the years?
• How does TSS address multiple risks faced by
farmers?
• How does TSS increase net returns to farmers?