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Case Study of a Co-operative Sector in India Ananda Das Gupta#

Introduction The success of a co-operative can be considered through the ways of (1) economic efficiency (2) growth and (3) promoting social justice. The participation of member in the decision making process is an essential parameter for gauging the performance of a co-operative. So, there is no doubt that co-operatives are economic institutions running along democratic lines. The cooperative is an organisation on the principles of “collectivism” as its authority rests with its general body. Thus, the authority structure in a co-operative is reverse of the normal bureaucratic structure. The need of establishing co-operative tea factories in the district of Dibrugarh, Assam was first stressed by the Planning Enquiry Commission. The commission suggested the co-operatives could increase the viability of small growers and would free them from the dependence of middlemen and privately owned bought-leaf factories. This led to the establishment of the first co-operative tea factory in the Northeast in the Year 1972 and was a success. As a result, twelve more co-operative factories have been formed since 1976 with the assistance from the State Government. To co-ordinate the activities of the co-operative tea sector,Tea Factories Federation Limited (TFFL in short) was set up in 1976 itself . TFFL is now having one elected Chairman, a Government-nominated Managing Director, who is in the India Administrative Service, one General Manager, one Deputy General Manager, one visiting Tea Maker and other staff including porter and sub-staff. The functional responsibility of TFFL covers: • • • • • Warehousing Packaging materials Supplying input items to the members (including pesticides/ fertilizers etc.) Providing technical expertise like extending the help rendered by the Tea Maker Providing Workshop to the member-units.

At present there are sixteen tea factories under the co-operative umbrella of TFFL, with the closure of the seventeenth factory named Chabua Tea Factory. The Chairman of TFFL revealed that another factory is also heading closure namely Morani Tea Factory within a short while from now. The prime causes attributed to the closure/likely closure of the several manufacturing units are: •

The ineffective managerial roles played by the Board.

Indian Institute Of Plantation Management, Bangalore, India

• • • • • Utter mismanagement at every level. eight of these members are elected by the general body (when elections are permitted) and four are nominated. Non-participatory attitude of the members for better prices in the bought-leaf sector. but in actual practice. The frequent transfer of the managing directors within a period of one month to six months affect the functioning of the apex body The discordant relationship between the managing director and the chairman also leads to managerial crisis. • • • Each co-operative is managed by a board of directors comprising of twelve members. more than the co-operative units pay i. Apathy on the part of the government officials for taking the initiatives. the top executives in the factory (Managing Director/Administrator and the Industrial Cooperative Officer (ICO). Management The chairman has general control over the affairs of the co-operative while the vice-chairman exercises powers. Further.e. The tea maker is the general supervisor on the manufacturing side and his role is important in determining the quality of the tea produced. At the same time.who is an official of the co-operative department of the State Government and comes next to Managing Director in hierarchy. The managing director is empowered to act as the ex-officio treasurer of the co-operative and he is granted to take custody of all its properties and accounts. which are assigned to him by the chairman. Lack of loyalty on the part of the growers as they often sell their Green leaf to the bought-leaf factories because they pay fifty paise to one rupee per kg. The chairman and vice-chairman are elected by the board members. Of the nominated members. three represent the state government and one is a representative of the Tea Board. He has powers to grant them leave and can take disciplinary action against them. Rupees six plus two rupees as subsidy. His work is to supervise the office work) being officials of the co- . he has hardly any effective say in the management of the factory. The term of a board is of three years. The managing director of the co-operative factory is nominated by the Registrar of co-operatives and is one of the nominated members of its board of directors. he is authorised to appoint staff and workers to the factory. as his position in the hierarchy is too low. Hence through the by-laws make the general body “ultimate authority in all matters relating to the administration of the society (by-law 21) and its Board of Directors is entrusted with its management. the powers granted to the managing director dominates over these bodies. No training from field to finish.

The loan amount is deducted from the growers from their dues for supplying green leaves. are opportunistic because they prefer to supply leaves to the bought-leaf factories rather than the co-operatives. do not have qualification (nor the experience) suited to tea manufacturing. 3. This could be to meet expenses for a marriage. This is one of the prime reasons for the losses faced by the co-operatives. many of them prefer to procure the supply of manure from the bought-leaf factories. Most members. The elected members should co-operate with the management.operative department of the state government. some of the co-operative members have observed that since the huge wage costs include the salary and perquisites of the two co-operative department officials of the State Government (MD and ICO). The most important reason is the availability of loans. which could otherwise have been utilised in useful ways. The co-operatives have higher overhead than the bought-leaf factories though the procurement prices for green leaves are the same for both. However. Hence once a grower takes a loan he has to keep supplying leaves to the boughtleaf factory till the loan is repaid. The ‘loyalty’ of the members could be ensured through some measures such as expulsion from the cooperative’s membership. . there is another grave problem persisting: the lack of loyalty of the members to the institution. it puts a “pinching” effect on the funds of the co-operatives. ironically enough. 2. The bought-leaf factories provide manure to their suppliers at cost price. A few suggestions have been made by some of the officials of the co-operatives towards running the units on a better scale. it is observed. The leaf price should be lowered and all members must be compelled to supply all their leaves to their respective co-operatives. Lack of proper induction and training of the co-operative executives apart. The question on why growers supply leaves to bought-leaf factories finds its answer the following three ways: 1. 2. The bought-leaf factories provide loans to their suppliers in times of need. to pay other expenses including personal debts or some other reason. These are: 1. As it is almost a common practice for the bureaucracy to play favourites in granting manure to its members.

On the contrary. Organizational Culture and (2). Article 115 (a) of the State Government Co-operative Societies Act (1961) empowers the government to usurp any of the decision-making powers from a co-operative’s elected body. . the law enforced by the state government are mainly responsible for curbing the democratic process. The bought-leaf factories provide another incentive to the growers by covering transport charges. But it is to be mentioned that the bought-leaf factories only in areas where they have to compete with the cooperative factories provide this incentive. Major Draw-back: The major drawback is the low level of member participation in the decision making process at the cooperatives. rather than its elected direct.3. The attitude of the state government is visibly in favour of bureaucrats running the co-operatives. Organizational Effectiveness. QUESTION What are the Suggestions towards the intervention of OD in revitalizing this particular Co-operative Sector? Give Candid arguments while making presentation on (1). Co-operatives therefore need adequate and effective laws to ensure elected members freedom to manage the affairs of their societies. Though a heavy dependence on bureaucracy is not a healthy affair to follow it is observed that the bureaucrats are not entirely responsible for this situation.