The third way could be the way forward

|
  • 0

The third way could be the way forward

Wednesday, 29 September 2021 | Prafull Goradia

The third way could be the way forward

Unlike the banking giants, the cooperative movement has been a success in India. They have been sturdily playing a seminal role

Along with the recent Cabinet expansion, Prime Minister Narendra Modi has introduced a Ministry of Cooperation. Earlier, on a visit to Amul Dairy at Anand, he had called this the third way; the Prime Minister probably meant limited corporations,  partnerships/proprietorships and now also cooperatives.

Why are cooperatives, or cooperative institutions, important? One, they enable the direct participation of people in entrepreneurial activity. Two, the trust of the beneficiaries. The cooperative movement commands trust even in the developed West. An International Labour Organisation (ILO) report says that during the 2008 global financial crisis, cooperative banks reported only seven per cent of the total losses and write-offs in the Western banks. In contrast, banking giants like the Lehmann Brothers suffered huge meltdowns. Cooperative banks form 20 per cent of Europe’s banking system. More than 60 per cent Americans trust the country’s credit union banks, as compared to commercial ones.

The Cooperative Society Act was enacted in 1912. The Anand Milk Union Limited, which today is a global Indian brand by the name of Amul, was started in 1946, under the direction of Sardar Vallabhbhai Patel. Cooperative societies are working from New Zealand in the east to the US in the west.

But it is in India they have a seminal role to play. Let us take the saga of Amul, the country’s best known and most successful cooperative institution. Under Sardar Patel’s initiative, dairy farmers of the then Kheda district of Gujarat organised themselves to form a dairy cooperative in order to directly undertake sale and processing of milk collected from member dairy farmers of the district.

Amul has made a world of difference, to not only India’s dairy farming, but also the country’s socioeconomic life. Figures tell this story like nothing else. During the two decades between 1950 and 1970, milk production grew by a bare one per cent annually; per capita availability of milk actually decided by an equivalent percentage in the same period. Various State Governments in the decade of the 1960s tried different strategies to develop dairying, including establishing dairies run by their own departments. Cattle colonies were set up to enhance milk production, but were concentrated in urban areas and not in the milk sheds or cattle grazing zones.

It was Operation Flood implemented by the National Dairy Development Board (NDDB), which revolutionised dairy development in India. Beginning in 1970, the NDDB replicated Amul’s successful model. Here, individual farmers are joined in village-level dairy cooperative societies (DCS), which in turn are joined in State-level marketing federations. The Amul pattern in each state has decentralised milk production by small milk producers, milk procurement by village-level dairy cooperative societies, centralized milk production by district-level unions and marketing of milk and milk products by the State federations.

Primary milk producers govern this entire federal cooperative structure to ensure that the higher tier organizations cater to the lower tiers and the gains at all levels flow back to the milk producers in significant measure. The Anand model enabled Operation Flood, making India the world’s largest producer of milk at more than 100 million tonnes annually, valued at `900 billion per year.

Milk today reaches more than 750 towns and cities of the country through the National Milk Grid Network. The number of women’s cooperatives has grown significantly. The cooperative model has empowered them in ways that were inconceivable decades ago. Women dairy cooperatives, with further branching out into animal husbandry, are another success story of this movement.

The cooperative movement has seen one of its great successes in Maharashtra and Karnataka, particularly the former. In Maharashtra, the cooperative movement has been embraced by the States’ rural and urban folk alike.

It has also spawned across-the-board success in the production of sugar and in the banking sector. In rural Maharashtra, it is cooperative banks that hold the sway and are the preferred banking institutions to deposit money. The cooperative movement in this State has also morphed into the political sphere. The sugar cooperatives in the State have become the prima donna of political influence and power.

One cannot also deny that many cooperative banks have floundered or are struggling. This is because they have shied away from professionalising their management. Instead, many have opted for what is sometimes derisively referred to as the “Lalu model of management”. In other words, family members or cronies have been appointed in the top decision making posts. But this does not diminish the importance of the cooperative movement.

But to come back to the third way; namely, the cooperative approach can enable a farmer of even a couple of hectares of land-holding, or his urban counterpart, to be a partner in entrepreneurship. The apex cooperative and its management need to be honest as well as imaginative. Depending on the product, it can be a manufacturing or a marketing exercise, while the cooperatives at the field level would supply the input, like milk in the case of Amul. It is a marvellous idea for a country with a large population and comparatively little land. The proprietorship/partnership model is the second way for the middle rung of entrepreneurs, while the first way is of the limited company model.

(This is part of an ongoing series on India making multi-dimensional advancement across States and nations).

(The writer is a well-known columnist, an author and a former member of the Rajya Sabha. The views expressed are personal.)

Sunday Edition

CAA PASSPORT TO FREEDOM

24 March 2024 | Kumar Chellappan | Agenda

CHENNAI EXPRESS IN GURUGRAM

24 March 2024 | Pawan Soni | Agenda

The Way of Bengal

24 March 2024 | Shobori Ganguli | Agenda

The Pizza Philosopher

24 March 2024 | Shobori Ganguli | Agenda

Astroturf | Lord Shiva calls for all-inclusiveness

24 March 2024 | Bharat Bhushan Padmadeo | Agenda

Interconnected narrative l Forest conservation l Agriculture l Food security

24 March 2024 | BKP Sinha/ Arvind K jha | Agenda