Poverty Reduction through Cooperatives: Security Net for Small Farmers and Rural Entrepreneurs

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Poverty Reduction through Co-operativesSecurity
Net for Small Farmers and Rural Entrepreneurs

• Dr. Rajiv Mehta
• Adviser
• Department of Agriculture and Cooperation
• Ministry of Agriculture
• Govt. of India
• Conference on Poverty Reduction and Advantage of
  
• Cooperatives in Protecting Small Farmers and
  Rural Entrepreneurs
• July, 13th , 2007
• Bali, Indonesia
• Indonesian Co-operative Council, The DEKOPIN and
  International Cooperative Alliance Asia and
  Pacific

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• World has deep prevalence of Poverty
• One fifth of the Worlds Population is in
  economic destitution
• About 40 of the worlds poor are in South Asia
• Addressing Poverty is a core development issue

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Poverty - an outcome of multiple deprivations

• Deprivation of income
• Deprivation of assets
• Human Skill, Health, Labour
• Natural Land
• Physical Infrastructure and other means of
  production
• Financial Savings, access to credit
• Social Network of contacts and reciprocal
  obligations
• Deprivation of access to basic amenities
• Deprivation of safety net vulnerability to
  adversities
• Deprivation of voice and capacity to deal with
  institutions of State and society
• (WDR -2001)

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Common disadvantages to Primary Producers

• Farmers, growers, dairymen, fishermen or rural
  craftsmen
• unorganized
• small operation
• isolated,
• market disconnect
• technology gap
• disparities in economic expansion and scale
• weak safety net

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Vulnerability in Agrarian Space

• Large population dependence
• In India, 70 population rural
• Two third livelihood depends on agriculture and
  allied activities
• 120 Million farm holdings
• 127 million cultivators, 107 million agriculture
  labour
• Weak asset base
• Average size of operational holdings 1.32
  Hectares
• 82 Holdings Small and marginal (2 or less than
  2 hectares)
• Average livestock holding 1.7 cattle-buffalo /
  operational holding
• Human asset - Skill, education, health,
  information
• Vulnerability to adversities
• 60 percent agriculture rain dependent
• Diversity of climatic conditions
• Occurrence of floods, droughts
• Logistics and connectivity (600 thousand
  villages)
• Market vulnerability disadvantage in price
  realisation

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Profile of rural poverty in India

• Rural poverty is generally concentrated in the
  agricultural labour and artisan households
• The geographical landscape of rural poverty has
  been changing
• The occupational composition of rural poor varies
  across the states.
• In developed states , high concentration among
  agricultural labour households,
• In less developed states poverty extends to other
  occupational groups including self employed in
  agriculture.

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Framework of Action Against Poverty
Multi pronged strategy to enhance entitlement and
access
Opportunity
Complimentary and Supplementary actions to
neutralize the deprivations
Security
Empowerment
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Enhance Income Capability

• Address Resource poor small and marginal
  farmers
• Subsidized inputs ( seeds, irrigation), credit,
  institutional support
• Focus on low productivity / rain fed regions
• Diversified agriculture horticulture, animal
  husbandry, poultry, fisheries
• On farm value addition
• Grading, sorting, quality improvement, on farm
  primary processing, adoption of good agricultural
  practices
• Rural Non Farm Employment
• Income Support and Supplementation

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Cooperatives The Development Catalyst

• Cooperative Little peoples chance in a world
  of bigness (Rochdale Pioneers 1844)
• Institution of mutual sharing and caring
• Business development for poor, un-organised and
  un-skilled people
• Overcomes structural constraints in agriculture
• De-bureaucratize and de politicize
• Conducive environment fot value creation
• Defuses class conflict, reduces social gaps and
  promotes collective responsibility

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Empowerment through Business Development

• Imperfection in the market
• Input, production, processing, investment,
• Insulation against imperfection and uncertainties
• Linkages for efficiency in transaction cost
• Input price, quality
• Interface with technology and extension
• Competitiveness
• Low yield, high production variability
• Special disadvantages conditions
• High perishables opportunity cost
• High seasonality of inputs and output
• Bulky material Handling, movement,
  transportation

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Village Cooperative Societies Grass root
Institutionalization ofOpportunity, Empowerment
and Security

• Rural infrastructure and services
• Storage / Cold storage
• Rural roads
• Health
• Veterinary Services
• Transport
• Irrigation
• Electricity
• Market Intelligence
• Technology
• Skill, knowledge and information

• Diverse Activities
• Strategic agricultural inputs
• Meeting consumer needs
• Marketing societies to ensure remunerative price
• processing and value addition
• Resource needs
• First Cooperative Society Act of 1904 to enable
  agriculture credit cooperatives

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Indian Co-operative Movement at a Glance

• Number of Co-operatives (all) 583,580
• Primary agriculture co-operatives 160,826
• Primary non-credit co-operatives 419,764
• Membership (all in million) 242.0
• Share capital (Billion US ) 6.2
• Government participation in primary
• agriculture co-operatives () 5.4
• Working capital (Billion US )
  108
• Reserves (Billion US ) 10
• Deposits (Billion US ) 60
• Coverage of rural households ()
  71
• Villages covered by co-operatives () 100
• Source NCUI Indian Co-operative Movement A
  Profile 2006. 1US Rs. 45

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Co-operatives in National Economy

• (Per cent Share)
• Indicators of Input supply
• Fertilizer Disbursed 35.0
• Fertilizer Production 26.5
• Indicators of Input Service
• Agriculture Credit Disbursed by coop 66.0
• Retail Fair Price shop (Rural Urban) 23.0
• Storage Facility (Village Level PACS) 64.0
• Employment Generation (in millions)
• Direct 1.2
• Self Employment 15.4

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Co-operatives in National Economy

• (Per cent Share)
• Indicators of Commodity Production / Purchasing /
  Marketing
• Sugar Produced 46.2
• Wheat Procurement 33.5
• Procurement of oilseeds and pulses 100.0
• Procurement of rubber 18.5
• Milk Procurement to Total Production
  7.4
• Milk Procurement to Marketable surplus
  10.5
• Ice Cream manufacture 45.0
• Animal feed production / Supply
  50.0
• Oil Marketing (Branded) 49.0
• Spindleadge in Coop 10.3
• Handlooms in Co-operatives 54.0
• Fishermen in Co-operatives (Active) 23.0

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Poverty reduction through Cooperatives
Furthering the process

• Broadening the operation
• Expansion of service domain
• Strengthening economic viability of rural area
• Wider socio-economic perspective (SHG)
• Focus on chronic poverty
• Asset strengthening
• Consolidation of business development
• Awareness propagation of success stories
• Commodity specific Cooperatives
• Active involvement of producer members
• Strengthening forward, backward and horizontal
  linkages
• Evolving command area / cluster approach

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Sugar Cooperatives

• First Cooperative Sugar Factory Parwara
  Maharashtra 1948
• (Late Vithal Rao Vikhe Patil)
• Number of Cooperative sugar mills 316
• Membership Total (in Million) 5.14
• Growers Membership 92.5
• (Millions US)
• Share Capital 716
• Turnover (Total) 2004-05 285
• Total cane crushed (Mill tns.) 44
• Total Sugar Produced (Mill tns.) 7.8
• Data Source NCUI Indian Co-operative Movement
  A Profile 2006. 1US Rs. 45

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Dairy Cooperatives

• First Milk Producers Cooperative Union Kaira-
  Gujarat- 1946
• (Late Tribhuvandas Kishibhai Patel)
• Number of Dairy Cooperatives 121,180
• Membership Total (in Million) 12.95
• Women Membership (in Million) 2.96
• (Millions US)
• Share Capital 83
• Working Capital 465
• Assets 413
• Turnover (Total) 2004-05 1206
• Total Milk Procured by Coops (Mill It.) 7325
• Liquid Milk Marketed per day (Mill It.) 15
• Balanced Cattle feed Production 1.09 million
  tns
• Data Source NCUI Indian Co-operative Movement
  A Profile 2006. 1US Rs. 45

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AMUL (Anand Milk Union Ltd 1946)A complete
development model
Gujarat Cooperative Milk Marketing Federation
(GCMMF) Indias largest food products marketing
organisation Amul model has rightly concluded
that dairy cooperatives have shifted dairying
from a sideline activity to a serious economic
enterprise, making it the major source of farm
income. (Dairy) Cooperatives have done more for
the emancipation of Indian women than centuries
of social reforms (World Bank, 1998)

• 13 District coop. milk producers' Union
• 2.6 million Milk producing members
• 12,792 Village Societies
• 6.5 million liters Daily(avg) milk collection
• 60 percent milk Converted to value added
• 594 Mts. Daily milk drying capacity
• 2640 Tns/ day Cattle feed manufecturing
• 1.05 Billion US Annual Turnover
• 28 Million US Exports
• Social and economic transformation of rural
  domain

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Impact of Operation Flood (OF) Farmer
controlled cooperative dairy programme

• Poverty Sixty percent of beneficiaries were
  small and marginal farmers
• Payments for 7325 million litters of milk to
  dairy producers annually
• Nutrition Increase in per capite milk
  consumption (107 gms / head in 1970 to 245 gms /
  head in 2005-06)
• Job Creation Women's engagement, release of men
  labour for non farm employment
• Education Income enhancement increased children
  enrolment in schools, also encouraged adult
  literacy
• Women in development formation of women's dairy
  cooperative societies
• Breed development, fodder supply, other inputs
  and consumer goods supply
• Elimination of risk
• Rural infrastructure (Physical, social, health)
• (Sourced and updated from World Bank Evaluation
  1996)

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A large proportion of rural livelihoods in India
are at the mercy of the law of diminishing
marginal returns from land. This has led to the
bleak phenomena of rural-urban migration,
casualisation of urban labour and feminisation of
agricultural labour etc. with the net effect of
extremely insecure rural livelihoods. A
successful rural development programme must help
rural people stay on voluntarily and profitably
in the villages. Cooperative dairy development
on the Amul Pattern has been instrumental in
securing rural livelihoods in many parts of India
through income generation, agricultural
diversification, risk distribution, female
empowerment and assured employment. Dr. V.
Kurian, Chairmas Speech 31st AGM of GCMMF 23rd
June 2005
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THANKSemail rajivmehta2003_at_rediffmail.comraji
vmehta2_at_gmail.com