Marketing cooperation society

CONTENT SHEET

1. INTRODUCTION

2. MATTER OF THE PROJECT :--

a. Salient Features

b. Types of Co operative Marketing Societies

c. Need and Importance

d. Organization

e. Membership

f. Structure

g. Resources

h. Functions

i. Weaknesses

j. Few Success

3. SUGGESTIONS

4. CONCLUSION

REFERENCES

( INTRODUCTION)

Cooperative marketing is based on the principles of cooperation. It is a system by

which a group of farmers join together to carry out some or all the processes
involved in carrying agricultural produce from the producer to the consumer. It is
a voluntary association formed by its members for mutual benefit and help. Such an
association brings divert benefits to its members in terms of fair prices.
Cooperative marketing is just an extension and application of the philosophy of
cooperation in the area of agricultural marketing. It is a process of marketing
through a cooperative society, formed for the producers, by the producers. It seeks
to eliminate the middlemen between the producer and the consumer, thus getting the
maximum price for their produce.

Cooperative marketing refers to advertising and promotional programs in which a

manufacturer or distributor supports the advertising efforts of a retailer (i.e.,
grocery store newspaper advertisements) or, as in the example of "Intel inside,"
another party that uses a specific part, a branded ingredient or licensed approach.
Such advertising is sometimes referred to as co-op advertising. Typically the
manufacturer will help underwrite a portion of, or in some cases, pay for
completely, the advertising costs incurred by the retailer. Cooperative marketing
is just an extension and application of the philosophy of cooperation in the area
of agricultural marketing. It is a process of marketing through a cooperative
society, formed for the producers, by the producers. It seeks to eliminate the
middlemen between the producer and the consumer, thus getting the maximum price for
their produce.

Salient Features Of Cooperative Marketing:--

Some salient features of a cooperative society are:

Although like any other business activity a cooperative society may need capital
for its

operation, yet it is the membership which is paramount, and not the capital
investment. Then the Voting right is based on the membership, and not on the sum of
shares held. The society will be managed by a board comprising elected members from
the general body.

And the principle of voluntarism is cardinal to the organization of the cooperative

society.

The principal objective of a cooperative marketing society is to gain all the

advantages of large-scale trading and volume of business to the individual members,
each one of whom is a small-scale operator, thanks to the fragmentation of
landholdings due to the partition of the family inheritance over several
generations. Finally, the keystone of a cooperative society is service, and not
profit which is the basis and rationale for the capitalist enterprise.

"What has been broadly found in the third section is that in all these countries,
farmers' holdings as also their main problems are by and large the same as those of
the Indian farmers. But factors such as strong motivation resulting in spontaneous
urge to set up marketing cooperatives, and keeping the cooperatives free from
extraneous influences with a strong determination to preserve them as a joint
undertaking, have made these cooperatives stronger and more successful than most of
their counterparts in India."

Types Of Cooperative Marketing Societies:--

The cooperative marketing societies may be grouped into the following types on the
basis of the commodities held by them.

1. Single commodity cooperative marketing societies: these societies deal in

marketing of only one agricultural commodity. Examples sugarcane cooperative
marketing society, cotton cooperative society and oilseeds growers cooperative
marketing society.

2. Multi commodity cooperative marketing societies: most of the cooperative

marketing Societies in India are of this type. They deal in marketing of a large
number of Commodities produced by the members such as food grains, cotton,
oilseeds.

3. Multi purpose multi commodity cooperative societies: a large number of

commodities are marketed by them and they perform such other functions such as
providing credit to the members, arranging for the supply of inputs required by
them and meeting their requirements of essential domestic consumption goods.
Farmers are hereby protected from exploitation of the village money-lender-cum-
village merchant.
Need And Importance Of Cooperative Marketing:-

In the context of rural marketing, cooperative marketing is of great importance.

Need and Importance of cooperative marketing is as follows:

1. Abolition of middlemen: By eliminating the role of middlemen, cooperatives have

been successful in protecting the interest of their members.

2. Collective bargaining: cooperative societies have bargaining power more than

that of a single producer.

3. Storage facility: cooperative Societies have their own godowns for storing their
products. They also provide storage facilities to their members at nominal charges.

4. Standardization and grading: the goods in the societies are rearranged

according to their Predetermined standards and grades so that they are sold at the
highest possible price.

5. Higher prices of members: cooperative societies ensure highest possible prices

for the products as they keep themselves in close touch with the rates in market in
market and sell them when the prices are high.

6. Market infrastructure: cooperative marketing societies have a very large and

wide Infrastructure. There are facilities such as godowns, warehouses, transport,
grading etc. These facilities involve large costs, which are beyond their means.
For this, they can seek financial assistance from government for the establishment
of these facilities.

7. Supplying inputs and consumer goods: cooperative societies can easily undertake
supply of inputs needed by the farmers. These societies can finance purchases by
the farmers from the sale price of their produce. Buying of inputs and consumer
goods by marketing society at wholesale rates benefit member farmers.

8. Facility of correct weighing: Manipulation of weights and measures and cheating

the farmers eliminated. Cooperative Marketing societies help in offering reasonable
price for the products to their members because they arrange for correct weighing
of the product of the members.

9. Relief from illegal production: The merchants make many unauthorized and illegal
deductions while taking agricultural products from the farmers. These deductions
Are made in the name of charity, donations etc. Cooperative societies protect their
members from such illegal deductions.

The Co-Operative Development Corporation:-

The National Co-operative Development Corporation has been promoting and financing
a wide range of economic activities in rural areas through co-operatives. The
Cooperation is a unique institution in the country catering to the development of
the rural economy and agriculture sector through co-operative. There is no other
institution in the country, which is exclusively for meeting the requirement of co-
operatives.

NCDC has been playing special attention to weaker sections co-operatives in various
part of the country. The promotional and development role of NCDC had lead to
continuous diversification and expansion of co-operative programs under its
preview.
Organization:--

Under the system of co-operative marketing whole responsibility of marketing is

taken Up by the farmers they organized on co-operative basis. The area of operation
of marketing society is usually fixed with reference to local conditions - area
based or commodity based. The commodity-based societies related to grapes, oranges,
banana, Pomegranate, etc. Have wider jurisdiction covering the major areas growing
each crop.

There are societies at the producer's level and they federate at state or national
level to deal with bigger markets including foreign markets for export of their
produce.

Membership:--

There are two types of members of cooperative marketing societies:

(i) Ordinary members:

Individual farmers, cooperative farming societies and service societies of the area
may become the ordinary members of the co-operative marketing society. They have
the right to participate in the deliberations of the society, share in the profits
and participate in the decision making process.

(ii) Nominal members:

Traders with whom the society establishes business dealings are enrolled as nominal
members. Nominal members do not have the right toparticipate in decision making and
share in the profits

Structure of Cooperative Marketing Societies:--

The cooperative marketing societies have both two-tier and three-tier structure. In
the states of Assam, Bihar, Kerala, Madhya Pradesh, Karnataka, Orissa, Rajasthan
and West Bengal, there is a two-tier pattern with primary marketing societies at
the taluka level and state marketing federation as an apex body at the state level.
In other states, there is a three- tier system with district marketing society in
the middle. At the national level, NAFED serves as the apex institution. The
pattern of the three-tier structure has been discussed in the paragraphs that
follow:

(i) Base level:

At the base level, there are primary cooperative marketing societies. These
societies market the product of the farmer members in that area. They may be single
commodity or multi commodity societies, depending upon the production of the crops
in that area. They are located in the primary wholesale market, and their field of
operations extends to the area from which the produce comes for sale, which may
cover one or two tensile, panchayat samitis or development blocks.

(ii) Central/District level:

At the district level there are central co-operative marketing unions or

federations. Their main job is to market the produce brought for sale by the
primary co-operative marketing societies of the area. These are located in the
secondary wholesale markets are generally offer a better price for the produce. The
primary co-operative marketing societies are members of these unions in addition to
the individual farmer members. In the two-tier structure, the state societies
perform the functions of district level societies by opening branches throughout
the district.

(iii) State level:

At the state level, there are apex (state) co-operative marketing societies. These
state level institutions serve the state as whole. Their members are both the
primary co-operative marketing societies and the central co-operative unions of the
state. The basic function of these is to coordinate the activities of the
affiliated societies and conduct such activities as inter-state trade, export-
import, procurement, distribution of inputs and essential consumer goods,
dissemination of market information and rendering expert advice on the marketing of
agricultural produce. The cooperative marketing network of the country includes 29
state level marketing federations, 173 district/regional marketing co-operative
societies, 2478 general purpose primary marketing societies and 5028 special
commodities societies

Resources:--

The sources of fund of the society are as under:

1. Share capital

2. Deposits.

3. Loans from higher financial institutions including NABARD.

4. Grants or subsides from the Govt. for godowns, Etc.

5. Reserve funds.

The marketing societies require short-term, Medium-term and long-term capital

1. Short-term capital is needed for financial advances to members for production,

packing, transport, etc. to meet contingent expenses.

2. Medium- term capital is required for purchasing motor trucks, etc.

3. Long-term loan is required for installation of machinery, construction of

building for godown, storage, etc.

Functions:--

1. To arrange for the sale of members produce to the best possible advantage.

2. To undertake activities in connection with grading, pooling and procurement of

produce of the members.

3. To provide storage facilitates to their members by renting or owning the godowns

and thereby facilitate to grant advances against pledge of produce.

4.To protect members from all types of malpractices eliminates the middleman in the
chain of marketing.

5. Co-operative marketing society ensures grading, etc. and supply of good quality
material to consumers.

6. It teaches business methods to farmers and serves them as agency for supply
market Information.

7. The society is able to stabilize prices over a long period by adjusting the
supply with the demand.

8. Marketing societies are also encouraged to undertake export trade so that they
can give Better prices to their members.

Weak Co-Operative Marketing:--

Although, many advantages are envisaged in the co-operative marketing the structure
has remained relatively weak as compared to credit co-operatives. There are only
about 1000 marketing societies as marketing is more difficult involving many
technical and commercial aspects. Marketing of perishable is still more different.
Arranging quick transport, arranging storage to avoid losses, to keep watch on
demand - supply position to ensure good prices to members are all matters need for
good marketing.

For want of these managerial aspects, desired number of co-operative marketing

societies has not come up and those which were started could not succeed. Several
marketing surveys/studies at farmer's levels have revealed that among several
marketing channels, co- operative channel has offered greater share of consumer's
prices to the producers. Whichever, marketing is unorganized, farmer - producers
have expressed that marketing Co-operative societies should be formed. This was
particularly reported in the cases of marketing of perishables.

Agreeing on one common mission -

The first step in moving towards a cooperative marketing arrangement is to make

sure all individuals are on the same page. This is achieved by making sure that all
members are onboard to operate for the same purpose. Most of the time, this is not
present among the members, even though most groups or steering committee members
think that they all want the same end result. Again, a facilitator can help the
group move through this process, because a common vision is essential for moving
any further on the marketing venture

Trust and sharing of information-

Many agricultural producers have operated individually for years and are skeptical
about the idea of a cooperative marketing venture. There is a time and process for
building a sense of trust among the members and generating an open sharing of
information in relation to the cooperative marketing venture.

This trust must occur among members to keep members loyal and make the effort
function successfully in the future. For e.g. We are going into business with all
members of the effort and if we have trust issues, why would we ever agree to run a
business with these people? This is a major roadblock for many groups but some
facilitated discussions can be held with professionals who are experienced in
dealing with the human components of cooperative marketing organizations.

FEW SUCCESSES:--

In spite of the difficulties encountered in the marketing of perishables,

Vegetables, milk, etc. there are few examples of good success.

1. Maha-grape co-operative federation marketing grapes in Maharashtra.

2. Co-operatives marketing pomegranate.

3. Co-operatives marketing banana in Jalgaon district.

4. Vegetables co-operatives in Thane District.

5. Milk co-operatives in Maharashtra and Gujarat.

6. Co-operative cotton marketing societies.

SUGGESTIONS FOR STRENGTHENING OF COOPERATIVE MARKETING SOCIETIES

i) Cooperative marketing societies should develop sufficient storage facilities in

the mandi as well as in the villages.

ii) The societies should give adequate representation to the small and marginal
farmers in their organizational set-up.

iii) In the selections of the officials of cooperative marketing societies,

weightage should be given to business experience and qualifications. After their
selection, the officials should be given proper training so that they may deal
efficiently with the business of the society. The efficiency should be rewarded,
wherever possible

iv). There is a need for bringing about a proper co-ordination between credit and
marketing co-operative societies to facilitate the recovery of loans advanced by
credit societies, and make available sufficient finance for marketing societies.

v) Cooperative marketing societies should diversify their activiti the produce and
inputs, and engage in the construction of storage facilities

CONCLUSION

The central problem to which we have been confronted was the quest to know how to
establish marketing cooperative in a traditional village, existing in the
traditional rural areas of any developing country. We should remember that
marketing is a system designed to transfer, in the most effective way, the
production from the producers to the consumers. We know that the existing marketing
system in the traditional rural areas is a system, which highly exploits the
producers and at the same time the consumers. This marketing system pays to the
producers the lowest possible price, and at the same time, sells to consumers at
the highest possible price. This system is composed of too many intermediary
stages, and each of these stages takes its part from the total payment by the
consumers.

There are several benefits to joining a cooperative marketing venture: obtaining

economies of scale, entering new market(s), accessing professional services,
maintaining more of the retail dollar, increasing bargaining power, and preserving
existing markets. These can benefit your operation by increased profits and
efficiency, but you need to consider the challenges before you make the final
decision. These are all related to the human dynamics, commitment, and trust of the
members who operate and own the organization.
REFERENCES

• Patel. M.S.: "Cooperative Marketing In India" Review of International

Cooperation Vol. 69 No. 2 1976. p.52.

• In the Indian Context, 97th Constitutional Ansendment Act, 2011

• Cooperative Societies Act, 1912

• Ministery of Cooperation.