TRADITIONAL vs. NEW GENERATION COOPERATIVES IN DAIRY SECTOR

Views:
 
Category: Education
     
 

Presentation Description

No description available.

Comments

Presentation Transcript

TRADITIONAL vs. NEW GENERATION COOPERATIVES IN DAIRY SECTOR:

TRADITIONAL vs. NEW GENERATION COOPERATIVES IN DAIRY SECTOR

PRODUCERS’ ORGANISATION:

PRODUCERS’ ORGANISATION amplify the political voice of smallholder producers, reduce the costs of marketing of inputs and outputs, provide a forum for members to share information, coordinate activities and make collective decisions. Hence, collective action through cooperatives or associations help the small farmers to adapt to new patterns and much greater levels of competition [Singh, 2002]. 2

Cooperatives The Development Catalyst:

Cooperatives The Development Catalyst Cooperative: Little people’s 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 for value creation Defuses class conflict, reduces social gaps and promotes collective responsibility 3

What do you mean by a Cooperative ?:

What do you mean by a Cooperative ? 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. 4

Values of a Cooperative:

Values of a Cooperative Cooperatives are based on the values of self-help, democracy, equality, equity and solidarity. Cooperative members believe in the ethical values of honesty, openness, social responsibility, and caring for others. 5

Principles of a Co-operative :

Principles of a Co-operative Voluntary and Open membership The Democratic Member Control Member Economic Participation Autonomy and Independence Education, Training and Information Cooperation Among Cooperatives Concern for Community 6

Cooperative Movement in the World:

Cooperative Movement in the World The earliest cooperatives were set up among the weavers. They set up the first co-operative in – Scotland (Fenwick, 1761; Govan, 1777; Darvel, 1840 ), France (Lyons, 1835 ), England (Rochdale, 1844 ), and Germany ( Chemnitz, 1845 ). The real co-operative movement can be credited to the Rochdale Pioneers who established a co-operative consumer store in North England. 7

Cooperative Movement in India:

Cooperative Movement in India 1904: The Cooperative Credit Societies Act i.e. the first Cooperative Law of India was passed 1912: The Cooperative Societies Act, 1912 had wider scope for other types of cooperatives to function 1919: Government of India Act, Cooperation as a subject was transferred to provinces 1942: Multi-unit Cooperative Societies Act, delegated the power of Central Registrar of Cooperatives to State Registrars for all practical purposes 1984: Multi-State Cooperative Societies Act Contd.

PowerPoint Presentation:

1991: Brahma Prakash Committee comes out with the Model Co-op Societies Act, with lesser state involvement 1995: The Government of Andhra Pradesh passes the new Mutually Aided Cooperative Societies Act, granting autonomy to the cooperatives. 2002: Multi-State Cooperative Societies (MSCS) Act, 2002 replaced the MSCS Act, 1984. 2002: Companies Amendment Act, 1956 provides an alternative to the institutional form that is presently available to cooperative enterprises 2004: Task Force on Revival of Cooperative Credit Institutions, set up under the chairmanship of Prof. A. Vaidyanathan 9

Cooperative Movement in Gujarat:

Cooperative Movement in Gujarat The first agricultural credit society registered under the 1904 Act was Vilaspur Cooperative Credit Society in the Dascroi taluka of Ahmedabad district. Kaira district Milk Union Ltd. popularly known as “AMUL” was established by Late Shri Tribhuvandas Patel in December 1946 at Anand. The state has also been ahead in the organisation of Agricultural Marketing cooperatives, Non-agricultural Cooperative Credit Societies, Forest Labourers Societies for Adivasi, Cooperative Housing, Poultry Cooperatives, Lift irrigation and Industrial cooperatives. 10

Table 1: Cooperative Movement at a Glance:

Table 1: Cooperative Movement at a Glance Particulars No., Percent share Number of Cooperatives (All level) 0.545 million Total combined coop membership [National Population 1.027billion] 236 million Share capital Rs. 223,944 million Working capital Rs. 3, 827,496.4 million Total households covered 75% Total villages covered 100% Number of National cooperative federations 19 Number of State level cooperative federations 367 Number of District level cooperative federations 2,890 Source: Indian Cooperative Movement – A Profile 2004, National resource Centre, National Coop. Union of India, New Delhi 11

Table 2: Share of Cooperatives in National Economy:

Table 2: Share of Cooperatives in National Economy Particulars Percent Share Rural Network (villages covered) 100% Agricultural credit disbursed by coops. 42.80 % Fertilizer disbursed (6.049 million tonnes ) 36. 17% Sugar produced by cooperative sector (10.164 million tonnes ) 59% Direct employment generated 1.15 million Self-employment generated for persons 14.79 million Milk procurement to Total Production 7.44% Milk Procurement to Marketable surplus 10.5 % Dairy Cooperatives – India becomes world’s largest milk producer Fertiliser Cooperatives – India becomes world’s largest Urea producer Source: Indian Cooperative Movement – A Profile 2004, National resource Centre, National Coop. Union of India, New Delhi 12

Main Areas of Operation of Cooperatives :

Main Areas of Operation of Cooperatives Agricultural Credit Agricultural Supplies Agricultural Marketing Agricultural Processing. It includes: Dairy cooperatives Sugar cooperatives Fisheries’ cooperatives Poultry cooperatives Industrial co-operatives Public Distribution of essential commodities through consumer co-operatives Urban credit Co-operatives Housing co-operatives 13

DAIRY COOPERATIVES:

DAIRY COOPERATIVES The Dairy Cooperative Network (As on 31 st March, 2009) includes 177 milk unions operates in over 346 districts covers 1,33,349 village level societies is owned by around 13.9 million farmer members of which 3.9 million were women. accounts for the major share of processed liquid milk marketed in the India. Milk is processed and marketed by 15 State Cooperative Milk Marketing Federations. Several brands have been created by cooperatives like Amul (GCMMF), Vijaya (AP), Verka (Punjab), Saras (Rajasthan), Nandini (Karnataka), Milma ( Kerala ) and Gokul ( Kolhapur ). As per data released by the Ministry of Food Processing Industries, exports of dairy products have been growing at the rate of 25% p.a. in quantity terms and 28% in value terms since 2001. 14

Structure of Dairy Cooperatives:

Structure of Dairy Cooperatives 15

Table 3: Status of Dairy Cooperatives :

Table 3: Status of Dairy Cooperatives Particulars Number Number of dairy cooperatives 103,305 Of which Anand pattern dairy cooperatives 96,206 Membership total (in million) 11.5367 Membership of Anand Pattern (in million) 10.738 Turnover (total) Rs. 5957.9 million Average milk procured per day (000 lts ) 16,504 Number of milk sheds (unions) 176 Total milk procured by cooperatives (000 lts ) 6023, 960 Source: Indian Cooperative Movement – A Profile 2004, National resource Centre, National Coop. Union of India, New Delhi 16

Share of Dairy sector in Indian Food Processing Industry:

Share of Dairy sector in Indian Food Processing Industry Source: D&B Research (2006) 17

PowerPoint Presentation:

18 2006

Table 4: Food Processing Units in Organised Sector:

Table 4: Food Processing Units in Organised Sector Particulars Number of Units Flour mills 516 Fish Processing Units 568 (+482 cold storage units) Fruit & Vegetable Processing Units 5293 Meat Processing Units 171 Sweetened & aerated water units 656 Milk Product Units 266 Sugar Mills 429 Solvent extract units 725 Rice mills 139208 Modernised rice mills 35088 Source: Ministry of Food Processing Industries, Annual Report 2003-04 19

Table 5: Employment in dairy farming systems:

Table 5: Employment in dairy farming systems Category of households Control area Project area Percentage change Landless 120.45 172.01 42.81 Marginal 144.63 177.48 22.71 Small 196.19 204.86 4.42 Medium 242.73 313.9 29.32 Large 436.63 448.49 2.72 Average change (increase) 20.4 MED: man-equivalent days Source: Singh et al. (1995) (MED/Household/Annum) 20

AMUL & Evolution of Anand Pattern Dairy Co-operatives:

AMUL & Evolution of Anand Pattern Dairy Co-operatives 'AMUL‘ i.e. Anand pattern of cooperatives in Kaira district of Gujarat state of India was started as a determined retaliation against the monopolistic exploitation of farmers by private traders. The cooperative structure and the system established in December 1946 as a part people's effort came to be known as Anand - Pattern of Dairy Co-operative. 21

OPERATION FLOOD:

OPERATION FLOOD Operation flood was launched in 1970 to create a virtual “flood” of rurally produced milk in India by helping rural milk producers to organise village level dairy cooperatives on the famous ‘ANAND PATTERN’ of the Kaira district of Gujarat. The program was started with the help of the World Food Program (WFP), and continued with dairy commodity assistance from the European Economic Community (EEC) and soft loans/credit from the World Bank. The National Dairy Development Board (NDDB) was entrusted with the task of implementing Operation Flood. It led to the "White Revolution," making India the world's largest milk producer. The program was implemented in three phases named Operation Flood (OF) I, II and III. 22

Table 6: Salient Features of Operation Flood:

Table 6: Salient Features of Operation Flood Key parameters Operation Flood Phases Phase I Phase II Phase III * Date of start July 1, 1970 April 1, 1981 April 1, 1987 Date of ending March 31, 1981 March 31, 1985 April 30, 1996 Investment ( Rs crore ) 116.50 277.20 137.95 No. of milksheds 39 136 170 No of DCSs set up 13,270 34,523 72,744 No of members ( lakh ) 17.5 36.3 93.0 Contd.

PowerPoint Presentation:

States covered Andhra Pradesh, Bihar, Delhi, Gujarat, Haryana , Karnataka, Madhya Pradesh, Maharashtra , Punjab, Rajasthan, Uttar Pradesh, and West Bengal Andhra Pradesh, Assam, Bihar, Goa , Gujarat, Haryana , Himachal Pradesh, Jammu & Kashmir, Karnataka, Kerala , Madhya Pradesh, Maharashtra , Orissa , Punjab, Rajasthan, Sikkim , Tamil Nadu , Tripura , Uttar Pradesh, West Bengal, Andaman & Nicobar , Pondicheri , and Delhi Andhra Pradesh, Assam, Bihar, Goa, Gujarat, Haryana , Himachal Pradesh, Jammu & Kashmir, Karnataka, Kerala , Madhya Pradesh, Maharashtra , Orissa , Punjab, Rajasthan, Sikkim , Tamil Nadu , Uttar Pradesh, West Bengal, Pondicheri and Delhi *: Includes progress during April 1985 to March 1987, a period during which activities were funded by the NDDB (Rs. 209.0 crore) Source: NDDB (2001) 24

Table 7: Impact of Operation Flood - I at Village Level in Sabarkantha Milkshed, 1980 :

Table 7: Impact of Operation Flood - I at Village Level in Sabarkantha Milkshed , 1980 Sr. no. Particulars Banaskantha Cooperative villages Control villages 1. Average milk production (l/ hh ) 89.63 43.14 2. Average milk production (l/ hh /per milch animal in milk) last month 79.31 53.25 3. Average price realised (Rs/l) 1.76 1.96 4. Gross revenue from milk and milk products (Rs/ hh ) 102.16 29.54 5. Gross revenue per milch animal in milk (Rs/ hh ) 90.40 36.47 6. Average annual income from milk (Rs/ hh ) -Landless households 557.79 (11.51) 370.75 (11.72) - Landed households 1619.97 (88.48) 788.74 (88.28) 27

Contd.:

Contd. 7. Employment in days from dairying ( hh /annum) -Landless households 66.54 (14.62) 38.97 (19.91) -Landed households 169.21 (38.26) 156.20 (36.40) 8. Calorie intake from milk and milk products (K calorie/capita/day) 154.0 97.0 9. Protein intake from milk and milk products (gm/capita/day) 5.0 4.0 26 * Implicit value of milk in terms of ghee price. ** Figures in parentheses represent percentage of the aggregate income, in case of employment these are percentage of total employment in all activities. Source: Katar Singh and V. Mukunda Das, Impact of Operation Flood I at Village Level, Research Report I, IRMA, 1984.

Anand Pattern (Traditional Cooperative):

Anand Pattern (Traditional Cooperative) 27

Salient Features of Anand Pattern Co-operatives:

Salient Features of Anand Pattern Co-operatives A single commodity approach; A three-tier organisational structure; Producer-elected leadership and decentralised decision making for total democratic Governance. Hiring of professional managers and technicians; Accountability of professional managers, technicians and other employees to the Board of Directors comprising of elected leaders from the producer members. Provision of all necessary inputs and services to member-producers at nominal price. Integration of production, procurement, processing and marketing functions; Cash payment to producers for their milk - daily or weekly; and Contribution to village amenities like drinking water, school etc. 28

PowerPoint Presentation:

IMPACT EVALUATION OF TRADITIONAL DAIRY COOPERATIVES IN DIFFERENT STATES OF INDIA 29

Table 8: IMPACT OF MILK PRODUCERS COOPERATIVE SOCIETY ON THE NET INCOME OF MARGINAL AND SMALL FARMERS (On an average) THROUGH DAIRYING IN CHITTOR DISTRICT (ANDHRA PRADESH) (in rupees) :

Table 8: IMPACT OF MILK PRODUCERS COOPERATIVE SOCIETY ON THE NET INCOME OF MARGINAL AND SMALL FARMERS (On an average) THROUGH DAIRYING IN CHITTOR DISTRICT (ANDHRA PRADESH) (in rupees) Sr. no. Particulars Marginal Farmers Small Farmers 1. Dairy income before joining milk cooperative society 3177 6615 2. Dairy income after joining milk cooperative society 4175 8135 3. Increase or decrease in income 850 1520 (25.5%) (22.98%) Source: Indian Cooperative Review, April 2006; Jayachandra , K. and Naidu, Y.G. 30

Table 9: PROPORTION OF DAIRY INCOME TO TOTAL INCOME OF MARGINAL AND SMALL FARMERS IN CHITTOOR DISTRICT (AP) (in rupees) :

Table 9: PROPORTION OF DAIRY INCOME TO TOTAL INCOME OF MARGINAL AND SMALL FARMERS IN CHITTOOR DISTRICT (AP) (in rupees) Sr. no. Particulars Marginal Farmers Small Farmers 1. Proportion of dairy income before joining the society 38.00 34.00 2. Proportion of dairy income after joining the society 43.40 37.70 3. Increase or decrease in proportion 5.4% 3.7% Source: Indian Cooperative Review, April 2006; Jayachandra , K. and Naidu, Y.G. 31

Table 10: AVERAGE DAILY MILK YIELD OF BUFFALOES AND COWS (litres):

Table 10: AVERAGE DAILY MILK YIELD OF BUFFALOES AND COWS ( litres ) Rainy Winter Summer Overall (A) Milch buffaloes Members 5.47 8.00 5.42 6.29 Non-members 4.46 6.41 4.66 5.18 (B) Milch cows Members 4.42 5.50 3.63 4.52 Non-members 3.78 4.82 3.24 3.95 Source: Indian Journal of Agricultural Economics, July-Sept. 1996; Shiyani R.L. 32

Table 11: IMPACT OF DAIRYING ON EMPLOYMENT OF MARGINAL AND SMALL FARMERS IN CHITTOOR DISTRICT (AP) (Percentage):

Table 11: IMPACT OF DAIRYING ON EMPLOYMENT OF MARGINAL AND SMALL FARMERS IN CHITTOOR DISTRICT (AP) (Percentage) Employment Marginal Farmers Small Farmers Male Female Male Female Full-time 46.3 68.6 27.8 50.7 Part-time 29.0 41.7 50.0 63.3 Source: Indian Cooperative Review, April 2006; Jayachandra , K. and Naidu, Y.G. 33

Table 12: AVERAGE DAILY MILK YIELD, PRICE AND COST OF MILK PRODUCTION:

Table 12: AVERAGE DAILY MILK YIELD, PRICE AND COST OF MILK PRODUCTION Producer type and season Buffalo Cow Milk yield ( Litre /day) Price of milk (Rs./lit) Cost of Production (Rs./ litre ) Milk yield ( Litre /day) Price of milk (Rs./lit) Cost of Production (Rs./ litre ) Members: Rainy 5.47 7.49 6.64 4.42 4.47 3.97 Winter 8.00 7.59 5.04 5.50 4.63 3.49 Summer 5.42 7.66 4.47 3.63 4.68 4.66 Overall 6.29 7.58 5.35 4.52 4.59 3.96 Individual Producers: Rainy 4.46 6.78 7.29 3.78 3.81 4.28 Winter 6.41 6.56 5.92 4.82 4.01 4.18 Summer 4.66 6.56 5.61 3.24 3.86 5.08 Overall 5.18 6.63 6.22 3.95 3.89 4.45 Source: The Asian Economic Review, August 1998; Shiyani R.L. and Deb U.K. 34

Table 13: IMPACT OF MILK PRODUCERS COOPERATIVE SOCIETY ON THE CREATION OF ASSETS OF MARGINAL AND SMALL FARMERS (On an average) IN CHITTOOR DISTRICT (AP) (in rupees):

Table 13: IMPACT OF MILK PRODUCERS COOPERATIVE SOCIETY ON THE CREATION OF ASSETS OF MARGINAL AND SMALL FARMERS (On an average) IN CHITTOOR DISTRICT (AP) (in rupees) Sr. no. Particulars Marginal Farmers Small Farmers 1. Assets value before joining the society 1400 2200 2. Assets value after joining the society 1610 2475 3. Increase or decrease in assets value 210 275 (15.00%) (12.5%) Source: Indian Cooperative Review, April 2006; Jayachandra , K. and Naidu, Y.G. 35

Table 14: PATTERN OF INCOME FROM DAIRYING FOR MEMBERS AND NON-MEMBERS OF MILK COOPERATIVE SOCIETIES IN PUNJAB, 1989-90 (Rs.):

Table 14: PATTERN OF INCOME FROM DAIRYING FOR MEMBERS AND NON-MEMBERS OF MILK COOPERATIVE SOCIETIES IN PUNJAB, 1989-90 (Rs.) Categories Income per capita Members Non-members Small 1280.72 1253.34 Medium 2521.60 2351.66 Large 3540.00 3375.13 Source: Chahal , S.S. (1991) ‘An economics analysis of milk marketing in Punjab’, Ph.d . Dissertation, PAU, Ludhiana. 36

Table 15: PER HOUSEHOLD ANNUAL MILK PRODUCED AND CONSUMED ON SAMPLE HOUSEHOLDS (in litre):

Table 15: PER HOUSEHOLD ANNUAL MILK PRODUCED AND CONSUMED ON SAMPLE HOUSEHOLDS (in litre) Category Milk produced Milk consumed Member Non-member Member Non-member Landless 913 849 89 96 Marginal 1181 1052 177 208 Small 1458 1305 293 298 Big 1855 1620 435 405 Average 1334 1207 231 249 Source: The Bihar Journal of Agril . Marketing; Oct-Dec 2000; Prasad et al. 37

Table 16: PER HOUSEHOLD ANNUAL GROSS DAIRY INCOME AND EXPENDITURE ON MEMBER AND NON-MEMBER HOUSEHOLDS (in Rs.):

Table 16: PER HOUSEHOLD ANNUAL GROSS DAIRY INCOME AND EXPENDITURE ON MEMBER AND NON-MEMBER HOUSEHOLDS (in Rs.) Category Gross dairy income Dairy expenditure Surplus dairy income over dairy expenses Percentage of surplus dairy income Landless Member 5638 2232 3406 60.41 Non-member 5954 2453 3501 58.80 Marginal Member 7376 3134 4242 57.51 Non-member 6325 3003 3322 52.52 Small Member 8337 3915 4400 53.04 Non-member 7028 3537 3491 49.67 Big Member 11323 4774 6549 57.84 Non-member 9646 4270 5376 55.73 Average Member 8169 3514 4655 56.98 Non-member 7238 3315 3923 54.20 Source: The Bihar Journal Agril . Mktng ; Oct-Dec 2000; Prasad et al. 38

Problems with Traditional Cooperatives :

Problems with Traditional Cooperatives The weaknesses of Cooperatives have been summarized by Cook (1995) as follows: 1) The Common property or free rider problem Free riders are cooperative members who make use of the capital of the cooperative by supplying produce, but without contributing their full share of that capital. The horizon problem It also arises from the manner in which capital is managed, and also results in a shortage of capital. Contd.

PowerPoint Presentation:

Members who plan to be suppliers far into the future will favour continuing investment at a rate necessary to sustain their farms and the cooperative. Retiring and dry (non-supplying) members may resist such investment and may even seek to withdraw the capital they have already contributed. The portfolio problem Farmers become members of a traditional cooperative in order to supply product to it, however they differ in their preferences for investments with various levels of risk. The more risk-averse members want to invest in the cooperative only to the extent that is necessary to find a market for their produce. Contd.

PowerPoint Presentation:

Other members may wish to invest more in the cooperative so that it can pursue discretionary business opportunities. These two groups have different views about the purpose of the cooperative. Influence costs There is lot of ‘politics’ in a cooperative and this has a cost in monetary terms and in terms of poor decision making. Influence costs are generally low in small, narrowly focused cooperatives, and high in big, diversified ones. Contd.

PowerPoint Presentation:

The above mentioned problems are inherent to the Cooperative structure. Besides these, there are many other problems faced by the Cooperatives, which are as follows: Unable to spread the business Lack of professional management Lack of accountability Incompetent to compete in the market Lack of level playing field Politicization and excessive role of the government chiefly arising out of the loop holes and restrictive provisions in the Cooperative Acts 42

Solutions to overcome this problem:

Solutions to overcome this problem Remove the restrictive provisions in the existing Act by bringing necessary amendments Enact Self-Reliant Cooperatives Act Use the Producers’ Company Legislation 43

What is a Producer Company? (New Generation Cooperative):

What is a Producer Company? (New Generation Cooperative) Producer Company is a business enterprise (practically cooperative) registered under the provisions of Part IX A of the Company Act, and is run on the basis of Mutual Assistance Principles . The amendment of the Companies Act, 1956 in 2003, provided for producer companies through a separate chapter based on the Alagh Committee report. 44

Mutual Assistance Principles:

Mutual Assistance Principles Voluntary and open membership Democratic member control Limited interest on share capital Distribution of surplus in patronage proportion Education of members, staff and others Cooperation among organizations following the principles of mutuality Concern for community These principles are same as that underlying a Traditional cooperative. That is why a Producer company is also known as a New Generation Cooperative (NGC). 45

What is a New Generation Cooperative?:

What is a New Generation Cooperative? The term has been applied to the 50 or so cooperatives that have emerged in North Dakota and Minnesota (USA) in the last four or five years. They represent the newest generation of cooperatives. Their major focus is on “value-added” rather than “commodities”. 46

PowerPoint Presentation:

Distinguishing features of NGCs are: Delivery rights tied to the level of equity invested and opportunity for appreciation/depreciation in their value; Closed membership; Higher level of initial equity investment; and Transferability of delivery rights. However, NGCs retain following features of a traditional cooperative: Democratic control through a one member, one vote policy. Excess earnings distributed among members as patronage refunds (dividends). May receive all or most of patronage as cash. Board of directors: Elected from the membership, by the membership. 47

Who can form a Producer Company ?:

Who can form a Producer Company ? Any ten or more individual producers or Two or more producer institutions A combination of both 48

PowerPoint Presentation:

DESIGNS OF A PRODUCER COMPANY or NEW GENERATION COOPERATIVE IN THE DAIRY SECTOR 49

Option - I:

Option - I 50

Option - II:

Option - II 51

Option - III:

Option - III 52

Salient features of NGC:

Salient features of NGC Delivery rights : Equity shares in NGC not only assign membership to producers, but they also allocate delivery rights and obligations. Delivery rights and shares act as a two way contract between the producer members and cooperatives. Through this mechanism, producer is assured a market for his produce and the cooperative society is assured a regular supply source. Contd.

PowerPoint Presentation:

The total quantity of delivery right shares that the cooperative sells to producers depends on the processing capacity of the cooperative operations. 2) Transferability of shares : The members are allowed to transfer their delivery right shares to others who wish to become members, subject to board approval. The price of shares in these situations is negotiated between the members who are willing to sell their delivery rights and the producers who are willing to buy these rights. The price of the shares depends on the performance and long term growth potential of the cooperatives. Contd.

PowerPoint Presentation:

3) Active and Closed membership : The NGC necessitates the full commitment of the members in the affairs of the society. In contrast to traditional cooperatives which accept new members on a continual basis, membership in NGCs is restricted once the target amounts are sold. 4) High equity investment : Due to the presence of delivery rights, the initial equity investment in NGCs are higher than in traditional cooperatives and each share entitles a member to deliver one unit of a farm product to the cooperative. Contd .

PowerPoint Presentation:

NGCs typically raise between 30 to 50 percent of their total capital requirements from the sale of equity shares. 5) Members’ Control : Company formed of individuals, member shall have single vote irrespective of share holding Where the company is formed exclusively by producer institutions, the voting right may be computed on the basis of participation in the business Company formed of individuals and institutions, there shall only be a single vote for every member 56

Advantages of NGCs:

Advantages of NGCs Producers work collectively to respond to problems or opportunities. Restricted membership provides stability to producers and efficiency for the plant. A diverse set of stakeholders ensure that the interests of the community are considered. Producers and processors are committed to the quality of the product. 57

PowerPoint Presentation:

A producer company can also be formed by conversion of a co-operative eligible to become a producer company. 58

Producer companies vs. Cooperatives:

Producer companies vs. Cooperatives Features Producer Companies Co-operatives Principles Mutual Assistance Co-operative principles Membership User-members Non-user can be Voting rights One member-one vote/ Patronage Voting One member-one vote Professional management Provision for experts in Board No such provision Nominees on board No such provision Provided 59

Contd.:

Contd. Audit By CA (Chartered Accountant) By Govt. Election responsibility By incumbent board By Registrar of Co-operative Societies Area of Operation Not restricted Restricted Registration Central Act State Act Restrictive Provisions No such provision Provided 60

How does the Producer Company Legislation overcome the problems faced by cooperatives ?:

How does the Producer Company Legislation overcome the problems faced by cooperatives ? Producer Company can spread its operations all over the country. Audit by Chartered Accountants (CA) and the responsibility of audit lies with the Board. Producer Company has liberty to invest its own funds. Timely elections is the responsibility of the Producer Company (Board). Contd.

PowerPoint Presentation:

Matters related to employees is the sole responsibility of Producer Company. Registrar of Companies does not have powers to rescind resolutions. Registrar of Companies or the Central Government does not have powers to appoint nominees in a Producer Company. Registrar or Central Govt. does not have powers to appoint an administrator or wind up a Producer Company. Only members of Producer company have the powers to amend the articles of association. Contd .

PowerPoint Presentation:

Only General Body of Producer Company has powers to merge, divide, amalgamate or reorganize Producer Company. Government does not have the right to give directives to Producer Company in Public Interest. 63

Other Opportunities - Producer Company set-up:

Other Opportunities - Producer Company set-up Producer Company for promoting its objectives can form subsidiary company, joint venture or enter into an agreement or other arrangement with any body or a corporate. Producer company can give special user rights to its active members as provided in its articles of association. Members must participate in the business of the Producer Company, articles of association will provide for minimum participation. Board of Producer Company may co-opt expert directors. 64

Examples of NGCs in Dairy sector in India:

Examples of NGCs in Dairy sector in India Junagadh dairy which was revived by NDDB in 2006, is currently being run successfully on the lines of New Generation Cooperatives. NDDB is also implementing a complimentary cooperative strategy by promoting new generation cooperatives in about eight states. 65

Examples abroad:

Examples abroad Similar legal frameworks are existing in many countries, to quote a few: New Zealand United States of America Switzerland Italy Denmark Norway 66

PowerPoint Presentation:

On one hand; the competition in Dairying is increasing while on the other, Cooperatives do not have a level playing field to compete with its competitors. Producer Company Legislation provides the needed level playing field for the New Generation Cooperatives. 67

Problems with NGCs:

Problems with NGCs Preferred shares provision compromises the principle of user ownership, though protects the user control principle. In practice, member-control may operate by control of delivery rights rather than by one-member one-vote; This structure is more suited for large growers who can afford large upfront investment in processing/marketing; These cooperatives are more like closely held companies; and These cooperatives have the potential danger to turn into Investor Oriented Companies (IOCs) instead of User Oriented Companies (UOCs). 68

Examples of NGCs in other sectors:

Examples of NGCs in other sectors 17 such companies have been organized in Madhya Pradesh under the District Poverty Initiative Project in the sectors of seed, grain, rice and tomato, chilli, poultry, potato, coriander, turmeric, ginger, milk , and biofertiliser production. PRADAN has facilitated the organization of Masuta Producers’ Company, which deals in silk yarn. The Development Support Centre, Ahmedabad has facilitated the organization of Dhari Krushak Vikas Producer Company in the Amreli district of Gujarat, which deals in agricultural inputs, and provides extension in integrated pest management and organic farming. There are many such companies in Uttarakhand, Andhra Pradesh and Maharashtra as well. 69

Conclusion:

Conclusion Change is the order of the day. The cooperatives are also not exempted from this rule. They require changes in system, structure, legislation, etc . in accordance with the local situation to make the cooperatives more vibrant. The cooperatives should have adaptability to face the challenges posed by the changing economic scenario. Contd.

PowerPoint Presentation:

First and foremost, it should survive and sustain in order to strengthen the socio-economic background of the members. In this context, NGCs can play an important role in solving the problems of cooperatives by undertaking commercial activities on sound lines. They also assure long term performance and growth of cooperatives through efficient and cost effective operations in the way beneficial to both cooperatives and its members with added financial strength. 73

PowerPoint Presentation:

THANK-YOU 72

authorStream Live Help