Agriculture and
Agricultural Cooperatives
in India
Prepared by
Dr Daman Prakash, Senior Consultant
IFFCO FOUNDATION,
34 Nehru Place, New Delhi 110019. India
July 2009
1
Agriculture
and Agricultural Cooperatives in India
01
02
03
04
05
06
07
08
09
10
11
12
13
14
Agriculture in India
…
…
…
…
…
…
…
Cooperative Movement of India
…
…
…
…
…
…
…
Role of Government in the Development of Agriculture and Agricultural Cooperatives
…
National Cooperative Union of India [NCUI] …
…
…
…
…
…
National Agricultural Cooperative Marketing Federation Limited [NAFED]
…
…
Tribal Cooperative Marketing Development Federation of India Limited [TRIFED] …
…
National Federation of State Cooperative Banks Limited [NAFSCOB] …
…
…
National Cooperative Agriculture & Rural Development Banks Federation Limited [NCARDBF]
Indian Farmers Fertiliser Cooperative Limited [IFFCO] …
…
…
…
…
Krishak Bharti Cooperative Limited [KRIBHCO]
…
…
…
…
…
National Federation of Dairy Cooperatives of India [NFDCI]
…
…
…
…
National Dairy Development Board [NDDB] …
…
…
…
…
…
National Bank for Agriculture and Rural Development [NABARD]
…
…
…
National Cooperative Development Corporation [NCDC]
…
…
…
…
2
03
08
15
16
22
24
25
27
28
31
32
33
34
35
Chapter-01
Agriculture in India
AGRICULTURE sector has a vital place in the economic development of India. Even though,
presently this primary sector’s contribution in India’s Gross Domestic Product was 18.0 per
cent during 2005-06 [at 1999-2000 prices], it provided employment to around 60 per cent of
the workforce and accounted for around 11 per cent of the total value of the country’s
exports. The transition towards faster and more inclusive growth calls for significant thrust on
agriculture sector. The Eleventh Five-Year Plan has rightly recognised that the objective of
doubling the growth rate of agricultural GDP to 4.1 per cent per annum is critical to ensure
the inclusiveness of growth. Agriculture is considered to be a primary sector of Indian
economy, which determines the viability and sustainability of economy. About 65% of the
workforce engages in agriculture which is two-third of employment and livelihood [Table-01].
The Green Revolution transformed India from a food deficient state to a self-sufficient
country. Indian agriculture today meets the growing variable demands of burgeoning
population. Within a span of three decades, the country has achieved self-sufficiency and
self-reliance in food grain production. The distribution of farm holdings in India is dominated
by small and marginal farmers [Table-02]. Rain-fed agriculture is the most common form
constituting about 60% of the net sown area of India.
Table-01: Population and Agricultural Workers [Millions] [1951-2001]
Year
1951
1961
1971
1981
1991
2001
Total Population
361.1
439.2
548.2
683.3
846.4
1028.7
Cultivators
69.9 [82.7%]
99.6 [76.0%]
78.2 [62.2%]
92.5 [62.5%]
110.7 [59.7%]
127.3 [54.4%]
Agri Labourers
27.3 [28.1%]
31.5 [24.0%]
47.5 [37.8%]
55.5 [37.5%]
74.6 [40.3%]
106.8 [45.6%]
Total Agri Workers
97.2 [100.0%]
131.1 [100.0%]
125.7 [100.0%]
148.0 [100.0%]
185.3 [100.0%]
234.1 [100.0%]
Source: Registrar General of India, New Delhi
Table-02: Distribution of Operational Land-holdings-All India [2000-2001]
Category of
Land Holding
Marginal [less than 1 ha]
Small [1.0-2.0 ha]
Medium [4.0-10.0 ha]
Large [10 ha and above]
All Holdings
No. of Operational
Landholdings [‘000]
Area Operated
[‘000 ha]
76,122
22,814
6,568
1,230
120,822
30,088
32,260
38,125
21,124
159,903
Average Size of Operational
Landholdings [ha] per family
member
0.40
1.41
5.80
17.18
1.32
India supports about 17 per cent of world population though it has only 2.4 per cent of the
world land mass and 4 per cent of fresh water resources. Indian population has been
growing at the rate of about 1.8% and the average land holding was about 0.15 ha in 200203.
India has 42 million ha of land under rice; 28 million ha under wheat, and just 6.5 million ha
under maize cultivation. In terms of acreage, India is number one in all these crops except
maize but on productivity front the country is far below the world average. It is the irony of
fate, or perhaps lack of resources and agricultural extension that in spite of the large tracts of
agricultural land, the productivity remains low. Specialised institutions of higher learning
3
engaged in research and development in agriculture sector, institutions established by
cooperatives and farmers’ groups along with progressive farmers are continuously engaged
in experimentation to boost productivity and production [Table-03].
Table-03: National Imports/Exports during 1990-91 to 2005-06 [Million Rupees]
Percent of National
Agriculture Exports
Imports
2000-01
120,862
5.29
286,573
2001-02
162,567
6.63
297,287
2002-03
176,089
5.92
346,531
2003-04
219,727
6.12
372,666
2004-05
220,575
4.59
398,633
2005-06
210,256
3.33
498,029
Source: DGCI&S, Ministry of Commerce, Government of India, Kolkata
Year
Agriculture Imports
Percent of National
Exports
14.23
14.22
13.58
12.7
11.2
10.95
India’s Role in World Agriculture Trade
India is third largest economy in Asia after Japan and China as measured in terms of its
Gross Domestic Product [GDP]. India ranks as the largest trading partner accounting for
about 21% of total trade [2005] in EU’s rank [Table-04].
Table-04: India’s Position in World Agriculture in 2003
India’s Position
% Share
Rank
Next To
Total Area [M.Ha]
329
13,428
2.4
07
Russia, Canada, USA, China, Brazil, Australia
Land Area [M.Ha]
297
13,067
2.3
07
Russia, China, Canada, USA, Brazil, Australia
Arable [Mn Ha]
162
1,404
11.5
02
USA
Irrigated [Mn Ha]
55
277
20.6
01
Population [Mn]
1,050
6225
16.9
02
China
Agri Produce [MMT]
755
3,234
23.3
02
China
Total Cereals [MMT]
232
2,075
11.2
03
China, USA
Wheat [MMT]
65
556
11.7
02
China
Rice Paddy [MMT]
132
589
22.4
02
China
Coarse Grains [MMT]
35
930
3.8
04
USA, China, Brazil
Groundnut-Shells [MMT]
8
36
22.2
02
China
Rapeseed [MMT]
4
36
11.1
03
China, Canada
Vegetables [MT]
82
842
9.7
02
China
Fruits [MMT]
46
480
9.6
02
China
Potatoes [MMT]
23
311
7.4
03
China, Russia
Onion-Dry [MMT]
5
53
9.4
02
China
Sugarcane [MMT]
290
1,333
21.8
02
Brazil
Tea [MMT]
0.89
3.21
27.7
01
Coffee-Green [MMT]
0.28
7.20
3.9
06
Brazil, Vietnam, Indonesia, Colombia, Mexico
Jute [MMT]
1.98
3.23
61.3
01
Cotton Lint [MMT]
2.10
19.53
18.8
03
China, USA
Cattle [M.Heads]
226
1,371
16.5
01
Total Milk [‘000MT]
86,960 599,600
14.5
01
Eggs [Million]
2,200
60,469
3.6
04
China, USA, Japan
Total Meat [‘000MT]
6,038
253,528
2.4
06
China, USA, Brazil, Germany, France
Tractors-in-Use [‘000]
1,525
26,704
5.7
04
USA, Japan, Italy
Source: FAO Production Year Book-2003, and FAO Statistical Book-2004
Item
India
World
4
Some of the schemes relating to agricultural development programmes are as follows:
-National Food Security Mission;
-National Policy for Farmers
-Promotion of Bio-fertiliser;
-Integrated Scheme of Oilseeds, Pulses, Oil Palm and Maize;
-Promotion of Integrated Pest Management;
-Promotion of Integrated Nutrient Management;
-National Bamboo Mission;
-National Horticulture Mission;
-Micro-irrigation programme.
A majority of rural development programmes are also focused on water conservation which
help enhancing agricultural productivity.
Agricultural Extension in India
Agriculture in India is a State [Provincial] subject and therefore the responsibilities of
providing extension services lies with the State governments. However, the Union or federal
government contributes to the extension programme through its Directorate of Extension and
Centrally-Sponsored scheme on various themes. A network of soil and water testing
laboratories has been established. The illustration explains how elaborate has been the
extension activity at various administrative levels in India [Table-05].
Table-05: Agricultural Extension Activity at Different Levels in India
Location
Agriculture
Horticulture
Animal Husbandry
National
Ministry of Agriculture and Cooperation, Government of India
State
Secretary/ Commissioner- Agriculture
Director [Agriculture]
Director [Horticulture]
Director (Animal Husbandry)
Region
Joint Director/Deputy Director Joint Director/Deputy Director
Joint Director/Deputy Director
District
District Agriculture Officer
District Horticulture Officer
District A.H. Officer
Block
Subject-Matter Specialists/Sub-Divisional Officers
Village
Agriculture Extension Agent
Village Level Worker
Village Level Worker
Target
Farmers
Farmers
Farmers
Besides government-run extension programmes, all the state Agricultural Universities also
run their extension activities and have a Directorate of extension education. Almost every
district is having an ICAR-supported Krishi Vigyan Kendra [agriculture Knowledge centres],
manned by specialists in various disciplines of agriculture including Home Science.
Agricultural-input agencies and certain NGOs also run their extension programmes either
independently or in collaboration with some institutions.
India has a very strong agricultural education system in the country consisting of: one
Central Agricultural University, 31 State Agricultural Universities, 4 national institutes
[deemed universities] under the Indian Council of agricultural research.
Biotechnology is one new area that has proven itself and converted many skeptics to diehard proponents. Biotechnology is enabling farmers to grow more food, helping keep pace
with a burgeoning global population. It is also enhancing sustainability by correcting some of
the problems inherent in the earlier technologies. Biotechnology research is being conducted
on 57 crops in 63 countries to improve yield, resistance to pest and drought and nutrient
5
value. Used responsibly, biotechnology can advance India’s agriculture to address the
challenge of feeding its increasing population, with its limited economic, land and water
resources. It would not be surprising if biotechnology proves to become the most important
agricultural advancement since the first farmer put a seed in the soil, because of its
beneficial and sustainable impact on the basic elements of farming.
Hybrid seeds, tissue-cultured planting material, bio-fertilisers and Bt cotton seed varieties
are the popular biotech interventions in present-day agriculture in India.
Strategies for Sustainable Growth in Agriculture
The Indian population is expected to be 1.4 billion by 2020. Therefore, Indian agriculture has
to diversify into valuable crops, raise productivity, increase soil efficiency and enhance the
application of modern technologies including biotechnology. These include focus on potential
areas, regionally-differentiated strategies, crop diversification and the scientific management
of natural resources [Table-06].
Table-06: Area, Production and Yield of Major Crops in India [Average of 2001-02 to 2005-06]
[Area: Million Ha; Production: Million M/T; Yield:Kg/ha]
Sr No.
01
Crop
Rice
Area [M.ha]
42.85
Production [MT]
85.72
Yield [Kg/ha]
2,001
02
Wheat
26.20
69.73
2,662
03
Jowar [Sorghum]
9.24
7.22
782
04
Bajra [Pearl Millet]
9.34
8.15
872
05
Maize
7.12
13.64
1,916
06
Coarse Cereals
29.08
32.92
1,132
07
Pigeon Pea
3.46
2.38
687
08
Chickpea
6.60
5.30
803
09
Total Pulses
22.22
13.18
593
10
Total Foodgrains
120.35
201.56
1,675
11
Oilseeds [all]
24.63
22.60
918
12
Sugarcane
4.15
267.34
64,473
13
Cotton [One bale of 170kg]
8.37
13.46 [Bales]
273
14
Potato
1.31
23.56
17,950
15
Onion
0.52
6.08
11,678
Source: Ministry of Agriculture and Cooperation, Government of India
After mid-1990s, growth rate in agricultural output declined sharply. Over the last 50 years,
decline in the growth of agricultural output was not evident for such a long period as seen
after 1994-95. The challenges were due to structural weaknesses, policy and plans of
agriculture in the following context: Poor agriculture policy; Inadequate irrigation and
fertiliser; Improper power [electricity] supply to agriculture; Slowdown in diversification;
stagnant cropping intensity; and Decline in area under cultivation due to expanding
urbanization and industrialisation.
Average fertiliser use in India is still low. Per unit of fertiliser consumption has remained
static, below 100kg [N+P+K/per ha], for a large period. Besides the low consumption, the
nutrient use was also too much imbalanced. Inadequate and imbalanced application resulted
6
in soil fertility degradation, which is the major cause of stagnation of food grain production.
Large areas, almost 65%, under cultivation are under rainfed farming. This area has not
benefited with Green Revolution. Production and productivity enhancement has not been
witnessed in the rainfed areas.
New seed and enhanced fertiliser use were the major contributors to the green Revolution.
India is now prepared for second green Revolution where hybrid seed of rice and genetically
modified [GM] seed will play a major role. Water conservation has also been given
prominence.
India has now emerged as the largest producer of mango, banana, coconut, arecanut,
cashew, ginger, turmeric, black pepper, vegetables and tea. Among the new crops, kiwi,
olive, gherkins, knows and oil palm have also been successfully introduced.
In terms of value, European Union continued to be the largest market for Indian marine
products, as its share increased to 33%. China became the largest market for Indian
seafood in terms of quantity, contributing for over 33% of India’s seafood exports, relegating
the EU to the second place [24%]. Japan emerged as the 2nd largest market for Indian
marine products in terms or value [16%] and 3rd in terms of quantity [11%].
------------------------------------------------------------
7
Chapter-02
The Cooperative Movement of India
COOPERATIVE institutions of today are no more those simple credit cooperatives, which
used to source funds from the government and then pass on the same in the form low-cost
credit to the farmers. That time the intention was to protect the interests of the poor farmers
who used to obtain credit from the middlemen and remain indebted to them for longer
durations and even life-long. The harvest was the best bet for the middlemen who also used
to exploit the farmers even while negotiating the price of the produce. The cooperatives of
today are more complex, diversified and multipurpose in character. Almost half of the
580,000 cooperatives of today, spread all over the country, big or small, need credit for
production and marketing.
Stages of Cooperative Development
Since its formal introduction in 1904, the Indian Cooperative Movement has passed through
a variety of stages of development. The first and major thrust was on providing relief to the
farmers through the organisation of agricultural credit cooperatives. The main intention was
to ‘free’ the farmers from the clutches of scrupulous middlemen and moneylenders. For this
purpose the government opened up various opportunities of borrowing to these cooperatives
for onward lending to the farmers. The credit was cheap and the cooperatives performed
only one function i.e., borrowing and lending. The funds were made available by the
government through the Reserve Bank of India.
The second phase was to organise and reorganize cooperatives to also add thrift and
savings and distribution of consumer goods, mainly in view of the pressures on the market
because of the two World Wars. During this period some sort of diversification of business
and multiplicity of functions had taken place. Consumer cooperatives thrived well and did a
wonderful business by taking over the distribution of essential goods to the people. The
process generated a variety of functions within the Indian Cooperative Movement e.g.,
growth in cooperative banking structures, cooperatives also got federated at various levels,
and awareness was created among the general public about the role, functions and utility of
cooperative institutions.
With the refinement of the Principles of Cooperation and the interest taken by the
government in the usefulness and development of cooperative institutions, a process of
education of members got into motion. Since the number of cooperatives had grown and
their responsibilities also increased, much was expected from these institutions in terms of
better and efficient management. Such a development generated a great deal of activity for
the training of personnel of cooperatives. Cooperatives also had taken up the training and
education of committee members and members. The entire Human Resource Development
[Cooperative Member Education and Cooperative Employees Training] in the cooperative
sector has been placed under the charge of the National Cooperative Union of India-NCUI.
The third phase which covered post-Indian Independence era, already heralded a full-scale
programme of cooperative education, training and extension. A clear need was felt for the
education of members and general public on the role and advantages of cooperative
institutions. Cooperative also emerged in the field of agri-processing, input distribution,
sectoral diversified activities like milk, oilseed etc. The subject of Cooperation was placed
under the charge of the Ministry of Agriculture and Cooperation at the central level and
similarly at the state level.
8
Primary Agricultural Cooperatives
There are over 175,000 primary level agricultural cooperatives [Primary Agricultural Credit
Societies-PACS] which serve over 250 million individual farmers throughout the country. The
primary role of PACS is to provide farm credit, input supplies and marketing of agricultural
produce. In addition there are nearly 100,000 non-credit agricultural cooperatives which
provide marketing, processing and warehousing services.
Almost the entire credit needs are met through a network of district central cooperative
banks which borrow funds from the state cooperative banks which, in turn, borrow money
from the National Bank for Agriculture and Rural Development [NABARD], a central level
financing agency created by the Government of India in place of the Reserve Bank of India’s
Agricultural Credit Division.
Short-Term [ST] and Medium-Term [MT] credit needs are met by State Cooperative Banks
and District Central Cooperative Banks, while the Long-Term Credit [LT] needs [investment
credit] are met by State Cooperative Agriculture and Rural Development Banks and their
district level branches [Fig-01].
Fig-01: Flow of Funds to Cooperatives and their Members
GOVERNMENT OF INDIA/RESERVE BANK OF INDIA
NATIONAL BANK FOR AGRICULTURE AND RURAL DEVELOPMENT
[NABARD] [Central Financing Agency for Agriculture,
Agricultural Cooperatives and Rural Development]
State Cooperative Banks [ST & MT Credit], State Cooperative Agriculture
and Rural Development Banks [Long-Term Credit-Investment]
District Central Cooperative Banks [ST & MT Credit] and
District Cooperative Agriculture & Rural development Banks [LT Credit]
Primary Level Cooperatives [for ST, MT and LT Credit]
Members of Primary Cooperatives
The sectoral federations e.g., district cooperative marketing federations, state level
marketing federations and the NAFED provide financial, business and promotional
assistance to the entire agricultural cooperative structure. The single-purpose cooperatives
like the milk federations/unions, oilseed federations etc. make necessary production plans
and make use of the primary agricultural cooperatives in production and procurement.
In order to ensure viability of national food stock, primary level cooperatives and their
federations procure foodgrains from the producer-farmers on behalf of the Central
Government.
There is no specific system of business development planning and production planning at
the primary level – this is generally looked after by the respective federations/business
9
unions. The federations are generally responsible for enhancing production and productivity
through various means e.g., input supply, extension and financial assistance to primary level
cooperatives.
Progress of Cooperatives at a Glance
Indian Cooperative Movement was basically organized against the exploitation of
unscrupulous money-lenders to exonerate the farming community from the web of poverty
and indebtedness. The Government took lot of measures to improve the conditions of the
farming sector and as such promoted Cooperative Credit Societies in the light of Raiffeisen
model credit societies on the basis of recommendation of Sir Fredrick Nicholson 1889. Now
cooperatives and formal legal entities under a statute have been in existence for a hundred
years.
Hundred Years of Cooperative Movement
-Emerging Issues and Challenges
Today Cooperative Movement in India is one of the largest movements in the world. Initially
started with a limited spectrum of activities or dispensation of rural credit has now entered in
all fields of economic activity with social content. The Movement has covered 100 per cent
villages and 75 per cent rural households and functioning over 580.000 cooperatives of
various levels with membership coverage of 400 million and working capital of Rs 6,000,555
million inclusive of credit and non-credit. It has been playing a significant role in disbursing
agricultural credit, distribution of agricultural inputs, providing market support, processing,
etc.
Emerging Issues
Over the last one hundred years [1904-2004] Cooperatives have made substantial
contribution to the country, particularly to the rural poor. Notwithstanding their achievements
and phenomenal growth, Cooperatives are beset with several issues and confront with
challenges in the era of economic reforms which is described as under.
[i]
WTO & Cooperatives: In the new millennium, a serious challenge which will be faced
by Cooperatives relates to WTO Agreement on Agriculture. Cooperatives are closely
attached with agriculture and agro-based activities in the rural areas. Concern is being
expressed by members of cooperative fraternity that the implementation of various
provisions of Agreement on Agriculture will seriously affect the farming community in terms
of their income levels, levels of living and quality of life. This aspect is particularly important
as 70% of population is dependent on agriculture and agro-based activities. Whereas only
4% of population is dependent on agriculture and allied activities in case of developed
countries.
Further, it has to be ensured that food security in terms of providing minimum food for
various sections of Indian population does not get adversely affected by the WTO
Agreement on Agriculture and hence there is the need for providing a separate "Food
Security Box" under WTO provisions with emphasis on encouraging on food production and
per hectare productivity of various crops. Various segments of Cooperative Movement
should be encouraged for improving their operational efficiency and for promoting cost
effectiveness and quality standards to face the daunting challenges of competitive culture.
10
[ii]
Participation of Women in Cooperatives: The need for greater participation of women
in cooperatives especially in areas where they have a natural advantage is accepted by all.
Under the system of adult franchise prevailing in India, women have equal opportunities for
voting and electing their representatives in Central and State Legislatures as also in local
bodies and panchayats. Central and State Governments are also extending various
concessions for promoting education among girls and women. However, despite these
favourable developments a majority of women are still illiterate and do not have access to
various resources including credit from banking channels.
For the uplift of women the Self-Help Group [SHGs] is in the tune with cooperatives. Their
conversion to cooperative form of organisation will go a long way in empowering women in
view of the vibrant democratic structure of the cooperatives. Micro-finance through SHGs by
involving more and more women will be important task in the 21st century.
[iii]
Professionalisation of Cooperatives: Cooperatives have gradually lost their
democratic character and have become the government-controlled bureaucratic
organizations. The cooperative societies must evolve as independent self-reliant,
autonomous and member-driven institutions besides professionalisation, human resource
development [HRD] business diversification recovery management fund mechanism and
setting up of a cooperative rehabilitation and development fund. New systems are installed
to check on government’s excessive control and regulation.
Central Government along with State governments has taken initiative to strengthen
infrastructure facilities and to develop professional skills in the cooperatives. The cooperative
education and training programmes are being implemented by National Cooperative Union
of India [NCUI] and National Council for Cooperative Training [NCCT] and Junior Level
Cooperative Training Centres. But still there is a need for professionalisation. The
cooperatives professional may have to redefine their roles in the light of the emerging
knowledge society. Information Technology [IT] has assumed such high importance that
Institutes of Cooperative Management [ICMs] should now turn their focus on I-Business, ECommerce, E-Governance etc. To enable them to acquire competitive ability in terms of
quality, cost, timeliness, availability, service and support, total quality management [TQM]
are the specific areas that would improve cooperatives in the near future.
[iv]
Cooperative Law Reforms: Since Cooperation is a State subject, the Central
Government does not issue directives to the States – it only can provide guidelines. The
state cooperative laws also contain articles which guide the cooperatives to frame their own
byelaws. The Registrar of Cooperative Societies issues ‘model byelaws’ to the cooperatives
which are adopted by the members at their first general body meeting. In many cases the
State laws were too hard on cooperatives and complicated for the members. There was thus
the need to reform these laws to conform to the model law of the central government. The
model Cooperative Societies Act 1991 provides scope to enable cooperators to develop selfreliant cooperatives with much autonomy and participation in democratic management. The
current Multi-state Cooperative Societies Act-2002 is quite liberal and serves as a model for
other States to make cooperatives more independent and free from government controls.
Accordingly parallel State Cooperative Law/Self-Reliant Cooperatives was first enacted in
Andhra Pradesh in the year 1995 followed by Madhya Pradesh, Chhattisgarh, Karnataka,
Orissa, Bihar, Jharkhand, J&K and Uttarakhand. The attempt is a reflection of reforms in the
cooperative sector sweeping across the world. Self-Reliant Cooperatives [SRC] seeks to
restore to all those cooperatives not dependent on the government equity, and share. Thus it
11
is an timely attempt to make the cooperatives more a member driven for which all possible
care may be taken to materialize the goal of the cooperative law reforms.
Another landmark in reforms in cooperative law is the amendment of Multi-State Cooperative
Societies Act 2002 the fifth Central Legislation on Cooperatives enacted in the 51st year of
Republic of India and aimed at removing the restrictive provisions of Multi-State Cooperative
Societies Act [MSCS] 1984. The Government's power to give directions and supersession of
Board has been restricted to such societies in which the Government holds 51% or more.
The societies will be free to raise resources by receiving deposits, raising loans and grants.
The federal cooperatives would have more responsibilities and the disputes would be settled
through arbitration at the choice of the society.
PACS at the primary level are independent, autonomous and democratic institutions. Their
main current businesses include: Input supplies [e.g., fertiliser and seed], marketing of
members’ products [assistance in the procurement of food grain for the national foodstock as
well as for the open market], and thrift and credit. Nearly 80-82% primary agricultural
cooperatives remain engaged in the distribution of fertiliser and procurement of Foodgrains
for the national food stock. Some major [multifunctional] primary cooperatives, especially in
Punjab, Haryana, Gujarat and Maharashtra, also offer farm extension services including
custom hiring of farm machines and warehousing.
Their organisational structure consists of the following organs: Members General Body
which elects a Managing Committee/Board of Directors answerable to the GB; The GB also
appoints an audit committee which is answerable only to the GB [not to the MC/BOD]. The
Managing Committee appoints a General Manager and other functional managers. The term
of office MC is generally three years. Depending on the range and quantum of business
operations, the MC can appoint more managers for various business departments. The audit
of the cooperative is generally done by the Cooperative Department. However, depending
on the size of business, audit can be done by chartered accountants from a panel prepared
by the Department.
[v]
National Policy in Cooperatives: Internal and structural weaknesses of cooperatives,
wide regional imbalances combined with lack of proper policy support had neutralized their
positive impact. This had necessitated the need for a clear-cut National Policy on
Cooperatives. Under this policy, cooperatives would be provided necessary support,
encouragement and assistance so as to ensure that they work as autonomous, self-reliant
and democratically managed institutions accountable to their members and make a
significant contribution to the national economy. The salient features of the Policy are:
While upholding the values and Principles of Cooperation, the National Policy
recognizes the cooperatives as autonomous association of persons, united voluntarily to
meet their common economic, social and cultural needs and aspirations through a jointlyowned and democratically-controlled enterprise;
Upholds the preservation of the distinct identity of cooperatives, its values and
principles by providing an appropriate environment and taking the required administrative
and legislative measures;
Recognizes cooperatives as a distinct economic sector and integral component of
the socio-economic system of the country and an effective and potential instrument of
socioeconomic development.
12
Accepts the need to phase out its shareholdings/equity participation in cooperatives.
The cooperative shall be enabled to set up holding companies/subsidiaries, enter into
strategic partnership, venture into futuristic areas like insurance, food processing and
information technology etc., and shall be independent to take the financial decisions in the
interest of the members and the furtherance of their stand.
Recognizes the role of the Government in ensuring that the benefits of liberalization
and globalisation in the emerging special provision in the Cooperative Societies Act with
regard to banking, housing, real estate development, processing, manufacturers
cooperatives, infrastructure development etc.;
Undertakes to devise and execute suitable programmes and schemes to build and
develop cooperative institutions in the cooperatively under developed states/regions with
particular reference to the North-Eastern States including Sikkim;
Recognizes the support of Cooperative Movement to develop human resources,
cooperative education and training, appropriate technologies and infrastructural facilities so
as to promote professional management in cooperatives.
Undertakes to initiate structural reforms in order to improve the functioning of the
cooperatives at various levels to ensure greater efficiency and viability.
Table-07 contains some key statistics relating to agriculture and cooperative development in
the country.
--------------------------------------------------------------------------
13
Table-07: Status/Share of Cooperatives in Indian Economy - Some General Statistics [2006]
S.No
Cooperative Sector
Status/Percentage
01
Formal Introduction of Cooperative Movement in India
1904
02
Total Number of Villages
720,642
03
Total Number of Households
191,963,000
04
Number of Cooperatives [all types, all levels]
583,580
05
Total Number of Members [all types]
440 million
06
Primary Agricultural & Credit Cooperatives
176,470
07
Primary Non-Credit Cooperatives [all types]
401,000
08
Villages Covered by Cooperatives
100%
09
Households Covered by Cooperatives
71%
10
Number of National Level Cooperative Federations
21
11
Number of State Level Cooperative Federations
367
12
Number of District level Cooperative Federations
2,890
13
Agricultural Credit Disbursed by Cooperatives
42.8%
14
Fertiliser Disbursed [6.049 Million Tonnes]
36.17%
15
Fertiliser Production [3.509.9 MT N&P] Nutrient
25.0%
16
Sugar Produced [10.164 Million M/Tonnes]
50.5%
17
Capacity Utilisation of Sugar Mills
99.8%
18
Wheat Procurement [6.926 Million M/Tonnes]
33.5%
19
Cattlefeed Production/Supply
50%
20
Retail Fairprice Shops [Rural+Urban]
20.3%
21
Milk Procurement to Total Production {World’s largest producer of milk]
7.44%
22
Milk Procurement to Marketable Surplus
10.5%
23
Ice Cream Manufacture
45%
24
Edible Oil Marketed [branded]
50.0%
25
Spindleage in Cooperatives [3.474 million]
9.7%
26
Handlooms in Cooperatives
54.0%
27
Fishermen in Cooperatives [active]
21.0%
28
Storage Facility [village level PACS]
64.5%
29
Rubber Procured and Marketed
18.5%
30
Arecanut Processed and Marketed
15%
31
Direct Employment Generated
1.15 million
32
Self-Employment Generated for Persons
14.79 million
33
Salt Manufactured [18,266 M Metric Tonnes]
7.6%
34
Number of Dairy Cooperatives
104,410
35
Membership of Dairy Cooperatives
13.07 million
36
Number of District Cooperative Unions
264
37
Number of State Cooperative Unions
27
38
Number of National Institute of Cooperative Management [VMNICM-Pune]
1
39
Number of Regional Institutes of Cooperative Management
5
40
Number of Institutes of Cooperative Management
14
41
Number of Junior Cooperative Training Centres
90
Source: Indian Cooperative Movement - A Profile 2006. Published by National Cooperative Union of India, New
Delhi. 11th Edition. December 2006
14
Chapter-03
Role of Government in the Development of Agriculture
and Agricultural Cooperatives
The first formal cooperative legislation enacted by the British India Government was the
Credit Cooperative Societies Law of 1904. Since then, in view of the economic upheavals
witnessed during and after the two world Wars, new laws continued to be enacted to
manage a large variety of cooperative institutions. After India’s Independence in 1947, taking
into account the needs of agriculture and other aspects, different cooperative sectors were
placed under the charge of different ministries, but generally, all cooperative institutions
remained under the charge of Ministries of Agriculture and Cooperation at the central and
state levels.
At the central level, the Ministry of Agriculture and Cooperation [MOAC], Government of
India, frames policies for the development of agriculture and agricultural cooperatives and
issues directives and guidelines to the State governments to implement them. Agriculture
and Cooperation are the State subjects in India and hence all development plans are
prepared and implemented by the State governments. The Central government prepares
budget and implements plans for the development of agriculture and cooperatives in
collaboration with the State governments.
The Central Government registers Multi-State Cooperatives [cooperatives whose area of
operation extends to more than one State].
Large cooperatives like the IFFCO are operating under dual control e.g., as a cooperative,
under the charge of the Ministry of Agriculture and Cooperation, and as a fertiliser producing
company, under the charge of the Ministry of Chemicals and Fertilisers. Same is the case
with housing cooperatives.
In order to ensure proper supply of inputs e.g., fertiliser, and to enhance agricultural
production and productivity the government provides subsidies. The government provides
subsidies in sectors like: concessional rate of interest to farmers for agricultural credit,
reduced rate of power and water supply. The subsidies are intended to maintain a
comfortable national food stock and to encourage marketing of agricultural produce.
Development of agricultural cooperatives is considered as crucial by the government for not
only enhancing agricultural production and productivity but also to provide relief [in the form
of credit, marketing and input supply] to the farmers. A large number of development and
relief programmes of the government are channelled through agricultural cooperatives.
-----------------------------------------------------------------------
15
Chapter-04
National Cooperative Union of India [NCUI]
3 Siri Institutional Area, Khelgaon Marg, New Delhi 110016
The National Cooperative Union of India [NCUI], the apex organisation of the Indian
Cooperative Movement, traced back its origin in 1929 when All-India Provincial Cooperative
Institutes Association came into being which was renamed later as All-India Cooperative
Union in 1954 and re-christened as National Cooperative Union of India in 1961.
The NCUI is a confederation of cooperatives not only of agricultural cooperatives but also of
all other forms of cooperatives, and therefore its membership is open to national level, state
level sectoral cooperative organisations as well as multi-state cooperative societies. The
membership is also open to the parastatal cooperative organisations. The membership of
the union as on 1st November 2007 stands as 193. [National federations-17, Multi-State
Cooperatives-35, State Cooperative Unions-30, State Cooperative Banks-18, State
Cooperative Agriculture and Rural Development Banks-14, Marketing Federations-15, etc.]
The counterpart ministry of the NCUI is the Ministry of Agriculture and Cooperation.
The objectives of NCUI are: To Promote and develop the cooperative movement; To
educate, guide and assist the people in their efforts to build up and expand the cooperative
sector; To serve as an exponent of cooperative opinion in accordance with Cooperative
Principles. Its functions are: Promotion of Cooperative Movement; Conduct of education,
training and research programmes; Conduct of and participation in national and international
cooperative conferences and seminars; Maintaining documentation services and conducting
publicity drives etc.
Management of NCUI
The General Body of the NCUI consists of delegates of member-societies [affiliates]. It elects
the Governing Council of 21 members including President, Vice-Presidents, and other
members. It appoints a Chief Executive to manage the affairs of the Union under the Act,
Rules, and byelaws and as per directions of authorities [Figure-02].
Fig-02: Organisational Structure of the Indian Cooperative Movement
NATIONAL COOPERATIVE UNION OF INDIA-NCUI
National Level [Multi-State] Cooperatives [Business]
National Cooperative Federations [Business]
State Cooperative
Unions [Promotional]
State Level Cooperatives [incl Banks] [Business]
State Cooperative Federations [Business]
District Cooperative
Unions [Promotional]
District Level Cooperatives [incl Banks] [Business]
District Cooperative Federations [Business]
Primary Level Cooperatives [All types] [Av Membership 1,500]
[Basic Units of Indian Cooperative Movement]
16
Human Resource Development
One of the important functions of NCUI is to develop a strong human resource base in the
cooperative sector. Visualising the importance of the HRD the NCUI has been actively
involved in providing the cooperative education to members, potential members and leaders
through the following programmes: National Council for Cooperative Training [NCCT];
National Center for Cooperative Education [NCCE]; Cooperative Education Field Projects;
General Member Education Programme; and Cooperative Education and Development
Programme for Women.
The NCUI’s promotional functions are shown in the following illustration [Figure-03]:
Fig-03: Key Activities of the National Cooperative Union of India
NATIONAL COOPERATIVE UNION OF INDIA
EDUCATIONAL
SERVICES
TRAINING
SERVICES
PROMOTIONAL AND
CONSULTANCY SERVICES
National Centre for
Cooperative
Education [NCCE]
National Council for
Cooperative Training
[NCCT]
Sectoral advisory services
rendered directly and through its
constituents
Member Education
Operated through
State and
District
Cooperative
Unions
Operates One National and
20 Institutes of Cooperative
Management [ICMs]
Maintains: Representation and
Participation in National and
International Organisations
Manages Junior Training
Centres
Policy dialogues with Governments
Through its extensive cooperative employees’ training network, the National Council for
Cooperative Training [NCCT] of the National Cooperative Union of India [NCUI] offers a wide
spectrum of training programmes aimed at strengthening cooperatives through management
courses. A number of institutes of cooperative management and other cooperative training
centres offer not only the diploma and certificate programmes but also MBA programmes
which are patronized by a large number of students and cooperative employees. At the
national level there is a national institute of cooperative management [Vaikunth Mehta
National Institute of Cooperative Management – VAMNICOM, located at Pune] and at the
regional and state levels there are institutes of cooperative management. Over 107 junior
level training institutes operate under the patronage of state and district cooperative unions.
In addition, several national cooperative federations and multi-state cooperatives also offer
various in-service management training programmes for the employees.
The figure below [Figure-04] contains information on the framework of cooperative education
and training in India. The NCCT/NCUI accepts trainees from abroad for its various training
programmes. Annexure-I gives information on the cooperative training institutions in India
[and in some other countries] and the programmes offered by them.
17
The network of cooperative member education and employees’ training operating under the
NCCT/NCUI is considered as the most extensive and largest in the world.
Fig-04: Existing Network for Training and Education in Cooperative Sector in India
NATIONAL
LEVEL
Main organisation with key mandate
for Training & Education in Cooperatives
NATIONAL COOPERATIVE UNION OF INDIANCUI
National Council for
Cooperative TrainingNCCT/NCUI
National Centre for
Cooperative
EducationNCCE/NCUI
VAMNICOM,
Pune [01]
STATE
LEVEL
RICMs/ICMs
[20]
State Coop Union
GRASSROOTS
LEVEL
JTCs [107]
Dist Coop Union
Cooperative
Inspector
[A]
Other Organisations:
-TOPIC-NCDC;
-NICM, Ahmedabad
-IRMA, Anand
-BIRD-NABARD
-NIRD, Hyderabad
[B]
In-House Training
Facilities of national and
state level Cooperative
organisations
[C]
ACSTIs and other State
Level Cooperative
Institutes
VAMNICOM-Vaikunth Mehta National Institute of Cooperative Management, Pune
RICM-Regional Institute of Cooperative Management; ICM-Institute of Cooperative Management
JTC-Junior Cooperative Training Centre; ACSTI-Agricultural Cooperative Staff Training Institute
-----------------------------------------------------------------------
18
ANNEXURE-I
HUMAN RESOURCE DEVELOPMENT IN COOPERATIVES
List of Institutions offering Programmes on Cooperatives and Rural Development
Country
INDIA
Institution
National Council for Coop Training [NCUI]
VM National Institute of Cooperative Management
[VAMNICOM], Pune
Regional Institute of Cooperative Management,
Bangalore
Regional Institute of Cooperative Management,
Chandigarh
Netaji Subhash Regional Institute of Cooperative
Management, Kalyani
DNS Regional Institute of Cooperative
Management, Patna
Udaybhanshinhji Regional Institute of Cooperative
Management, Gandhinagar
Indira Gandhi Regional Institute of Cooperative
Management, Lucknow
Institute of Cooperative Management, Bhopal
Madhusudan Institute of Cooperative
Management, Bhubneshwar
Natesan Institute of Cooperative Management,
Chennai
Institute of Cooperative Management, Dehradun
Institute of Cooperative Management, Guwahati
Institute of Cooperative Management, Hyderabad
Institute of Cooperative Management, Imphal
Institute of Cooperative Management, Jaipur
Institute of Cooperative Management, Kannur
Institute of Cooperative Management, Madurai
DR Gadgil Institute of Cooperative Management,
Nagpur
VV Patil Institute of Cooperative Management,
Pune
Institute of Cooperative Management,
Thiruvananthapuram
National Centre for Cooperative Education,
New Delhi
Junior Cooperative Training Centres [107 units run
by State Cooperative Unions with guidance
provided by NCCT-NCUI]
NCDC-TOPIC, Gurgaon
Agricultural Cooperative Staff Training Institutes
ACSTI [Several of them located in different parts of
the country – Established under NCDC World Bank
Programme]
Institute of Rural Management, Anand [IRMA]
Punjab Coop Training Institute, Chandigarh
[Punjab Govt institution]
19
Remarks
Overall Coop Trg organisation
Diploma courses and MBA
Programmes in Coops
-do-do-do-do-do-doDiploma/Certificate Courses
-do-do-do-do-do-do-do-do-do-do-do-doMember Education Trainers’ Training
Certificate courses and leaders’
training programmes
Employees’ and Leaders’ Training
Cooperative Banks’ employees
Training
MBA in Coops and Rural Development
Farm/Coop training programmes
IFFCO’s FMDI, Gurgaon
THAILAND
In-house training programmes for
agricultural cooperatives
Leaders’ training programmes
Training of farmers
Leaders’ training programmes
Bank officers’ training, rural
development, micro-credit programmes
-doInternational/national
Certificate/Diploma courses
Training programmes for
national/international participants
Training programmes for national and
international participants
International/national coop training and
diploma courses
Govt Institution. Offers
international/national certificate
courses
Employees’/staff training institution
PHILIPPINES
Employees’ and leaders’ training
programmes
Employees’/leaders’ training
programmes [SHG and Micro-Credit
programmes also included]
Certificate courses, leaders’ training
programmes
Diploma/Degree Programmes
IFFCO’s Farmers’ Training Institute, Phulpur
IFFCO’s CORDET at Kalol
Asian Institute of Rural Development, Bangalore
NABARD’s BIRD, Lucknow
UK
BRITISH
COLUMBIA
CANADA
MALAYSIA
SRI LANKA
RBI’s Staff Training College, Pune
Cooperative College-UK
Manchester
British Columbia Institute for Cooperative studies,
University of Victoria
Centre for the Study of Cooperatives, University of
Saskatchewan, Saskatoon. Canada
Cooperative College of Malaysia, Petaling Jaya
Institute of Cooperative Business Management
[former School of Cooperation], Polgolla
CPD’s Cooperative Training and Development
Centre, Bangkok
NEPAL
Centre for Cooperative Training and Development,
Baneshwar, Katmandu
BANGLADESH Cooperative Academy for Rural Development,
Comilla
Cooperative College of Bangladesh, Comilla
ISRAEL
JAPAN
University of the Philippines-Agricultural Credit and
Cooperatives Institute, LB
Histradut’s Kibuz Cooperative Institute
IDACA-Institute for the Development of Agricultural
Cooperatives in Asia, Tokyo
Consumer Cooperative Institute, Tokyo/Kobe
[Japanese Consumers Cooperative Union]
INDONESIA
USA
KOREA
IKOPIN/Cooperative Academy, Bandung
LAPENKOP-Institute of Cooperative Management
of DEKOPIN, Bandung
Wisconsin University Cooperative Centre,
Wisconsin
North American Institute of Cooperative StudiesNASCO, Chicago
Agricultural Cooperative College, Kyongg-do.
[National Agricultural Cooperative Federation]
20
Agri Coops [Kibuz] focused
programmes. International/National
Certificate courses
JA-Zenchu’s international training arms
– Participants come from all over the
world under Govt programmes. No
specific certificate courses
Cooperative leaders training
programmes [also includes salesmen
training etc.]
Cooperative University
Cooperative leaders’ training [also rural
development and SHG programmes]
University Degree programmes in
cooperatives, rural development and
community management
Cooperative training programmes for
national and international participants
Formal degree and certificate
programmes
MYANMAR
PAKISTAN
VIETNAM
Central Cooperative College, Paunggyi, Hlegu
[Cooperative Department institution]
National Centre for Cooperative Training,
Islamabad
Central Institute of Economic Management, Hanoi
[Vietnam Cooperative Alliance institution]
Certificate programmes/leaders training
courses
Certificate course and leaders’ training
programmes
Employees’ training, leadership training
--------------------------------------------------------------------------------
21
Chapter-05
National Agricultural Cooperative Marketing
Federation of India Limited [NAFED]
NAFED House, 1 Siddhartha Enclave, Ring Road, New Delhi 110014
The National Agricultural Cooperative Marketing Federation of India Ltd. [NAFED-India], was
established on 2nd October 1958. It is an apex cooperative marketing body playing a key
role in the Cooperative Movement. NAFED has a unique place in the agriculture sector of
India being a ‘farmer-friendly’ organization dealing in a wide range of agricultural
commodities like Foodgrains, Pulses, Oilseeds, Spices, Horticultural produce, Cotton, Tea,
Jute & Jute goods, Poultry products, Chemical & Bio-fertilisers.
NAFED functions through its Headquarters at New Delhi and four Regional Offices located
at Delhi, Chennai, Calcutta and Mumbai, which are supported by 24 Branch Offices, 8 SubOffices and 18 Industrial Units/Agro-Service Centres/Godowns/Shops spread all over India.
The management of NAFED vests in the Board of Directors, which includes Chairman and
Managing Director. The Board is supported by two standing committees - Executive
Committee and Business Committee. In addition, the Board can also constitute two more
committees/sub-committees as per the provision of the MSCS Act/Rules and Bye-laws of
NAFED.
Membership of NAFED comprises of state level marketing federations, apex level marketing
federations, state level tribal and commodity federations, Primary marketing/processing
societies, National level cooperative organizations and Government of India. The current
total number of members is 832. The membership of NAFED increased from 824 to 832
during the year 2007-2008. The composition of the membership is as follows: State Level
Marketing Federations-25, Apex Level Marketing Federations-03, State Level Tribal and
Commodity Federations-24, Primary Marketing/ Processing Societies-777, Government of
India-01, NCCF & Other National level cooperative organisations-02.
NAFED achieved a turnover of Rs 14,121.04 million in 2003-04 and export was to the extent
of Rs 56,15.4 million. Rice, wheat, groundnut and maize were the major commodities
exported, besides some quantities of onion, garlic, sugar, rubber etc. The Government of
India provides support to farmers through the mechanism of Price Support Scheme [PSS] to
sustain and improve the production of food grain, oilseeds and pulses. As Central Nodal
Agency, NAFED procured various other commodities, such as Urd, Gram, Green gram
[moong], Copra and Potato. Bumper production of perishable crops of times, leads to
sudden crash in the prices. Government of India, on the request of the concerned state
government, allows NAFED purchase of such commodities [not covered under PSS].
NAFED also procures jute and poultry products.
To uplift the socio–economic condition of the farmers in North-Eastern Region, NAFED has
been continuously extending its marketing support to NE States by handling products like
tea and arjun flower. Similarly, NAFED is providing support to the tribal, particularly Niger
seed growers in the states of Orissa, Madhya Pradesh, Karnataka and Bihar. NAFED also
involved itself in distribution of fertilisers in the states of Bihar, U.P., Assam, Punjab,
Uttarakhand and Tamil Nadu. As part of diversification, NAFED has also taken up seed
business. Consumer marketing has been identified as one of the focal areas of expansion.
22
Voluminous supplies of NAFED brand of edible oil, basmati rice, tea, spices etc. were made
in various states and through its various retail outlets.
NAFED has created infrastructure for warehousing, grading and packing of important
agricultural commodities. NAFED has also setup various industrial units for production of
agricultural inputs. Production of bio-fertilisers has been undertaken from its Indore [M.P.]
and Bharatpur [Rajasthan] plants. Processing and cold-storage facilities have also been
provided by the organization.
NAFED launched a scheme to provide advance to farmers against stock stored in
NAFED/Societies godowns. The underlying idea of the scheme is to provide funds to the
farmers to meet their immediate needs and, at the same time, give them an option to
arrange sale of their produce at the most opportune time instead of selling it in a hurry at
whatever price available. Framers can avail of advance facility up to 80% against the total
value of stock.
--------------------------------------------------------------------
23
Chapter-06
Tribal Cooperative Marketing Development
Federation of India Limited [TRIFED]
NCUI Complex, 3 Siri Institutional Area, Khelgaon Marg, New Delhi 110016
The Tribal Cooperative Marketing Development Federation of India Limited [TRIFED] is a
National Cooperative Society having its headquarter in New Delhi and 14 offices all over
India. TRIFED was established in 1987 under the aegis of the then Ministry of Welfare, Govt.
of India. Presently TRIFED is functioning under the administrative control of Ministry of
Tribal Affairs, Govt. of India because a separate Ministry has been created for Tribal affairs
exclusively.
The main object of TRIFED is marketing development of tribal products. The basic role of
TRIFED as a National Federal Cooperative is that of a “Service Provider/Market Developer”.
TRIFED renders the requisite services as provided in the Byelaws and as laid down in MultiState Cooperative Societies Act, 2002 to its member-cooperatives in marketing development
of tribal products.
As a service provider for its member-cooperatives TRIFED undertakes activities like
research & development, training programmes imparted to tribals, value-addition of existing
tribal products for developing better market potential of such products, organising fairs and
exhibitions, exploring new markets, national and international, for tribal products besides
providing marketing intelligence/information to its members etc.
The main object of TRIFED is to serve the interests of its members in more than one State
for the social and economic betterment of its members by conducting its affairs in
professional, democratic and autonomous manner through self-help and mutual cooperation
for undertaking marketing development of the tribal products. The ultimate objective of
TRIFED is socio-economic development of tribal people in the country by way of marketing
development of the tribal products on which the lives of tribals depends heavily as they
spend most of their time and derive major portion of their income from collection/cultivation
of Non-timber Forest Produce [NTFP].
As a cooperative, TRIFED’s primary objective is to serve the interest of its members.
Therefore in order to serve their interest in the field of marketing development of tribal
products, some of the services which TRIFED offers are as follows: Appointment of
Architects or consultants for Interior works; Marketing Facilitation; Market Development;
Direct Market Intervention or Market Making; Direct Intervention for Development; Craft
Market Development; TRIFED Quality Control Research and Development Centre; Fair
Trade Development & Regulation.
---------------------------------------------------------------
24
Chapter-07
National Federation of State Cooperative
Banks Ltd [NAFSCOB]
JK Chambers, Fifth floor, Plot No. 76, Sector-17
Vashi, Navi Mumbai 400703 Maharashtra
The Cooperative banks in India started functioning almost 100 years ago. The cooperative
bank is an important constituent of the Indian Financial System. The cooperative banks in
India play an important role even today in rural financing. Cooperative banks in India are
registered under the Cooperative Societies Act. The cooperative bank is also regulated by
the Reserve Bank of India-RBI. They are governed by the Banking Regulations Act 1949
and Banking Laws [Cooperative Societies] Act, 1965. The National Federation of State
Cooperative Banks Ltd. [NAFSCOB], was established on 19th May 1964 with a view to
facilitate the operations of State and Central Cooperative Banks in general and development
of cooperative credit in particular. Cooperative banks have no direct links with private banks.
The spread of cooperative financing institutions and other commercial banks engaged in
rural credit is explained in the illustration below [Figure-05]:
Fig-05: Institutional Arrangement for Agriculture and Rural Credit-India
RESERVE BANK OF INDIA/GOVERNMENT OF INDIA
National Bank for Agriculture and Rural Development
[NABARD]
COOPERATIVE BANKS
State Coop Banks [30]
Dist Central Coop Banks [368]
[Branches 12,858]
PACS [180,000]
SCARD Banks [19]
[Branches 778]
Primary Agr RD Banks [772]
[Branches 1048]
COMMERCIAL BANKS
Commercial Banks [299]
Metro Branches [8,625]
Urban Branches [10,540]
Semi Ur Branches [14,686]
Rural Branches [32,423]
TOTAL OUTLETS [125,605]
REGIONAL RURAL BANKS
Regional Rural Banks [196]
Metro Branches [6]
Urban Branches [348]
Semi-Urban Branches [1,875]
Rural Branches [12,080]
TOTAL OUTLETS [81,078]
The specific objectives of NAFSCOB are: To provide a common forum to the member-banks
to examine the problems of cooperative credit, banking and allied matters and evolve
suitable strategies to deal with them; Promote and protect the interests of the member banks
in all spheres of their activities and to give expression to the views of the member banks; Coordinate and liaison with Government of India, Reserve Bank of India respective State
Governments, NABARD and other higher financing institutions for the development of
cooperative credit on behalf of the member-banks; Provide research and consultancy inputs
to the member-banks in order to facilitate them to strengthen their own organizations;
Organise conferences/ seminars/workshops/meeting to share the views of common interest
with a view to contribute for better policy decisions.
25
The Federation functions with three of its wings, viz., Planning Research and Development
[PRD]; All-India Mutual Agreement Scheme [AIMAS]; Computer Service Division.
There are more than 180,000 Primary Agricultural Credit Societies [PACS], almost 35% of
the total cooperative institutions in the country. The average primary membership per each
PACS is about 1500 individual farmers. The input and output needs and services of the
members are met by these PACS. The greatest need of the farmers is input supply and
marketing of agricultural produce. In both the cases, money supply is an important factor.
Major credit needs are met by the cooperative banking structure. The State Cooperative
Banks serve the primary members through their affiliates, the district central cooperative
banks. The credit linkage of the primary membership is the PACSs which are linked with the
district central cooperative banks.
In the rural credit sector the cooperative and rural credit system in India is world's largest
and most wide-spread. While the Short-Term credit needs are met by the State Cooperative
Banks, the Long-Term credit needs are covered by the agricultural cooperative and rural
development banking system. Regional Rural Banks and some of the commercial banks
also meet credit needs of the farmers and others. The cooperative credit structure is a threetier structure.
The Short-Term cooperative credit sector has a workforce of 514.000; 15,000 at the state
cooperative banks level, 109,000 at the district central cooperative bank level and 390,000 at
the primary cooperative level.
Features of Cooperative Credit System: Providing credit to farmers is the most critical factor
in ensuring a sustained agricultural production. The system was introduced right at the time
of the inception of Cooperative Movement in India in 1904 with the objective of freeing the
farmers from the clutches of middlemen.
Functions of Coop Credit Institutions: Some of the functions of cooperative banks engaged
in the delivery of Short-term credit are given below:
[a]
Primary Agricultural Credit Societies: Assessment of credit needs; Disbursement of
credit to members; Recovery of credit; Promotion of economic interests of members.
[b]
District Central Cooperative Banks: Serve as balancing centre among district level
financing institutions; Organise credit to primary cooperatives; Carry out banking business;
Sanction, monitor and control implementation of policies.
[c]
State Cooperative Banks: Serve as balancing centre among state level financing
institutions; Organise credit for creditworthy farmers/cooperatives; Carry out banking
business; Serve as leaders of cooperatives at state level.
[d]
National Federation of State Cooperative Banks: Provides common platform to
member-banks; Promotes and protects interests of member-banks; Coordinates and liaison
with government, RBI, NABARD and others; Provides research, consultancy and advisory
services.
---------------------------------------------------------------------
26
Chapter-08
National Cooperative Agriculture and Rural
Development Banks’ Federation Limited
701, A-Wing, BSEL Tech Park, Vashi,
Navi Mumbai 400703. Maharashtra
Rural cooperative credit system in India has two streams – Short-term credit and Long-term
credit. The LT structure had its beginning in the early 1920s with the establishment of Land
Mortgage Banks to provide long-term loans to farmers to redeem their prior debts. The first
such bank was established in 1920 in Punjab followed by other provinces. These were
subsequently reorganized to be termed as agriculture and rural development banks [ARDBs]
and their operations were diversified to include investment credit for agriculture.
They played a very important role in improving the productivity of land especially through
development of minor irrigation and facilitating farm mechanization in the ‘60s and ‘70s.
They started financing rural non-farm sector projects during ‘80s and ‘90s which helped rural
families to increase their income through value-addition.
At the primary level there are primary cooperative agriculture and rural development banks
which are affiliated to district level banks and which are affiliates of the state level agriculture
and rural development banks. The state level banks have formed their national federation –
the National Cooperative Agriculture and Rural Development Banks, with promotional
functions and acting as a spokesperson of the structure. The structure employs around
25,000 personnel.
As in March 2006 there were 19 state level banks with 2,646 operational units. Their
aggregate membership was 29.79 million. They had raised a sum of Rs 5511 million as their
own funds. To support their lending operations these banks borrowed funds from NABARD.
The total amount of loans disbursed during 2005-06 was about Rs 30,000 million. Minor
irrigation and farm mechanization continued to be the major sectors financed accounting for
20% and 27% to total respectively followed by dairy/animal husbandry [16%], rural non-farm
sector [14%], rural housing [6%], and plantation and horticulture [6%].
The LT structure has done commendable work in speeding up capital formation in
agriculture. The performance of ARDBs, however, started declining since the latter part of
‘90s mainly due to inherent deficiencies associated with their design as non-resource based
specialised term lending agencies thereby severely restricting their ability to meet the
financial services needs of members. These banks are unable to maintain business growth
commensurate with the growth rate in agricultural credit resulting in their market share
getting eroded progressively.
----------------------------------------------------------------------
27
Chapter-09
Indian Farmers fertiliser Cooperative Limited [IFFCO]
IFFCO Sadan, C-1 Saket District Centre, New Delhi 110017
Fertilisers have been considered as an essential input to Indian agriculture for meeting the
uncontrolled food grain requirements. Chemical fertilisers bear a direct relationship with food
grain production along with a number of supporting factors like High Yielding varieties,
irrigation, credit, enhanced total factors of productivity, size of the product market and prices
they face both for inputs and outputs. The first fertiliser factory was established in India was
at Ranipet in Tamil Nadu in 1906. In the context of global market, the major hurdles before
Indian farmers are access to technology, government endeavours, resources, markets,
institutions and services.
The Indian Farmers Fertiliser Cooperative Limited [IFFCO], a multi-state cooperative, has
emerged as a role model for cooperatives. Over 40 years of its inception, IFFCO has turned
into a true cooperative – of farmers, by the farmers and for the farmers. IFFCO has steadily
grown in strength and stature from a modest membership of 57 cooperatives in 1967-68 to
nearly 48,000 agricultural cooperatives as in January 2009 with an individual membership of
nearly 45 million. The initial equity capital of Rs 600,000 contributed by the cooperatives in
1967-68 has also gone up to Rs 4240 million in 2007-08. The society ensures supply of
quality fertilisers at farmers’ doorsteps and also work for socio-economic development of the
rural masses in India.
There is no apex organisation of agricultural cooperatives in India such as JA-Zenchu [the
Central Union of Agricultural Cooperatives of Japan] but in recent years the IFFCO has
played a significant role like as a union of agricultural cooperatives providing guidance,
education, audit etc. to member-agricultural cooperatives.
Production
IFFCO commissioned its Kalol and Kandla plants in Gujarat in early 1975 and subsequently
expanded its wings by erecting two more plants at Phulpur and Aonla in Uttar Pradesh in the
year 1981 and 1988 respectively. In order to augment its complex fertiliser manufacturing
capacity, IFFCO acquired DAP/NPK/NP plant in Paradeep in September 2005. IFFCO’s
market share in production of nitrogenous and phosphatic fertiliser is 20 per cent and 25 per
cent respectively in the country.
Marketing
The marketing of IFFCO’s products is channelled through nearly 48,000 cooperative outlets
and 158 Farmers Service Centres [FSC] spread over 29 states across the country. Some of
the performance highlights of IFFCO during 2007-08 are given below:
Production of Fertilisers …
Production of Urea
Production of NPK/DAP/NP
Highest Sale of Fertilisers
Profit before Tax
…
Profit after Tax …
…
Highest Turnover
…
Highest marketing productivity
Plant productivity
…
…
…
…
…
…
…
…
…
…
7.0 MT
4.0 MT
3.0 MT
9.3 MT
Rs 3,800 million
Rs 2,580 million
Rs 121,630 million
6,158 per employee
1,354 tonnes per employee
28
Corporate Social Responsibility
In line with its Vision and Mission statements IFFCO has undertaken several social activities
in the areas of community development, environment protection and horticulture, health
care/medical facilities etc. the Society continued to galvanise its efforts towards development
of model agricultural villages through Village Adoption Programme. The Programme started
with an objective to bring about overall development in the living standards of rural
community through integrated rural development with particular emphasis on agriculture
development, creation of drinking water facilities, medical and veterinary check-up.
Information and Communication Technology
IFFCO has stepped up its initiative to carry the benefits of Information Technology [IT] to the
doorsteps of Indian farmers with specific focus on meeting the requirements of agriculture
and cooperative sector. For this purpose, IFFCO is taking measures to develop web-based
services to provide exhaustive information on agriculture, fertiliser industry, agro-chemicals
and information on cooperative sector.
Vision-2010
Having accomplished the objectives envisaged in Vision-2000 and Mission-2005, IFFCO
embarked on Vision-2010 which focuses on future growth and development of the society
and aims at:
-Installation of ammonia and urea plants including acquisition of fertiliser units;
-Backward integration to meet feed stock requirements such as Phosphoric acid;
-Generation of Power;
-Production and marketing of micro-nutrients, seeds, bio-fertilisers, pesticides;
-Value-addition to agri-products and marketing;
-Information technology and IT-enabled services;
-Establishment of Retail Chain in urban and semi-urban locations
-Diversification into new growth areas such as mobile telephony and communication
technology in the rural areas.
Pursuing its Vision-2010 forward, IFFCO has already acquired fertiliser plant in Paradeep,
set up a power generation company in Chhattisgarh and formed joint-ventures to
manufacture phosphoric acid in Egypt, Jordan and Australia. IFFCO has also set up IFFCO
Kisan Sanchar Limited for providing mobile telephony and communication technology in rural
areas.
IFFCO Associates and Subsidiaries
With 18 associate and subsidiaries at its command, IFFCO has become a diversified entity
by spreading its wings across the different continents. A brief description of these follows:
IFFCO-Tokio General Insurance Company [ITGI] – The IFFCO-Tokio General Insurance
Company, established in December 2000, is a joint venture undertaking between Tokio
Marine and Nichido Fire Group of Japan and IFFCO. The ITGI, a 700 employee strong
company, is counted amongst the three leading private insurance companies in India It
undertakes general insurance business in India and offers a range of over 40 policies. The
Company operates through 170 locations across the country. During the year ending March
2008, the ITGI’s Gross written premium stood at Rs 12,350 million registering a growth of
7% A variety of farmer-friendly products have been launched
29
Jordan-India Fertiliser Company [JIFCO] – IFFCO signed an MoU with Jordan
Phosphates Mines Company for setting up a Phosphoric Acid Plant with a capacity of 1500
MT per day in Jordan. Plant and associated facilities would involve an investment of around
USD 580 million – IFFCO hold 52% of the stake.
Industries Chimiques Du Senegal [ICS] – IFFCO consortium now holds a majority 85%
equity in ICS which manufactures phosphoric acid and phosphatic fertilisers. The ICS has
capacity to produce 660,000 MT of phosphoric acid per year.
Indo-Egyptian Fertilisers Company [IEFC] – IFFCO promoted this company in 2005 along
with El Nasr Mining Company of Egypt to set up a Phosphoric Acid plant
Kisan International Trading-FZE [KIT] – It has been trading in raw materials and fertilisers
from its base in Dubai. It ventured in exporting Iron Ore Fines from India to China. KIT is
catering to the requirement of imported urea in India through MMTC and IPL.
IFFCO-Legend Joint venture – IFFCO has entered into a long-term off-take and supply
agreement with Australia’s Legend International Holdings, Inc. for five million tonnes
annually of concentrated rock phosphatic. The venture with a total investment of about USD
800 million will help in easing the phosphate supply position and availability of phosphatic
fertiliser in India.
Oman-India Fertiliser Company [OMIFCO] – IFFCO contributed 25% in the equity of this
company. The plant built at Sur in Oman at a cost of USD 892 million produced 1.9 million
Tonnes of urea and 1.3 million tonnes surplus ammonia.
IFFCO-Chhattisgarh Power Limited [ICPL] - The ICPL has been set up in joint venture
with Chhattisgarh State Electricity Board for establishing a pit-head power project of 1320
MW capacity at an estimated cost of Rs 62,650 million. The 90% of power generated would
be off-take by the CSEB and the balance 10 per cent power would be sold to other
neighbouring states.
IFFCO-Kisan Sanchar Limited [IKSL] – It was established with an objective of using
Information Communication Technology to empower farmers in rural India and to strengthen
the cooperative network.
IFFCO Foundation - The IFFCO Foundation was established by IFFCO as an independent
institution as a public trust in January 2003. Its main is: Strengthening management and
participatory character of the Indian Cooperative Movement by using duly tested and
appropriate consultancy, advisory and technological interventions sourced from within the
country and abroad and in accordance of the Cooperative Principles. It carries out
development programmes in the field of agriculture, horticulture, micro-credit, agricultural
cooperatives through its 13 field stations in five States by holding education, training and
demonstration programmes. Farmers, rural women and youth are the main targets.
Other ventures are: Kisan SEZ [Special Economic Zone], IFFCO Kisan Bazaar Limited,
Commodity Exchange/Collateral Management, Indian Potash Limited, Kisan Sewa Trust,
Indian Farm Forestry Development Cooperative Limited, and Cooperative Rural
Development Trust.
-----------------------------------------------------------------------
30
Chapter-10
Krishak Bharti Cooperative Limited [KRIBHCO]
A-10, Sector-1, Noida 201301. Uttar Pradesh
KRIBHCO, a premier cooperative society for manufacture of fertiliser, registered under MultiSate Cooperative Societies Act 1985, was promoted by Government of India, IFFCO, NCDC
and other agricultural cooperative societies spread all over the country and incorporated on
April 17, 1980. Total membership of KRIBHCO is 5,732 agricultural cooperatives.
KRIBHCO has setup a fertiliser complex to manufacture urea, ammonia and bio-fertilisers at
Hazira in Gujarat. Hazira fertiliser complex has two streams of ammonia plant and four
streams of urea plant. Annual capacity of urea and ammonia is 1.8 million tonnes and 1.0.3
million tonnes, respectively. The total Project cost was Rs 8,900 million against the
estimated cost of 9,570 million. The trial production commenced from November 1985 and
the commercial production commenced from March 1986. Since then, it has excelled in the
performance in all areas of its operations. KRIBHCO has a well-established Environment
Management System, which has been certified in line with ISO-14001.
The promotional and agricultural activities of KRIBHCO do not limit merely to increased use
of fertilisers but also aims at over all improvement of the living standards of farming
community and to provide them social/educational infrastructure. Various programmes have
been designed to meet the requirements of farmers, cooperative societies and communities
at large. KRIBHCO has established a chain of Krishak Bharati Sewa Kendras in various
states for providing all essential agro-input to farmers under one roof. KRIBHCO Kisan Help
lines are also available at different locations for answering farmers’ queries.
KRIBHCO has promoted Gramin Vikas Trust [GVT] to manage different rural development
projects in various states of the country. The activities undertaken by GVT are formation of
Self-Help Groups, general health camps, animal health camps, grain banks, soil and water
conservation etc. GVT has adopted many tribal villages across India for their development.
KRIBHCO has invested Nagarjuna Fertilisers and Chemicals Ltd., OMIFCO and Gujarat
state Energy Generation Ltd. KRIBHCO is a zero debt organization and is having a net worth
of Rs. 20,000 million. KHIBHCO is consistently making profits since its commercial
operations began in 1986. KRIBHCO has been paying dividend to its shareholders since
1986-87 and has an uninterrupted record of dividend distribution.
---------------------------------------------------------------------------
31
Chapter-11
National Cooperative Dairy Federation of India [NCDFI]
Anand-388001 Gujarat
The National Cooperative Dairy Federation of India [NCDFI], based at Anand [Gujarat], is
the apex organisation for the cooperative dairy sector. Its members include federal dairy
cooperatives of states and union territories. Primary objective of NCDFI is to facilitate the
working of dairy cooperatives through coordination, networking and advocacy.
Important activities of NCDFI includes; coordinating sale of milk and milk products of its
members to the Ministry of Defence and other para-military organizations, and marketing of
frozen semen doses produced by Sabarmati Ashram Gaushala [cowshed] and Animal
Breeding Centre
-----------------------------------------------------------------
32
Chapter-12
The National Dairy Development Board [NDDB]
NDDB Complex, Anand-388001 Gujarat
The National Dairy Development Board was created to promote, finance and support
producer-owned and controlled organisations. NDDB's programmes and activities seek to
strengthen farmer cooperatives and support national policies that are favourable to the
growth of such institutions. Fundamental to NDDB's efforts are cooperative principles and
cooperative strategies. The NDDB was founded in 1965 to replace exploitation with
empowerment, tradition with modernity, stagnation with growth, transforming dairying into
an instrument for the development of India's rural people
NDDB began its operations with the mission of making dairying a vehicle to a better future
for millions of grassroots milk producers. The mission achieved thrust and direction with
the launching of "Operation Flood", a programme extending over 26 years and which
used World Bank loan to finance India's emergence as the world's largest milk producing
nation. Operation Flood's third phase was completed in 1996 and has to its credit a
number of significant achievements.
As on March 2006, India's 117,575 village dairy cooperatives federated into 170 milk
unions and 15 federations procured on an average 21.5 million litres of milk every
day. 12.4 million farmers are presently members of village dairy cooperatives.
Since its inception, the Dairy Board has planned and spearheaded India's dairy
programmes by placing dairy development in the hands of milk producers and the
professionals they employ to manage their cooperatives. In addition, NDDB also promotes
other commodity-based cooperatives, allied industries and veterinary biologicals on an
intensive and nation-wide basis.
------------------------------------------------------------------------
33
Chapter-13
National Bank for Agriculture and Rural Development [NABARD]
Plot No. C-24, G-Block, Bandra-Kurla Complex
Post Box No. 8121, Bandra [East], Mumbai 4000051
The National Bank for Agriculture and Rural Development [NABARD] NABARD is set up by
the Government of India as a development bank with the mandate of facilitating credit flow
for promotion and development of agriculture and integrated rural development, the task
which was earlier performed by the Agricultural Credit Department of the Reserve Bank of
India. The mandate also covers supporting all other allied economic activities in rural areas,
promoting sustainable rural development and ushering in prosperity in the rural areas.
With a capital base of Rs 20,000 million provided by the Government of India and Reserve
Bank of India, it operates through its head office at Mumbai, 28 regional offices situated in
state capitals and 391 district offices.
It is an apex institution handling matters concerning policy, planning and operations in the
field of credit for agriculture and for other economic and developmental activities in rural
areas. Essentially, it is a refinancing agency for financial institutions offering production
credit and investment credit for promoting agriculture and developmental activities in rural
areas.
Some of the principal activities of NABARD are, as follows:
Initiating measures towards institution-building for improving absorptive capacity of
the credit delivery system [Short-Term, Medium-Term and Long-Term [Investment Credit],
including monitoring, formulation of rehabilitation schemes, restructuring of credit institutions,
training of personnel et.;
-
Promoting research in the fields of rural banking, agriculture and rural development;
Functioning as a regulatory authority, supervising, monitoring and guiding
cooperative banks and regional rural banks etc.
The flow of agricultural credit is through the channel of state cooperative banks, state
cooperative agriculture and rural development banks and their respective district banks and
financing channels.
---------------------------------------------------------------------
34
Chapter-14
National Cooperative Development Corporation [NCDC]
NCDC Building, 4 Siri Institutional Area, Khelgaon Marg, New Delhi 110016
The National Cooperative Development Corporation [NCDC] was established by an Act of
Parliament in 1963 as a statutory Corporation under the Ministry of Agriculture.
Functions
Planning, promoting and financing programmes for production, processing, marketing,
storage, export and import of agricultural produce, food stuffs, certain other notified
commodities e.g. fertilisers, insecticides, agricultural machinery, lac, soap, kerosene oil,
textile, rubber etc., supply of consumer goods and collection, processing, marketing, storage
and export of minor forest produce through cooperatives, besides income generating stream
of activities such as poultry, dairy, fishery, sericulture, handloom etc.
NCDC Act has been further amended which will broad base the area of operation of the
Corporation to assist different types of cooperatives and to expand its financial base. NCDC
will now be able to finance projects in the rural industrial cooperative sectors and for certain
notified services in rural areas like water conservation, irrigation and micro irrigation, agriinsurance, agro-credit, rural sanitation, animal health, etc.
Loans and grants are advanced to State Governments for financing primary and secondary
level cooperative societies and direct to the national level and other societies having objects
extending beyond one State. Now, the Corporation can also go in for direct funding of
projects under its various schemes of assistance on fulfillment of stipulated conditions.
Organisation & Management
The Management vests in 51 members widely represented General Council to give shape to
its policies and programmes and Board of Management with 12 members to cater to day-today activities. Besides its Head Office, NCDC functions through 18 Regional/State
Directorates. The Managing Director is the Chief Executive. Various functional divisions look
after the programmes. The field offices play an important role in project
identification/formulation and oversee its implementation.
NCDC is endowed with in-house technical and managerial capabilities in the areas of
Cooperation, Organisation & Methods, Financial Management, Costing, Economic Analysis,
Projections, Management Information Systems/Feasibility Studies, Sugar, Oilseeds, Textiles,
Food, Fruits & Vegetables, Dairy, Poultry and Live stock, Fishery, Handlooms technologies
besides Civil Engineering, Refrigeration and Preservation to help cooperatives to
identify/formulate projects and successfully implement them.
-----------------------------------------------------------------------------------------
IndCoops-dp
July,2009
35
About the author…
Dr Daman Prakash is the Director of the Rural Development and Management Centre, New Delhi,
India and also the Senior Consultant of the IFFCO Foundation [promoted by the Indian Farmers’
Fertiliser Cooperative Limited – world’s major producer of urea and DAP]. Dr Prakash served the
International Cooperative Alliance Regional Office for Asia and the Pacific [ICA ROAP] since 1962
in various capacities and retired from there as Director [ICA/Japan Agricultural Cooperatives
Management Training Projects]; Served in Indonesia as Chief Technical Advisor of the ILO/UNDPSWISS Projects on KUD Management Development, Training and Education; Served in Sri Lanka as
Senior Consultant to the Swedish supported ICA/SCC Cooperative Teachers’ Training Project [197881]; Served as senior consultant to the JA-Zenchu/MAFF-Japan on fact-finding survey missions in
Indonesia, Laos PDR, Mongolia, Cambodia and Republic of Uzbekistan. Presently also works as
consultant to the FAO, NEDAC, UN/ESCAP, JA-Zenchu-Japan. He is the author of several articles
and publications on cooperatives and allied subjects. He can be reached through his email:
damanprakash@yahoo.co.in. Postal address:J-102 Kalkaji, New Delhi 110019. India
Credit Note: This paper has been prepared at the request of the Central Union of Agricultural Cooperatives [of
Japan] JA-Zenchu, Tokyo.
36