Centre's three new national cooperatives signal sector's growing clout

But, critics say the approach in forming should have been bottoms-up instead of top-down

Perhaps for the first time ever in the long history of the Indian cooperative movement, the Centre, through a cabinet decision, announced the formation of not one but three brand new multi-state cooperative societies that will cover a whole gamut of issues such as seed production and distribution, organic farming, and export promotion.

The three cooperatives formed under the Multi-State Cooperative Societies Act will act as anchors and facilitators to promote their respective objectives. They will have members from all sorts of existing state cooperatives and even national ones.

National Dairy Development Board (NDDB), National Agricultural Cooperative Marketing Federation of India (Nafed), Amul, Indian Farmers Fertilizer Cooperative Ltd (IFFCO), Kribhco, National Cooperative Development Corporation (NCDC), etc. are among the major promoters of these cooperatives.

All of them will contribute towards the paid-up capital of each of the three cooperatives and play a big role in their initial operation.

In the case of the cooperative on seeds, reports said that it will be called the Bhartiya Sahakari Beej Samiti and might be housed on the campus of IFFCO to tap the over Rs 30,000 crore domestic seeds markets which is at present dominated by a clutch of global players and also some prominent domestic brands.

Cooperatives contribute substantially in various sectors. They contribute 28.80 per cent in fertiliser production, 35 per cent in fertiliser distribution, 30.60 per cent in sugar production and 17.50 per cent in the procurement of marketable surplus of milk in the national economy.

There are 854,000 registered cooperatives in the country, with more than 290 million members, especially from the marginalised and lower-income groups in rural areas.

Cooperatives have a presence in almost all sectors, for example, agriculture (food grains, pulses, oilseeds, etc.), horticulture (fruits, vegetables, flowers, aromatic products, etc.), dairy, poultry, livestock, fisheries, sugar, spices, organic products, fertiliser, handloom, handicraft, textile, tea/coffee, minor forest produce, Ayurveda or herbal medicines, processed food and leather, among others.

National seeds cooperative

According to an official statement, the national-level multi-state seed cooperative society would act as an apex organisation for production, procurement, processing, branding, labelling, packaging, storage, marketing and distribution of quality seeds; strategic research and development; and to develop a system for preservation and promotion of indigenous natural seeds; through various cooperative societies across the country.

It will be supported by relevant ministries, especially the Ministry of Agriculture and Farmers Welfare, Indian Council for Agricultural Research (ICAR) and National Seed Corporation (NSC) through their schemes and agencies.

The proposed cooperative society will help to increase the seed replacement and varietal replacement rate, ensuring the role of farmers in quality seed cultivation and seed variety trials, production and distribution of certified seeds with a single brand name by utilising the network of all levels of cooperatives.

The availability of quality seeds will help increase agricultural productivity, strengthen food security, and increase the farmers' income.

The members will benefit both by the realisation of better prices by producing quality seeds, higher production of crops by use of High Yielding Variety (HYV) seeds and dividends distributed out of the surplus generated by the society, the official statement said.

The seed cooperative society will involve all forms of cooperative structures and all other means to increase the SRR and VRR by ensuring the role of farmers in quality seed cultivation and seed variety trials, production and distribution of certified seeds with a single brand name.

National cooperative for organic food products

National Dairy Development Board (NDDB), Amul and NAFED will be among the five promoters of the newly announced national-level cooperative society for organic food products, which will focus on enhancing farmers' income by improving production, certification and marketing system.
 

According to sources, the National Cooperative Organic Society, based in Anand, Gujarat, will be set up with an authorised share capital of Rs 500 crore.

Sources said it would have an initial paid-up share capital of Rs 100 crore.

NDDB, cooperative NAFED, Gujarat Cooperative Milk Marketing Federation (GCMMF), which markets milk products under the Amul brand, NCDC and National Cooperative Consumers' Federation of India Ltd (NCCF) have come forward to become promoters of this new society. They will contribute Rs 20 crore each for initial paid-up share capital, sources said.

They said the NDDB would be the main promoter, adding that these products would be marketed under the Amul brand.

A new brand will also be unveiled to market the products globally.

Initially, the focus of this national-level society would be on improving the marketing system so that farmers get a better income for their organic produce.

Gradually, the certification system and testing labs will also be strengthened.

"There are 854,000 registered cooperatives in the country with more than 290 million members. Cooperatives can be utilised for the development of organic clusters and its entire supply chain," a source said.

On the potential, sources said that India accounts for only 2.7 per cent of the world organic market and thus has a huge potential to expand.

The total size of the world organic food market (2020) was around Rs 10 trillion, and out of that, the size of the Indian organic market is around Rs 27,000 crore (Rs 20,000 crore domestic and Rs 7,000 crore exports).

America has a market share of more than 40 per cent. Sources said that the size of the Indian organic market is set to grow at 20-25 per cent every year, while the global market is projected to grow by 15 per cent annually.

India has the largest number of organic producers, at 1.6 million farmers out of 3.4 million farmers globally.

There are 3.4 million organic producers in 190 countries, with a land coverage of 74.9 million hectares.

In area terms, India ranks 4th with 2.7 million hectares of organic land. Australia is number one, with 35.7 million hectares.

Cooperatives societies, including primary societies, district, state and national level federations, multi-state cooperative societies and Farmers' Producer Organizations (FPOs), can become members of this national-level society for organic products.

India has a large potential to produce varieties of organic products due to its diverse agro-climatic conditions. In several parts of the country, the inherited tradition of organic farming is an added advantage, especially in North Eastern Region where Sikkim was declared as a fully organic state in 2016

Cooperative for exports

The third and biggest cooperative in financial terms is the one for promoting exports of products made by cooperative societies.

According to officials, the multi-state cooperative society for export of products made by cooperatives will have an authorised share capital of Rs 2,000 crore and an initial paid-up capital of Rs 500 crore contributed by five existing coops.

These are IFFCO, KRIBHCO, NAFED, GCMMF, and NCDC.

Sources said the new co-op would be headquartered in Delhi. Any cooperative across India, whether governed by state laws or Central legislation, could become a member of the new body to export its products and capture new markets.

The society will focus on exporting the surpluses available in the country with the cooperative sector, scout for newer markets for products made by cooperatives, promote products made by cooperatives in the global arena and help increase their demand globally.
 

The new cooperative will also provide proper institutional support for aggregating exportable surplus, working capital, logistics, technical know-how and training.

The national cooperatives will also provide all back-end support that includes procurement, storage, processing, marketing, branding, labelling, packaging, certification, research and development and trading to the members to boost the export potential of their products.

Many of these products have a huge demand in many countries. Still, in the absence of an umbrella cooperative society, the export potential of cooperative products/services still needs to be explored, they said.

The contribution of cooperatives to India's export is minuscule.

Top-down instead of bottom-up

The landmark event in the country's history of the cooperative movement also signifies the importance and value that the current Central government has placed on the cooperative movement.

But, critics said it goes against the grain of the concept of cooperatives because cooperatives are formed when people with common objectives join together to serve their common interests and not because of some government diktat.

"The whole concept of cooperatives is that it should be independent of any government interference and run by the people, but these three bodies and the way they have been formed through a cabinet decision gives an impression that it will be a government-controlled and government-run institution which will be a great disservice to the whole sector," a senior sectoral expert who declined to be identified said.

He said that a better way would have been for the government to exhort the cooperatives to form these bodies for their own good.

"Government can promote a business but not a cooperative," the expert said.

He said these cooperatives should also ensure that they don't just work for their members or those who want to become members but should ensure that anyone or everyone who wants to avail of their services and platforms could benefit.

"The one cooperative on the promotion of exports to me is not much needed because exports are not boosted due to any single body but they get a leg up due to the quality of the products, the branding etc. All these should have been kept in mind," the expert said.