COOPERATIVE MARKETING

Cooperative

According to H.E.Badcock, an early cooperative leader said that cooperatives are legal, practical means by which a group of self-selected, selfish capitalists seek to improve their individual economic position in a competitive society.

Other leaders in cooperative thought have defined a cooperative as “a business voluntarily owned and controlled by its member-patrons and operated for them on a nonprofit or cost basis.”

Two aspects of these definitions deserve attention. First, a cooperative is a legal, institutionalized entry

that permits group action that can compete within the framework of other type of business organization.

Second, cooperatives are voluntary organization set up to serve and benefit those who are going to use them.

Co-operative Marketing

According to RBI “Co-operative marketing is a co-operative association of cultivators formed primarily for the purpose of helping the members to market their produce more profitably than is possible through private trade.”

According to FAO ‘Co-operative Marketing is a system through which a group of farmers join together to carry on some or all the process involved in bringing goods to the consumer.”

Kinds of Cooperative Business

• According to their tasks performance, cooperative fall into four broad categories such as

• Marketing cooperatives.

• Purchasing cooperatives.

• Service cooperatives.

• Processing cooperatives.

Marketing cooperatives:

• Marketing cooperatives sell farmers products.

• They are an example of farmers vertically integrating into the food marketing channel.

• These cooperatives may collect members product for sale, grade, package, and perform other functions.

• Cooperative livestock commission organizations, producers milk associations and cooperative elevators are example of cooperative action as marketing agents.

• The objective of such organizations is to secure the greatest possible amount for the products of their farmer- owners.

• Some associations act solely as commission agents. Some associations act as bargaining agents and do not actually handle the product.

• Others will actually buy the commodity from the farmer for resale. Some cooperative specialize in handling only a single commodity; others handle multiple commodities.

Purchasing cooperatives• Purchasing cooperatives sell supplies to farmers.• Some purchasing cooperatives are engaged only in

retailing and wholesaling. • In other instances, such as in fertilizer and petroleum,

they manufacture the products they sell and acquire the sources the raw materials.

• Most states have large statewide associations that are examples of this type of cooperative.

• The objective of such organizations is to provide savings for the farmer on purchases. The principle source of such savings will usually come from lower prices or from higher quality and better adapted supplies and equipment.

Service cooperatives.• Service cooperative provide their members with

improved services or with services they could not otherwise obtain.

• Today the services provided may include credit, insurance, electric power, telephone, irrigation and drainage.

• Membership may be of rural or urban people or a combination of the two.

Processing cooperatives.

• The processing cooperative engages in the packing or processing of the farmers product.

• Cheese and butter manufacturing, sugar-refining, fruit-packing, and vegetables-canning associations are examples of this type of cooperative.

• This is another form of vertical integration by which farmers attempt to add value to their products and capture a larger share of the consumer’s food.

Objectives of Co-operative Marketing

1. To sell the members product directly in the best market and in a state that attracts the best price.

2. To grade the produce in such a way that the best price is obtained for all qualities to the advantages of the grower.

3. Give fair weight.

4. Handle the crop without damage or waste.

5. Strengthen the bargaining power.

6. Help members to produce the best product, which has most demand, this may include processing also.

7. Educate the members in marketing.

8. Stand for fair trading practices and stop manipulation of prices.

9. Provide finances to producers and help them in getting finances.

Functions and Progress of Co-operative Marketing

• Marketing of produce goods.

• Distribution of fertilizers

• Distribution of seeds and agricultural machinery

• Grading and pooling of produce goods.

• Processing activities

• Provision of storage facilities

• Provision of financial assistance• Manufacture of Implements• Foreign and Inter-state trade• Other activities• Brings in economy in cost of marketing.• Supply quality goods to customer.• Makes available grading & transportation facilities.• Acts as a part of the government for procurement and

implementation of price support policy.• Encourage self – help and thrift.• Links marketing with credit.

Need & Importance of Co-operative Marketing

1. Abolition of Middlemen.

2. Collective bargaining.

3. Storage facilities – for members.

4. Standardization and grading.

5. Higher prices of members.

6. Market infrastructure.

7. Supplying inputs and consumer goods.

8. Facility of correct weighting.

9. Relief from illegal deductions.

10.Linking credit, processing and & farming.

 

Advantages of Co-operative Marketing

1. Reduce cost and improved services.

2. Improve marketability – reduce all undefined and undesirable market changes.

3. Safeguards against rising costs & input prices.

4. Provides credit.

5. Storage facilities.

6. Processing of agro product.

7. Market intelligence.

State/National Agricultural Co-operative MarketingFederation (NAFED)

• It was established in 1958, with the following objectives:

1. Co-ordinate & promote the marketing and trading activities of its members in agricultural Goods.

2. Undertake or Promote inter – state, intra – state & international trade.

3. To undertake the supply of agricultural Inputs like seed, fertilizer, manure, agricultural implements, etc.

Co-operative Marketing structure

State level Marketing Societies or Federation

• These are apex institutions for all co-operative marketing in the state.

• Functions of State Level Co-operative Marketing Societies:

1.They provide credit and other facilities to District Marketing Societies.(DMS)

2. They buy and sell products of DMS.

3. Wholesale distribution of chemical fertilizers, iron, steel, cement, sugar, wheat, kerosene, coffee seeds, rice, milk powder, etc., in addition to agricultural implements & insecticides.

4. Overall co-ordination of co-operative marketing.

District Level Marketing Societies – Central Marketing Societies

1. They deal with primary marketing societies (PMS) at village level.

2. Purchase & sell agro product & supply agri. inputs to farmers through PMS.

Primary Marketing Societies

• They deal in a single commodity or many commodities at a time.

• They collect & standardize the produce brought to them by their members & make arrangements for their sale.

• They also advance loans to their members against the produce. They are multipurpose societies.

Evaluation of Co-operative Marketing in Bangladesh

1. Less cost of marketing.

2. Quality goods supplied to customers.

3. Help in growth of better crops.

4. Credit facilities at low interest rates.

5. Fair prices to customers.

6. Stabilization of prices.

7. Surplus distribution.

8. Help Govt. in programs for rural development.

9. Educative value.

Reasons for Poor Performance

1. Unplanned setup – no attention while fixing the volume of produce, area of operation, finance requirements, etc.

2. Malpractices.

3. Lack of initiative by members, only Govt. initiative.

4. Less no. of regulated markets.

5. Competition from credit societies, middlemen, traders, etc.

6. Lack of co-ordination.

7. Lack of audit and supervision.

8. Illiterate farmers & less marketable surplus.

9. Lack of warehousing & transport facilities.

10. Defective loan policies.

11. Untrained persons.

12. Lack of funds.

13. No incentives to Marketing Societies.

Measures for Improvement

1. Proper Storage facilities.

2. Grading & Standardization.

3. Large area of operation – so as to have large business.

4. Bring down cost of management.

5. Specialized knowledge and techniques.

6. Better co-ordination between credit societies and marketing societies.

7. Trained and experienced staff.

8. Target oriented approach – in terms of number of societies.

9. Organization of societies should be run on democratic lines

10. Finances of the societies should be improved

11. Marketing societies should undertake sales on commission basis