Change the laws governing co-ops to reduce political interference

Updated: Oct 31 2005, 06:44am hrs
The biggest challenge before the cooperative sector is to strengthen its marketing structure and find talented and spirited individuals willing to work for a sector not considered gla-morous. Cooperatives need to transform themselves into producers companies to compete with multinational corporations (MNCs) in the ever-expanding processed food bazaar, stresses National Dairy Development Board (NDDB) chairperson, Dr Amrita Patel. Discussing various facets of the cooperative movement in India with Chandra Shekhar, Dr Patel also made a case for reducing political and administrative interference in the working of cooperatives. Excerpts:

Why has the successful Anand-pattern of cooperatives not been replicated elsewhere

We have to look at the genesis of the Anand movement. It started during the pre-Independence days, with Sardar Vallabhai Patel suggesting to farmers that they organise themselves into a cooperative. The first meeting of farmers was presided over by Morarji Desai. He picked up a reluctant Tribhuvandas Patel, then a Gujarat Pradesh Congress Committee president, to head the farmers cooperative.

Later, Lal Bahadur Shastri, as Prime Minister took keen interest in the cooperative movement. At his behest, NDDB was set up in 1965. The Anand movement was a result of selfless service by our national leaders. Its success can also be attributed to the coming together of two important factorspower of farmers and a professional structure.

The present political and administrative structure is not fully supportive of the cooperative movement. Cooperatives do not enjoy autonomy. They are often superseded by the state governments in public interest, which can be interpreted in any manner. Under the present circumstances, it would not be possible to start an Anand-type movement even in Gujarat.

Is it possible to develop cooperative movements for commodities other than milk

Cooperatives are more successful in the case of milk because of the nature of the commodity and the business model which has evolved over time. Unlike other food products, milk is highly perishable. It has to be sold soon after it is milked, morning and evening. Farmers cannot hold it in the hope of getting a better price.

As for commodities like oilseeds, fruits, etc there is no compulsion on the producer to sell the products immediately. They can wait and sell their produce in mandis where it may be possible to get a better price.

The problem with edible oil is adulteration. There is no way in which cooperatives can compete with adulterated oil which is widely available in the market. Mainly because of these reasons, it has not been possible to develop an Anand-type cooperative movement for other commodities.

What can be done to prevent wastage of fruits and vegetables

It is possible to organise fruit and vegetable producers associations. They can come together for mutual benefit. The real problem, however, is the absence of graded products. We need graded products, for which there is a long way to go. Second, we should not overplay wastage. In India, there is a market for all grades of products. At NDDB, we have gone in for frozen foods. Though the margins are high in processed products, the volumes are low.

We can look at the processed foods markets abroad. But before that, we need to deal with our own problems. We have to reduce the pesticide and lead content to meet Western standards.

The other big problem is the availability of power in rural areas , a must for storage and processing of food products. India can also enter organic farming in a big way to tap the export market. However, some infrastructure is needed before we can think of entering the export market of processed foods in a significant way.

How is NDDB gearing itself to face competition from MNCs

It is true that MNCs have deep pockets, but we have our own advantages. We may be weak in marketing, but our advantage is our strong ties with milk producers. This is because of the essential structure of milk cooperatives. MNCs cannot go to millions of producers. Second, Indian milk is very competitive.

However, we have other problems. As milk production is basically a domestic business, it is not possible to meet the hygiene norms laid down by the West. We are yet to adopt mechanised methods of milking. And though bacteria is destroyed as part of the pasteurisation process, it is not enough for Western countries who insist on guidelines not possible to implement in Indian conditions.

What can cooperatives do to face increasing competition

Indian cooperatives need to organise themselves in a stronger way to compete with MNCs. They can transform themselves into producer companies. There is a provision for the formation of producers companies in the Companies Act. However, not a single cooperative has taken advantage of this provision.

As producer companies, cooperatives would enjoy the benefits of a company, without losing the characteristics of a cooperative. There is also a need to reduce the tiers in the cooperative structure to reduce costs. The government should also think of changing laws governing cooperatives to reduce political and administrative interference.

We also have to strengthen our marketing, the most neglected aspect. In most cooperatives, persons performing different functions are assigned marketing jobs. This wont help because competition is growing.We need professionals to reach our products to consumers.

It is difficult to find talented persons to work for cooperatives as they are not considered as glamorous as companies. Cooperatives can share and learn from one another. Mother Dairy has been quite successful in maintaining an edge over its rivals, successfully keeping Kwality Walls out of Delhi.