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  1. 1. By- Anumati Malak Apoorva S Huddar Bishal Diganta Rachit Khandelwal Sourav Mukherjee
  2. 2. 0 20 40 60 80 100 120 140 160 91-92 92-93 93-94 94-95 95-96 96-97 97-98 98-99 99-00 00-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 yield in lakh tons sown area in lakh ha Low farm incomes due to inadequate productivity growth and low prices for the farm output have pushed farmers to crippling debt, a few among them unfortunately resorted to suicide Our agriculture by and large is still dependent on rainfall which determines the production Changing crop pattern in India Relative Share of Borrowing of Cultivator Households from Different Sources The weak bargaining positions of the small farmers (0.01-2.50 acres) and Marginal farmers (2.51-5 acres) is a major reason for his low income. He is at extreme disadvantage because he has very little economic power, small land, so savings, no warehouses, rice-mills, farm equipment. At short no leverage to extract the most reasonable terms for transactions into which he has to entre. Thus even if he has a good harvest, his earnings will not significantly increase as prices of his product will drop drastically. On the other hand, shortage or supply does not likewise redound to his benefit. Rather, the traders, the miller, the middlemen, and other private money will profit most as his produce is already committed to these economic agents at prices dictated by them. The small and marginal farmers solely bears the burden of increase in prices of production inputs or failure of crops.
  3. 3. IMPLICATION OF LEWIS THEORY  Sa = TAS – Fa - La TAS = Total Agricultural Surplus Fa = farmers’ consumption of agricultural goods La = farmers’ consumption of industrial goods Sa = Savings from agricultural sector TAS can be increased only if we could increase the productivity of our agricultural sector.  In the absence of a developed agricultural sector, the base for ‘take off’ into mature economy would be weak and Indian economy characterized by widespread disguised unemployment and high rate of population growth, is expected to remain in a pitiable condition. Contextual importance of agriculture Firstly, as a system for improving the production of agricultural commodities for providing food security. Secondly as a system contributing to the income of farming families and thereby contributing to improvements in the quality of living of farming communities Eighty-three per cent of the landholdings in the country are now marginal or small unless there is urgent intervention in aggregating producers through farmers institutions the economy will be unlikely to achieve scale in production and leverage it to the advantage of all stakeholders, especially primary producers. The small and marginal farmers do not use advanced machinery as they will face Returns to decreasing scale due to small size of their land. With increasing demand for land in the market, the small and marginal farmers will be tempted to sell and give up their land and join the ranks of landless labor force . With no employment opportunities emerging in the non- agricultural sector and corporate sector not being in a position to offer large employment opportunities, the poverty situation is bound to worsen and the social tension are bound to accentuate.
  4. 4. INHERENT DANGER TO BRING SMALL AND MARGINAL FARMERS IN CORPORATE FOLD Marginal farmers who constitute 83% of the farm household in India, will be the worst affected by contract farming as they lack the surplus to invest and do not have risk bearing capacity The expansion of contract farming will also force small and marginal farmers to lease out their land to corporate at payments below the market price. In a district of Karnataka where rose is cultivated under corporate farming , ST and SC farmers were forced to lease out their land at 1/3 of market price (reported by S.P. Singh in 2005 Farmers organisations in AP and Maharashtra has listed complains of farmers being forced to join FPCs and made to sign documents in English that they do not understand. The AP government tried to introduce JSC farming in the name of cooperative farming in 2009.The resolution was passed by Gram Sabha through dubious means. The women’s refused to hand over the land to the companies when they came to know that boundaries of their land would be removed and they will not be able to enter the land without companies permission and that the landholdings will never be returned to them. Finally resistance from the farmers forced the State government to withdraw the scheme.( Frontline AGRICULTURAL COOPERATIVE SYSTEM Cooperatives have long been recognized as the democratic institution for social and economic development Historically they have been viewed as the most effective rural organization capable of unifying diffused individual power of small producers and consumers that can tilt the balance of economic and bargaining power in their favour. They are being used primarily to serve as means to increase participation, to broaden ownership of productive enterprise, to mobilize savings for capital formation as well as to secure credit need to carry on business. In a country like India where the population is high relative to the land area and where land is scattered and fragmented development should be brought to the countryside. It is through cooperative that social and economic opportunities are made more accessible to the lowest segment of the society Countries like Philippines, Netherlands has effectively developed their Agricultural sector through the cooperative agricultural system. The AMUL model has helped India to emerge as the largest milk producer in the world. More than 15 million milk producers pour their milk in 1,44,246 dairy cooperative societies across the country. Their milk is processed in 177 District Co-operative
  5. 5. COOPERATIVE 2 COOPERATIVE 3 C5 Model COOPERATIVE1 EACH COOPERATIVE WILL COMPRISE OF : 1. Elected board of members 2. SHG Groups 3. Supply Cooperative VILLAGE CO-OPERATIVE SOCIETY Two Elected member from each cooperative DISTRICT CO-OPERATIVE SOCIETY Two Elected member from each village co-op STATE CO-OPERATIVE SOCIETY Two Elected member from each District co-op
  6. 6. THE COOPERATIVE MODEL IS BASED ON SEVEN PRINCIPLES Open and voluntary membership One man one vote Limited interest rate on capital Education and training of farmers Cooperation among cooperatives Building networks Technology for effectiveness FOCUS Establishment of a direct linkage between farmers and consumers Eliminating Middle man Farmer control procurement, processing and marketing Professional management INTERGATION PROGRAM The final stage in the cooperative system consists of federating or vertical integration of cooperatives of similar function and organizing all types of cooperative s at the provincial, city and state level – horizontal intergation Producer-Consumer, Producer- Retailer-Consumer supply chain
  7. 7. The most significant attempt to integrate production , financing and marketing aspects of agriculture into a single system is designed through this cooperative model The small and marginal farmers will form an agreement to join the cooperative and the boundaries of their land will be removed but the farmers will notlosie the ownership of their land. The profit ratio will be equal to the ratio of capital contribution by the farmer. The cooperatives need to register themselves to the government in order to receive their opening Capital. FRAMEWORK OF EACH COOPERATIVE MODEL The SHG group in each cooperative will form Micro-credit system which will result in additional capital formation in the system . One SHG member will represent in the cluster level SHG The registered cooperative will be connected to the village cooperative society with 2 elected representative SHGs can issue short term loan up to Rs.15000. Formation of SHG will also result in Women’s empowerment in the society CREDIT EXPERIENCE WITH COOPERATIVES IN PHILIPINES With the implication of the countryside credit delivery program, Land bank has accelerated the extension of financial assistance to the small farmers in rural areas. In two and half year loans extended has expanded ten times. Today the bank has credit relationships with some 620 cooperatives. The growth in financial assistance becomes more meaningful considering the 99% collection rates of these loans. Because of the channel of credit delivery which is the cooperative not only was the small farmers able to obtain the needed credit, he is also able to sustain acceptable level of repayment of his obligation. Record shows that loans to cooperative is better than loan to individual farmers for the following reasons : 1.Peer pressure 2. Financial fallback of share capital 3. On- site loan administration 4. Economies of scale
  8. 8. Two elected members from each cooperative will from village cooperative federation. One SHG member from each cooperative will form the Cluster Level SHG- up to Rs 30000 loan can be sanctioned Each cooperative need to deposit certain amount of their profit to VCS which will be deposited to a Nationalized Bank The VCS will provide storage and warehousing and Cold Chain facilities to the sanctioned co-operatives The VCS will act as a Machine pool for the farmers and will act like Machine pool co-op Agribusiness can be started at VCS level for manufacturing fertilizers and processing the agricultural residue into finished goods The VCS will be linked to the NGO’s and Government officials and Agricultural scientist in order to update the farmers about Gov. schemes and advanced technologies VCS will provide irrigation facilities to the cooperatives and can avail loans from the District Level federation unit. VCS will be responsible for providing tanning and education to the farmers and will supply the food grains to the District level co-op society. FUTURE SCOPE FOR ESTABLISHMENT OF AGRICULTURE MACHINERY INDUSTRY IN THIS SECTOR Agricultural Machinery – a leading industry in Europe While the financial crisis is still paralyzing many industries in Europe, the agricultural sector continues to grow at a rapid pace. Based on high investment and demand, the future prospects of the segment are bright. For 2012, the German Machinery and Plant Manufacturing Association (VDMA) has recorded an above average growth in the European farm machinery sector. According to its figures, last year represented a dynamic upswing of 6% (£ 23,6 billion). Looking forward, this trend should continue in the current year. Experts of the French Agricultural Equipment Manufacturers Union (Axema) expect the branch to grow about 3% in 2013. They are especially optimistic for western European countries where the high demand remained unbroken over the last ten years. By Agriaffaires – 21 May 2013Posted in: Farming
  9. 9. Two member from each VCS will form The District Cooperative federation VCS will supply the surplus food grain produced by the farmers to the DCS DCS will market some amount of the harvest to the local market through the supply chain - Producer-consumer Through Agro-Mall as established in Gujarat DCS will supply the remaining grains to the State Level Co-op for selling it to the government for export DCS will act like a Marketing and Supply Chain cooperative Producer-retailer through the supply chain of farmers It is exclusive marketing organisation of 'Amul' and 'Sagar' branded products. It operates through 48 Sales Offices and has a dealer network of 5000 dealers and 10 lakh retailers, one of the largest such networks in India. Its product range comprises milk, milk powder, health beverages, ghee, butter, cheese, Pizza cheese, Ice-cream, Paneer, chocolates, and traditional Indian sweets, etc Supply cooperative in Netherlands's emphasises on education system, Innovative supply and processing industries, inexpensive natural gas, production of cheap fertilizers, promotion of environment friendly agriculture. "sustainable agriculture-societal accepted agriculture which meets the ecological, cultural, economic, and international standards are required by the community"... thinking out of the box is a major success in agriculture, eg: producing energy(heat) in greenhouses DISTRICT COOPERATIVE SOCIETY (DCS)
  10. 10. Two Elected Member from each DCS will form the State Level Cooperation. The SLC will sell the crops to the government which will be used for export and will redistribute the profit. The SLC will act as a pressure group to the government and will have direct link with the government. Israel: Granot was established in 1940 in order to utilize economics of scale both in marketing agricultural products and reducing purchasing prices of goods for the member farms. Uniting the farms into one big cooperative, made it possible to use expansive technologies for processing agricultural products. Until today this advantage helps to reduce costs and finance operating capital necessary to sustain the agricultural farms. TRANSFORMATION OF THE RURAL AGRARIAN SECTOR The focus on cooperative is very important in order to accelerate rural development. Where efforts of government agencies or private institutions or even foreign countries could be dissipated in attempting to bring about growth in the rural economy the same can be harnessed if channelized through a common organization- the cooperative. The very important link is highly desirable because :  It reaches as many beneficiaries as possible. It accelerates implementations of program and projects within a much shorter period of time. It reduces the cost of administrating the project or programs. It enables a broader base of individuals and institutions to participate in the developmental effort. Because of the value of development itself can be brought to the rural economy. Obstacle can be overcome with collective effort. Indeed, prosperity and development can be a reality and the improvement in the quality of life of the rural communities can be attained through such a model.
  11. 11.  The small and marginal farmers will merge their land to form the agriculture cooperative.  There will be proper networking among the various level of the cooperative model.  The cooperatives should have an understanding and coordination with other cooperatives in order to shift their cropping pattern and all cooperatives should not harvest the same crop i.e either cash crop or food crops in order to avoid fluctuations in cropping pattern.  State Governments should put in place a policy framework for facilitating the functioning of cooperatives with free and fair means, in no less equal terms with any other organization engaged in economic activities.  States should refrain from deputing officers to occupy key positions in cooperatives except on an explicit request from a cooperative and ensure that the officers if deputed to hold key positions are given a minimum tenure of three years.  Cooperatives should undertake member awareness and education programmes on a continuing basis in order to sensitize members regarding their rights, responsibilities and obligations in respect of the organization to which they belong and make special efforts to facilitate women and youth participation in cooperatives. CHALLENGES ASSUMPTIONS Merging the land of small and marginal farmers to form cooperative To maintain cooperation among the members of cooperatives To attract and retain competent professionals in the cooperatives Proper networking with various levels of the cooperative system To ensure zero political interference in the cooperative system
  12. 12.    Economic and Political Weekly, Vol. 19, No. 2 (Jan. 14, 1984), pp. 94-96  Frontline  Agricltural Growth, Farm Size and Rural Poverty Alleviation (MA- ECO) Hanumantha Rao, C H  Econometric Models in Agriculture Reddy, Satyanarayana K  State of Indian Agriculture 2011-12  