How Cooperatives Help Farmers

Source: The post How Cooperatives Help Farmers has been created, based on the article “India should try the Amul model for all agricultural commodities” published in “Live mint” on 23rd December 2024

UPSC Syllabus Topic: GS Paper3-Government policies and interventions for development in various sectors and issues arising out of their design and implementation.

Context: This article discusses the challenges Indian farmers face in getting fair prices for their produce and highlights successful cooperative models like Amul that have helped farmers receive better returns. It also talks about government and banking efforts to support such cooperative models, enhancing farmer welfare and productivity.

What are the Main Challenges Faced by Indian Farmers?

1. Low Earnings: Farmers receive only one-third of the final selling price of their produce, with the rest taken by traders, wholesalers, and retailers.
2. APMC Issues: Markets under Agricultural Produce Market Committees (APMCs) added more middlemen, increasing burdens on farmers instead of reducing them.
3. Lack of Effective Cooperatives: Unlike Amul’s success in dairy, cooperative efforts for essential crops have been less effective due to political interference and government oversight.
4. Limited Bargaining Power: Farmers struggle with price discovery and fair procurement, often facing exploitation in traditional systems.
5. Dependence on Middlemen: Many farmers rely on intermediaries for market access, reducing profitability.

How Have Cooperative Models Benefited Farmers?

1. Increased Earnings: Amul returns 80–82% of milk prices to farmers, ensuring better income.
2. Social Infrastructure: Cooperatives like Campco and Totgars’ Cooperative Sale Society provide education, healthcare, and savings mechanisms.
3. Market Stability: Amul ensures fair price discovery and prevents price escalation.
4. Global Success: Amul achieved a ₹59,445 crore turnover in 2023-24 and ranks as the world’s strongest dairy brand.
5. Supportive Services: Farmers receive discounts on supplies and veterinary care through cooperatives.
6. Financial Empowerment: District cooperative banks provide credit at low rates, improving financial access.
7. Other Examples: Spice boards in Kerala and betel-nut cooperatives in Karnataka boost returns and welfare.

For detailed information on Cooperative Societies: Benefits and Challenges read this article here

What Efforts Are Being Made to Support Farmer Cooperatives?

1. Creation of a Ministry of Cooperation: The Indian government has established this ministry to promote the cooperative movement across various sectors under the vision of Sahakar se Samriddhi (Prosperity through Cooperation).
2. Promotion of Specialized Cooperatives: Institutions like Bhartiya Beej Sahakari Samiti, National Cooperative Organics, and National Cooperative Export are being set up to support organic farming, farm exports, and seed production.
3. RBI’s Oversight: The RBI is stepping up regulation of cooperative banks to enhance farmer benefits and financial stability.

What is the Global Perspective on Farmer Cooperatives?

Globally, the farmer cooperative model has proven to be economically viable. Banks like Rabo Bank in the Netherlands and various cooperatives in former Soviet Republics have developed strong agricultural economies, showing the potential success of this model on a global scale.

Question for practice:

Examine how cooperative models like Amul have improved farmer welfare and income in India.