Transcript Cooperative marketing

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
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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, sugarrefining, fruit-packing, and vegetablescanning 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 Cooperative 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
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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 Cooperative Marketing
Federation (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 cooperative 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
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Less cost of marketing.
Quality goods supplied to customers.
Help in growth of better crops.
Credit facilities at low interest rates.
Fair prices to customers.
Stabilization of prices.
Surplus distribution.
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