Poverty Reduction through Co-operatives

Document Sample
Poverty Reduction through Co-operatives Powered By Docstoc
					Poverty Reduction through Co-operatives:
Security Net for Small Farmers and Rural Entrepreneurs



                                                                                Dr. Rajiv Mehta
                                                                                             Adviser
                                                           Department of Agriculture and Cooperation
                                                                              Ministry of Agriculture
                                                                                       Govt. of India

               Conference on Poverty Reduction and Advantage of
Cooperatives in Protecting Small Farmers and Rural Entrepreneurs
                                                                                           July, 13th , 2007
                                                                                            Bali, Indonesia

     Indonesian Co-operative Council, The DEKOPIN and International Cooperative Alliance – Asia and Pacific
   World has deep prevalence of Poverty

   One fifth of the World’s Population is in
    economic destitution

   About 40% of the world’s poor are in South Asia

   Addressing Poverty is a core development issue




                                                 2
  Poverty - an outcome of multiple deprivations
 Deprivation of income

 Deprivation of assets
   o   Human – Skill, Health, Labour
   o   Natural – Land
   o   Physical – Infrastructure and other means of production
   o   Financial – Savings, access to credit
   o   Social – Network of contacts and reciprocal obligations

 Deprivation of access to basic amenities

 Deprivation of safety net – vulnerability to adversities

 Deprivation of voice and capacity to deal with institutions
  of State and society
                                                                       3
                                                             (WDR -2001)
Common disadvantages to Primary Producers

  Farmers, growers, dairymen, fishermen or rural craftsmen

  –   unorganized
  –   small operation
  –   isolated,
  –   market disconnect
  –   technology gap
  –   disparities in economic expansion and scale
  –    weak safety net


                                                             4
        Vulnerability in Agrarian Space
 Large population dependence
   o   In India, 70% population rural
   o   Two third livelihood depends on agriculture and allied activities
   o   120 Million farm holdings
   o   127 million cultivators, 107 million agriculture labour

 Weak asset base
   o   Average size of operational holdings : 1.32 Hectares
   o   82% Holdings Small and marginal (2 or less than 2 hectares)
   o   Average livestock holding: 1.7 cattle-buffalo / operational holding
   o   Human asset - Skill, education, health, information

 Vulnerability to adversities
   o   60 percent agriculture rain dependent
   o   Diversity of climatic conditions
   o   Occurrence of floods, droughts
   o   Logistics and connectivity (600 thousand villages)                    5
   o   Market vulnerability – disadvantage in price realisation
        Profile of rural poverty in India
• Rural poverty is generally concentrated in the agricultural
  labour and artisan households

• The geographical landscape of rural poverty has been
  changing

• The occupational composition of rural poor varies across the
  states.

•    In developed states , high concentration among agricultural
    labour households,

• In less developed states poverty extends to other
  occupational groups including self employed in agriculture.
                                                              6
                                         0
                                             5
                                                 10
                                                      15
                                                           20
                                                                25
                                                                     30
                                                                          35
                                                                               40
                                                                                    45
                          Or
                               iss
                                  a
               M            Bi
                ad             ha
                   hy              r
                       aP
                 Ut        ra
                               de
                    ta             sh
                       rP
                           ra
                  M            de
                                  sh
                     ah
                        ar
                            as
                               ht
                                  ra
                       Al
                           l-I
                  W            nd
                     es            ia
                        tB
                            en
                                ga
                   Ta
                       m            l
                          il
                             Na
                      Ra         du
                         ja
                             sth
                     Ka          an
                         rn
                             ata
                                  ka




    Rural
                          As
                               sa
                                  m
                         Gu
                              ja
                                 ra



    Urban
                                     t
                               Go
                                  a
               An         Ke
    Total          dh         ra
                                 la
                                                                                         Incidence of Poverty in India (2004-05) In %




                      ra
                         Pr
                            ad
                               es
                                  h
                            De
                                lh
             Hi         Ha         i
                m           ry
                  ac           an
                     ha            a
                        lP
                           ra
                              de
            Ja                   sh
              m           Pu
                 m           nj
                   u&            ab
                         Ka
                            sh
                               m
7




                                  ir
Framework of Action Against Poverty
Multi pronged strategy to enhance entitlement and access


                    Opportunity




                 Complimentary and
                    Supplementary
                 actions to neutralize
                   the deprivations

 Empowerment                             Security
                                                           8
                Enhance Income Capability
• Address Resource poor – small and marginal farmers

• Subsidized inputs ( seeds, irrigation), credit, institutional
  support

• Focus on low productivity / rain fed regions

• Diversified agriculture : horticulture, animal husbandry,
  poultry, fisheries

• On farm value addition :
   – Grading, sorting, quality improvement, on farm primary processing,
     adoption of good agricultural practices

• Rural Non Farm Employment

• Income Support and Supplementation                                  9
                          Cooperatives
                    The Development Catalyst
    Cooperative : Little people’s chance in a world of bigness
                                                          (Rochdale Pioneers 1844)

• Institution of mutual sharing and caring

• Business development for poor, un-organised and un-skilled people

• Overcomes structural constraints in agriculture

• De-bureaucratize and de politicize

• Conducive environment fot value creation

• Defuses class conflict, reduces social gaps and promotes collective
  responsibility
                                                                           10
 Empowerment through Business Development
 Imperfection in the market
   o Input, production, processing, investment,
   o Insulation against imperfection and uncertainties

 Linkages for efficiency in transaction cost
   o Input price, quality
   o Interface with technology and extension

 Competitiveness
   o Low yield, high production variability


 Special disadvantages conditions
   o High perishables – opportunity cost
   o High seasonality of inputs and output
                                                           11
   o Bulky material – Handling, movement, transportation
                 Village Cooperative Societies
                  Grass root Institutionalization of
               Opportunity, Empowerment and Security

  Diverse Activities                   Rural infrastructure and services

                                   •   Storage / Cold storage
• Strategic agricultural inputs    •   Rural roads
                                   •   Health
• Meeting consumer needs           •   Veterinary Services
                                   •   Transport
• Marketing societies to ensure    •   Irrigation
  remunerative price
                                   •   Electricity
• processing and value addition    •   Market Intelligence
                                   •   Technology
• Resource needs                   •   Skill, knowledge and information
   – First Cooperative Society
     Act of 1904 to enable
     agriculture credit                                               12
     cooperatives
   Indian Co-operative Movement at a Glance
Number of Co-operatives (all)                                  583,580
   –   Primary agriculture co-operatives                       160,826
   –   Primary non-credit co-operatives                        419,764

Membership (all in million)                                    242.0

Share capital (Billion US $)                                   6.2

Government participation in primary
agriculture co-operatives (%)                                  5.4

Working capital                     (Billion US $)             108
Reserves                            (Billion US $)              10
Deposits                            (Billion US $)              60

Coverage of rural households (%)                                 71
Villages covered by co-operatives (%)                          100
Source: NCUI: Indian Co-operative Movement – A Profile 2006.   1US$ = Rs. 45   13
    Co-operatives in National Economy

                                                   (Per cent Share)
       Indicators of Input supply
    o     Fertilizer Disbursed                       35.0
    o     Fertilizer Production                      26.5

       Indicators of Input Service
    o     Agriculture Credit Disbursed by coop       66.0
    o     Retail Fair Price shop (Rural + Urban)     23.0
    o     Storage Facility (Village Level PACS)      64.0

       Employment Generation (in millions)
    o     Direct                                     1.2
    o     Self Employment                           15.4


                                                                 14
         Co-operatives in National Economy
                                                                (Per cent Share)

       Indicators of Commodity Production / Purchasing / Marketing

    o      Sugar Produced                                     46.2
    o      Wheat Procurement                                  33.5
    o      Procurement of oilseeds and pulses                100.0
    o      Procurement of rubber                             18.5

    o      Milk Procurement to Total Production               7.4
    o      Milk Procurement to Marketable surplus             10.5
    o      Ice Cream manufacture                              45.0
    o      Animal feed production / Supply                    50.0
    o      Oil Marketing (Branded)                            49.0

    o      Spindleadge in Coop                               10.3
    o      Handlooms in Co-operatives                         54.0
    o      Fishermen in Co-operatives (Active)                23.0
                                                                             15
   Poverty reduction through Cooperatives
                 Furthering the process

 Broadening the operation
  o Expansion of service domain
  o Strengthening economic viability of rural area
  o Wider socio-economic perspective (SHG)
 Focus on chronic poverty
  o Asset strengthening
  o Consolidation of business development
  o Awareness – propagation of success stories
 Commodity specific Cooperatives
  o Active involvement of producer members
  o Strengthening forward, backward and horizontal linkages
                                                        16
  o Evolving command area / cluster approach
                           Sugar Cooperatives
First Cooperative Sugar Factory: Parwara Maharashtra – 1948
(Late Vithal Rao Vikhe Patil)


• Number of Cooperative sugar mills                                         : 316
• Membership Total (in Million)                                             : 5.14
• Growers Membership                                                        : 92.5 %

                                                                    (Millions US$)
• Share Capital                                                             : 716
• Turnover (Total) 2004-05                                                  : 285

• Total cane crushed (Mill tns.)                                            : 44
• Total Sugar Produced (Mill tns.)                                          : 7.8

                                                                                           17
Data Source: NCUI: Indian Co-operative Movement – A Profile 2006.                    1US$ = Rs. 45
                            Dairy Cooperatives
First Milk Producers Cooperative Union: Kaira- Gujarat- 1946
(Late Tribhuvandas Kishibhai Patel)

• Number of Dairy Cooperatives                                             : 121,180
• Membership Total (in Million)                                            : 12.95
• Women Membership (in Million)                                            : 2.96

                                                                    (Millions US$)
•   Share Capital                                                           : 83
•   Working Capital                                                         : 465
•   Assets                                                                  : 413
•   Turnover (Total) 2004-05                                                : 1206

• Total Milk Procured by Coops (Mill It.)                                  : 7325
• Liquid Milk Marketed per day (Mill It.)                                  : 15

• Balanced Cattle feed Production                                          : 1.09 million tns
                                                                                           18
Data Source: NCUI: Indian Co-operative Movement – A Profile 2006.                    1US$ = Rs. 45
                AMUL (Anand Milk Union Ltd – 1946)
                       A complete development model
Gujarat Cooperative Milk Marketing
Federation (GCMMF):
                                     13       : District coop. milk producers' Union
India’s largest food products        2.6 million        : Milk producing members
marketing organisation               12,792             : Village Societies
                                     6.5 million liters : Daily(avg) milk collection
                                     60 percent milk : Converted to value added
“Amul model has rightly
                                     594 Mts.           : Daily milk drying capacity
concluded that dairy cooperatives
have shifted dairying from a         2640 Tns/ day : Cattle feed manufecturing
sideline activity to a serious       1.05 Billion US$: Annual Turnover
economic enterprise, making it the
                                     28 Million US$ : Exports
major source of farm income.
(Dairy) Cooperatives have done
more for the emancipation of            Social and economic transformation
Indian women than centuries of
social reforms”                         of rural domain
 (World Bank, 1998)                                                            19
                  Impact of Operation Flood (OF)
               Farmer controlled cooperative dairy programme
• Poverty: Sixty percent of beneficiaries were small and marginal farmers
     – Payments for 7325 million litters of milk to dairy producers annually

• Nutrition: Increase in per capite milk consumption (107 gms / head in 1970 to 245 gms
    / head in 2005-06)

• Job Creation: Women's engagement, release of men labour for non farm employment

• Education: Income enhancement increased children enrolment in schools, also
    encouraged adult literacy

• Women in development: formation of women's dairy cooperative societies

•   Breed development, fodder supply, other inputs and consumer goods supply

•   Elimination of risk

•   Rural infrastructure (Physical, social, health)
                                                                                     20
                                     (Sourced and updated from World Bank Evaluation – 1996)
“A large proportion of rural livelihoods in India are at the
mercy of the law of diminishing marginal returns from land.
This has led to the bleak phenomena of rural-urban
migration, casualisation of urban labour and feminisation of
agricultural labour etc. with the net effect of extremely
insecure rural livelihoods. A successful rural development
programme must help rural people stay on voluntarily and
profitably in the villages.

Cooperative dairy development on the Amul Pattern has
been instrumental in securing rural livelihoods in many
parts of India through income generation, agricultural
diversification, risk distribution, female empowerment and
assured employment.”
                                                              Dr. V. Kurian,
                                 Chairma’s Speech   31st   AGM of GCMMF
                                                             23rd June 2005
                                                                               21
           THANKS

email: rajivmehta2003@rediffmail.com

      rajivmehta2@gmail.com

                                       22

				
DOCUMENT INFO