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  • Writer's pictureThe Financial Literacy Cell

Repeal of Farm Laws! What Holds Next?

The recent repeal of the three controversial farm laws has put the agricultural sector in a perpetual flux as the sector became much more sentient to reforms. Given the flaws in the agricultural sector such as low productivity, indebtedness, heavy dependence on monsoon, famer suicides, MSP muddle, etc. the still protesting farmers are not really ready to call-off the protest anytime soon. It raises the question of- ‘what’s next?’ Even after 74- years of independence from colonial rule, Indian farmers continue to struggle for independence from various agricultural problems. As agriculture is a sector that emotionally appeals to the masses, Indian agencies are prompted to undertake visionary and effective policy measures to stimulate industry landscape by taking into account the social, political and economic aspect of the agricultural sector.

Can the substantial model of cooperative farming bring another green revolution to the sector? Can it become a possible way towards liberalization of the sector? Is it the solution for the farmers’ concern?

The term “Cooperative farming” refers to the mobilization of a group of farmers for cultivation of a crop and achieving the economies of scale through the efficient division of labor, equipment and funds. During the colonial period in India, a British official, Nicholson had suggested introducing ‘Raiffeisen’, the German model of cooperative farming. Consequently, the British Government introduced the Cooperative Credit Societies Act, 1904 that enabled agricultural credit cooperatives in the rural and remotest parts of India. Under the sponsorship and nurturing of the Government it played a very crucial role in strengthening the weaker belt of farmers. This form of farming has deep roots in India’s history.

The three core areas of the agricultural sector central to the model of cooperative farming, which are: economies of scale, specialization and marketing. As farming in India is plagued by micro and scattered land holding, the cooperatives by consolidating the resources such as farm lands, inputs, funds, etc. can substantially improve productivity. They can also come up with both technical and vocational services to the small-scale farmers to convert agriculture into agro-business enterprises. As India is blessed with varied climate and landforms, co-operatives can make the farmers reap out the benefits of the same through effluent diversification.

In contrast to farm bills, by increasing the bargaining power of the farmers, the marketing of the products will also become favourable and the small and marginal farmers can be protected from exploitation in APMCs and other markets. As it is often truly said- ‘Where there is Unity, there is always victory’.

Even from the sociological perspective, cooperatives can propagate the extravagant values of toleration, brotherhood, condemnation of social evil, resisting exploitation, articulacy and harmonious development through peace and unity. It can provide the unaware, a cognate view of how the democratic structure works and the notion of self-governance.

In India, the ‘Verghese Kurien’ legacy in the form of the Milk revolution has always been a remarkable achievement in the sector. Talking specifically about the agricultural cooperatives, most of the countries are reaping the benefits of this surreal farming. One such example is our neighbor China, which has achieved unparalleled success in agriculture. Let's consider some facts-

•In Kenya, cooperative societies have an effective market share of 70 percent of coffee, 76 percent of dairy, & 95 percent of cotton.

•In Colombia, the National Federation of Coffee Growers provides production and marketing services to 5 lakh coffee growers. It contributes to the National Coffee Fund, which finances research and extension activities for coffee-growing workers.

• In Brazil, cooperatives are deriving 40 percent of the agricultural GDP and 6 percent of total agriculture.

These are not mere factual numbers as they represent the feasibility and the splendor of this type of farming. The adoption of this technique effectively and functionally makes complete sense in India, considering the fact that more than 55% of the population derives their livelihood from agriculture only and more than 85% of them are small and marginal ones. If we just take a look in India, in 2018, the Tamil Nadu government came up with the three-tier structure in this regard where at the lowest level FIGs {Farmer Interest Groups} would be there with up to 20 farmers, and five such FIGs would form a Farmer Producer Groups (FPGs), 10 FPGs will form 1 FPO. FIGs and FPGs were responsible for economies of scale, and FPOs performed the marketing function. They can easily purchase farm equipment, pesticides, and each FPG was granted a sum of INR 5 lakh. In the Tiruchirappalli district, 78 FPGs have been emphatically promoted which includes both the agriculture and horticulture crops.

Though the formation of cooperatives in India is not a very challenging task but it still has some hurdles such as mismanagement and beguile of the opportunity, government interventions, lack of awareness among the masses and the small organizational size. For the better functioning of cooperatives, the government should take the seat of supervisor; this would lead to less interference, while it is effectively managed by its competent members. To ensure and attest to the self-governing nature of the cooperative society, it is essential to maintain the quality of the professional management.

As per the study of World Bank’s Global Financial Development Report 2014-17, it is an effective way for poverty reduction. The cooperatives can also be a way to liberalise the sector after a particular time. In the rural India, the rural cooperatives can be reshaped into high-spirited prosperous models for farmers’ socio-economic development by ensuring infrastructural development, good governance, professionalism, policy legislatives, strict guidelines, digitization, member’s education, assured quality, market linkage, processing of produce, skilled staffing and fair policies.

Thus, we can come to the conjecture that the cooperative system holds immense potential to alleviate poverty and tackle the issues of food security, if their functional mechanism corresponds to effective administration.

By - Riddhi Aggrawal

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