Instructor: Satyendra Nath Mishra, XSRM, XUB

|| Office Room 02-219 || Extension: 7752||

Name: Pritish Baruah, Rahul, Rishav Pandey and Samaksh Baj Roll No: ur18017,
ur18018, ur18019, ur18020
Class: MBA (RM) Section: A
Assignment Type: Case Analysis - 04
_________________________________________________________________________

Managing Co-operatives Farming: A Case of Gambhira Collective

Farming Society

Why we do not see other success stories of Agriculture cooperative in India, in-spite of
small agriculture land holding?

In-spite of small land holding pattern in our country, we don’t have successful co-operatives,
like the Gambhira collective farming society. The reasons for the same are as follows.
1) The politicization of co-operatives
2) Market Linkage
3) Lack of co-operation of the part of the people – Tragedy of the Commons
4) Crab theory: The curious case of social structure in agriculture

1. The politicization of co-operatives:

A cooperative is the most open, transparent and democratic business entity wherein the
principle of one man- one vote principle ensures an equal say in its affairs to all members, as
evident in Gambira collective farming society.
In early stages of development of co-operatives, the state had supported in a major way for its
existence in term of cash and cash equivalents, kinds, etc., But over the decades, it has resulted
in the progressive stifling of state interference into the function of co-operatives.
The increasing control and politicization of agriculture co-operatives, we have been unable a
success co-operative as Gambira collective farming society. The primary reasons for the
politicization of co-operatives the fact it provides the significant financial source to the
political class and a major corruption by them will largely go un-noticed due to structural
design issue of co-operatives. Hence the political class would always like to control the co-
operatives.
Many farmers allege that the co-operative societies are not working to the interests of the
farmers but to a political class that controls the societies. The reason for such assertion is being
attributed to the higher rate of capital is being charged to them by the societies than it would
have from other formal credit sources, in case of defaults of loan by the farmers, then the
cooperatives charge heavy penalties, members have no say in major policy matters or

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 Instructor: Satyendra Nath Mishra, XSRM, XUB
|| Office Room 02-219 || Extension: 7752||

functioning of the co-operatives such as credit policy, monitoring policy etc,.Thus

exacerbating the vulnerabilities of small and marginal farmers.
There are many governments appointed committees which have cited these reasons as a main
bane for the co-operatives and had suggested measures to rectify it. One such committee is
choudhry Brahm Prakash Committee which, way back in the early sixties had advocated
complete freedom of co-operatives from government control and had suggested the
cooperative acts of states and also the central act to be changed to give full autonomy to
cooperatives.
The state and it’s planning bodies have failed to give all the visible support in terms of
legislation that provide autonomy and level playing field to the co-operatives. The
cooperatives with a large number of small farmers and middle-class population contribute
significantly to the Country’s GDP and create localized employment that can’t be ignored.
The measures protecting the interest of co-operatives are very necessary in the times of
increasing globalization and advancement of technology in the economy, as the members of
the co-operatives are mainly from small and marginal farmers section, which are neither gain
much from the globalization of economy nor by its technology advancement.
The state functioning departments impose a lot of bureaucratic hurdles in their functioning
because of restrictive laws which have been in place to govern co-operatives. These restrictive
laws limit the growth of the co-operatives and thus unable to meet their working capital, which
creates a perpetual cycle of dependency of co-operatives on state machinery for their working.
These laws need to be done away with and provide an inclusive environment for their ease of
doing business.

2. Market Linkage
Gambhira Collective Farming Society has a strong connection and understanding among
concerned traders who procure the produce from the society. They have a robust management
of business plan and have achieved the power to bargain because of collective group
formation. Secondly, they have a competitive pricing of product along with satisfactory
quality of produce. Due to this reason they have build a good reputation and trust among
traders over the years. All these factors have lead to an efficient market linkage through which
the society is not only able to achieve break even in terms of sale but also gain profit and give
bonus to farmers (distributed through group leaders).
However, that is not the case with all cooperative farming society. This may happen due
to poor pricing of produce, inefficient management and business decisions. All cooperatives
don’t have bargain power to motivate the traders to purchase their product. Sometimes,
middlemen are involved who charge inappropriate amount and societies have to accept their
price quotation, as they don’t have alternative choice. This inappropriate pricing by
middlemen causes problems between societies and traders leading to decrease in sell. Some
cooperatives are not able to develop internal bonding and understand among producers, which

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 Instructor: Satyendra Nath Mishra, XSRM, XUB
|| Office Room 02-219 || Extension: 7752||

leads to inefficiency and dissatisfaction among farmers. Furthermore, a society’s success

relies heavily on satisfactory quality of produce and many societies are not able to meet the
expectations of quality of produce of traders due to which the societies are not able to maintain
long lasting relation with traders and they shift to other farmer societies for better quality
produce.
Moreover, these societies face strong competition among each other as well as big
retailers in urban areas who utilize their bureaucratic power to influence trade. Big retailers
are able to provide more bargain of product price as compared to societies, which attract the
traders.
Marketing skills also play a vital role in the profitability of cooperatives. Most members
don’t have knowledge able the nuances of managing the business strategy. They often end up
taking poor managerial decisions, which lead to losses. If these cooperatives are able to obtain
government or private consultancy support on management of marketing techniques they
could achieve profit. Not all cooperative societies get such kind of external support to improve
market linkage through innovative techniques. Entry to local market is another challenge
which the societies face. It is difficult to gain trust of the market and even if they achieve it, it
is a costly affair in marketing the produce. Sometimes there are demand-supply
mismanagement and societies are not able to identify or provide local market needs of the
consumer.
Last but not the least storage facility plays an important role in attaining efficient market
linkage and timely delivery of good quality products. Most cooperatives are not able to sell
100 percent of their produce and don’t have proper storage facility to keep the products fresh.
Contractors who charge high as well as fluctuating price to store the produce manage storages
and all societies don’t have sufficient budget to afford it.

3. Lack of co-operation of the part on the people – Tragedy of the Commons

In the Indian context, most of the people are in the grip of illiteracy, ignorance and
conservatism. They do not understand the significance of cooperation in their lives. Absence
of willing cooperation on their part hinders the growth of cooperative movement. Lack of
faithfulness and a sense of self-sacrifice for the good of cooperatives are some of the most
serious problems faced by the cooperative societies in our country. It has also observed that
lack of awareness and cooperative education and training is also responsible for non-
cooperation between people of the cooperatives.
Cooperatives suffer severely from nepotism, favoritism, and partiality which results in lack of
cooperation among small and medium farmers as they do not get their fair share. Due to these
reasons problems such as free riding, shirking, opportunism arises which collectively results
in Tragedy of the Common. The tragedy of the commons is a situation in a shared-resource
system where individual users acting independently according to their own self-interest
behave contrary to the common good of all members by depleting or spoiling that resource

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 Instructor: Satyendra Nath Mishra, XSRM, XUB
|| Office Room 02-219 || Extension: 7752||

through their collective action. It is rare to find any cooperative to overcome the problem of
Tragedy of the Commons.
To overcome such issue some cooperatives decided to have centralized leadership by
restricting individual freedom to exploit the resources. But the solution to replace individual
decision freedom by centralized leadership immediately raises the question of whether group
members are prepared to freely give up their decisional freedom. There is no mechanism to
solve the conflicts which arises at the time of decision making. Hence many cooperatives fail
to maintain the balance between the different objectives.
Problem of lack of co-ordination also exists among the institutional agencies at the grass-root
level which is highly visible in finance co-operative societies where defaulters of co-operative
society become the borrower of the other agencies. Such double financing and overlapping
are found simply because of lack of co-ordination.
The collective can overcome these problem by forming small groups, devising proper
mechanisms for sharing works and profits, monitoring and sanctioning of stakeholders at all
levels and institutionalizing rules, norms and values as “The tragedy of the commons”--which
claimed that, without the protection of private property rights, natural resources will be
degraded by neglect--has been not just challenged but reversed by theorists proposing a
“inverse commons” in which collectives produce more robust, inventive results than
commercial entities.

4. Crab theory: The curious case of social structure in agriculture.

The Gangatic plains of the northern part of India is among the world’s most fertile land which
is most suitable for agriculture but it is also one the places where caste, creed and social
standings play a major role in day to day life. Here the big farmers are mostly from the upper
caste communities or from dominant communities of that are and the small and marginal
farmers usually are from the weaker section of the society. The population of this region
exploded from 1951- 1992 leading to overpopulation and highly fragmentation of agricultural
land due to India’s archaic inheritance laws. Now coming to the crab theory, this theory says
that a crab will try to pull another crab below him so that it can move forward. This usually
happens here as a big farmer won’t share agri inputs or share his expertise with a small farmer
because of the fear that the small farmer may surpass his growth. So, if 20 small farmers with
less than 2 hectares each form a cooperative the big and influential farmers of that area will
feel threatened and they will try to undermine the newly formed cooperative such that their
influence and power stays relevant. Then the caste divide will come into play as a small farmer
from upper caste will not want to form a cooperative with from a lower caste due to his pride.
The concept of agriculture cooperatives have a better chance of success where the population
is of homogenous nature as they have a better chances of working together than people with
deep rooted caste, creed, race and religion divide as they will try to undermine each other even
before the formation of a cooperative.

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