TRADITIONAL vs.

NEW
GENERATION
COOPERATIVES IN
DAIRY SECTOR

PRODUCERS ORGANISATION
amplify the political voice of smallholder producers,
reduce the costs of marketing of inputs and outputs,
provide a forum for members to share information, coordinate activities and make collective decisions.
Hence, collective action through cooperatives or associations help the small farmers to adapt to new
patterns and much greater levels of competition [Singh, 2002].

Cooperatives
The Development Catalyst
Cooperative: Little peoples 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 for value creation
Defuses class conflict, reduces social gaps and promotes collective
responsibility
3

What do you mean by a

Cooperative ?
A cooperative is an autonomous association of
persons united voluntarily to meet their common
economic, social and cultural needs and aspirations
through a jointly-owned and democratically controlled
enterprise.

Values of a Cooperative
Cooperatives are based on the values of self-help,
democracy, equality, equity and solidarity.
Cooperative members believe in the ethical values of
honesty, openness, social responsibility, and caring for
others.

Principles of a Co-operative
Voluntary and Open membership
The Democratic Member Control
Member Economic Participation
Autonomy and Independence
Education, Training and Information
Cooperation Among Cooperatives
Concern for Community
6

Cooperative Movement in the

World
The earliest cooperatives were set up among the weavers.

They set up the first co-operative in

Scotland (Fenwick, 1761; Govan, 1777; Darvel, 1840 ),
France (Lyons, 1835 ),
England (Rochdale, 1844 ), and
Germany ( Chemnitz, 1845 ).

The real co-operative movement can be credited to the

Rochdale Pioneers who established a co-operative
consumer store in North England.
7

Cooperative Movement in India

1904: The Cooperative Credit Societies Act i.e. the first Cooperative
Law of India was passed
1912: The Cooperative Societies Act, 1912 had wider scope for
other types of cooperatives to function
1919: Government of India Act, Cooperation as a subject was
transferred to provinces
1942: Multi-unit Cooperative Societies Act, delegated the power of
Central Registrar of Cooperatives to State Registrars for all
practical purposes
1984: Multi-State Cooperative Societies Act

Contd.

 1991: Brahma Prakash Committee comes out with the Model

Co-op Societies Act, with lesser state involvement
1995: The Government of Andhra Pradesh passes the new
Mutually Aided Cooperative Societies Act, granting autonomy
to the cooperatives.
2002: Multi-State Cooperative Societies (MSCS) Act, 2002
replaced the MSCS Act, 1984.
2002: Companies Amendment Act, 1956 provides an
alternative to the institutional form that is presently available
to cooperative enterprises
2004: Task Force on Revival of Cooperative Credit
Institutions, set up under the chairmanship of Prof. A.
Vaidyanathan
9

Cooperative Movement in Gujarat

The first agricultural credit society registered under the 1904 Act was
Vilaspur Cooperative Credit Society in the Dascroi taluka of
Ahmedabad district.
Kaira district Milk Union Ltd. popularly known as AMUL was
established by Late Shri Tribhuvandas Patel in December 1946 at
Anand.
The state has also been ahead in the organisation of Agricultural
Marketing cooperatives, Non-agricultural Cooperative Credit Societies,
Forest Labourers Societies for Adivasi, Cooperative Housing, Poultry
Cooperatives, Lift irrigation and Industrial cooperatives.

10

Table 1: Cooperative Movement at a Glance

Particulars

No., Percent share

Number of Cooperatives (All level)

0.545 million

Total combined coop membership

[National Population 1.027billion]

236 million

Share capital

Rs. 223,944 million

Working capital

Rs. 3, 827,496.4 million

Total households covered

75%

Total villages covered

100%

Number of National cooperative federations

19

Number of State level cooperative federations

367

Number of District level cooperative federations

2,890

Source: Indian Cooperative Movement A Profile 2004, National

Centre, National Coop. Union of India, New Delhi

resource
11

Table 2: Share of Cooperatives in National

Economy
Particulars

Percent
Share

Rural Network (villages covered)

100%

Agricultural credit disbursed by coops.

42.80 %

Fertilizer disbursed (6.049 million tonnes)

36. 17%

Sugar produced by cooperative sector (10.164 million tonnes)

59%

Direct employment generated

1.15 million

Self-employment generated for persons

14.79 million

Milk procurement to Total Production

7.44%

Milk Procurement to Marketable surplus

10.5 %

Dairy Cooperatives India becomes worlds largest milk producer

Fertiliser Cooperatives India becomes worlds largest Urea producer
Source: Indian Cooperative Movement A Profile 2004, National
Centre, National Coop. Union of India, New Delhi

resource
12

Main Areas of Operation of

Cooperatives
Agricultural Credit
Agricultural Supplies
Agricultural Marketing
Agricultural Processing. It includes:
Dairy cooperatives
Sugar cooperatives
Fisheries cooperatives
Poultry cooperatives
Industrial co-operatives
Public Distribution of essential commodities through consumer co-operatives
Urban credit Co-operatives
Housing co-operatives

13

DAIRY COOPERATIVES
The Dairy Cooperative Network (As on 31st March, 2009)
includes 177 milk unions
operates in over 346 districts
covers 1,33,349 village level societies
is owned by around 13.9 million farmer members of which 3.9 million were
women.
accounts for the major share of processed liquid milk marketed in the India.

Milk is processed and marketed by 15 State Cooperative Milk Marketing

Federations.

Several brands have been created by cooperatives like Amul (GCMMF),

Vijaya (AP), Verka (Punjab), Saras (Rajasthan), Nandini (Karnataka), Milma
(Kerala) and Gokul (Kolhapur).

As per data released by the Ministry of Food Processing Industries, exports

of dairy products have been growing at the rate of 25% p.a. in quantity terms
and 28% in value terms since 2001.
14

Structure of Dairy Cooperatives

15

Table 3: Status of Dairy Cooperatives

Particulars

Number

Number of dairy cooperatives

103,305

Of which Anand pattern dairy cooperatives

96,206

Membership total (in million)

11.5367

Membership of Anand Pattern (in million)

10.738

Turnover (total)

Rs. 5957.9 million

Average milk procured per day (000 lts)

16,504

Number of milk sheds (unions)

176

Total milk procured by cooperatives (000 lts)

6023, 960

Source: Indian Cooperative Movement A Profile 2004, National

resource Centre, National Coop. Union of India, New Delhi
16

Share of Dairy sector in Indian Food

Processing Industry

Source: D&B Research (2006)

17

2006

18

Table 4: Food Processing Units in

Organised Sector
Particulars
Flour mills
Fish Processing Units

Number of Units
516
568 (+482 cold storage units)

Fruit & Vegetable Processing Units

5293

Meat Processing Units

171

Sweetened & aerated water units

656

Milk Product Units

266

Sugar Mills

429

Solvent extract units

725

Rice mills

139208

Modernised rice mills

35088

Source: Ministry of Food Processing Industries, Annual Report 2003-04

19

Table 5: Employment in dairy farming

systems
(MED/Household/Annum)

Category of
households

Control area

Project area

Percentage
change

Landless

120.45

172.01

42.81

Marginal

144.63

177.48

22.71

Small

196.19

204.86

4.42

Medium

242.73

313.9

29.32

Large

436.63

448.49

2.72

Average change (increase)

MED: man-equivalent days
Source: Singh et al. (1995)

20.4
20

AMUL & Evolution of Anand Pattern

Dairy Co-operatives
'AMUL i.e. Anand pattern of cooperatives in Kaira district of
Gujarat state of India was started as a determined retaliation
against the monopolistic exploitation of farmers by private
traders.
The cooperative structure and the system established in
December 1946 as a part people's effort came to be known
as Anand-Pattern of Dairy Co-operative.

21

OPERATION FLOOD
Operation flood was launched in 1970 to create a virtual flood of
rurally produced milk in India by helping rural milk producers to
organise village level dairy cooperatives on the famous ANAND
PATTERN of the Kaira district of Gujarat.
The program was started with the help of the World Food Program
(WFP), and continued with dairy commodity assistance from the
European Economic Community (EEC) and soft loans/credit from the
World Bank.
The National Dairy Development Board (NDDB) was entrusted with
the task of implementing Operation Flood. It led to the "White
Revolution," making India the world's largest milk producer.
The program was implemented in three phases named Operation
Flood (OF) I, II and III.
22

Table 6: Salient Features of Operation

Flood
Key
parameters

Operation Flood Phases

Phase I

Phase II

Phase III*

Date of start

July 1, 1970

April 1, 1981

April 1, 1987

Date of ending

March 31, 1981

March 31, 1985

April 30, 1996

277.20

137.95

No. of milksheds 39

136

170

No of DCSs set 13,270

up

34,523

72,744

No of members 17.5
(lakh)

36.3

93.0

Investment
crore)

(Rs 116.50

Contd.

States covered

Andhra Pradesh,
Bihar,
Delhi,
Gujarat, Haryana,
Karnataka,
Madhya Pradesh,
Maharashtra,
Punjab, Rajasthan,
Uttar Pradesh, and
West Bengal

Andhra Pradesh,
Assam,
Bihar,
Goa,
Gujarat,
Haryana, Himachal
Pradesh, Jammu &
Kashmir,
Karnataka, Kerala,
Madhya Pradesh,
Maharashtra,
Orissa,
Punjab,
Rajasthan, Sikkim,
Tamil
Nadu,
Tripura,
Uttar
Pradesh,
West
Bengal, Andaman
&
Nicobar,
Pondicheri,
and
Delhi

Andhra Pradesh,
Assam,
Bihar,
Goa,
Gujarat,
Haryana, Himachal
Pradesh, Jammu &
Kashmir,
Karnataka, Kerala,
Madhya Pradesh,
Maharashtra,
Orissa,
Punjab,
Rajasthan, Sikkim,
Tamil Nadu, Uttar
Pradesh,
West
Bengal, Pondicheri
and Delhi

Includes progress during April 1985 to March 1987, a period during which activities were
funded by the NDDB (Rs. 209.0 crore)
Source: NDDB (2001)
*:

24

Table 7: Impact of Operation Flood - I at Village

Level in Sabarkantha Milkshed, 1980
Sr.
no.

Particulars

Banaskantha
Cooperative villages

Control villages

1.

Average milk production (l/hh)

89.63

43.14

2.

Average milk production (l/hh/per milch

animal in milk) last month

79.31

53.25

3.

Average price realised (Rs/l)

1.76

1.96

4.

Gross revenue from milk and milk

products (Rs/hh)

102.16

29.54

5.

Gross revenue per milch animal in milk

(Rs/hh)

90.40

36.47

6.

Average
(Rs/hh)

-Landless households

557.79
(11.51)

370.75
(11.72)

- Landed households

1619.97
(88.48)

788.74
(88.28)

annual

income

from

milk

27

Contd.
7.

Employment
(hh/annum)

in

days

from

dairying

-Landless households

66.54
(14.62)

38.97
(19.91)

-Landed households

169.21
(38.26)

156.20
(36.40)

8.

Calorie intake from milk and

products (K calorie/capita/day)

milk

154.0

97.0

9.

Protein intake from milk

products (gm/capita/day)

milk

5.0

4.0

and

* Implicit value of milk in terms of ghee price.

** Figures in parentheses represent percentage of the aggregate income, in case of employment
these are percentage of total employment in all activities.
Source: Katar Singh and V. Mukunda Das, Impact of Operation Flood I at Village Level,
Research Report I, IRMA, 1984.

26

Anand Pattern (Traditional Cooperative)

27

Salient Features of Anand Pattern

Co-operatives

A single commodity approach;

A three-tier organisational structure;
Producer-elected leadership and decentralised decision making for
total democratic Governance.
Hiring of professional managers and technicians;
Accountability of professional managers, technicians and other
employees to the Board of Directors comprising of elected leaders
from the producer members.
Provision of all necessary inputs and services to member-producers
at nominal price.
Integration of production, procurement, processing and marketing
functions;
Cash payment to producers for their milk - daily or weekly; and
Contribution to village amenities like drinking water, school etc.
28

IMPACT EVALUATION OF TRADITIONAL

DAIRY COOPERATIVES IN DIFFERENT
STATES OF INDIA

29

Table 8: IMPACT OF MILK PRODUCERS COOPERATIVE

SOCIETY ON THE NET INCOME OF MARGINAL AND SMALL
FARMERS (On an average) THROUGH DAIRYING IN CHITTOR
Sr. Particulars
Marginal
Small Farmers
DISTRICT
(ANDHRA
PRADESH)
no.
Farmers
(in rupees)
1.
Dairy income before joining 3177
6615
milk cooperative society
2.

Dairy income after joining milk 4175

cooperative society

8135

3.

Increase
income

1520

or

decrease

in 850
(25.5%)

(22.98%)

Source: Indian Cooperative Review, April 2006;

Jayachandra, K. and Naidu, Y.G.
30

Table 9: PROPORTION OF DAIRY INCOME TO TOTAL

INCOME OF MARGINAL AND SMALL FARMERS IN
CHITTOOR DISTRICT (AP)
(in rupees)
Sr.
no.

Particulars

Marginal
Farmers

1.

Proportion of dairy income 38.00

before joining the society

34.00

2.

Proportion of dairy income after 43.40

joining the society

37.70

3.

Increase or
proportion

3.7%

decrease

in 5.4%

Small Farmers

Source: Indian Cooperative Review, April 2006; Jayachandra, K. and Naidu,

Y.G.

31

Table 10: AVERAGE DAILY MILK YIELD OF BUFFALOES

AND COWS
(litres)
Rainy

Winter

Summer

Overall

Members

5.47

8.00

5.42

6.29

Non-members

4.46

6.41

4.66

5.18

Members

4.42

5.50

3.63

4.52

Non-members

3.78

4.82

3.24

3.95

(A) Milch buffaloes

(B) Milch cows

Source: Indian Journal of Agricultural Economics, July-Sept. 1996; Shiyani R.L.

32

Table 11: IMPACT OF DAIRYING ON EMPLOYMENT OF

MARGINAL AND SMALL FARMERS IN CHITTOOR DISTRICT
(AP)
(Percentage)
Employment

Marginal Farmers

Small Farmers

Male

Female

Male

Female

Full-time

46.3

68.6

27.8

50.7

Part-time

29.0

41.7

50.0

63.3

Source: Indian Cooperative Review, April 2006; Jayachandra, K. and

Naidu, Y.G.

33

Table 12: AVERAGE DAILY MILK YIELD, PRICE AND

COST OF MILK PRODUCTION
Producer
type
and
season

Buffalo

Cow

Milk yield
(Litre/day)

Price of Cost
of Milk yield
milk
Production (Litre/day)
(Rs./lit)
(Rs./litre)

Price of Cost
of
milk
Production
(Rs./lit)
(Rs./litre)

Rainy

5.47

7.49

6.64

4.42

4.47

3.97

Winter

8.00

7.59

5.04

5.50

4.63

3.49

Summer

5.42

7.66

4.47

3.63

4.68

4.66

Overall

6.29

7.58

5.35

4.52

4.59

3.96

Members:

Individual Producers:
Rainy

4.46

6.78

7.29

3.78

3.81

4.28

Winter

6.41

6.56

5.92

4.82

4.01

4.18

Summer

4.66

6.56

5.61

3.24

3.86

5.08

Overall

5.18

6.63

6.22

3.95

3.89

4.45

Source: The Asian Economic Review, August 1998; Shiyani R.L. and Deb U.K.

34

Table 13: IMPACT OF MILK PRODUCERS COOPERATIVE

SOCIETY ON THE CREATION OF ASSETS OF MARGINAL
AND SMALL FARMERS (On an average) IN CHITTOOR
DISTRICT (AP)
Sr.
Particulars
Marginal
Small Farmers
(in rupees)
no.
Farmers
1.

Assets value before joining the 1400

society

2200

2.

Assets value after joining the 1610

society

2475

3.

Increase or decrease in assets 210

value

275

(15.00%)

(12.5%)

Source: Indian Cooperative Review, April 2006; Jayachandra, K. and

Naidu, Y.G.
35

Table 14: PATTERN OF INCOME FROM DAIRYING FOR

MEMBERS AND NON-MEMBERS OF MILK COOPERATIVE
SOCIETIES IN PUNJAB, 1989-90
(Rs.)
Categories

Income per capita

Members

Non-members

Small

1280.72

1253.34

Medium

2521.60

2351.66

Large

3540.00

3375.13

Source: Chahal, S.S. (1991) An economics analysis of milk marketing in

Punjab, Ph.d. Dissertation, PAU, Ludhiana.

36

Table 15: PER HOUSEHOLD ANNUAL MILK PRODUCED AND

CONSUMED ON SAMPLE HOUSEHOLDS
(in litre)
Category

Milk produced

Milk consumed

Member

Non-member Member

Nonmember

Landless

913

849

89

96

Marginal

1181

1052

177

208

Small

1458

1305

293

298

Big

1855

1620

435

405

Average

1334

1207

231

249

Source: The Bihar Journal of Agril. Marketing; Oct-Dec 2000; Prasad et al.
37

Table 16: PER HOUSEHOLD ANNUAL GROSS DAIRY INCOME

AND EXPENDITURE ON MEMBER AND NON-MEMBER
HOUSEHOLDS
(in Rs.)

Category

Gross dairy
income

Dairy expenditure

Surplus dairy
income over dairy
expenses

Percentage of
surplus dairy
income

Member

5638

2232

3406

60.41

Non-member

5954

2453

3501

58.80

Member

7376

3134

4242

57.51

Non-member

6325

3003

3322

52.52

Member

8337

3915

4400

53.04

Non-member

7028

3537

3491

49.67

Member

11323

4774

6549

57.84

Non-member

9646

4270

5376

55.73

Member

8169

3514

4655

56.98

Non-member

7238

3315

3923

54.20

Landless

Marginal

Small

Big

Average

Source: The Bihar Journal Agril. Mktng; Oct-Dec 2000; Prasad et al.

38

Problems with Traditional Cooperatives

The weaknesses of Cooperatives have been summarized
by Cook (1995) as follows:
1)

The Common property or free rider problem

Free riders are cooperative members who make use of the

capital of the cooperative by supplying produce, but
without contributing their full share of that capital.

2)

The horizon problem

It also arises from the manner in which capital is managed,

and also results in a shortage of capital.
Contd.

Members who plan to be suppliers far into the future will favour
continuing investment at a rate necessary to sustain their farms and
the cooperative.

Retiring and dry (non-supplying) members may resist such

investment and may even seek to withdraw the capital they have
already contributed.

3)

The portfolio problem

Farmers become members of a traditional cooperative in order to

supply product to it, however they differ in their preferences for
investments with various levels of risk.

The more risk-averse members want to invest in the cooperative only

to the extent that is necessary to find a market for their produce.

Contd.

Other members may wish to invest more in the

cooperative so that it can pursue discretionary business
opportunities.

These two groups have different views about the purpose

of the cooperative.

4)

Influence costs

There is lot of politics in a cooperative and this has a

cost in monetary terms and in terms of poor decision
making.

Influence costs are generally low in small, narrowly

focused cooperatives, and high in big, diversified ones.

Contd.

The above mentioned problems are inherent to the Cooperative

structure. Besides these, there are many other problems faced
by the Cooperatives, which are as follows:
Unable to spread the business
Lack of professional management
Lack of accountability
Incompetent to compete in the market
Lack of level playing field
Politicization and excessive role of the government chiefly
arising out of the loop holes and restrictive provisions in the
Cooperative Acts

42

Solutions to overcome this problem

Remove the restrictive provisions in the existing Act by
bringing necessary amendments
Enact Self-Reliant Cooperatives Act
Use the Producers Company Legislation

43

What is a Producer Company?

(New Generation Cooperative)
Producer Company is a business enterprise (practically cooperative)
registered under the provisions of Part IX A of the Company Act, and is run
on the basis of Mutual Assistance Principles.
The amendment of the Companies Act, 1956 in 2003, provided for producer
companies through a separate chapter based on the Alagh Committee
report.

44

Mutual Assistance Principles

1.
2.
3.
4.
5.
6.

Voluntary and open membership

Democratic member control
Limited interest on share capital
Distribution of surplus in patronage proportion
Education of members, staff and others
Cooperation among organizations following the principles of
mutuality
7. Concern for community
These principles are same as that underlying a Traditional
cooperative.
That is why a Producer company is also known as a New
Generation Cooperative (NGC).
45

What is a New Generation

Cooperative?
The term has been applied to the 50 or so cooperatives
that have emerged in North Dakota and Minnesota
(USA) in the last four or five years. They represent the
newest generation of cooperatives. Their major focus is
on value-added rather than commodities.

46

Distinguishing features of NGCs are:

Delivery rights tied to the level of equity invested and
opportunity for appreciation/depreciation in their value;
Closed membership;
Higher level of initial equity investment; and
Transferability of delivery rights.
However, NGCs retain following features of a traditional
cooperative:
Democratic control through a one member, one vote policy.
Excess earnings distributed among members as patronage
refunds (dividends). May receive all or most of patronage as
cash.
Board of directors: Elected from the membership, by the
membership.
47

Who can form a Producer

Company ?
Any ten or more individual producers or
Two or more producer institutions
A combination of both

48

DESIGNS OF A
PRODUCER COMPANY or
NEW GENERATION COOPERATIVE
IN THE DAIRY SECTOR

49

Option - I

50

Option - II

51

Option - III

52

Salient features of NGC

1)

Delivery rights:

Equity shares in NGC not only assign membership to

producers, but they also allocate delivery rights and
obligations.

Delivery rights and shares act as a two way contract between

the producer members and cooperatives.

Through this mechanism, producer is assured a market for

his produce and the cooperative society is assured a regular
supply source.

Contd.

 The total quantity of delivery right shares that the

cooperative sells to producers depends on the processing
capacity of the cooperative operations.
2) Transferability of shares:
The members are allowed to transfer their delivery right
shares to others who wish to become members, subject
to board approval.
The price of shares in these situations is negotiated
between the members who are willing to sell their delivery
rights and the producers who are willing to buy these
rights.
The price of the shares depends on the performance and
long term growth potential of the cooperatives.
Contd.

3) Active and Closed membership:

The NGC necessitates the full commitment of the
members in the affairs of the society.
In contrast to traditional cooperatives which accept new
members on a continual basis, membership in NGCs is
restricted once the target amounts are sold.
4) High equity investment:
Due to the presence of delivery rights, the initial equity
investment in NGCs are higher than in traditional
cooperatives and each share entitles a member to deliver
one unit of a farm product to the cooperative.
Contd.

 NGCs typically raise between 30 to 50 percent of their

total capital requirements from the sale of equity shares.
5) Members Control:
Company formed of individuals, member shall have
single vote irrespective of share holding
Where the company is formed exclusively by producer
institutions, the voting right may be computed on the
basis of participation in the business
Company formed of individuals and institutions, there
shall only be a single vote for every member
56

Advantages of NGCs
Producers work collectively to respond to problems or
opportunities.
Restricted membership provides stability to producers
and efficiency for the plant.
A diverse set of stakeholders ensure that the interests of
the community are considered.
Producers and processors are committed to the quality of
the product.
57

A producer company can also be formed by

conversion of a co-operative eligible to
become a producer company.

58

Producer companies vs.

Cooperatives
Features

Producer Companies

Co-operatives

Principles

Mutual Assistance

Membership

User-members

Co-operative
principles
Non-user can be

Voting rights

One member-one vote/

Patronage Voting

Professional
management

One member-one
vote

Provision for experts in No

Board
provision

Nominees on No such provision

board

such

Provided
59

Contd.
Audit

By
CA
(Chartered By Govt.
Accountant)

Election
responsibility

By incumbent board

By Registrar of Cooperative Societies

Area
of Operation

Not restricted

Restricted

Registration

Central Act

State Act

Restrictive
Provisions

No such provision

Provided
60

How does the Producer Company

Legislation overcome the problems faced by
cooperatives ?
Producer Company can spread its operations all over the
country.
Audit by Chartered Accountants (CA)
responsibility of audit lies with the Board.

and

the

Producer Company has liberty to invest its own funds.

Timely elections is the responsibility of the Producer
Company (Board).
Contd.

 Matters related to employees is the sole responsibility of

Producer Company.
Registrar of Companies does not have powers to rescind
resolutions.
Registrar of Companies or the Central Government does
not have powers to appoint nominees in a Producer
Company.
Registrar or Central Govt. does not have powers to
appoint an administrator or wind up a Producer
Company.
Only members of Producer company have the powers to
amend the articles of association.
Contd.

 Only General Body of Producer Company has powers to

merge, divide, amalgamate or reorganize Producer
Company.
Government does not have the right to give directives to
Producer Company in Public Interest.

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Other Opportunities - Producer

Company set-up
Producer Company for promoting its objectives can form
subsidiary company, joint venture or enter into an
agreement or other arrangement with any body or a
corporate.
Producer company can give special user rights to its
active members as provided in its articles of association.
Members must participate in the business of the
Producer Company, articles of association will provide
for minimum participation.
Board of Producer Company may co-opt expert
directors.
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Examples of NGCs in Dairy sector

in India
Junagadh dairy which was revived by NDDB in
2006, is currently being run successfully on the
lines of New Generation Cooperatives.
NDDB is also implementing a complimentary
cooperative strategy by promoting new
generation cooperatives in about eight states.

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Examples abroad
Similar legal frameworks are existing in many
countries, to quote a few:

New Zealand
United States of America
Switzerland
Italy
Denmark
Norway
66

On one hand; the competition in Dairying

is increasing while on the other,
Cooperatives do not have a level playing
field to compete with its competitors.
Producer Company Legislation
provides the needed level playing field
for the New Generation Cooperatives.

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Problems with NGCs

Preferred shares provision compromises the principle of user
ownership, though protects the user control principle.
In practice, member-control may operate by control of delivery
rights rather than by one-member one-vote;
This structure is more suited for large growers who can afford
large upfront investment in processing/marketing;
These cooperatives are more like closely held companies;
and
These cooperatives have the potential danger to turn into
Investor Oriented Companies (IOCs) instead of User Oriented
Companies (UOCs).
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Examples of NGCs in other sectors

17 such companies have been organized in Madhya Pradesh
under the District Poverty Initiative Project in the sectors of seed,
grain, rice and tomato, chilli, poultry, potato, coriander, turmeric,
ginger, milk , and biofertiliser production.
PRADAN has facilitated the organization of Masuta Producers
Company, which deals in silk yarn.
The Development Support Centre, Ahmedabad has facilitated the
organization of Dhari Krushak Vikas Producer Company in the
Amreli district of Gujarat, which deals in agricultural inputs, and
provides extension in integrated pest management and organic
farming.
There are many such companies in Uttarakhand, Andhra
Pradesh and Maharashtra as well.
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Conclusion
Change is the order of the day. The cooperatives are
also not exempted from this rule.
They require changes in system, structure, legislation,
etc. in accordance with the local situation to make the
cooperatives more vibrant.
The cooperatives should have adaptability to face the
challenges posed by the changing economic scenario.

Contd.

 First and foremost, it should survive and sustain in order

to strengthen the socio-economic background of the
members.
In this context, NGCs can play an important role in
solving the problems of cooperatives by undertaking
commercial activities on sound lines.
They also assure long term performance and growth of
cooperatives through efficient and cost effective
operations in the way beneficial to both cooperatives and
its members with added financial strength.

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