CONCEPT OF POULTRY PRODUCERS CO-OPERATIVES FEDRATION & SOCIETY IN INDIA
Primary producers‟ organisations or collectivities are being argued to be the only institutions which can protect small farmers from ill-effects of globalization or make them participate successfully in modern competitive markets (Trebbin and Hassler, 2012). Producers‟organizations not only help farmers buy or sell better due to scale benefits but also lower transaction costs for sellers and buyers, besides providing technical help in production and creating social capital. In Mozambique, where 80% farmers are small holders and only 7.3% were members of any farmer organization in 2005, the membership in a farmers‟ organisation led to 50% increase in profits for small farmers from the crops handled by the organization (Bachke, n.d.). It is also argued that co-operatives or such collectivities are needed for small farmers as they help realize better output prices and credit terms and, thus, can help eliminate interlocking of factor and product markets into which small farmers are generally trapped (Patibandla and Sastry, 2004).
In India, there are many legal forms of organisations into primary producer can organise themselves. A Producer Company (PC) is one such and relatively new legal entity of the producers of any kind, viz., agricultural produce, forest produce, artisanal products, or any
other local produce, where the members are primary producers. PC as a legal entity was
enacted in 2003 as per section IXA of the Indian Companies Act 1956. Since the above
enactment, the PC has been hailed as the organizational form that will empower and improve the bargaining power, net incomes, and quality of life of small and marginal
farmers/producers in India.
While each member in a PC can have only one vote, he/she can contribute different amounts of share capital to the PC. The shares of the PC members cannot be transferred outside the membership. A PC should have a minimum of 10 members or two producer entities or a combination thereof can form a PC. By virtue of assigning equal voting rights to each member, the issues of management control by small and marginal producers has been resolved in the design of PC. In spirit, the current PC design also takes into account the efficiency of the community of producers rather than the efficiency of shareholders/financiers of a profit seeking company.
The Federation is Federal Apex institution which has two-tier approach to the Co-operative Poultry Farming, namely the Primary Co-operative Poultry Societies at the root level and Federation at the state level.
AIMS & OBJECTIVES
• To encourage and help in establishing Poultry Co-operatives in the State.
• To facilitate the marketing of poultry and poultry products of the members and others.
• To arrange sale of poultry products on contract basis to Government, Semi-Government, individual dealers, whole-sellers, retailers within and outside the State after necessary processing, grading etc.
• To establish sale centers within and outside the State for promoting sale of poultry products.
• To arrange compounding and sale of balanced poultry feed and other ingredients to its members and others.
• To take measures for prevention and control of poultry diseases.
• To organise training of poultry farmers, publication of literature on poultry, arranging workshops, seminars, demonstration, lectures, poultry shows etc.
• To encourage co-operative spirit.
• To uplift the economical and social status of the members.
• To arrange financial assistance for its members.
• To work as a liaison between the State Government / Central Government / N.C.D.C./ other agencies and the members.
• To make bulk procurement of poultry pre-mixed feed from within the State and other States, mainly for sale and supply to affiliated societies and arrange for proper storage, packing, grading and transport of such goods.
• To establish and run manufacturing and processing units for the production of pre-mixed poultry feed in collaboration with other co-operatives or directly by itself.
• To render technical guidance and assistance to affiliated societies in grading, packing and standardization, bulk buying, storing, display, processing and other business techniques and also management methods to improve and increase their operational, managerial efficiency.
• To collect and disseminate intelligence and other information relating to the business of poultry co-operatives.
POULTRY COOPERATIVES
Poultry is a very important subsidiary activity in rural areas particularly for the landless and weaker sections of the rural community. With a view to develop poultry farming in cooperative sector, the Corporation has been extending its assistance to poultry cooperatives since 1974-75.
NCDC assistance cover’s the following poultry activities:
i. Establishment of cluster of poultry units with rearing capacity ranging from 5000 and more for each unit with low input technology birds as well as hybrid variety birds with provision for selling pullets to member farmers for backyard poultry farming;
ii. Assistance to societies for incubators, hatcheries and accessories for providing Day Old Chicks to societies engaged in poultry activities;
iii. Assistance for marketing of poultry products by involving producer members;
iv. Poultry dressing units with a minimum capacity of 300 birds per day;
v. Arranging training for members of cooperative societies in collaboration with Govt. of India/State Poultry Training Centres;
vi. Sanction of additional funds to existing Integrated Cooperative Poultry Projects already assisted by NCDC towards expansion of existing capacity and margin money. Only such societies, which are doing well and have positive net worth will be eligible for sanction of assistance. In addition assistance will also be provided to such societies whose projects are partially completed but functioning and have positive net worth towards their completion and margin money.
Rationale for producer/farmer companies in India Co-operatives in India
The co-operative form of organisation has been perceived and seen as a means to achieving reduction in poverty and increase in wellbeing of local people (Birchall, 2003) in the presence of other structural constraints like small holdings, lack of bargaining power of small sellers of produce or services and competition from other forms of organizations. But, co-operatives across the developing world have been more of a failure than success and are alleged to have led to exclusion of really poor, elite capture of such bodies, promoting differentiation instead of equity in rural communities like in case of sugar co-operatives in Gujarat (Ebrahim, 2000).
In India, the only exceptions to the failure have been sugar and milk co-operatives in some
states especially in Maharashtra and Gujarat (Baviskar and Attwood, 1991). But, even in
Gujarat, there are as many cases of failure as are of success of co-operation which include
chicory, tobacco, cotton, vegetables, grains and canal irrigation co-operatives though Gujarat is also known for very vibrant sugar co-operatives in south Gujarat which work like
companies and trade in shares informally and the tubewell companies in north Gujarat which have solved the irrigation problem to a large extent (Shah, 1996). In this context, there has been a constant search for alternative forms of collectivization or co-operation to achieve the objectives of development of poor people though some researchers also differentiate between collectivization and co-operation in the sense that whereas former refers to organizing to avoid exploitation in markets and the latter as organising in situations of missing markets (Shah,1996) .Linking small producers to markets is an important and popular policy and practice issue (Ton, 2008 for an excellent review). There is a need for aggregation in order to benefit from economies of scale. Organised systems are also needed for sharing services such as knowledge input, production supervision, storage, transportation, etc, and to absorb price risks to which primary produce is always subjected. Producers‟ organizations amplify the political voice of smallholder producers, reduce the costs of marketing of inputs and outputs, and provide a forum for members to share information, coordinate activities and make collective decisions. They also create opportunities for producers to get more involved in value adding activities such as input supply, credit, processing, marketing and distribution. On the other hand, they lower transaction costs for processing/marketing agencies working with growers
under contracts. Collective action through cooperatives or associations is important not only to be able to buy and sell at a better price but also to help small farmers adapt to new patterns and much greater levels of competition (Farina 2002).
Cooperatives are different from other forms of organisations not in terms of business
functions they perform but in terms of the manner and philosophy with which these functions are performed. The role of a cooperative is to create an interface between the farmer and global market, provide access to permanent risk bearing capital for farmers, manage risk for farmers through diversification, set standards in the market, provide more competitive market conditions and market access to farmers, and to promote economic democracy at the grass
root level (Singh, 2008).
In India, the alternative ways of registering farmer producer organisations (FPOs) include
societies and trusts, cooperatives, Mutually Aided Co-operative Societies (MACS) (or self
reliant co-ops), private limited companies, public limited companies, and PCs. There could
also be Mutual Benefit Trust (MBT) under the Trust Act. Farmer organizations registered
under the societies Act can‟t legally involve in any trading of inputs or outputs as they are not trading entities. But, until recently, in India and many other developing countries, traditional cooperatives were mostly organised under the co-operative structure, like State CooperativeSocieties Acts in India
Table : Differences between a co-operative and a PC in India
Feature Co-operative PC Registration under Co-op societies Act Companies Act
Membership Open to any individual or co-operative Only to producer members and their
agencies Professionals on Board Not provided Can be co-opted
Area of operation Restricted Throughout India Relation with other entities Only transaction based Can form joint ventures and alliances Shares Not tradable Tradable within membership only Member stakes No linkage with no. of shares held Articles of association can provide for linking shares and delivery rights
Voting rights One person one vote but RoC and
government have veto power Only one member one vote and non- producer can‟t vote
Reserves Can be created if made profit Mandatory to create reserves
Profit sharing Limited dividend on capital Based on patronage but reserves must
and limit on dividend Role of government Significant Minimal
Disclosure and audit
requirements Annual report to regulator Very strict as per the Companies Act
Administrative control Excessive None
External equity No provision No provision
Borrowing power Restricted Many options
Dispute settlement Through co-op system Through arbitration
The membership/shareholding of PCs in India ranges from individual producers to informal self help groups and individual producers, registered SHGs and individual members, and only institutional members.
Table : A comparison of various options for registration under the companies Act
Type of
company>
Parameter
Private limited Company
Limited Company
PC
Minimum
No. of
Directors
required
2
3
5
Number of
Members
Minimum 2; Maximum 50
Minimum 7 Minimum 10 primary producer
members or two producer
institutional members
Membership
eligibility
Any one
Any one Only primary producer or
producer institutions can be
member.
Type of
shares Equity and Preference Equity and Preference Only Equity
Voting rights based on number of equity shares
held based on number of equity shares
held Only one vote irrespective of
number of shares held.
Share
transferability can be transferred to any other
person on price consideration can be transferred to any other
person on price consideration can be transferred only to
primary producer on price
consideration
Share
allocation open to investors and FIs open to investors and FIs not open to investors and FIs
Conversion
clause
Conversion of Private Limited to
Limited is possible, but
conversion to PC is not possible
Conversion of Limited to Private
Limited is possible, but
conversion to PC is not possible. No conversion is possible, but
registered multi state
cooperatives/cooperatives can
be converted to FPCs and vice
versa.
Internal audit conditional subject to financial
limit conditional subject financial limit Compulsory
Donations no bar on donations made no bar on donations made can be made only up to 3% of
the net profit.
Investor
friendliness
Investor friendly Investor friendly but more
procedural than private limited. Not investor friendly and more
procedural than private limited
and limited companies.
Table : Indicators for performance assessment of poultry co-operatives
Indicator Parameters
Input Procurement efficiency Average DOC price; Average feed price
Output Competitiveness Price realized; Average sale weight
Bird transportation + sales person costs
Productivity Efficiency Mortality; Feed Conversion Ratio (FCR)
Efficiency Index (EI)
Member profitability Grower margin (Rs/kg); Grower margin (Rs/annum)
Integration and collectivization Personnel and administration; Meetings and directors‟
costs; Supervisor costs and travel
Financial health Gross profit; Net profit; Buyers‟ outstanding
Working capital; Stock in hand Though farmers mobilization and donor support is important to create farmers companies, capital investment is needed for a scale up and to allow the business to move forward, which can come from social investors and venture funds. Equally important is the support provided by promoters in terms of market outlets, in creation of market for products and communicating the differentiated messages like sustainability or fair trade or farmer‟s ownership. The farmer organizations can obtain shares in such companies, if they have no revenue generating equity, through grant from a public and non-government source, a trust fund or a bank loan (Koning and Piters, 2009).
Reference-On request
Compiled & Shared by- Team, LITD (Livestock Institute of Training & Development)
Image-Courtesy-Google
Reference-On Request.
