An Analytical Study of Cooperative Advantage from Membership Perspective in Agricultural Credit Cooperatives of India.

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1 An Analytical Study of Cooperative Advantage from Membership Perspective in Agricultural Credit Cooperatives of India 1. Introduction Sushila Kaul The cooperative movement in India has made remarkable progress and there are million cooperative societies with a membership of more than 209 million and working capital of more than Rs million. Every fourth cooperative in India is a primary credit society and delivers timely and adequate credit to farmers. The primary agricultural societies are disbursing nearly 46% of total agricultural credit, which enables small and marginal farmers and other weaker section of society to adopt modern agricultural technology and improved cultural practices for raising farm productivity and production. The organization of these societies dates back to 1904, when the first cooperative society act was passed. These societies were started with the object of providing cheap credit to the agriculturists in order to provide the farmers credit at proper rate of interest.. The main functions of these societies includes providing short term and medium-term credit; supply agricultural and other production requirements and undertake marketing of agricultural produce. In addition, the cooperatives help in formulating and implementing a plan for agricultural production for the village and undertake such educative, advisory and welfare functions as the members might be willing to take up. The societies are also expected to inculcate the habit of thrift and saving among their members. The members of agricultural cooperatives pool their resources by making deposits and are entitled for credit at a reasonable rate of interest to meet their credit needs. These members participate in the management of these societies as well. The available evidence indicates 1

2 that number of primary agricultural credit societies in the year was million. This number doubled during The same showed a declining trend later during 1981 and onwards. During the year , this number was The number of members of these societies was million in This figure was million in It became million in The ratio of villages to primary agricultural societies is 7 for the nation as a whole, while it is 2 for the western region and 13 in the central region. The statistics indicates that there is a wide gap in the growth of membership in different parts of the country. This differential pattern of growth and development of cooperatives in general and membership pattern in particular is linked with the development of farm sector in various states and regions of the country. Considering the importance of agricultural credit cooperative societies, the objective of the present paper is to study the cooperative advantage from membership perspective in agricultural credit societies in India. 2. Data and Methodology The data on different variables have been obtained from a Report entitled, Some Aspects of Farming, (2005) published by NSSO, Govt. of India. Secondary data have also been obtained from various issues of the publications of NABARD and CSO, New Delhi. State-wise information was obtained on number of members of cooperative societies (Y), literacy rate of farmers in the state (X 1 ), knowledge of the farmers about minimum support price (X 2 ), their knowledge about world trade organization (X 3 ), the association of farmers with registered organizations (X 4 ), and self-help groups (X 5 ). 2

3 It was hypothesized that the members per agricultural credit society is dependent on the literacy rate of farmers, their knowledge about the existence of minimum support price, their awareness about the global organizations like world trade organization, proportion of farmers, who are aware about their rights and are members of any registered society and number of farmers, who belong to any self help group in the village. A positive influence on membership is expected from better education level of farmers and extent of knowledge of agricultural business as well as W.T.O. and minimum support prices of various agricultural commodities. It is hypothesized that several of these independent variables will have positive effect on growth prospects of membership in the cooperatives. The findings of the study will be useful in promoting agricultural credit societies in different regions and will be helpful in correcting the regional imbalances in the development of cooperatives by improving social and economic status of people. The equations using least square technique have been estimated. The role of membership was analyzed and the impact of various variables were obtained using the following regression model: Y = β 0 +β 1 X 1 +β 2 X 2 +β 3 X 3 +β 4 X 4 +β 5 X 5 +e Where, Y = Member per agricultural society ( no.) X 1 = Proportion of male farmer s literacy X 2 = Proportion of household knowing minimum support prices X 3 = Proportion of farmers knowing WTO X 4 = Proportion of farmers belonging to registered organizations X 5 = Proportion of farmers belonging to self help groups β 0 = Intercept and β 1 to β 5 are regression coefficients and e is the error term. 3

4 3. Results The fitted regression equation was able to account for 68% of the total variability, as the value of R 2 was.68.the regression coefficients corresponding to the variables X 3 and X 5 were found to be significant at 5% level of significance. The other coefficients, however, were not found to be significant. Also these two variables appear to have a positive influence as reflected by the signs of the regression coefficients, as indicted in the fitted equation and the values of the regression coefficients presented below: Y = β 0 +β 1 X 1 +β 2 X 2 +β 3 X 3 +β 4 X 4 +β 5 X 5 +e Y = (-) X X X * 3 +(-) X X 5 +e The fitted regression equation was found to be highly significant, as the F value (4.32) exceeds the Table value of F at 2.5% level of significance. 4. Conclusions It therefore emerges that there is a distinct possibility of increasing the membership of cooperatives, by increasing the level of knowledge about the phenomenon of globalization and impacts thereof, like World Trade Organisation. Furthermore, proportion of farmers belonging to self help groups seems to positively influence the membership. The literacy rate also affects positively the membership, even though, in this study the contribution does not affect significantly. It appears that literacy, basic knowledge about the global patterns and participation in self help groups are expected to increase the membership, thereby giving a boost to the cooperative movement in the agrcultural sector. 4

5 References: Central Statistical Organization Statistical Abstracts of India, (various issues) Deptt. Of Statistics, Ministry of Planning, New Delhi. Kaul, Sushila (2004) Problems and Prospects of Women Co-operatives in Indian Dairy Sector Paper presented at 3 rd Asia Pacific Research conference of ICA at Chiangmai, Thailand, Nov.30, Kaul, Sushila (2005) Economic Analysis of Regional Variation in Dairy Cooperatives of India accepted for presentation in International Co-operative Research conference,held at Cork,Ireland,Aug.10-14,2005. Kaul, Sushila (2006) Assessment of Role of Leadership in Dairy Cooperatives in India presented at 4th Asia Pacific Research conference of ICA at Colombo, Sri Lanka,Aug.15-16, Mamoria, C.B.(1982) Agricultural Co-operative Structure in India, Kitab Mahal. NSSO(2005) Some Aspects of Farming, Govt. of India, New Delhi. 5