CHAPTER-I

REVIEW OF LITERATURE

INTRODUCTION

Varied intensive research studies are a sin-quo-non for giving dynamism

and broad-based identity to cooperative marketing. An overview of related

theory and practice, concepts and tools of analysis is essential for effective

research in this discipline.

MARKETING RESEARCH

Market research consists of inquiries to open up new markets for

specific products, or to expand the existing ones, thro’ better knowledge of

consumer-demand and producer-supply conditions. Whereas marketing

research is broader and more profound. “Marketing Research has its objective

the discovery of processes, organisations, arrangements and situations that will

tend to maximize the total sum of satisfactions of the society”.1 In the context

of agriculture, “Marketing Research implies research into the efficiency of the

marketing system as a whole of the methods employed and of organisations

involved” 2 Data and conclusions presented as a result of such research may be

helpful to various marketing enterprises, Government and producers in raising

1 Adlove L. Larsen, Ph.D., Agricultural marketing, Prentice Hall, Ince-Englewood Cliffs,

N.J.U.S.A. Third printing, June, 1957. p.479 (Cooperative Perspective, April-June 1975
- quoted by Dr. M. Gopalan)
2 Ibid p.p. 478-490 (Cooperative Perspective, April-June 1975 - quoted by Dr. M.
Gopalan)
their efficiency. One of the most pertinent developments in recent economic

thought and action has been the recognition of the importance of agricultural

marketing in underdeveloped countries. “There is great scope for Marketing

Research in the less developed countries, in many of which even the basic

information is lacking”.3 Marketing specialists stress the need for research

designed to appraise the effectiveness of existing marketing institutions and to

guide Government policies along lines that would maximise attainment of their

goal. Within the objectives of marketing research there may be almost

unending number of problems needing solutions. These problems are in many

ways different from those of marketing of industrial products, owing to

different conditions of demand and supply.

APPROACHES TO MARKETING RESEARCH

Of late, several approaches to the study of various dimensions of

marketing issues have been developed. Such approaches are highlighted in the

following chart -

3 Expressed in FAO, New Delhi meeting on Agricultural marketing, 1959

2
 Approaches to Marketing Research

I
Studies on ‘what’
I
Studies of‘who’
I
Studies on ‘what
of marketing does ‘what’ and ‘who’ does

I
‘ what’ for specific

The functional The institutional

I
farm products

The commodity
approach

I
Potential
approach
„ I.,
Potential
I
approach

Potential
Research areas
*-------- T~
Study of Study of
Exchange physical
Study of
facilitating
I
Research areas

Study of marketing channel

and middleman marketing
Research areas

Both functional and

institutional aspects
functit>ns functions for a particular
commodity

r
a) Buying
r i
a) Storage a) Standardisation Organised and
(Cotton, Jute etc.,)

Unorganized markets
b) Selling b)Transp b) Financing
-porta c) Risk bearing a) Regulated Markets
tion, d) Marketing b) Cooperatives
etc., information, c) State Corporations
etc., d) Commodity Corporations
e) Wholesalers
f) Retailers
g) Brokers
h) Commission Agents
i) Special Middlemen
j) Facilitating Middlemen

The concept of marketing efficiency and its measurements also emerged

as the latest developments in the recent day researches in marketing.

3
COOPERA TIVE MARKETING

Cooperative marketing is defined as the system by which a group of

farmers are involved in joint action. Their marketing processes involved in

bringing goods from the producers to the consumers. It can be considered as a

formal association of cultivators based on cooperative principles primarily for

the purpose of helping themselves.

LITERATURE ON COOPERATIVE MARKETING SOCIETIES

The main aims of this Review of the literature on cooperative marketing

are-

(i) to know how-far the ground is already prepared;

(ii) to identify the lacuna therein; and

(iii) to pin-point the fresh and need based issues for further research.

Several individual investigators, expert committees, commissions and study

teams had made a few studies and observations on various aspects of

cooperative marketing societies. The important findings and observations

found in research publications are reviewed here under. For the specific

purpose of review, the available literature on the subject are classified as

follows:

□ Studies on marketing disabilities / problems (problem identifying

studies)

4
 □ Working of cooperative marketing societies in India (i.e., Role

analysing studies)

□ Studies on Regulated and Cooperative markets

□ Evaluation studies

□ Efficiency based studies

□ Suggestion-based studies / studies for rehabilitation

□ Policy-oriented studies

□ Opinion-surveys

□ Management oriented studies

□ Studies on input and output marketing

□ Single commodity based studies

□ Feasibility studies

□ Post-facto studies

□ Others

A kaleidoscopic picture on cooperative marketing is drawn by most of

the above literature. The approach and observations of each one of such studies

are reviewed hereunder.

5
Studies on marketing disabilities

The malpractices in the system of agricultural marketing are well known.

Marketing malpractices are nothing but thefts (Royal Commission on Agriculture,

1928). Since 1928, conditions had improved with the development of institutional

marketing agencies like regulated markets etc. However a number of malpractices in

different guises were reported to be continued. For instance, The All India Rural

Credit Survey Committee (1954) had described the position as follows:

“While standards of marketing have improved in most of the relatively

few regulated markets which have been established, a number of malpractices

still exist even in these, since personnel and enforcement are two great

problems, not always attended to, much less solved.”

The malpractices create marketing disabilities to the farmers. The

following are the malpractices in the system of agricultural marketing reported

by Dantwala Committee on Cooperative Marketing and commodity market

surveys conducted by the Directorate of marketing, Government of India.

> Multiplicity of market charges

> Unwarranted and heavy trade allowances

> Adulteration and lack of grading

> The under cover method of sales

> Incorrect weightment

> Delayed payment of sale proceeds

6
 > Deduction of advanced money with heavy interests from the sale

proceeds

> Taking of large samples by buyers

> Low marketable surplus

> Superfluous middlemen

> Bottlenecks in storage and transportation and

> Lack of market information.

The above deficiencies are to be removed. Efficient marketing

organisation, therefore, becomes vital to the health and well being of a

community. So an orderly marketing i.e., cooperative way of marketing

assumed importance. However these cooperative organisations had also faced

some problems in their tasks.

The report of the All India seminar on cooperative marketing of

agricultural produce conducted by National Cooperative Union of India (1962-

63) had drawn attention to the cruxes of cooperative marketing societies and of

marketing of agricultural produces. It stressed the need for standardisation and

grading of agricultural produces, strengthening of organisational and functional

7
aspects of cooperative marketing in addition to the need for the provision of

technical guidance and training of marketing personnel.4

The study conducted by Dr. Kahlon and Grewal (1962) had examined

the reasons for the failure of ‘Linking of Credit with Marketing”.5 Whereas

prof. Shah in his study had highlighted the working of integrated scheme of

credit and marketing.6

Prof. Chaturvedi7 and Svardstrom8 in their study had observed the

disproportionate fall in prices after harvest. These authors had recommended

the method of ‘purposive exchange’ through the institution of cooperative

marketing to eliminate the defects.

The All India Rural Credit Survey (1954)9 among other things, had

observed the limited role of marketing cooperatives in the disposal of

marketable surplus, the domination of commission agents and the need for the

linking of credit with marketing and warehousing development.

4 National Cooperative Union of India, Report of the All India Seminar on Cooperative
Marketing, New Delhi, 1963.
5 Kahlon and Grewal.s.s., ‘Integration of credit with marketing’, Agricultural situation in
India, Vol.xviii, No.9„ Dec. 1962, P.547-565.,
6 Shah.A.C. Integrated scheme of rural credit, University of Bombay, 1963
7 Chaturvedi, Theory of marketing in underdeveloped countries, Kitab mahal, Allahabad,
1954, p-20
8 Svardstrom, K.F., Agricultural marketing for cooperatives, Allied publishers, Bombay,
1969.
9 RBI, All India Rural Credit Survey, Bombay, 1954

8
 The National Cooperative Development Corporation appointed a

committee on cooperative processing.10 This committee had pointed out the

problems in processing as a vital issue in marketing and suggested the need for

the undertaking of processing activities as an adjunct function by the marketing

cooperatives.

The All India Rural Credit Review Committee (1969)11 had specifically

noted the problems of small and marginal formers and the need to help them on

the marketing front.

G. S. Kamat (Dr)12 in his publication on marketing- The Cooperative

Way (1974)-had revealed that weak share capital base, wrong location,

inefficient management etc., were causative forces for the weakness of

cooperative marketing.

There are also several studies connected with the specialized

cooperative marketing societies. For example, the production and marketing

problems of groundnut growers and their relationship with marketing

cooperatives were examined by Prof. Gopalan. M. and Eswaran (1979)13. The

study spelled out various problems faced by the concerned cooperative

marketing societies.

10 National Cooperative Development Corporation, Report of the committee on cooperative

processing, New Delhi, 1954
1 RBI, All India Rural Credit Review, Bombay, 1969.
12 Kamat.G.S., Marketing - The Cooperative way, 1974
13 Prof. Gopalan.M. and Eswaran, production and marketing problans of groundnut growers
in coimbatore district, Tamilnadu., the role of cooperative markedly societies in solving such
problems, Sri. Ramakrishna Mission Vidyalaya College for Rural Higher Education,
Coimbatore, 1979.

9
 In an article, Chakuu (Dr.o.p.)14 had examined the operational problems

of the marketing cooperatives. He has established that effective planning is a

powerful instrument to transfigurate the functioning of marketing cooperatives

and to make them economically viable institutions. He fvas classified the

operational problems of the marketing societies as:

Technological: arises due to lack of financial resources

(grading, Processing problems etc.,)

Non- Technological: arises due to defective organisation and

inefficient management (irrational budgeting,

improper evaluation,etc.,)
TcX
The author has also suggested the ftmeasures to over-come the

above constraints.

Working ofMarketing Cooperatives in India

Right from 1913, primary cooperative marketing societies are

functioning in India. They have undertaken many activities. The coverage of

their working aspects is bound to give a complete picture of the general

working of a cooperative marketing society. The factual studies can highlight

the performance and role of cooperative marketing societies and facilitate

spatial and temporal analysis. In this connection a study on the working of

primary cooperative marketing societies in Thanjavur district has analysed

14 Chakuu, o.p., operational problems of the marketing cooperatives in J&K State, Indian
Cooperative Review, Jan 83, p. 235 -247.

10
their actual performance. It has projected the vital need for improvements in

overall working in order to obtain more marketing- share in the disposal of the

principal crops like paddy, groundnut and pulses (study team, 1965). It is

relatively an old study and it has probed the working aspects in a descriptive

manner without much of statistical analysis. Again the primary data were not

used in this study.

The Dantwala Committee (Government of India, 1966) had reviewed

the pattern of marketing of agricultural produce, input supply, supply of

consumer articles at different levels. The pattern of development with

particular reference to inter-relationships between the organisations at different

levels for the successful working of both cooperative credit and marketing,

integration of credit with cooperative marketing and processing, effective role

of cooperative marketing societies in linking of credit with marketing were

stressed by his study.

Micro level studies on the working aspects of individual cooperative

marketing societies will definitely throw more light on the role and

performance of such societies at grass root level. The organisational, structural,

financial, functional and managerial aspects of working were probed by an

individual investigator (Ganesan, 1965). The various marketing activities and

services undertaken by the selected cooperative marketing societies, their

managerial and administrative aspects etc., were also analysed in that study.

11
But it has described particulars about a few societies only and their positive

and negative aspects of working are just listed.

Ramesh Singh Jalal15 in his study has identified the following problems

with reference to the selected cooperative marketing societies in Nainital

district (U.P). Farmers resorting to money lenders due to faulty policies of

PACS, Marketing Cooperatives’ helps only to big farmers, corrupt practices in

marketing cooperatives, low market share of such societies (less than 20

percent), poor membership coverage, doing commission agency business for

the benefit of traders and lack of godown facilities were the main findings of

this study. It has concluded that the cooperative marketing societies could not

attain even partial success and they have become a formality.

Ghanashylam Das, Prabakar Reddy and Sithambar (1985)16 had

examined the working of Andhra Pradesh Cooperative Marketing Federation

(MARKFED) with special reference to fertilizer distribution. This study has

probed the aspects like purchase procedure, distribution channel, etc. Its main

findings were-

❖ Under tied up sales, some fertilizers were supplied to the farmers

which they did not require

❖ The margin in fertilizer business was low

15 Ramesh Singh jalal, a critical review of cooperative marketing of agricultural products - a

case study, Cooperative Perspective, April-June 1981, p.42-48
16 Ghanasylam Das, o., Prabhakar Reddy,m., Sithambar, G., working of‘MARKFED’ in
Andhra pradesh - a case study, Indian Cooperative Review, July 1986, p. 1-15

12
 ❖ Inadequate storage facilities

❖ Problem of loss in transit

❖ Non- marketing of pesticides and seeds

❖ Delayed supply of fertilizers

❖ Seasonal sales of fertilizers

This study has also suggested remedial measures to overcome the above

problems.

To analyse the degree of association of different variables with the

working of cooperative marketing societies based on the opinions of the policy

makers and officials of the member societies, a study was done by Sankara

Murthy17 (1985). Cluster analysis of variables was adopted. The main findings

were

^ The cooperative marketing societies had a good communication

and coordination system within and among organisations.

S There was need for imparting training to the policy makers

^ Member societies had good performance

S The societies experienced managerial problems

S The impact indicators and the financial support to member

societies were considered as immediate attention areas.

17 Shankara Murthy,H.G., Working of marketing cooperatives in Karnataka - cluster analysis

approach, Indian Cooperative Review, July 1989, p.59-68.

13
 A case study, ‘ working of primary cooperative marketing societies in

Andhra pradesh’18 had examined the progress of a cooperative marketing

society, its impact on the price level, benefits provided, inconveniences caused

etc., It revealed a good picture of the performance of cooperative marketing

societies in Andhra pradesh and provided certain suggestions. Almost at the

same period, Singhal19 has made an attempt to ascertain the usefulness and

utility of the cooperative marketing societies in Haryana state. He revealed an

unsatisfactory position by observing that the quantum of business during the

period under study (6 years) was almost stagnant or had receded, non­

implementation of linking of credit with marketing, storing, grading etc., were

not at all covered.

The Tiruchengodu cooperative marketing society in salem district in

Tamilnadu is one of the few good marketing organisations in the state. Mr.

Mahalingam, in his study, had concluded that this society had acted as a becon

light in providing effective and efficient marketing, distribution and post

harvest dealings in the district.

Report on marketing of specific plantation crops, NCDC, 1966

suggested measures for the development of specific cooperative marketing

societies with their adjunct function of processing in respect of crops like

18 Shankaraiah, A., Srinivas, M., Anjaiah, K., Working of primary cooperative marketing
societies in Andhra pradesh - A case study, Indian Cooperative Review, July 1988, p.
61-72
19 Singhal, C.D., Functioning of primary cooperative marketing Structure in Haryana - A
Case study, Indian Cooperative Review, July 1989, p. 94-105

14
areeanut, coconut, black pepper; etc., During 1950’s the Union Ministry of

Agriculture thro’ its Directorate of Marketing and Inspection had conducted a

series of commodity surveys20 on the marketing of various agricultural

commodities. However, these studies are very old and so they have no

relevance to the present day conditions.

Gopalan .M (Dr) and Ramdev21 had given a detailed account of the

various aspects of a hill vegetables cooperative marketing society and the

problems therein.

A comparative analysis with respect to performance of cooperative

societies and private agencies involved in vegetable maMceting in Gujarat was

conducted in the year 1994.22 Two marketing channels were studied.

1. Producer - Cooperative society - Retailer -Consumer

2. Producer - Private trader - Retailer - Consumer.

The main findings were:

□ Market share of cooperative marketing societies was 72 percent

□ Price received and producer’s shares of consumer’s rupee were

high in channel II.

20 Govt, of India, Ministry of Agriculture, Directorate of Marketing and Inspection, A

Survey on the Marketing of Agricultural Commodities, 1950.
21 Gopalan. M (Dr) and Ramdev. J., Marketing of hill vegetables in the Nilgiris district
with special reference to the role of cooperative marketing societies, Tamil Nadu,
M. Phil thesis (unpublished), Bharathiar University, 1985.
22 Parmar, G.D., Khunt, K.A., Desai, D.B., Role and performance of cooperatives in
marketing of vegetables: A case of south Gujarat, Indian Cooperative Review, July
1995, pp. 83-88.

15
 This study concluded that the society had good coverage and created a

fair competition.

Studies on Regulated and Cooperative Markets

Regulated Markets have been established by District market committees

under the Agricultural Produce Market Acts of various Indian states. Growers,

commission agents, traders and cooperative marketing societies are their

functionaries. They are expected to ensure orderly trade in the notified crops in

the notified area. They collect cess from commission agents, traders and from

cooperative marketing societies also. They are intended to counteract the

malpractices prevailing in the assembling markets against the interest of the

peasants.

Various studies show that wherever Regulated Markets are strong and

active, the cooperative marketing societies in those areas are weak and vice-

versa. Information on various working aspects and impacts of Regulated

Markets in various areas are shown by several studies / observations: prof.

Dantwala, M.L., (1947), Kulkami, A.P., (1962), Lakshman singh (1962), Pillai

(1965), Raja (1972), Kandar (1998), Sexena, B.E. (1964) and Natu(1967).

They show the minimisation of cost of marketing, nature of flow of

information from one place to other, level of success of implementation of

Agricultural Produce Market Act, impact of conditions over those of

unregulated conditions, extra income to growers, functionaries’ nature and

16
extent of role in the market yards, systems of sales, amenities and their

adequacies, relationship between arrivals and prices, advantage or otherwise of

storage, poor representation to growers in the market committees,etc.

There was the impact of Regulated Market with regard to reduction in

market charges (Hiranmatdari and Rajakrishna, 1963). Whereas an empirical

study conducted in Karnataka on some facets of Regulated Markets concluded

that the popular opinion about the ease of earning huge profits from storing

products in the godowns of Regulated Markets may be more a myth than a

reality (Donald Taylar, 1972). In that study the costs of storage, storage loses,

insurance premium, interest rates on capital tied up, bag loses, remuneration to

entrepreneurial management etc., are applied to calculate the costs. Yet the

study has shown that the arrivals directly made by growers to regulated market

yards were very meagre and it has identified the factors desisting the growers

to make direct arrivals (Krishnasami and Gopalan, 1965). The investigations so

far made have not probed the extent of relative popularities of Regulated and

Cooperative markets among the various strata of growers and specific reasons

for the low quantum of direct arrivals of produce from farmers for sale and

their relative operational efficiency on various aspects.

To a farmer who is conscious of his economic interests, a marketing

cooperative is as important as a credit cooperative (FAO, 1960). Theoritically,

it has many advantages. But how far these advantages have practically accrued

17
to the farmers is a question for study. Ryon and others (1965) in their study

provided a descriptive account of the nature of cooperative marketing in

general in various areas. Many more studies have come out concentrating on

one or other aspects of cooperative marketing. But most of these studies have

not specifically examined the impact aspects of cooperative marketing

societies.

Evaluation Studies

Whether the primary cooperative marketing societies have made

remarkable forward strides in the actual marketing of agricultural produce?

This issue was probed by several committees. Their reports have observed the

lack-lustre performance of several societies. The Expert committee on

Assessment and Evaluation in its final report has observed that “ the main area

where cooperative is at its weakest at present is in respect of cooperative

marketing”.

The following are the three main objectives of which cooperative

marketing societies were organised.

(i) Pledge loan (ii) Marketing of produce (iii) input supply

The actual performance of cooperative marketing societies in the above

trio-aspects was evaluated by a follow-up survey conducted by the RBI

(Development of Cooperative Marketing: A Survey Report, 1968). It

concluded that (i) the actual performance of the marketing societies was none

18
too encouraging (ii) a very insignificant proportion of the total produce came

into cooperative markets and (iii) cooperative marketing societies had made

negligible impact on the farmers about their ability and scope as good

marketing institutions.

Surveys also show that most of the primary cooperative marketing

societies did not effectively cover all the villages in terms of membership of

growers and collection of agricultural produce. However, in some States for

some crops cooperative marketing societies played a crucial role in marketing.

For example, State-wise data show that U.P and Maharastra accounted for 81

percent of total sugarcane marketed thro’ cooperatives.

This progress could be achieved due to the State Cane Acts under which

Sugar Factories are required to buy their requirements of sugarcane from

reserved areas only thro’ Cane Marketing Societies. Studies also reported

about the regional imbalances even in the limited progress made by

cooperative marketing societies.

Surveys reveal that inspite of a number of advantages and facilities

offered by the marketing societies, many members do iot come to sell their

produce thro’ them. Cumbersome procedure, delays, attraction by private

dealers, lack of cooperative education were some of the reasons reported for

the non-use of marketing societies.

19
 The evaluation studies have also identified the following defects and

difficulties, which retarded their effective performance:

o Inadequate working capital

o Sales by the recently organised societies are not upto the mark

o Insufficient inducement to farmers to bring their produce to the

societies.

o Inadequate provision of marketing services

o Non-provision of processing facilities

o The area of operation for many societies are unnatural

o Position of godowns is far from satisfactory

o Defective loan policies

o Vested interests

o Some societies are dominated by traders and non-cultivators

o High operational costs

o Inadequate business support from Apex cooperative marketing

societies.

Other causes for poor performance:

The survey conducted by RBI (1965) has also identified the following

other causes for the poor performance of many cooperative marketing societies

in various states.

20
 □ Societies emerged with official initiative and not by farmers

□ Target hunting

□ Unplanned programmes of action

□ Lack of integration of tiers

□ Competition from credit societies

□ Bias towards individual membership

□ Poor management

□ Malpractices and favouratism

□ Non-helps from regulated markets

□ Concentration on distribution activities

□ Lack of supervision

□ Weak and non-viable credit societies.

There appears to be a vicious circle in the agricultural sector of the

cooperative movement. Credit societies could not work efficiently as

cooperative marketing is not well developed. While the latter could not keep

pace as the former are weak links.

Based on the above difficulties, suggestions have been made by several

studies and committees to improve their performance.

21
Efficiency based studies

An efficient marketing system is a pre-requisite for stable and

remunerative prices to producers, which can alone provide the necessary

stimulus and incentive to increase production. H.N. Patl, P. Kumar and M.A.

Muralidharan23 conducted a study in 1980 on the marketing efficiency of

cooperative organisations in the mango industry in maharastra state. The study

analysed the cost of grading, packing and transportation, commission, per crate

cost of marketing,etc., under various channels of marketing. It concluded that

the channel, producer -* cooperative -»• consumer - was the most efficient one in

mango trade.

A study24conducted in Karnataka with the Arecanut market revealed

that the market share of cooperative societies was continuously increasing. The

degree of buyers concentration was studied thro’ the technique of Lorenz curve

and the magnitude of the concentration was measured by the Gini

concentration ratio. The wide gap between the line of equality and the Lorenz

curve showed the high degree of concentration in arecanut trade. The study

brought out many positive features of the society.

23 Patil, H.N., Kumar.p., and Muralidharan, M. A., marketing efficiemcy of cooperative

organisation, Indian Cooperative Review, April, 1985, p: 419-424
24 Balachandra K. Naik, Ramachandra Bhati, Vilas s. Kulkami, Giris N. Kulkami, An
economic analysis of marketing efficiency of cooperative organisations in Sirsi
Arecanut market, Indian Cooperative Review, April 1989, p: 455-459.

22
 S.L. Tripathi (1986) conducted a case study25 on the general

performance of a cooperative marketing society in Madhya pradesh. The study

revealed there was considerable increase in the membership, share capital, total

working capital and fixed assets, which showed that members developed

confidence in the society. The management was dynamic and helping to the

cause of the society. This study has identified certain problems and most of

them were related to the Dal mill run by the society. The study also offered

suggestions to improve the working of the Dal mill.

The marketing efficiency of a marketing cooperative in a potato region

in Tamilnadu was examined by Dr. M. Gopalan and Mathan Gopalan26 (1988)

in Nilgiris District. The study revealed that the overall marketing efficiency of

the Nilgiris Cooperative marketing Society was good though lot very good. It

suggested some concrete efforts for its further improvement.

Another study27, “ marketing efficiency and operational problems of

vegetable cooperative marketing societies in Maharastra State” was conducted

in 1991. Marketing costs, marketing efficiency and problems of members and

non-members were analysed. The study concluded that the cooperative

25 Tripathi,S.L., Adarsh Cooperative marketing Society Limited, Depalpur, Distlndore

(M.P), Cooperative Perspective, oct-dec.86, p: 33-40
26 Gopalan. M (Dr) and Mathan Gopalan, Marketing Efficiency of Marketing Cooperative
in a Potato Region In Tamilnadu: An Empirical Study, Indian Cooperative Review,
Jan.91, pp: 203-210.
27 Bilonikar, K.V., Tilekar, S.N., Nawadkar, D.S., and Kamble, S.S, Marketing
efficiency and operational problems of vegetables coopertive marketing societies in
Maharastra State, The Bihar Journal of Agricultural Marketing, April - June 1998, p:
220-226

23
marketing societies helped the producers in minimising the marketing costs

and operate more efficiently in marketing the produce than the private traders.

Shankar Murthy28 (1986) studied the impact of the MARKFED on farm

market in Karnataka. The study stated that fertilizer business was the leading

component of the federation and the overall market share of pesticides and

insecticides was low. The market share with respect to farm products and

storage was also weak. The study listed out many suggestions to improve the

input and output marketing activities of the federation.

A performance analysis study on the Tamilnadu Cooperative Marketing

Federation29 (1995) covered many working aspects like paid up share capital,

working capital, input and output marketing, business results etc. The growth

ratio figures indicated that the federation had grown in all its activities. The

study opined that the forthcoming years, TANFED is likely to emerge a major

supplier of agricultural inputs.

An attempt was made to analyse the role and functional efficiency of

primary cooperative marketing societies in Karnataka30, which revealed that

the societies’ marketing linkage with the producers was not impressive. They

face financial threats. The study found out that 1/3 of the societies were not

28 Shankar Murthy, H.G., Impaact of the MARKFED on farm market in Karnataka -

Factor analysis approach, Indian cooperative Review, Oct - 1989, P: 173-182
29 Jaya Anitha Abraham & N. Ajjan, An analysis of Tamil Nadu Cooperative Marketing
Federation dining 1982-83 to 1991-92, Indian cooperative Review, Jan.96, p:292-294
30 Ravi, P.C., Shashidara, B.M and Chengappa, P.G., Marketing Coopertives in
Karnataka - Trends and Performance, Indian cooperative Review, July. 1995, p: 67-82.

24
performing any marketing function at all. They were engaged in the supply of

inputs and consumer goods. For other societies, the turnover in marketing of

agricultural produces was only 15.75 percent (inputs 23.54% and consumer

goods 6.76 percent). More than 46% of the societies have incurred loss over

the years. Profitability to other societies were attributed to the increased

volume of consumer goods handled.

Suggestion-based Studies

The All India Rural Credit Survey Committee (1954)31 had

recommended the reorganisation and re-structuring of cooperative marketing

societies. Implementation of Integrated Scheme of Rural credit, development

of institutional infrastructure like cooperative development and warehousing

corporations, training arrangements etc., were also recommended by the

survey. Most of these recommendations had been implemented in the course of

the Second Five-year plan.

The All India Rural Credit Review Committee32 in its report had

suggested the following

S Wherever marketing cooperatives are appointed as agents for

Government schemes, adequate working funds should be

provided by the state Governments or FCI.

31 RBI, All India Rural Credit Survey Committee, Mumbai,

32 RBI, All India cooperative Review Committee, Mumbai, 1969.

25
 S The bill / Hundi system suggested by RBI for financing the Apex

Marketing Societies thro’ the primaries is recommended for

introduction wherever it has not been already adopted.

S Pledge loans should be effectively given

S Gradually bringing down the quantum of trade credit

S Augmentation of share capital

S Efforts to recruit and train personnel for managerial posts

S Creation of common cadre at apex level

S Producer-cum-traders should not be allowed to become full

members. This was also recommended by MirdhaCommittee,

1965.

A state level convention on marketing cooperatives organised by the

Registrar of Cooperative societies and Tamil Nadu Cooperative Union under

Agricultural High Level Committee in Chennai had discussed the various

facets of cooperative marketing societies and came out with several

recommendations for improving the cooperative marketing structure,

reorientation of their marketing approaches, goals and programmes for serving

the primaiy cooperative marketing producers in an able and efficient manner.

26
 Venkatachala Naidu33 had stated that marketing share of the cooperative

marketing societies is to be increased by many - fold. For such increase,

societies should build up a good member relationship.

Seetharaman, S.P., and Mithileshwar Jha had suggested supply of inputs

to the farmers at reasonable prices and thereby minimising the cost of

production and high returns. The cooperative marketing societies should play a

key role to enable farmers to get more of consumer’s price.

A survey report of NAFED34 (1978) had observed that strengthening of

weak and dormant marketing societies was essential for the protection of

farmers.

The post - harvest price depressions can be rectified by the method of

purposive exchange through cooperative institutions - svardstrom35.

Several types of malpractices of middlemen are cited already. The

cooperative marketing societies have failed to arrest such malpractices. It

implies the streamlining of the functions of cooperative marketing societies

and extending their benefits to more number of primary producers. Efficient

33 Venkatachala Naidu, V., Member relationship, Tamil Nadu Journal of Cooperation,

Tamil Nadu Cooperative Union, Chennai, May-June 1983.
34 NAFED, To Strengthen Weak and Dormant Marketing Cooperatives - Survey Report,
Tamil Nadu Journal of Cooperation, Tamil Nadu Cooperative Union, Oct. 1984, p:
175-186.
35 Svardstrom, K., ‘Agricultural Marketing for Cooperatives’, Allied Publishers, Mumbai,
1969

27
management, broad based quality services, effective public relationships, better
"XA.
image building etc., are essential.

The method of “cooperative Exchanges” thro’ cooperative marketing

societies was also suggested by Chadurvedi to eliminate disproportionate fall

in price after harvest.

Swaminathan, Joint Registrar of Cooperative Societies (Rtd.,), in

association with Tamil Nadu Cooperative Union, Chennai conducted a study in

1998 with the main objective of how to rehabilitate weak cooperative

marketing societies. Non-involvement in the main marketing business, lack of

infrastructural facilities, lack of tie-up arrangements, poor resources etc., were

reported as problems. For rehabilitation of such weak societies (about 61

percent), he has also offered suggestions for overcoming of above said

limitations. The main suggestions are (i) The business turnovers should be

enhanced and (ii) Establishment cost should be minimised.

Policy related studies

All policies of the State (Food policy, Price policy etc.,) have some

implications for cooperative development - including the development of

cooperative marketing. Policies also have bearing on action programmes and

organisation. Both individuals and institutions have studied and discussed

policy-issues with reference to cooperative marketing societies. Policies for

36 Gopalan, M and Athimoolam, K., An enquiry into the Marketing Operations of a

Cooperative Marketing Society, M.Cop thesis (unpublished), Sri Ramakrishna Mission
Vidyalaya College for Rural Higher Education, 197.

28
financial assistance to cooperative marketing societies by the SBI, commercial

banks and cooperative banks were recommended by The All India Rural Credit

Review Committee, 1969.

Food and price policies of the Government have implications for the

role of cooperative marketing societies. Report of the food grains policy

committee appointed by the Government of India under the Chairmanship of

Venkattapaiah (1966) had examined varied aspects of food policy with

reference to procurement of food grains, their distribution and movements and

prices of food grains. It has recommended interalia a prominent role for

cooperative marketing societies in the interstate food grains distribution. The

food corporation of India should make available resources on an agreed basis

to cooperative marketing societies for the purpose of food grains procurement.

The storage capacity of the cooperatives should be extended and used for

procurement of other commodities like cotton, groundnut, jute, sugarcane and

inputs like fertilizer and pesticides. It had also emphasised the need for close

liaisons between FCI and cooperative marketing societies (Government of

India, Report of the Food Grains Policy Committee, New Delhi, 1966).

In any cooperative policy, there is a place for the role of cooperative

marketing societies. Those marketing societies should play an important role in

the rural development. In this regard, the marketing share of the cooperative

marketing societies should be enhanced. It implies framing of cooperative

29
 policies for the undertaking of marketing of agricultural produce on a large

scale. Such a committed involvement warrants proper policies and

programmes. It implies implementation of minimum support-price-policy

(NCDC, 1964). Study on the actual working of the cooperative marketing

societies in various regions will not only help to assess tfceir progress but also

to find out the factors which have helped or hindered the development of such

cooperative marketing societies and to spell out the policy implications for

their development on right lines. In this regard the findings of the study

conducted by the RBI stressed the need of formulation of appropriate policies

relating to cooperative marketing societies. Policies are to be framed to

facilitate cooperative marketing societies to engage in the procurement of food

grains as agents of Government Civil Supplies Corporation. (RBI,

Development of Cooperative Marketing, A Survey Report, Mumbai, 1968).

Opinion surveys/studies

Farmers’ opinions on various institutional and non-institutional agencies

and their view points on the business practices are examined by Tewari and

George.37 The study suggested the copying of useful practices of the

commission agents by the cooperative marketing societies- especially with

reference to provision of quality services, storage facilities, etc.

37 Tewari, S.C., George, M.V., ‘Marketing of Agricultural Produce thro’ Cooperative

Marketing Societies - An Opinion Survey’, Indian cooperative Rwiew, NCUI, New
Delhi, July 1994, p:206-214.

SO
 There are also broad surveys which tried to evaluate the performance of

cooperative marketing societies on the basis of the opinions and responses

gathered from the members (Government of India, Cooperative marketing and

processing, New Delhi, 1965). These surveys had also reported the weaknesses

of primary cooperative marketing societies, stressed the need for suitable

managerial personnel, building up of adequate resources for marking outright

purchases. Many of such concrete suggestions were based on the opinion

surveys which use mainly the primary data thro’ field investigations.

To identify the factors influencing the choice of the farmers to dispose

of their produce through specified agencies, an opinion survey38 was conducted

by S.C. Tewari and M.V. George (1966). The study revealed that the farmers

(70 percent) mostly preferred to sell their produce thro’ private traders due to

the following reasons.

o Availability of easy, clean, adequate and interest free loans

o Traders maintained secrecy of lending

o Availability of loans for unproductive purposes

o Provision of cheap and adequate storage facilities

o Arrangements for the transportation of produce

o Supply of required inputs adequately and on credit

38 Tewari, S.C., George, M.V., Marketing of agricultural produce through cooperative

marketing societies- An Opinion Survey, Indian cooperative Review, NCUI, 1971, p:
206-214.

31
 o Free supply of gunny bags etc to the regular clients

o Better personal relationship and hospitality

The respondents also provided suggestions for the betterment of the

cooperative marketing societies.

Management -oriented studies

Efficient management warrants proper planning, organising, controlling,

staffing, directing, coordination, better communication, exhibition of desirable

leadership style, teamwork etc., Marketing management is an important area of

operational/functional management. A management orientation to marketing

functions is essential because of the ‘5C’problems in marketing.

First C: Complexities in marketing

Second C: Competitions in marketing
Third C: Confusions in marketing
Fourth C: Conflict of interests in marketing and
Fifth C: Constant change in marketing.
To overcome these problems, the marketing cooperatives have to follow

modem marketing strategies. They should evolve froper marketing mix

techniques (i.e., 4 Ps of marketing with reference to product aspect, price

aspect, promotion aspect and place (of distribution aspect). They should also

make SWOT analysis i.e., study of their own and their products’ strengths,

weaknesses, opportunities and threats, in the market. They should fix targets

and make steps to achieve the targets.

32
 A few studies show the need for improvements in the functional

management of cooperative marketing societies. They should become the

active agri-business enterprises by adopting appropriate management

techniques. An evaluation of cooperative marketing in South-East Asia had

reviewed the trends and made the following marketing management oriented

suggestions (ICA, Report of the Experts Committee on Cooperative Marketing,

New Delhi, 1967).

❖ Development of systematic cooperative marketing

❖ Proper policy framing for procurement of agricultural produces

❖ Proper financial planning

❖ Adoption of sales promotion techniques

❖ Proper organisation (i.e., arrangements) for sales

❖ Suitable administrative set-up for policy making and execution

❖ Controlling, directing and coordinating of marketing of

marketing cooperatives

❖ Improvements of the products to be sold

❖ Technical advice

❖ Management development programme for managerial personnel

❖ Proper federating of marketing cooperatives.

33
 For the efficient performance of the marketing cooperatives, the unique

problems are to be identified. Improvement of each of the marketing activity is

to be analysed in terms of recent management techniques. Therefore an

efficient management is sine-quo-non for cooperative marketing societies.

(Mishra, R.A., 1971).

Studies in input and output marketing

Apart from finance, chemical fertilizers, improved variety of seeds,

pesticides and insecticides, small tools and equipments are the key inputs for

agricultural production. These inputs constitute an important component of cost

of production. So the kind parts of production requisites are to be supplied at

fair price. Their quality, timely and adequate supply are also essential.

Therefore one of the main objectives of cooperative marketing societies is to

manufacture/procure inputs and supply them to the farmers at reasonable

prices. Another main objective is to sell or purchase the output of the farm (i.e.,

Agricultural produce) at remunerative prices. The price receipt per unit of sales

made to / through the cooperative marketing societies should be advantageous

when compared to the sales made to / through other marketing agencies. The

prices for the output should justify the cost of production plus a reasonable

gain. Then only the agricultural avocation will be a paying proposition. In

modem commercial agriculture this agri-business assumes importance.

Agriculture is no longer subsistence one. It is also commercial one. But it is

34
often reported that farmers have to pay high prices for the inputs they buy and

get the low prices for the outputs they sell due to many unfavourable factors.

So the terms of trade are unfavourable in the agricultural sector to ensure

favourable terms of trade in agriculture, the cooperative marketing societies are

expected to pay a crucial role both in input and output marketing operations.

But did they play their role effectively in these regards.

Several studies and surveys on cooperative marketing societies have

also examined this vital issue. Several shot - coming were highlighted by the

National Commission on Agriculture in its report (1976). Therefore there is a

paramount need for the development of a network of marketing facilities thro’

cooperative marketing societies.

Again the main objective of integration of input and output marketing

services of the cooperative marketing societies is to help the primary

agricultural producers- more especially the medium, small and marginal

farmers. This aspect has been emphasised by a study on this issue

(Kanagasabapthy, 1983).

Single commodity based studies

Single commodity cooperative marketing societies deal with mainly one

or two crops popularly grown in the local area. These specialised societies can

have tie-up arrangements with higher level marketing federations, commodity

corporations etc., so that it is possible for them to implement the price-support

35
policies. Such societies should develop storage facilities (Food grains policy

committee, Government of India, 1966). The role of input and output

marketing by a single commodity based cooperative marketing society has

been examined in an empirical study (kalpana, 1995). This study was

conducted in the Tirupur cotton commodity assembling marketing centre.

Many aspects like input supply, sales by different methods, storage and

grading, etc., were examined and the actual role of the cooperative marketing

society was probed in terms of utilisation of its services by the nearest and

farthest farmers. This study concludes that agricultural marketing efficiency and

increase in production largely depends on the quality of input supply and

improvements in the methods of agricultural production and effective

marketing. The study suggested

- In regulated market yards, the cooperative marketing society

should compete with local commission agents and traders.

- The society should adopt various modes of marketing and

ensure the loyalty of primary members.

- More utilization of the society by various size groups of

farmers.

Nilgiris district, a hill resort in Tamil Nadu State is famous for its potato

cultivation. The Nilgiris Cooperative Marketing Society sells the

potatoes and other hill vegetables of the members to the best advantage.

36
 M. Boothalingam39(1988) conducted a case study of this society and analysed

the various activities in detail. The study suggests the supply of quality seeds

adequately. The farmers were satisfied with the mixture (fertilizer) supplied by

the NCMS. But DFFCO forces the NCMS to sell their fertilizer which the

farmers do not like. So this aspect is to be looked into carefully. In the same

year Badhnai and Seksena40 did a case study in Uttar pradesh. The farmers are

forced to sell to the local traders for the consumption credit they have received

during off seasons. This system is termed as ‘credit based marketing system’.

This study has been conducted with a view to study the magnitude of the

problem and its possible solution. The main findings were

- The peasants sold a major portion of vegetables to local

traders. Convenience and debt obligations were the main

reasons for such sales.

- Prices they received were lower.

- Nearly 90% of the Respondents purchased consumer goods on

credit and at higher prices from the village traders during off

seasons.

- There was lack of competition in the market which was

favourable to traders. They dictated the price.

39 Boothalingam, M., Cooperative Marketing of Vegetabfes - A case study, Cooperative Perspective,

Jan-mar, 1990, p: 48-56.
40 Badhani, K.N., and Seksena, R.M., Credit based marketing system perilous for poor
peasants - A case study of vegetable market of Garampani Area of District Nainital
(U.P), Indian cooperative Review, July 1990, p: 11-20.

37
 The study suggested a consumers’ credit cooperative society (CCC’s) to

be organised with proper coordination with the marketing society to distribute

the goods of daily needs of peasants on credit during off seasons. The CCC’s

may even directly undertake the marketing of vegetables.

“The Farmers Rural Extension Service in Horticulture (FRESH)”

marketing cooperative society, Hyderabad (A.P) was studied by Sudha and

Subramaniam4l(1995). The study analysed various aspects and concluded that

the financial standing of the society was not encouraging. Reduction in

overhead expenses, borrowings and blocking capital, fixation of prices in

consideration with transport and packing expenses, consumer’s preference

while deciding the method of sales were some of the important suggestion

given by the society.

Madan Lai Kataria and Prakash Mehta42 conducted a study in 1968 in

Punjab. Cotton is one of the important cash crops in Punjab State and the study

was undertaken in Bhatinda district which shared about 18.42 percent of the

total cotton production in the state. The study found out fiat the producer was

able to increase his share in consumer’s rupee when marketed thro’

cooperative society. This was due to 1) lack of too many middlemen and 2)

reduced market costs. The researchers concluded that marketing through

41 Sudha, M. and Subramaniam, K.V., Marketing of Fruits and Vegetables through

Cooperatives - case study of FRESH Hydrabad, Indian cooperative Review, Jan 96, p:
42 MadanLl Kataria and Prakash Metha, Cotton Mariceting tiiro’ Cooperative Society,

Indian cooperative Review, April 1969, p: 421-426.

38
cooperative society is a much paying business than marketing thro’ ‘Adhitias’

(private traders).

Working of coconut marketing cooperatives in Kerala was studied by

M. Kuttiappan. Of the cash crops grown in Kerala, the most important is

coconut accounting for 70 percent of India’s coconut production. The study

identified the following problems.

o Limited owned fimds

o Inadequate working capital

o Lack of cooperation among various cooperatives

o Lack of uniformity in the working of these societies.

The study has concluded that inspite of the difficulties, the processing

and marketing of coconut offer the cooperatives excellent opportunities for

making its impact felt in the rural economy of the state.

Pepper marketing by the cooperatives is all the more important since it

is an important foreign exchange earner to our country. Kerala accounts for

about 96 percent of the total area under cultivation and production of black

pepper in India. Jeya S. Anand43 in her article made an attempt to analyse the

efficiency of a pepper marketing society. The society made outright purchases

of spices and sold to the marketing federation. Efficiency of the society was

judged from two angles, viz., Technical (operational) and Economical (price)

43 Jeya S. Anand, Pepper Marketing by Cooperatives - A case study, Indian cooperative

Review, April, 1991, p: 303-310.

39
efficiency. Statistical tools like seasonal indices, correlation coefficient and

regression coefficient were used. The study concluded that though the

procurement policy of the society is sound, its selling policy was not at all

impressive. The study suggested the reduction in operating expenses,

strengthening of owned funds and chalking out an efficient selling policy to

make the society a profitable one.

Feasibility studies

These studies are meant for starting of new cooperative marketing

societies for the growers of certain important crops grown in an area. They are

in a way action researches. The possibility of organising a separate society for

a crop can be investigated by collecting data in the area of cultivation, volume

of production, number of growers, inability of the existing institution etc.,

Individual growers may be interviewed and group discussions may also be

organised with the involvement of farmers, traders, consumers and society

representatives. Survey of literature also shows a few of such feasibility

studies. For example

> Feasibility of forming a coconut marketing society in the

Anaimalai area in Coimbatore district of Tamil Nadu State (Sri

Ramakrishna Mission Vidyalaya, Coimbatore.)

40
 > Feasibility of forming a coconut growers’ marketing society in

the Pattiveerampatti area (Gandhigram Rural Institute - Deemed

University, Tamil Nadu State).

> Feasibility of starting tapioca marketing society and sago factory

in Salem/ Attur area in the Tamil Nadu State (Sri Ramakrishna

Mission Vidyalaya, Coimbatore.)

The findings of the above studies show the scope for farming separate

cooperative marketing societies in the respective areas.

Post Facto Studies

A post facto study will refer to the results after occurance of an incident

or a fact. The studies made by several individuals and institutions44 mainly

provided a descriptive account of the marketing cooperatives in general in

various areas. Most of these studies narrate post-facto some elements of

problems and tend to overemphasis the evils of middlemen element and a few

of the advantages and limitations in the functioning of marketing cooperatives

at farmers’ level. Most of these studies are found to be relatively old and so

44 1. Directorate of Marketing and Inspection, Ministry of Agriculture, Government of India,

Report on Ad-hoc survey in the working of cooperative marketing societies in Gujarat,
1950. 2. ICA., Cooperative Marketing Study Based Seminar Report, New Delhi, 1963. 3.
Chakravarthi, J.M., Cooperative Marketing in West Bengal. 4, Krishnasami, O.R., and
Ganesan, N., An Assesment of the working of the primary marketing societies in Tanjore
district, Tamil Nadu, M.eop thesis (unpublished), Sri Ramakrishna Mission Vidyalaya
College of Rural Higher Education, Coimbatore, 1965. 5. RBI., Development of
Cooperative Marketing A survey Report, Mumbai, 1968. 6. Gopalan.M., and Athimoolam,
K., An enquiry into the marketing operation of a cooperative marketing society, M.eop
thesis (unpublished), Sri. Ramakrishna Mission Vidyalaya College of Rural Higher
Education, Coimbatore, 1970.

41
they bear no relevance to the current trends pertaining to the cooperative

marketing societies.

Other studies

No cooperative association has ever succeeded for a long period by

ignoring cooperative principles. So an attempt was made to study the principles

of marketing cooperatives and examine the working of cooperative marketing

societies in Pali District45 (1967). The main findings of the study were

□ The societies did not follow the business principles like large volume of

business, sound management etc.,

□ The impact of cooperative marketing societies in the handling of

Agricultural produce, transporting and processing had been

insignificant.

□ The non-observance of the cooperative principles of large has

contributed to the failure of the cooperative marketing societies in Pali

district.

The study revealed that the cooperative marketing societies abroad had

succeeded because they have followed the cooperative principles to a great

extent.

The various factors, which affect agricultural prices are:

=> Indebtedness

45 Kapde, M.V., Cooperative Principles and their application to marketing cooperatives in

Pali District, Indian cooperative Review, NCUI, New Delhi, Jan. 1969., p: 309-316.

42
 => Distance from the market centre

=> Size of marketable surplus

=> Place of sales

=> Time of sales

=> Agency of sales

Each of these six factors have been related to price of wheat and was

analysed (1974)46. 7 marketing cooperatives in the region of Ajmear district of

Rajasthan was covered. The study clearly analysed the relationship and results

were found to be uniform in all the 7 regions. The study suggested that the

societies must mobilise the surplus of small and medium class who resort to

village sale. They have to step up their activities by enrolling more members.

A SUM UP

A survey of the bulk of available literature / studies on cooperative

marketing societies show that most of them focused attention mainly on one or

other facts of cooperative marketing societies. Most of the studies are relatively

old and of descriptive nature. They may not be relevance to the latest trends

and developments. So far no serious attempt is made to study the farmer’s

actual utilisation and satisfaction with the services of cooperative marketing

societies. So much so, studies are also lacking to assess scientifically the

46 Kapde, M. V., Agricultural prices and Marketing Cooperatives, Cooperative Perspective, Oct-Dec.
1975, p: 53-59

43
social, economic, democratic and other impacts of cooperative marketing

societies on the members in the Tamil Nadu State. There is a research gap in

this pertinent aspect. Such assessment of impacts is bound to throw more light

on actual benefits accrued to people. It is therefore to fill up that lacuna, this

empirical evidence based study is undertaken.

44