Marginal Farmers Largely Outside Cooperatives

Syllabus: GS3/ Agriculture; Economy

Context

• A report by Forum of Enterprises for Equitable Development (FEED) highlights that less than 25% of India’s marginal farmers are members of agricultural cooperatives, despite making up nearly 60-70 percent of the country’s agricultural households.

What are Cooperatives?

• A cooperative is an organization or business that is owned and operated by a group of individuals who share a common interest, goal, or need. 
• These individuals, known as members, participate in the cooperative’s activities and decision-making process, typically on a one-member, one-vote basis, regardless of the amount of capital or resources each member contributes. 
• The main purpose of a cooperative is to meet the economic, social, or cultural needs of its members, rather than to maximize profits for external shareholders.

Role of Primary Agricultural Credit Societies (PACS)

• Primary Agricultural Credit Societies (PACS) are credit societies that are registered under the Cooperative Societies Act of the State concerned. 
• They are grassroots-level institutions in villages with individual farmers, artisans, and other weaker sections as member shareholders. 
• They form the lowest tier of the federated short-term cooperative credit structure with District Cooperative Banks (DCCBs) and/or State Cooperative Banks (StCBs) in their upper tiers.
• They serve as the closest institutional interface for farmers to access;
  • Agricultural credit
  • Inputs such as seeds and fertilisers
  • Procurement and marketing channels
  • Public services including PDS and digital services.

Key Findings of the Report

• Marginal farmers, defined as cultivators owning less than one hectare of land, form the structural backbone of India’s agrarian economy.
• Barriers to Inclusion in Cooperatives: 
  • Complex membership procedures and documentation requirements.
  • Long physical distance to PACS, raising transaction costs.
  • Limited capital availability within cooperatives, reducing their effectiveness.
  • Persistent social exclusion based on caste, class, and gender.
• Digital Divide Limits Benefits: Digital adoption by cooperatives remains low, particularly in states like Tripura and Bihar. Digital skills gaps among farmers, especially older and women farmers, further constrain uptake.
• Gender and Leadership Gaps: Cooperatives continue to be male-dominated, especially in leadership roles. While 21.25 lakh women are registered as cooperative members, only 3,355 women serve as directors on cooperative boards nationwide.
• Positive outcomes of the Cooperative Access:
  • 45 percent of cooperative-linked marginal farmers reported an increase in household income.
  • 67 percent of cooperative members accessed credit and financial services through PACS.
  • 42 percent of marginal farmers linked to cooperatives reported improved crop yields.

Government Initiatives

• Formation and Promotion of Farmer Producer Organisations (FPOs): The Central Sector Scheme for Formation and Promotion of 10,000 FPOs focuses on small and marginal farmers.
  • It provides handholding support, equity grants, and credit guarantee cover.
• Digital Agriculture Mission: Aims to build a digital public infrastructure for agriculture, including farmer registries and land records.
• National Cooperative Development Corporation (NCDC) Support: NCDC provides financial assistance and capacity-building support to cooperatives.
  • It focuses on strengthening cooperatives in credit, marketing, processing, and storage.

Way Ahead

• In India’s agrarian structure those who dominate agriculture numerically remain institutionally marginalised. 
• Strengthening PACS, simplifying cooperative membership, bridging the digital divide, and promoting genuine gender inclusion are essential to make cooperatives effective instruments of inclusive rural development. 
• For India’s agricultural transformation to be equitable and resilient, marginal farmers must be placed at the centre of cooperative reform.

Source: DTE