CO-OPERATIVES

CO-OPERATIVES

A co-operative is an association of persons who voluntarily join together for the purpose of carrying out a business.

It is a group of persons who accept to pool their resources and work together with the aim of achieving a common economic or social end, accepting the risks involved and the benefits of the undertaking.

Importance of farming cooperatives

1. Members access farm inputs easily and at reduced price due to discounts of bulk purchasing.

2. All members share equally the overhead costs and society benefits.

3. Farmers can get better prices for their products due to collective bargaining.

4. Members are able to learn from each other the new farming techniques and to share information regarding market trends

5. Cooperatives provide storage facilities for the farmer's produce.

6. Farmers can easily access financial assistance in form of loan from cooperatives.

7. Marketing of farmers produce is easy because of the good organization in place . For example collection, transportation, processing and storage of produce are done collectively.

8. They give incentives to the farmers to produce more due to increased market and higher incomes.

9. It enables the pooling of machines and other equipment for effective utilization.

10. Processing farmers' produce. Some cooperatives are involved in processing farmers' produce eg., milk, cotton etc.

Problems faced by cooperatives

1. Mismanagement by leaders. Cooperatives declined due to inefficiency and mismanagement by manager who lacked the required knowledge, training and ideological orientation.

2. Corruption and embezzlement of funds.

3. Inadequate storage facilities which hampers purchase and storage of products.

4. Government interference in the running of societies, which encourage favoritism and nepotism.

5. Political instability, which lower ability to produce and destroys infrastructure.

6. Competition from private buyers/ producers of goods and services who may offer better terms.

7. Illiteracy of most of the farmers, which makes their participation difficult.

8. Bureaucracy, which slows down decision making.

9. Low interest paid on share capital which discourages investment in cooperatives.

10. Shortage of basic infrastructure such as roads and railways which hamper transport and communication.

Principles of cooperatives.

These are guidelines on which cooperatives operate. They include.

1. Open membership: A cooperative society is open to all those willing to join and make use of it services irrespective of religion, race, tribe, language or sex.

2. Democracy: A cooperative society is a democratic institution that is run on a democratic basis. All members must have equal say i.e. one man- one vote. Management is done by elected officials.

3. Capital shares. To become a member of a cooperative society, one has to buy shares.

4. Neutrality: A cooperative is expected to be free from the influence of politics, tribal affiliation, religion and other bias than can affect its performance.

5. Education: it is one of the duties of a cooperative society to teach its members the principles and techniques of cooperatives including how to produce economically, how to make use of new technologies etc.

6. Continuous expansion: the membership and physical facilities (e.g., building , machinery) of a viable cooperative society is expected to increase over time.

7. Dividends and interest. Dividends and interest of share capital must be shared according to each member's contribution to the society. No member should again at expense of others.

Types of cooperatives

Cooperatives are classified according to the activities they perform, and they include the following

1. Producers/ growers cooperatives: These are found in rural areas. Their main activities are to avail inputs to members at reasonable prices and to transport and market members' crop products.

2. Consumers cooperatives. These cooperative societies distributes goods to the consumers at minimum possible price.

3. Saving and credit cooperatives. These provide members with loan facilities for investment. Members keep on depositing money on their accounts, and are given credit proportional to their savings.

4. Service cooperatives. These provide a variety of services to their members, which include transporting and storage of agricultural products and insurance.

5. Processing cooperatives. Their function is to add valve to agricultural commodities by changing them into a form that is more appealing to the consumers. They include milk, meat and fruit processing cooperatives.