Boxwallahs in cooperatives

Since the Parliamentary Standing Committee for Home Affairs under Pranab Mukherji has reported on it and the Bill has been passed, a cooperative can become a producer company.

These kind of initiatives are important. Some of the more serious reviews of rural development strategies that have worked in the developing world during the last decade or so showed that the ones that covered the last mile by reaching the farmer or the rural artisan were actually hybrid forms of organisations. The name of the game was partnerships, it was pointed out. Success came more often than not when farmers8217; groups linked up with others. These 8216;others8217; could be companies, NGOs, local bodies and so on. There were no clear-cut formulas. But strategic partnerships were important.

Last year and earlier this year the advertised proposal to create an organisational and legal framework for the establishment of producer companies received flak. While the Independent Cooperative Initiative in its Anand Declaration supported it, some groups were ideologically opposed to it. Having chaired the high-level committee on the draft legislation for corporatisation of cooperatives, I kept on pointing out that the one-vote, one-share principle which was the heart of a cooperative organisation was very much there.

In fact, these features were reproduced in the annexure on the objectives, etc. of the proposed legislation. But the debate continued. Hopefully the issue is now settled.

The last decade has seen very few new sources of growth in rural India. The agricultural growth rate is marginally lower as the Tenth Plan document recognises. More important, growth of the diversifying components of Indian agriculture is definitely slower since the mid-nineties. The need for the farmer to access newer technologies, better inputs and wider markets is very compelling. India needs an explosion of organisations which makes this their business. This is not happening and growth and profitability have been suffering.

There are two problems with the kind of answers being brought out in nice art-paper policy brochures doing the rounds. They do not recognise that the great strength of Indian agriculture is peasant farming. Second, the nature of the contract the peasant enters into with the input supplying and output using world has to take care of his incentives also. If organisations and institutions are not created and strengthened to build on these principles for the strategic integration of the organised and corporate sector, with Indian agriculture, the consequences can be very severe.

Some of the points we have been making, which were initially resisted bitterly, are now gaining acceptance. There is now acceptance that we cannot rest on the so-called India-taxes-agriculture and negative AMS doctrines. There is now acceptance of our proposal for evolution of agro-climatic and state-level WTO-compatible diversification and agricultural growth strategies.

As we argued at the time of the formulation of this year8217;s budget, the strategy has to walk on two legs. The first is to create disincentives to those who would block diversification and this gets into price and subsidy policies. The second, equally important leg, has to be to strengthen the institutions which help sustainable diversification.

Farmers8217; institutions have to be an important component of any capacity building exercise at the cutting edge.

At the global level we have made progress in getting some of these principles accepted. Under the guidance of the former Swedish prime minister Ulsten, myself and the former New Zealand Environment Minister Beckam, the UN expert group on strategies for sustainable development demanded at Johannesburg that we 8220;facilitate access to credit lines as well as to preferential terms of financing and of providing funds for collateral support systems and sharing of investment risk.

These processes should be targeted, amongst others, to artisan and producer groups linked with local and global markets, local government agencies providing social and economic infrastructure, and farming and rural communities.8221; I understand this was accepted at Monterrey. Will we do it at home?