COOPERATIVE ENTREPRISES IN KERALA: SEARCH FOR A PARADIGM SHIFT

By K Vijayachandran

Our cooperation department, by tradition, is a hot bed of petty politics and corruption. Ministers, without exemption, had found it impossible to impart it a vision and regain its lost sense of purpose. The department, headed by the registrar of cooperatives has a total total staff strength of close to 800, spread over the fourteen districts and the head quarters at Thiruvananthapuram. State Cooperative Bank, the District Cooperative banks and the 1600 Primary Agricultural Credit Societies (PACS) are under its direct control. It directly manages over thirty cooperative hospitals and has in recent years started several professional collages under the umbrella of CAPE. More than ten thousand tiny cooperative enterprises engaged in a variety of service activities are also under the direct charge of the department. Then, there are an equal number of production enterprises, administered by other departments, but their accounts are to be audited by the cooperative department, which maintain a fairly large contingent of auditors for this purpose.

NABARD and NCDC, the lending and development agencies of the Central Government in the cooperative sector, mostly operate through the state cooperation department. Cooperative bureaucracy in the state, therefor, wields considerable clout over the life and livelihood of a large section of our working people: The department is looked at as a key resource by development planners, and the skillful use of it with imagination could make big contributions in farming, industry and a variety of service sectors. However, the general perception is that cooperative enterprises in Kerala have been a near total failure. Such sweeping generalizations are hardly supported by documented evidence or research on the successes and failures of cooperative movement in the state. The picture presented in this article is based on data and information readily available in the Economic Reviews of the State Planning Board, the official web site of cooperative department and other miscellaneous sources.

State Planning Board has not so far attempted a serious review of the efficacy of cooperative enterprises in Kerala; neither has it attempted any critical evaluation of the performance of cooperation department. According to the Economic Survey 2006, there were 1587 primary agricultural credit societies (PACS) in Kerala in the year 2006. Total advances made by them is reported as Rs.15360 Crore, of which only Rs. 3915 Crore or 27 percent was for agricultural purposes. More than 71 percent was longterm loans and this mostly for non-agricultural purposes. Quantity of fertilizer supplied or crops procured were meager and more than half (55 percent) were incurring losses. Total membership in these PACS has reportedly reached 272 lakh. This looks abnormal for the State population of 310 lakh according to 2001 census which had counted the number of farmers (minimum of 51 percent of income from farming) in the state as 10 lakh. PACS in Kerala has lost its focus on agriculture long ago, and the allegations that it is misusing the resources provided by NABARD for non-agricultural purposes, (even for usurious lending!) appears to be well-founded. Successive Cooperation Ministers had turned a Nelson's eye toward such negative trends in the working of these institutions which were supposed to be focused on agriculture development.

In sharp contrast to this scandalous performance of the omni-crop PACS organized under the state cooperative laws, is the success story of the mono-crop cooperatives of rubber cultivators, incorporated under the central statute. Membership of these cooperatives was more closely defined, and members being genuine rubber cultivators were interested in the management of the cooperative set up that provided them with better seedlings, technology and other inputs of great relevance and value. Rubber cooperative movement was organized under the patronage of Rubber Board, the commodity board that served also as a technology generator. Results of this cooperative adventure were fantastic in terms of expansion of cropped areas, yield improvement and increased profitability of the crop. However, the RUBCO, sponsored by the state cooperation department, was based on an altogether different organizational concept: driven by bureaucratic enthusiasm it had its initial years of success, but the extremely heterogeneous membership is asserting itself as a long term liability. Better and fuller utilization of rubber wood, by converting it into ready to use engineering timber was one of its more fundamental objectives, and this basic objective remain by and large unfulfilled even after a decade, due to serious strategic mistakes. Palazhy Tires promoted as a cooperative venture of rubber growers by the department and a contemporary of RUBCO has ended up as a multi-crore scandal.

Most of the ten thousand producer cooperatives, functioning under departments other than the cooperative department, are in real bad shape. Possibly, a notable exemption are the cooperative enterprises under the directorate of Diary Development. MILMA, representing more than 7.63 lakh diary farmers, who have organized around 2400 Anand pattern cooperative societies, was a partnered the so called white revolution in Kerala, together with the Swiss assisted livestock breeding program. However, the state is prevented from taking full advantage of this great experiment, due to political shortsightedness and bureaucratic bungling.

There are over 600 fishermen cooperative under Matsyafed, which has neither helped the fishermen nor the consumers: Despite great advances in fishing boats and marine product processing technologies for exports, local market continue to stagnate and remain extremely underdeveloped. Big possibilities for cooperative farming in the inland fishery sector remain unexploited. These are best organized locally at the panchayat level: However, neither the cooperation department nor the fishery department appears to has shown any innovative initiatives in this regard.

There are over 2300 tiny cooperatives under the care of Khadi and Village Industries Board, which are noted for their precarious existence. Industrial cooperatives sponsored by the industries department, numbering over 2000, face a similar situation. Large number of them could be possibly salvaged by liberating them from bureaucratic stranglehold, by setting up product wise apex societies for technology and market support, and by bringing them under the loving care of local self governments.

Cooperative spinning and weaving mills, promoted by the industries department, were a disaster right from the very start: Worker-cooperators ,who were supposed to be owning them, hardly had any participatory role in managing these fairly sophisticated industries. Such enterprises are typical examples of bureaucrat-politician nexus trying to defraud public funds: They could have been better promoted and managed as public enterprises, accountable to the state legislature. Among the six hundred and odd hand loom cooperatives, those in Malabar area are mostly producer cooperatives and are doing well. But, their counterparts in Thiruvananthapuram district which are supposed to be worker cooperatives are controlled by local political bosses as their pocket organisations: They are possibly the worst examples of industrial cooperatives and are similar to the six hundred and odd coir cooperatives in the spinning sector. Cooperatization of small producers was the right approach in the coir sector from the very beginning of the four decade old coir project. However, worker cooperatives continue to get political support even today despite their near total marginalization and colossal losses.

Unlike in the coir sector, worker cooperatives of the late sixties in beedi manufacture, turned out to be an instant success right from the very beginning because, market was local and technology totally indigenous and mostly based on worker-skill. Political and ideological commitment of workers was another supportive factor behind the success story of Dinesh Beedi, that grew into a cooperative movement of nearly half a lakh beedi workers. Cooperative Coffee Houses organized by the retrenched workers of Coffee Board Cafeteria in the early sixties on an all India basis, is yet another shining example for worker cooperative initiatives. These should serve as models, trend setters and inspiration for the worker cooperative movement in the country.

Kerala has a rich and varied experience in the organization and management of cooperative enterprises and the state could immensely benefit by learning from it. However, neither the Minister nor the department of cooperation appear to be keen on learning from the past. Administrative review of the cooperative department as published on the Government web site does not carry even the latest data and are not consistently objective in their analysis. It begins with a somewhat comic indictment of the British: The British East India Company miserably exploited India by absorbing all her resources during pre-independent period. After independence earnest steps were taken to make her healthy in every respects. It was generally admitted by the Architects of India that co-operatives can act as an effective media for the socio-economic reconstruction of the country. Hence attempts were made by the Planning Commission to develop the co-operative movement as a self reliant.... Well, that is rhetoric band not a substitute for the vision and perspective that is badly needed today.

There is a special para in the official web site on the health care sector, a top favorite of the cooperation Minister: In service sector, 150 Hospital and Dispensary Co-operatives are functioning in the State. A Federation of Co-operative Hospitals has been registered during 9th Plan period to act as on Apex Federation of Cooperative Hospitals. Most of the Cooperative Hospitals and Dispensaries are either defunct or in loss. Only 22 Societies are running on profit.....". It may be noted that a cooperative enterprise is basically a capitalist enterprise set up to get the best out of the capitalist market. It is easy to visualize a hospital as a cooperative enterprise of a couple of greedy doctors but not as an enterprise of a body of potential patients, whose basic instinct is to avoid hospitals like plague itself. It is obvious that initiatives taken by the cooperative department in service sectors like health care, professional education etc or in modern industries like tire manufacture or textiles etc are not the right type of priorities.

Principles of cooperation and cooperative enterprises could be used in a big way for re-organizing our agriculture as well as manufacturing and service industry, including retail trade, all facing the many sided threats of globalisation. But this means learning the right type of lessons from our past experience: PACS have to possibly give way to crop based cooperatives, that could modernize the cultivation of our major crops, and set up agro-processing plants. Traditional industries and crafts could get a new lease of life through cooperative institutions with the real and genuine involvement of workers or small producers, depending on the nature of product and market. And for this, there has to be a total rethinking on the cooperation laws and policies.

Official website of the state cooperation department concludes with a reference to the reforms suggested by the Central Government: Consequent on the adoption of liberalization policy, Government of India suggested to adopt model Co-operative Societies Act for providing full autonomy to Co-operatives. The policy dictates for the enactment of legislation to enable a new generation of mutually aided self reliant Co-operatives. Total decontrol is intended. The main object is to limit the power of Registrar of Co-operative Societies to the extent of Registration of Co-operative Societies and to give full freedom to Co-operatives in all aspects. Independent audit is also envisaged. However, It is evident from the web site as well as the public comments of the Minister that, his department is reluctant to accept such sweeping changes. And the issue deserves a serious public debate.

24.07.2007