Cooperative societies can make agricultrue viable by providing cheap loans, selling agricultural inputs at reasonable rates and buying farm produce at fair price

Punjab has been the leader in food grain production; despite the bad weather, this year too, the contribution of wheat to the national grain reserve from Punjab is more than 46 per cent. However, the economic condition of the farmers of Punjab is getting worse. They cannot repay the loans taken on crops and commit suicide. One-third of the farmers in Punjab are either marginal with up to 2.5 acres of land or small farmers with 2.5 to 5 acres of land. Their total land is only 9.7% of the cultivable land in the state. According to a survey, the number of marginal and small farmers with up to 5 acres of land is 3,61,938, while the number of semi-medium farmers with 5 to 10 acres of land is 3,67,938 and medium farmers with 10 to 25 acres of land is 3, 05,220. There are only 57,707 farmer families with more than 25 acres of land. Despite their hard work and optimization of the yield, more than 80 per cent of the farmers in the state are in debt.

The majority of the farmers depend on six-month yield crops i.e. wheat and paddy, and earn what barely meets the repayment of the money borrowed during the previous six months for expenditure on growing the crop and supporting the families. Then the cash is needed for the next cycle. But they don’t have savings to defray the expenses on agricultural implements, seeds, fertilizers and pesticides, on the one hand, and on personal needs, such as food, clothing and health facilities for the family, children's education and other social responsibilities, on the other. Thus, the farmers have to take a loan for the next term. Small landowners face difficulty in loan sanctions from banks or moneylenders. Due to a lot of paperwork and lateral guarantees, the sanction of bank loans is delayed and sometimes completely refused or else the partial amount is sanctioned. Then the farmer has to approach some private moneylender for a loan at a high interest rate to save the crop. Due to the high interest rate, the real income from the crop decreases, while due to delayed loans, the use of fertiliser and pesticides is delayed causing low yield and losses. Some moneylenders sell fertilizers and pesticides instead of giving the loan amount in cash, so the farmers have to buy these products at the moneylender's price. What is worse is that sometimes the farmers double their losses when they happen to buy fake products.

In such circumstances, cooperative societies can be a solution to this thorny issue. They can purchase agricultural inputs like quality seeds, fertilizers and pesticides in bulk at competitive prices and sell to the farmers at a marginal profit, sanctioning the total cost as a crop loan at low interest. Societies can buy farm machinery and tools and rent to such farmers at a reasonable cost. This will benefit both farmers and cooperatives.

Cooperative societies can encourage farm support activities and set up processing and procurement centres for agro-products to help farmers generate their daily, weekly or monthly income. If possible, they may employ marginal farmers on a part-time basis in the processing units.

Future of Cooperative Societies: There are 19164 cooperative societies in Punjab out of which 3953 are Primary Agriculture Cooperative Credit Societies (PACS). Of these, 56% are in profit, 38.6 in loss, while the rest are in 'no profit, no loss'. While effecting administrative reforms in cooperative societies and efficient utilisation of funds, the Punjab Government can take advantage of the recent Union Cabinet decision to expand the scope of cooperative societies, by setting up new PACS in unrepresented villages and by computerizing PACS for their efficient, transparent and accountable performance.

Future Action Plan:

In Punjab, the State Agricultural Development Bank (SADB), Primary Agricultural Development Bank (PADB) and Primary Agricultural Cooperative/ Credit Societies (PACS) should jointly support dairy, poultry, fisheries, piggery and agro-processing units in addition to loans for crops. operative farming should be developed by pooling the holdings of 2.5 to 5 acres of land to form a unit of at least 25 acres to which 10 acres of Panchayat land on concessional contract may be added making it a unit of 35 acres. In addition to other facilities, such cooperative farms may be provided electricity connections for tube wells on priority and the necessary machinery at concessional rates.

The other types of cooperative farms can be the cooperative farm for Dalits, the cooperative farm for women and the cooperative farm for landless farmers, each on 10 acres of Panchayat land attached to a subsidiary business of dairy, piggery, poultry, fish farming etc.  Similarly, by combining 5-10 acres and 10-25 acres of land holdings, cooperative farms of 35-50 acres can be created without the addition of Panchayat land. These farms should also be given the same facilities as other cooperative farms. 

The writer is Professor (Retd) Guru Nanak Dev University, Amritsar and a member, the Governing Council Amritsar