FUNCTIONING BY CO-OPERATIVE MARKETING

The important functions carried out by the cooperative marketing
societies are:

(i) Sale on commission basis: Co-operative marketing societies
act as commission agents in the market, i.e., they arrange for
the sale of the produce brought by the members to the
market. They produce is sold by the open auction system to
one who bids the highest price. The main advantage, which
the farmer-members get by selling the producer through
cooperative marketing societies instead of a commission
agent, is that they do not have to accept unauthorised
deductions or put up with the many malpractices, which are
indulged in by individual commission agents. As there is no
individual gain to any member in the marketing of the
agricultural produce through cooperative marketing
societies, no malpractices are expected to be indulged in.
This type of marketing is not risky for cooperative societies.
But sometimes traders in the market from a ring and either
boycott the auction on bid a low price when the produce is
auctioned on the cooperative marketing societies shops.
These tactics of the traders reduce the business of
cooperative marketing societies. Therefore, farmers hesitate
to take their produce for sale in the market through
cooperative marketing societies.

(ii) Purchase of members produce: Cooperative marketing
societies also enter the market as buyers. A society
participates in bidding together with other traders, and
creates conditions of competition. The commodities thus
purchased by a society are sold when prices are higher.

This system of the outsight purchase by the society involves the
risk of price fluctuation. If the managers of societies lack business
experience, they hesitate to adopt the outright purchase system. In 1964-
65, the National Cooperative Development Corporation recommended
that the outright purchase system should be adopted only by a society
which possesses in the following qualities:
(a) The society has a trained manager, i.e., one who is capable of
understanding the intricacies of the trade.
(b) The society is financially sound and has adequate borrowing
facilities.
(c) The society is affiliated to a good viable central level society;
and
(d) The society possesses processing facilities.

(iii) Advancement of credit: Cooperative marketing societies
advance finance to farmers against their stock of foodgrains
in the godowns of the societies. Thus increases the holding
power of the farmers and prevents distress sales. Generally,
societies advance credit to the extent of 60 to 75 per cent of
the value of the produce stored with them. The recoveries are
affected from the sale proceeds of the produce of the farmer.
This function involves no risk to the society. Moreover, it
increases the business.

(iv) Procurement and price support purchases: Co-operative
marketing societies act as agents of the government in the
procurement of food grains and other agricultural
commodities at the announced procurement or support
prices.