Co-operative Society - National Institute of Open …

1 Lesson 9Co- operative SocietySo far you have learnt about sole proprietorship, partnership and joint stock company asdifferent forms of business organisation. You must have noticed that besides many differ-ences among them in respect of their formation, operation, capital contribution as well asliabilities, one common similarity is that they all engage in business activities to earn profit it is impossible for them to survive and grow. But there are certain organisationswhich undertake business activities with the prime objective of providing service to themembers. Although some amount of profit is essential to survive in the market, their mainintention is not to generate profit and grow. They pool available resources from the mem-bers, utilise the same in the best possible manner and the benefits are shared by the mem-bers.

2 Let us know more about ObjectivesAfter studying this lesson, you will be able to:!explain the meaning of Co-operative Society ;!state the characteristics of a Co-operative Society ;!describe the procedure of formation of a Co-operative Society ;!identify different types of Co-operative societies;!discuss the advantages and disadvantages of a Co-operative Society ; and!assess the suitability of co operative Society form of business Meaning of Co-operative SocietyLet us take one example. Suppose a poor villager has two cows and gets ten litres of consumption by his family everyday he finds a surplus of five liters of milk. What canhe do with the surplus? He may want to sell the milk but may not find a customer in theBusiness Studies94village.

3 Somebody may tell him to sell the milk in the nearby town or city. Again he finds itdifficult, as he does not have money to go to the town to sell milk. What should he do? Heis faced with a problem. Do you have any solution for him?One day that poor villager met a learner of NIOS who had earlier read this lesson. Thelearner told him, you see, you are not the only person facing this problem. There are manyothers in your village and also in the nearby village who face a similar problem. Why don tyou all sit together and find a solution to your common problem? In the morning you cancollect the surplus milk at a common place and send somebody to the nearby town to sellit. Again in the evening, you can sit together and distribute the money according to yourcontribution of milk.

4 Of course first you have to deduct all the expenses from the villager agreed to what the learner said. He told everybody about this new idea andformed a group of milk producers in his village. By selling the milk in the nearby town theywere all able to earn money. After that they did not face any problem of finding a market forthe surplus process continued for a long time. One day some body suggested that instead of sellingonly milk why not produce other milk products like ghee, butter, cheese, milk powder sell them in the market at a better price? All of them agreed and did the same. Theyproduced quality milk products and found a very good market for their products not only inthe nearby town but in the entire think it over.

5 A poor villager, who was not able to sell five litres of milk in his village, isnow selling milk and milk products throughout the nation. He is now enjoying a good did it happen? Who made it possible? This is the reward of a joint effort or co term co-operation is derived from the Latin word co-operari, where the word comeans with and operari means to work . Thus, co-operation means working those who want to work together with some common economic objective can form asociety which is termed as Co-operative Society . It is a voluntary association of personswho work together to promote their economic interest. It works on the principle of self-helpas well as mutual help. The main objective is to provide support to the members.

6 Nobodyjoins a cooperative Society to earn profit. People come forward as a group, pool theirindividual resources, utilise them in the best possible manner, and derive some commonbenefit out of the above example, all producers of milk of a village joined hands, collected the surplusmilk at a common place and sold milk and milk products in the market. This was possiblebecause of their joint effort. Individually it would not have been possible either to sell orproduce any milk product in that village. They had formed a Co-operative Society for a similar way, the consumers of a particular locality can join hands to provide goods oftheir daily need and thus, form a Co-operative Society . Now they can buy goods directlyfrom the producers and sell those to members at a cheaper price.

7 Why is the price cheaper?Because they buy goods directly from the producer and thereby the middlemen s profit iseliminated. Do you think it would have been possible on the part of a single consumer toObjectives of Coopera-tive Society !Render service ratherthan making profit!Mutual help insteadof competition!Self help instead ofdependenceCo- operative Society 95buy goods directly from the producers? Of course, the same way people can form other types of Co-operative societies as well. Let usknow about Types of Co-operative SocietiesAlthough all types of cooperative societies work on the same principle, they differ withregard to the nature of activities they perform. Followings are different types of co-opera-tive societies that exist in our Co-operative Society : These societies are formed to protect the inter-est of general consumers by making consumer goods available at a reasonable buy goods directly from the producers or manufacturers and thereby eliminatethe middlemen in the process of distribution.

8 Kendriya Bhandar, Apna Bazar andSahkari Bhandar are examples of consumers Co-operative Co-operative Society : These societies are formed to protect the inter-est of small producers by making available items of their need for production like rawmaterials, tools and equipments, machinery, etc. Handloom societies like APPCO,Bayanika, Haryana Handloom, etc., are examples of producers Co-operative Marketing Society : These societies are formed by small producersand manufacturers who find it difficult to sell their products individually. The societycollects the products from the individual members and takes the responsibility of sell-ing those products in the market. Gujarat Co-operative Milk Marketing Federationthat sells AMUL milk products is an example of marketing Co-operative Credit Society : These societies are formed to provide financial sup-port to the members.

9 The Society accepts deposits from members and grants themloans at reasonable rates of interest in times of need. Village Service Co-operativeSociety and Urban Cooperative Banks are examples of Co-operative credit Farming Society : These societies are formed by small farmers towork jointly and thereby enjoy the benefits of large-scale farming. Lift-irrigation Co-operative societies and pani-panchayats are some of the examples of co-operativefarming Co-operative Society : These societies are formed to provide residentialhouses to members. They purchase land, develop it and construct houses or flats andallot the same to members. Some societies also provide loans at low rate of interest tomembers to construct their own houses.

10 The Employees Housing Societies and Met-ropolitan Housing Co-operative Society are examples of housing Co-operative Questions in the blanks with suitable word(s) in the following statements:(i)A Co-operative Society works on the principle of self-help as well as _____.(ii)Through housing Co-operative societies members may get _____ at low rates ofinterest to construct their own Studies96(iii)Small producers who find it difficult to sell their products individually may form_____ Co-operative Society to sell their produce.(iv)Consumers Co-operative societies help to eliminate _____ in the process of dis-tribution of goods.(v) Pani-panchayats and lift-irrigation Co-operative societies are example of _____ Co-operative Characteristics of Co-operative SocietyA Co-operative Society is a special type of business organisation different from other formsof organsation you have learnt earlier.