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Some concerns for Consumer Cooperative Societies by

Dr. Bhagwati Prasad Ex-Chief Executive National Cooperative Union of India

During ICA/COOPFED Workshop on Development of Consumer Cooperatives in Sri Lanka on 24-26 May 2012

What is Consumer Cooperative ?

A consumers' cooperative is a business owned by its customers for their mutual gain. It is a form of free enterprise that is oriented toward service rather than pecuniary profit. The customers or consumers of the goods and/or services the business provides are also the individuals who have provided the capital required to launch or purchase that enterprise.

Forms of consumer Cooperatives

Consumers' cooperative may comprise supermarkets, convenience stores, and other businesses owned by independently-owned, and run Co-operative societies, which benefit from joint co-ordination and co-operation in managing their businesses. As mutually-owned businesses, each member of a society has a shareholding equal to the sum they paid in when they joined.

Relevance of Consumer Cooperatives

Consumer Cooperatives constitute the institutional framework in the distributive trade for providing essential consumer articles to the vulnerable section of society at reasonable prices. As a National policy, consumer cooperatives have been developed as self-reliant grass-root democratic institutions owned, managed and controlled by their members for the protection of interests of consumers.

The presence of consumer cooperatives creates an impact in the market especially to protect the interests of consumers by way of keeping intermediaries away from the distribution channel. It plays a vital role from the distribution of consumer goods, particularly essential consumer goods at fair prices to rural areas, including remote, inaccessible and hilly terrains.

State Support to Consumer Cooperatives

Consumer Cooperatives have received a good deal of support from the Govt. as they help check malpractices in times of crises arising from shortages by making goods available and thereby checking undue rise in their prices. But in normal situation Govt. support is not forth coming for strengthening consumer cooperatives in general.


In general consumer cooperatives have four tier structure as follows:
1. Primary consumer cooperatives 2. Secondary i.e. Wholesale Consumer Stores 3. State level Consumer Federations 4. National level Consumer Federation

Structure of Consumer Cooperatives in India

1. National level NCCF

2. State level

-- State Consumer Cooperative Federation 3. District level -- Wholesale Consumer Cooperative Stores 4. Primary level -- Primary Consumer Cooperative Societies/Primary Agriculture Cooperative Societies 5. School Cooperatives

Structure of Consumer cooperatives in Sri Lanka

1. National level 2. Primary level -- COOPFED Multi Purpose Cooperative Societies 3. COOPFED & MPCS are selling consumer goods through Self- Service Shops, Cooperative Super Markets, Coop City and Mini Coop City Shops. 4. School Cooperatives/ youth cooperatives

Status at a glance in India ( as on 2006-7 )

1. No. of State Federations30
a. Branches495 b. Membership i. cooperative stores4495 ii. Individual members10856 iii. Other Institutions--4667

2. No. of Wholesale consumer Stores812

a. Branches4871 b. Membership i. cooperative stores0.018 Million ii. Others 1.763 Million

3. No. of Primary Consumer Stores21512

a. Branches7280 b. Membership 5690 Million

4. Student Cooperatives8137

Status at a glance in Sri Lanka ( as on 2009-10 )

1.Multi Purpose Cooperative Societies312

2. School Cooperative Societies761

Membership 216900

3. Youth Cooperative Societies21


4. Co-op City Stores363 Annual T/O Rs. 3600 Million

5. Mini Co-op City outlets1000 Annual T/ORs.3000 Million

Problems of Consumer Cooperatives

1. Lack of Professionalism- Purchase, Sales, Inventory- control, finance, HRD 2. Lack of Govt. support ( Sri Lanka exception ) 3. Limited scope for financial resources mobilization 4. Lack of business relationship between different tiers

Problems ------------continued 5. No control over production v/s dependence on middlemen and producers 6. Lack of modernization and upkeep of outlets 7. Lack of business ethics in BOD 8. Lack of autonomy in business operations due to restrictive provisions in cooperative

9. Fierce competition from private due to globalization 10. Consumer Coops lagging behind in adoption of new technology and coping with emerging retail culture/trend 11. Problem of old and un saleable stock due to wrong purchases 12. Employees not keen to adopt new work culture

Some suggested action Points for strengthening consumer cooperatives

1. Policy and financial support from Govt. 2. Mobilization of resource 3. Professionalization of management through HRD

4. Training of BOD in business ethics and making them aware about business strategy 5. Tie ups and collaborations

Some suggested action---------continued

6. Diversification

7. Expanding business horizon beyond local boundaries

8. Top management must play more pro active role in conduct of business based on market situation 9. Adoption of business strategy based on demand and supply

Some suggested action--------continued

10. Establishing link between vast network of cooperative structure and using them for business expansion 11. Adoption of new technology 12. Research and development in retail management 13. Higher tier must provide guidance and support to lower tier in business promotion

Conclusion Consumer cooperatives world wide are facing sever threat of survival with few exceptions where continued support of the Govt. is available. If provided appropriate and timely remedial measures, cooperatives are capable of giving better service to the people. In the present day environment of rising prices, Govt.s. must come forward with policy and financial support to consumer cooperatives for controlling price