Cooperative

Also called: cooperative society · Topic: Rural Development: Diversification, Allied Sectors and Organic Farming · NCERT: Class 6, Ch 14 "Economic Activities Around Us"

Meaning

A cooperative (or cooperative society) is a group of people who come together voluntarily to meet their shared economic and social needs in a formal way. The members own it, take decisions together, and get back any profit it makes, instead of an outside owner.

It matters because it gives small, scattered producers bargaining power (the strength to negotiate a better price). Pooled together, their small outputs become a business large enough to deal with big buyers. India's dairy success, AMUL and the White Revolution, is the best-known example.

Explanation

Why a cooperative is needed: the middleman problem

• The case of milk in Anand, Gujarat (early 1940s):
• Milk spoils fast. Farmers had to walk or cycle in the heat to sell it quickly.
• So they depended on middlemen (traders who stand between the producer and the buyer).

• Middlemen bought milk in bulk at very low prices and sold it on at a profit.

• Why farmers had no power:

• They could not store milk, so they had to sell at whatever price they were offered.
• Many small sellers faced a few buyers, so the buyers set the price.
• This is a market failure for small producers. The market, left alone, gives them an unfair deal.

How a cooperative works

• Voluntary membership: people join by choice. Nobody is forced to join.
• Member ownership: the people who use the cooperative also own it.
• Joint decisions: members decide things together. No single outside owner controls it.
• Profits return to members: the money a middleman would have kept goes back to the farmers.
• How this fixes the milk problem:
• Pooling gives bargaining power. Farmers sell together, so middlemen can be cut out.
• Shared facilities. Common chilling and processing plants make each farmer's small output saleable.
• Value addition. Turning milk into butter and milk powder (products that keep far longer than liquid milk) removes the pressure to sell quickly.

The Anand pattern: a model structure

• Anand pattern: a three-tier cooperative structure. Milk producers own it and professional managers run it.
• Tier 1: village dairy cooperative society. It collects milk twice a day, tests its quality (fat content) and pays farmers.
• Tier 2: district milk union. It processes the milk (chilling, pasteurisation, which means heating milk to kill bacteria, and making products). It also supplies cattle feed and veterinary care.

• Tier 3: state federation. It markets the brand.

• Key idea: farmers own and control the business, and trained experts manage it.

What makes cooperatives succeed or fail

• They succeed when there is:
• farmer control, so members trust the cooperative and stay loyal;
• professional management, so it runs efficiently;

• strong links between collection, processing and marketing.

• They fail when there is (NCERT, Class 11, Rural Development, 5.4):

• low member coverage: too few farmers join;
• weak links between marketing and processing cooperatives: goods are produced but cannot be processed or sold well;

• poor financial management: losses, political interference and weak accounts.

• Contrast: Anand-pattern dairy cooperatives mostly avoided these problems. Many weak, government-run cooperatives did not.

In India

• AMUL (1946):
• Sardar Vallabhbhai Patel advised the farmers of Kaira to form a cooperative.
• It was formally set up as the Kaira District Cooperative Milk Producers' Union. The brand name AMUL grew out of this union.
• Tribhuvandas Patel, a lawyer and freedom fighter, was the founding chairman figure. Dr Verghese Kurien, an engineer, was its professional manager and builder. He joined in 1949.

• Farmers, including women, controlled collection, pasteurisation and sale. Today AMUL runs many plants and exports its products.

• GCMMF (Gujarat Cooperative Milk Marketing Federation, 1973): the state federation that markets the AMUL brand.

• NDDB (National Dairy Development Board):
• It was set up in 1965 at Anand.
• It became a statutory body (a body created by an Act of Parliament) under the NDDB Act, 1987 [4].

• Its mandate was to help set up Anand-pattern dairy cooperatives across the country through Operation Flood [3].

• Operation Flood (launched 1970):

• It ran in three phases: 1970-80, 1981-85 and 1985-96.
• It was funded by selling milk powder and butter oil donated by the EEC (European Economic Community).

• It organised cooperatives in milksheds (rural areas that supply milk) and sent their milk to cities [3]. This rural–urban link is the national milk grid.

• Size of the cooperative network (2025):

• 22 milk federations, 241 district cooperative unions, 28 marketing dairies and 25 Milk Producer Organisations (MPOs) [5].

• Together they cover about 2.35 lakh villages and have 1.72 crore dairy farmers as members [5].

• Women in cooperatives:

• About 48,000 women dairy cooperative societies work at the village level [5].

• Women are 71% of producer members in MPOs [5].

• White Revolution 2.0:

• It is a cooperative-led initiative of the Ministry of Cooperation, launched on 25 December 2024 [3].
• It runs for five years, 2024-25 to 2028-29 [3].
• It will set up 75,000 new Dairy Cooperative Societies (DCS) and strengthen 46,422 existing ones [3].

• Target: cooperative milk procurement of 1,007 lakh kg per day by 2028-29 [3]. NDDB coordinates it [3].

• Result: milk output rose from about 17 to 210 million tonnes (MT) between 1951 and 2021, roughly twelvefold (210 ÷ 17 ≈ 12.4). It reached 247.87 MT in 2024-25 [2].

• Other state cooperative brands: Nandini (Karnataka), Aavin (Tamil Nadu), Vijaya (Andhra Pradesh), Verka (Punjab), Sudha (Bihar), Kevi (Nagaland).

Don't confuse with

• Private dairy company: outside shareholders own it and take its profits. In a cooperative, the milk producers themselves own it and get the profits.
• Government-run cooperative: officials or politicians often control it. The Anand pattern is farmer-controlled and managed by professionals, which is why it succeeded where many others failed.
• Mother Dairy: it is an NDDB subsidiary, not a state cooperative federation like GCMMF or Nandini.
• White Revolution vs White Revolution 2.0: the first refers to Operation Flood (1970), run through NDDB. The second is the Ministry of Cooperation's programme launched on 25 December 2024 [3].

Prelims Hooks

• Cooperative: voluntary membership, member ownership, joint decisions, and profits returned to members.
• AMUL (1946) = Kaira District Cooperative Milk Producers' Union. Sardar Patel advised it, Tribhuvandas Patel led it and Verghese Kurien managed it.
• Anand pattern = 3 tiers: village society → district union → state federation. It is producer-owned and run by professional managers.
• NDDB: set up in 1965 at Anand. It became statutory under the NDDB Act, 1987 [4]. GCMMF (1973) markets AMUL.
• Trap: Mother Dairy is an NDDB subsidiary, not a state federation. Gujarat is the model for dairy cooperatives, but Uttar Pradesh is the top milk producer.
• White Revolution 2.0: Ministry of Cooperation; launched 25 December 2024; 75,000 new DCS; target of 1,007 lakh kg/day by 2028-29 [3].

Mains Points

• Cooperatives as an answer to market power:
• Pooling a perishable product takes away the middleman's power to squeeze the farmer.
• Professional management keeps the cooperative efficient.

• This is why the Anand pattern succeeded where many credit and marketing cooperatives failed because of low coverage, weak links and poor finances (NCERT 5.4). Use it in GS-III answers on agricultural marketing.

• Cooperatives for inclusion and diversification:

• Dairy cooperatives give small, landless and women farmers a daily cash income, not a once-or-twice-a-year crop payment. This protects them when crops fail.

• With about 48,000 women dairy cooperative societies and women making up 71% of MPO members [5], cooperatives also support women's empowerment.

• Gaps and the way forward:

• Cooperative coverage is still weak in the East and North-East, where farmers still depend on middlemen.
• White Revolution 2.0 (75,000 new DCS) [3] tackles this coverage gap. The lasting lesson of the Anand pattern is farmer control plus professional management, with little political interference.

Related concepts

• Anand pattern
• White Revolution

Read more

• Dairy cooperatives and the White Revolution: from AMUL to Operation Flood