TERM PAPER

By

AZHAR RASOOL BASRA

A.S. No.87
SYNDICATE No.11

TOPIC:
The History of Co-operatives in Pakistan has
been

disastrous

_________

Analyse

the

position

with

reference to the progress of the Movement since 1947

THIRTEENTH COMMON TRAINING PROGRAMME

Civil Services Academy, Walton, Lahore .

Azhar Basra receiving commendation certificate from

Sheikh
Manzur Elahi, former Director General, Civil Services
Academy (1986)

TERM PAPER

TOPIC:
The

History

disastrous

of

Co-operatives

Analyse

the

position

in

Pakistan

with

has

reference

progress of the Movement since 1947.

By
AZHAR RASOOL BASRA
A.S. No. 87
SYNDICATE No.11

THIRTEENTH COMMON TRAINING PROGRAMME

Civil Services Academy, Walton, Lahore.

been
to

the

DEDICATED TO
MY FRIEND
SHAHID MAHMOOD CHEEMA

Chapter

CONTENTS
T i t I e

Pages

Preface and Acknowledgement.

01-02

II

Introduction of the Cooperative Movement.

03-07

III

Effects of Partition on the Movement.

08-10

IV

Post Partition Activities.

Cooperative Departmental Setup.

16-18

VI

Cooperative Financial Setup.

19-21

VII

Agricultural Credit.

VIII

Agricultural Production and Cooperative

Marketing.

25-27

IX

Industrial and Women Cooperatives.

28-29

Cooperative Propaganda, Education and

Training

30-31

Xl

Claim of the Movement on Government

32-34

Xl-

A Problems of Cooperatives.

XII

Conclusions and Recommendations.

11-15

22-24

35-37

1
CHAPTER 1
PREFACE AND ACKNOWLEDGEMENT

It is indeed difficult if not impossible for a person

like me, who had been associated with the cooperative
movement as an official of the Cooperatives Department for
about

eight

years

to

accept

the

alleged

role

of

the

cooperatives in their historical perspective as disastrous.

The Cooperatives rendered yeoman services to rural as well
as urban classes of our society at a number of critical
junctures of time. After partition there was a complete
breakdown

of

socio-economic,

commercial

and

banking

structures. The migration and influx of millions of people

from across the border and sudden exodus of non-muslim
financiers

and

traders

caused

disruption

in

the

entire

economic life of the country and particularly that of the

Punjab. The problems arising out of this grave national
emergency were such that immediate action had to be
taken. The Cooperative Movement came to the rescue and
took a number of emergency steps which were absolutely
new to the movement, but went a long way in saving the
situation. Some of these were palliatives, some temporary
expedients and some pure experiments; but there were
others which were intended to be a permanent feature of
the

movement.

Under

the

stress

of

rapidly

changing

circumstances, the cooperative movement underwent what

amounts to a virtual transformation not only in form and

2
content but also in conception. This small document is an
humble attempt to highlight the tremendously constructive
and

effective

contributions

made

by

the

movement

in

uplifting the downtrodden, and in this context it would be a

complete antithesis of what the topic of the Term Paper
suggests.
I am gratefully indebted to the Research Wing of
the Academy in general for their help and assistance and
Mr.

M.

Rashid

Director

invaluable guidance.

-sd(Azhar Rasool Basra)

Research

in

particular

for

his

3
CHAPTER II
INTRODUCTION OF THE COOPERATIVE MOVEMENT
Before the advent of the British rule in India, the
village community had a well developed organization which
drew its force not from legislation but from the willing cooperation and consent of the community as exercised by
the village elders of established reputation. Not law but
social

sanctions

were

the

force

to

arrive

at

various

decisions. As a member of the community, the village

sahukar

also

carried

on

his

three

main

functions

of

supplying credit, of marketing produce and of distributing

goods

which

requirements

were
of

needed

the

for

members

meeting

of

the

the

daily

community.

He

respected the social sanctions and his dealings with the

community

were

tampered

with

moderation.

The

introduction of the British Civil Laws gradually weakened

social

sanctions

which

enabled

the

members

of

the

community to take protection under the new laws. The

village

money-lender

exploited

the

rural

masses

by

charging exhorbitant rates of interest and by getting the

movable and immovable property attached and auctioned
in satisfaction of his debts for which he had secured
decrees from the civil court. As a result of which the land
was gradually passing into the hands of the money-lenders
and a landless class was being gradually created. In order

to tackle these twin problems two types of legislation were

enacted. One was intended to provide an alternative

4
source of credit in the form of taccavi and the other to stop
the process by which the land was gradually passing out of
the hands of the actual cultivator.
The Cooperative Societies Act:
This legislation was not enough and it was soon
realized that something more must be done if the process
mentioned above was to be successfully arrested. The
Government, therefore, passed the first Co-operative Credit
Societies Act, 19014. This Act, however, regulated the
lormalion and working or tIic Cooperiitive Credit Societies
only. Soon afterwards it was felt that the scope of the
movement had to be extended if it was to play the part it
was meant for. The 19014 Act was, therefore, amended in
1912 and renamed as the All-India Co-operative Societies
Act, 1912. The scope of the Co-operative Movement was
extended to spheres other than credit.
Four Stages:
The Co-operative Movement passed through four
distinct stages upto partition. The first stage began in
19011 and ended in 1918. The second lasted from 1919 to
1929. The third commenced in 1929 and continued till

1939. The fourth began with the Second World War and
lasted till partition.
First Stage 19014-1918:
From its very inception the Movement met with
serious opposition from vested interests, who were anxious
that the movement should not be successful. The moneylender in particular realized
5
that the success of the Co-operative enterprise would mean
his displacement. Besides, the persons who administered
civil law, mainly came from non-agriculturist classes. They
had a bias in favour of the money-lender and against the
movement. The progress of the movement was, therefore,
slow. By 1912, the number of societies, membership, and
share-capital did not increase as expected. The conditions
which had marked the infancy of the movement continued
even

after

1912,

but

the

officials

and

non-officials

interested in the movement worked hard for its expansion.

They intensified their efforts even further during the period
of First World War, with the result that the number of
societies increased manifold and the working capital and
membership swelled enormously.
Second Stage 1919-1929:
When the First World War was over, our soldiers
who had been abroad returned home. They had faced
difficulties and were much bolder than the rest of the
population. Their example tended to make the general
masses

less

afraid

of

those

who

were

against

them

especially the money-lender. Moreover, the enactment of

the Punjab Usurious Act of 1918 made the debtors realize

that decrees would not be obtained simply by means of the
entries in the account books of money-lenders, and the civil
courts

could

go

behind

the

loan

transactions.

These

circumstances created an atmosphere which was favourable

for the expansion of the movement. During this period sale
societies and commission shops were organized, which
brought into prominence the malpractices of the nonagriculturist classes, as a result of which other useful
enactments were
6
ultimately passed. This period saw also the unique venture
of cooperative consolidation which was designed to provide
relief against the evils arising out of fragmentation of
holdings. Mortgage banks were also started for providing
long-term loans for the redemption of mortgages and for
the liquidation of old debts due to the money-- lender. For
improving the general social and economic conditions of
the rural masses, better living societies, cattle breeding
societies and better farming societies were also started.
The womens side was hot neglected either and Womens
Thrift and Savings Societies were also organized. Industrial
Cooperative

Societies

were

organized

with

view

to

facilitating the purchase of raw material and disposal of

finished goods. This period also saw the birth of three
important institutions of provincial stature. These were the
Punjab Co-operative Union, Punjab Provincial Co-operative
Bank and the Punjab Industrial Co-operative Bank.
Third Stage 1929-1939:
It was in 1929 that depression set in and prices
fell

suddenly.

The

money-lender

resorted

to

coercive

measures to recover his debts. A legislation was made to

give protection In I lie debtors, which was popularly known

as

Golden

Laws.

The

protection

which

the

new

laws

afforded to the debtors gave opportunities to the less

scrupulous

members

to

exploit

the

situation.

As

consequence, there was a serious set-back in the recovery

of loans. This period also saw the failure of mortgage banks
and the loss of business commission shops. Briefly, the
period between 1929-39 was one of the difficulties and setbacks.

7
Fourth Stage 1939-19I7:
The debt legislation had started affecting the
movement towards the end of the third stage, but their real
effect was felt during this period. Recovery became even
more difficult and the credit side of the movement showed
a

further

decline.

The

number

of

better

living,

cattle

breeding and medical aid societies etc. showed an increase.

The best relieving feature, however, was the expansion of
the consolidation of holdings activities. The fourth stage
also saw the Second World War and in the Cooperative
Movement the Government found a very useful, widespread
as well as reliable agency, which could cope with the needs
of the rural as well as urban population as for as the
purchase and disposal of controlled articles was concerned,
because the old channels did not prove dependable. The
Cooperatives Department started the purchase of wheat.
Simultaneously a number of Central Cooperative Banks
started

the

wholesale

work

for

controlled

articles

like

sugar, salt, cloth and kerosene oil. With the advent of

Second World War the prices of agricultural commodities
had risen and the need for credit in the rural areas had
decreased. The money-lender had, however, curtailed his
activities and found it more profitable to invest his money
in trade and commerce under the changed circumstances.
During this period the movement extended its activities

and started servicing non-members on a much wider scale.

This was in fact a departure from its past policy.
This was the state of affairs in the movement
when the partition came.

8
CHAPTER III
EFFECTS OF PARTITION ON THE MOVEMENT
As a result of partition, thirteen districts, which
were the most advanced from the Co-operative point of
view, went to the Indian Dominion and with them a large
number of societies, a very large number of members and a
good deal of working capital were lost to the movement.
Before partition, commerce, trade and banking
were almost entirely in non-muslims hand. The Muslims
mainly depended on agriculture and allied occupations. The
headquarters of the majority of the banking institutions and
whole of their funds were transferred to India or to places
out-side Pakistan. A vacuum was thus created in the realm
of trade, commerce, banking as well as in the sphere of the
pacca and kacha arhties. The cottage workers had to face a
similar

situation

due

to

the

migration

of

non-muslim

financiers.
Rice Problem:
The

paddy

crop

was

harvested

soon

after

partition. At that time it was discovered that there were no

purchasers of paddy. It is true that a few muslims had
money; but they were afraid of investing it in such ventures
in the disturbed conditions

9
that prevailed. Government finance at this critical period
was completely out of question. The Cooperative sector had
not only funds, which consisted of the accumulated savings
of

the

members

organizations

for

over

four

decades,

but

also

had

which were spread over in all important

mandis as well as villages. It was, therefore, considered

that there could be no better agency than this sector for
meeting the situation. This was a new venture for the
Movement.

The

Cooperative

Movement

had,

under

the

circumstances, to fill the vacuum, created not only by the

exodus of arhtis but also by the departure of those nonmuslims who used to own or run rice husking mills. In the
first instance they had to make arrangements for the
purchase of paddy and then for getting the same husked.
Rice husking mills were allotted to the Cooperative Sector.
As a result of the stepping in of the Cooperative Movement,
not only the price of paddy rose to the pre-partition level,
but other private persons also came into the field. A
successful beginning was, therefore, made for filling the
gap created by the exodus of non-muslims from the rice
market.
Cotton Problem:
While the Co-operative Sector was engaged in
rehabilitating the rice market, it became apparent that
unless something was done, there might be a crash in the
cotton market. To begin with, the Cooperative Sector was
given four mills in very important cotton producing areas.
The crash in the cotton market was averted.

10
Food Procurement:
The Government

requested

the

Cooperative

Sector for assistance in the procurement of wheat also. The

movement

set

up

number

of

purchasing

centres

and

purchased wheat in the first two harvests. The wheat

problem was, however, short-lived as the vacuum created
was soon filled up by the Zamindars as well as small
traders who took to the work of kacha and pacca arhtis as
well as commission agents.
Consumer Goods:
Consumer goods ceased to be imported and soon
after partition, there developed an acute scarcity thereof.
No agency was left to take up this trade. Once again the
Government had to approach the Cooperative Sector and
the Cooperative Movement again came to the rescue. On
the one hand, it saved the country from cloth famine and
on the other it was mainly instrumental in bringing down
the prices of consumer goods. The Central Co-operative
Banks and the Lahore Central Co-operative Store acted as
wholesalers of the imported cloth of India, and a number of
co-operative societies undertook the retailing of cloth. The
Co-operative

Sector

at

the

instance

of

Government

undertook the responsibility of importing sugar and made

arrangements for its wholesale and retail distribution, on
the lines similar to those of cloth.
It will, therefore, be seen that while the new
undertakings helped in the restoration of the trade and

commerce of the country, the agricultural side of the

movement remained ignored.

11
CHAPTER IV
POST-PARTITION ACTIVITIES
In the beginning the Co-operative Sector agreed
to work the rice husking mills as there was no-body else to
do so. Gradually normal channels of trade were revived and
a number of private persons came forward to run these
mills. The Government, as a matter of policy, withdrew
these mills from the Cooperative Sector and allotted them
to deserving private persons. In the same way the cotton
ginning mills were also given to private individuals. As
things

returned

gradually

to

withdrew

normal
from

Central

the

Cooperative

business

of

Banks

handling

the

imported cloth. On the revival of normal trade conditions

the

matter

of

import

distribution

of

sugar

as

well

was

as

wholesale

gradually

and

given

to

retail

private

agencies, and finally it was taken over by Government

under the Sugar Nationalization Scheme of 1953.
Multi-purpose Societies:
The Co-operative Multipurpose Societies had to
be hurriedly organized and were a combination of cooperative

institutions

and

individuals

who

were

in

position to invest money. The main idea was to attract

finance.

The

real

co-operative

followed

nor

was

it

emergency.

In

spite

possible
of

societies rendered useful

principles
to

do

defective

so

were
in

neither
time

organization,

of

these

12
service in a time of national emergency The societies
worked

satisfactorily

so

long

as

they

were

under

the

effective departmental supervision. When the supervisory

staff was withdrawn, conditions deteriorated and a number
of them suffered heavy losses.
Co-operative Cotton Corporation:
In order to afford necessary facilities to the
institutions running cotton ginning factories and with a
view to confining their business within the movement, a
new

organization

namely,

the

Punjab

Provincial

Co-

operative Corporation was set up. Its membership was

confined only to those Co-operative Multi-purpose Societies
which were dealing in cotton.
Lahore Central Co-operative Store:
It was thought that if arrangements could be
made

to

supply

consumer

goods

through

co-operative

organizations, the consumers could be benefitted, and the

evil of black marketing or profiteering could be very much
reduced. With this object in view the Lahore Central Cooperative

Store

was

established.

The

membership

was

thrown open to Co-operative Societies, individuals as well

as central co-operative banks.
Co-operative Cotton Textile Mill, Khanewal and Cooperative Textile Mill, Lawrencepur (Attock):
It was considered that if cotton cloth or woollen
cloth could be produced in co-operative organization, it
could be sold to the public at reasonable rate, because
there would be no element of exploitation or excessively
high profits. With this object in view

13
the above mentioned two very big ventures were takn in
hand by the movement. Both of them have now been sold
to the private entrepreneurs.
Co-operative Insurance Society of Pakistan:
Partly to fill the gap but mostly with a view to
making arrangements for getting insurance effected within
the movement this Society was organized. This society was
intended to serve those Co-operative Organizations which
were dealing in articles needing insurance and had to go
out-side the movement for getting them insured.
Co-operative Farming Societies:
With the twofold object of affording monetary
assistance to the refugees and trying on experiment in cooperative

farming,

co-operative

farming

societies

were

started. Inspite of a number of defects and drawbacks, the

Societies rendered useful service by providing a number of
amenities to their members like improved seed, chemical
fertilizers, improved agricultural implements, cane crushing
and sugar producing machinery.
The history of the movement after independence
can be divided into six phases*.
First Phase - 19117 to 1955:
During this period the above mentioned main ventures were
established. The movement did not enjoy a good reputation
but became richer in material gain.
* Agricultural
Ahmad.

Cooperatives

in

Pakistan

by

Riazuddin

14
Second Phase - 1955 to 1960:
During

these

six

years

all

the

commercial

business taken up and looked after by the movement was

gradually returned back to the private owner.
Third Phase 1961 to 1966:
A beginning was made in this phase, from its
early

days,

to

expand

and

revitalize

the

movement.

Establishment of the Co-operative Development Board on

May 7, 1962 was a major step in creating the required
capacity for development planning and project preparation
and promoting self-management within the movement. The
Co-operative Board (renamed as such in 1965) dominated
the whole phase. It was suddenly dissolved in December,
1966 and some of its projects were transferred to private
businessmen while others were to be disposed of in some
other manner.
Fourth Phase - 1966 to 1971:
Co-operative leaders alongwith the central and
urban cooperative banks involved them-selves in the game
of politics in this period of political strife. The agricultural
credit was used to enhance political prestige.
Fifth Phase 1971 to 1977:
These were the eventful six years for the cooperatives. The Co-operative Societies Reforms Order was
issued on 15th March, 1972, which provided:
(a) that no individual would be a member of an
apex or a central bank;

15
(b) that no person would be a member of the
managing committee of a co-operative bank for
more than two consecutive terms;
(c) that no new bank other than an apex or
central bank would be registered;
(d) that no trader would be a member of an
agricultural credit or marketing society.
With the passing of this Order a great upheaval
took place in the movement whereby many directors of
cooperative banks all over the country were unseated.
Another significant development of this phase is the coming
into

being

of

the

Federal

Bank

for

Co-operatives

in

December 1976. As a result of which all co-operative banks

other than the Provincial Co-operative Bank were abolished
which caused a big gap between the base and the apex.
Sixth Phase - 1977 to onwards:
The Federal Bank for Co-operatives has provided
huge amounts of credit for agricultural co-operatives and
has determined loading policies and procedures for the
Provincial Co-operative Banks.
During this period National Co-operative Union of
Pakistan

was

formed

on

May

23,

1983.

An

Inquiry

Commission was appointed by the Sind Government to

ascertain the causes of failure of the movement in that
Province.
This brief study reveals that the policies of the
Government have been sporadic and not consistent as for
as the co-operative movement is concerned.

16
CHAPTER V
CO-OPERATIVE DEPARTMENTAL SET-UP
At the time of Independence in the Punjab, Sind
and North-West Frontier Province the Organizational set-up
of the respective co-operative departments was almost the
same

except

operatives

few

differences.

Department

was

the

The

Head

Registrar,

of

the

Co-

Co-operative

Societies, who was assisted by Chief Auditor and Deputy

Registrar (Administration), at Headquarters. In the field,
the Deputy Registrars were in the divisions and Assistant
Registrars in the districts. Under them were Inspectors and
Sub-Inspectors. In October, 1955, all the provinces were
integrated into one unit. In 1959, a post of Joint Registrar
at Headquarters, and in 1960 the post of Principal Cooperative

Training

College

were

created

by

the

Government. The same year post of Registrar was upgraded

and

designated

as

Commissioner

Co-operative

Societies, West Pakistan, which was, however, abolished

two years later in 1962.
The Province of West Pakistan was divided into
six

regions

and

six

Regional

Registrars,

Co-operative

Societies were appointed with their headquarters at Lahore,

Multan, Peshawar, Quetta, Hyderabad, and Karachi. The
Regional Registrars had Assistant Registrars, Inspectors
and Sub-Inspectors functioning under them.

17
A

Co-operative

Development

Board,

as

mentioned in the previous chapter, was constituted under

the Ordinance known as the West Pakistan Co-operative
Development Board Ordinance, 1962. It consisted of both
Government

officials

and

co-operators.

The

Board

was

assigned the task of planning and development of the cooperative

movement.

democratization

of

however,

abolished

January,

1967

It

was

the
in

office

step

movement.
December,

of

the

towards

This

1966

Board

and

Registrar

from

the
was,
1st

Cooperative

Societies was again revived on the previous pattern. The

same

year,

the

Co-operatives

Department

which

was

attached with the Labour and Social Welfare Department, in

the Secretariat became an independent department with its
own Secretary Cooperation.
The Co-operative Sector had been expanding at a
fairly rapid pace during the last couple of decades. The
membership

of

the

co-operative

societies

particularly

tripled in the Punjab since independence, while loaning

specially

to

agricultural

credit

societies

had

increased

manifold. The strength of the field staff had not changed

during

this

time.

department in

To

streamline

the

working

of

the

the Punjab and to make it operate on

efficient lines it was thought imperative that the strength

of staff specially at district level and below should be
suitably

increased.

The

Department

was,

therefore,

reorganized in November 1979 when 21 new posts of Circle

Registrars in grade 17. one in each district were created
alongwith 60 posts of Assistant Registrars, who were now
posted at Tehsil headquarters. Similarly, Inspectors were
posted at Markaz (Thana) level, and Sub-inspectors for
every two Union Councils. In the other Provinces situation
did not change in form or content.

18
This

timely

provided

promotion

improved

efficiency

frustrated

and

expansion
opportunities

of

the

demoralized

field
during

of

the

which

department
resulted

staff

which

had

all

these

years

in
felt
of

stagnation. It also enabled the staff of the department to

provide better guidance and have effective supervision and
control on the movement it self.

19
CHAPTER VI
CO-OPERATIVE FINANCIAL SET-UP
Each province has a co-operative bank called the
Provincial Co-operative Bank. In order to provide credit
facilities extended by the Federal Bank for Co-operatives to
Azad

Kashmir

and

Northern

Areas,

the

Azad

Kashmir

Government Co-operative Bank and the Northern Areas Cooperative

Bank

have

also

been

declared

as

Provincial

Banks.
The Punjab Provincial Cooperative Bank:
The Cooperative Credit structure in the Punjab,
prior to October 1976, was three tier system. Primary
cooperative societies and the Central Cooperative Banks
alongwith Banking Unions and Industrial Unions etc. formed
the first and the second tiers of the financial setup. In
order to further strengthen the financial structure of the
co-operative societies an apex institution known as Punjab
Provincial Co-operative Bank was established. This was the
third tier of the system. The Bank was financed by the
State Bank of Pakistan through lumpsum allocation in the
Agriculture

Sector

against

guarantee

furnished

by

the

Provincial Government.
In

October,

1976

the

Federal

Government

promulgated an Ordinance for the Establishment of Federal

Bank

for

Co-operatives

and

Regulation

of

Co-operative

Banking, whereby all the Central Co-operative Banks and

other Co-operative Banks (Urban and

20
Industrial) in the Punjab were dissolved and their assets
and liabilities stood transferred to the Punjab Provincial Cooperative

Bank.

The

dissolved

Co-operative

Banks

alongwith their branches were declared the branches of the

Punjab Provincial Co-operative Bank. With the passage of
time the business of the Bank increased and new branches
are being opened, and at present the number is above 134.
The Sind Provincial Co-operative Bank:
At the time of separation of Sind from Bombay
Presidency

in

1934

the

Central

Co-operative

Bank

at

Karachi was re-named as the Sind Provincial Co-operative

Bank. Talluka banks and Zamindari banks were formed
dissolving all central cooperative banks in 19q6. In 1976
these banks were converted into ordinary primary societies
which were affiliated with the Provincial Bank. When the
Federal Bank started patronising it in 1976, the Bank was
insolvent. The position has not improved any further so far.
The Frontier Provincial Co-operative Bank:
The Bank was established after independence. All central
co-operative banks, Hazara Bank and the Banking Union,
Hangu were merged into this Bank. During the one unit
period

it

was

affiliated

to

the

Punjab

Provincial

Co-

operative Bank and re-gained its full-fledged status of a

provincial bank on the dissolution of the One Unit. Before
the formation of the Federal Bank it had a weak financial
base. The position improved by 1981-82 as its owned funds
increased to 12.78% of the working capital. Borrowings
have also shown a trend of increase.

21
The Baluchistan Provincial Co-operative Bank:
The movement in the province of Baluchistan
started

late

after

independence.

The

Provincial

Co-

operative Bank was established as late as in 1972 with a

membership

of

twenty-seven

societies.

Its

membership

increased by L127 as on 30th June, 1982 and share capital

upto Rs.7.06 million out of which 5.30 million was the
contribution from the Government.
The operations of the Azad Kashmir Government
Co-operative Bank and the Northern Areas Co-operative
Bank are not so extensive.
The Federal flank for Cooperatives:
The

Bank

was

established

under

the

Establishment of the Federal Bank for Co-operatives and

Regulation of Co-operative Banking Ordinance 1976. One
of its primary objectives is to provide credit facilities to
Provincial

Co-operative

Banks

and

regulate

their

operation. It is a sort of a subsidiary of the State Bank and

its paid-up capital of Rs.200 million has been shared as
follows:
State Bank of Pakistan
millions
Federal Government
millions
Government of the Punjab
millions
Government of Sind
=
Government of NWFP
millions
Government of Baluchistan
millions
Total =

150

20

10
10 millions

5
200 millions

The Board of Directors consists of the full Board

of Directors of the State Bank, two nominees of the Federal
Government and two nominees each from the Provincial

Government and the Managing Director is appointed by the

Federal Government.

22
CHAPTER VII
AGRICULTURAL CREDIT
The small farmer has few resources to run his
small farm. Availability of credit for him is limited, cooperative credit is the only orqanized system which can
provide him credit and agricultural inputs on credit at his
door-steps. The position* of agriculture credit Societies in
the country is given below:
Number

Membership

34,111

1,398,163

The

number

of

Average per society

41

cooperative

societies

actively

participating in loaning operations in Punjab is large but

the area of operation of a society is quite small. It is
exactly

the

opposite

in

Sind.

Since

the

co-operative

movement h1is recently been introduced in Baluchistan and

the

population

is

sparsely

distributed

the

number

of

societies is very small there. In NWFP, Norther Areas and

Azad Kashmir the position is midway between the two
extremes of the Punjab and Baluchistan.
The working of cooperatives in agricultural sector
has been modified and improved. Instead of providing
credit in the shape of cash the co-operative societies are
supplied agriculture

* Agricultural
Ahmad.

Cooperatives

in

Pakistan

by

Riazuddin

23
inputs like fertilizers, pesticides, seeds etc. on credit.
Only in Barani areas part of the loan is given in cash. The
loaning to farmers is intensive. Some new programmes in
this connection were under taken in the Punjab which are
as under:
(1)
(2)
(3)
(4)
Societies.

Supply of interest free credit in kind and

recoveries of loans in cash as well as in kind.
Marketing of Agricultural produce.
Wheat seed exchange programme.
Organization
of
water-users
Co-operative

As far as the advancing of credit in kind in concerned the

position is more or less the same in NWFP, Northern Areas
and Azad Kashmir except in Sind and Baluchistan where
loans are mostly given in cash.
The System of interest-free loaning was introduced in the
year 1978-79. This facility is available to the farmers
owning uptp 124 acres of land. The interest part of the loan
is re-imbursed by the Federal Government. The amount of
credit provided to these co-operative societies in Pakistan
during 198182 was Rs.1220.80 millions* and the recovery
made was about 90 per cent in Punjab, NWFP, and AJ&K and
below 50 per cent in Sind and Baluchistan. The continued
success of cooperative loaning in Punjab can be ganged
from the fact that there is a regular increase in the use of
fertilizers

through

co-operatives.

During

Rabi

1980-81

about 75 lacs bags of fertilizers were distributed through

cooperatives

* Agricultural Credit in Pakistan by Riazuddin Ahmad.

24
on cash and credit as against 63 lacs bags during the year
1979-80. Similarly during Kharif 1981 about 25 lacs bags of
fertilizers

were

distributed

as against 22.25

lacs bags

during Kharif 1980.

Wheat Seed Exchange Programme:
Under

this

programme

wheat

seed

certified

by

the

Agriculture Department is purchased by the co-operative

societies in every union council and is exchanged with the
wheat at the time of sowing of the next Rabi crop. Where
exchange

is

not

possible

farmers

can

purchase

this

certified seed on cash and carry basis. The object is to

provide good quality seed to small farmers.

Water Users Co-operative Societies:

Improvement

of

water-courses

was

under-taken

in

the

Province of the Punjab by On Farm Water Management

Programme Directorate. The object of the programme is to
strengthen

the

water

courses

and

clear

them

of

any

obstruction in order to ease the flow of water. With a view

to reduce the wastage of water, concrete water out-lets
(Nakkas) are installed.

25
CHAPTER VIII
AGRICULTURAL PRODUCTION AND COOPERATIVE
MARKETING
It is essential that greater credit facilities should
be afforded to the rural masses, the majority of which lives
on

bare

subsistence

level.

The

various

Government

agencies in the Agriculture Sector should make hectic

attempts in improving the economic conditions of the rural
population

by

increase

in

production

and

provision

of

suitable marketing facilities, so that they can produce more

and then sell their produce at reasonable rate. In the
context of providing marketing facilities to the agricultural
community a total number of 136 marketing societies have
been organized all over the country. Most of them are
dorment.

However,

single

commodity

marketing

co-

operatives* for sugarcane, potatoes and fish are quite

active.
In

the

Punjab

a scheme

under the

name

of

Reconstruction of Rural Credit and Agricultural Marketing

was introduced. The scheme was aimed at improving the
economic conditions of farmer members of the cooperatives
by assisting them in increasing agricultural production by
ensuring adequate supply of agricultural inputs through a
package deal; and marketing of their agricultural produce.
Under the scheme the existing primary cooperati.ves were
developed, or

* Agricultural
Ahmad.

Cooperatives

in

Pakistan

by

Riazuddin

where

such

societies

did

26
not

exist,

new

ones

were

organized to provide the farmers with the services which

were

thought

essential

for

improved

agricultural

production. At the mandi town level these societies were

federated into the secondary institutions known as the
Cooperative Farm Service Centres. The Centres besides
providing

the

requirement

of

the

member

societies

in

respect of agricultural inputs also supplied tractors and

other

agriculture

machinery

on

hire

basis,

as

well

as

provided repair facilities for these implements. Godowns

facilities were also made available at these centres to store
agriculture inputs and produce for marketing purposes. Due
to

shear

mismanagement

these

centes

have

run

into

colossal losses and the Government is trying to make them

economically viable.
In this respect the Government of the Punjab have launched
another project in 1984 under the name of Strengthening
and

Development

of

Cooperative

Procurement

by

Organizing Co-operative Supply and Marketing Federations

in Punjab. The scheme has been designed to develop the
economic

conditions

of

farmers

members

of

-the

co

operative societies by linking the agriculture credit with

supply of agriculture inputs and marketing of agriculture
produce. The Supply and Marketing Federations at the
district level will coordinate and facilitate the working of
their affiliated primary co-operative societies and would act
as liason agency between the farmers and organizations
inducted in agriculture production. At the district level a
District Co-operative Supply and Marketing Federation
has been established, whose membership consists of

27
primary agricultural societies, Farm Service Centres and
IRDP

Markaz

Associations.

At

the

provincial

level

Provincial Co-operative Supply and Marketing Federation1

has been established, whose membership consists of 27
District

Co-operative

Supply

and

Marketing

Federations

only.
The

object

of

the

above

federations

are

to

arrange as a package the supply of agricultural inputs to

the

members

of

their

affiliated

societies

as

well

as

marketing of the agricultural produce of their members, It

is hoped that these federations will go.a long way not only
in catering with the needs of small farmer--co-operators as
mentioned above but also in extending the cooperative
movement to all the villages in the Province, co-operatizing
100% farmer population and helping in grooming of local
leadership.

28
CHAPTER IX
INDUSTRIAL AND WOMEN CO-OPERATIVES
Industrial Cooperatives provide many advantages
to individual artisans and craftsmen. They raise capital,
purchase raw materials and other requirements at a fair
price and endeavour to sell their products on favourable
terms. These co-operatives cover the trades of hand-looms,
powerlooms, sports goods, surgical instruments, textile and
leather

goods,

furniture

making,-

metal

goods

etc.

At

present the total number of industrial societies is about

2171 all over the country.
Comparative study of the industrial cooperative
societies is given in the following tines.
Pakistan
Lahore*:

Cycle
This

operative

is

society,

Industrial
not

only

but

also

Co-operative

the

biggest

one

of

Society,

industrial

the

largest

cocycle

manufacturing concerns in the country. The number of its

members is 9l and paid-up share capital is Rs.7.6 millions.
It is producing Rustam and Sohrab brand of cycles which
are

very

exporting

popular

in

cycles

and

the

country.

spare

parts

The

society

is

also

and

earning

foreign

exchange. Its present capacity is 1 ,80,000 bicycles per

annum, besides production of spare parts valuing Rs.200
crore annually.
* Agricultural Cooperative Movement in Pakistan
Perspective, Problems & Plan of Action.

Pakistan
Sialkot:

Sports

29
Co-operative

Industrial

Society,

This society, with 165 members and a sharecapital of Rs.1 .31 lacs is functioning to procure and
distribute

among

its

members

units

raw

materials,

indigenous as well as imported, used in the manufacture of

sports goods at a nominal profit. Approximately 1 ,000
workers earn their livelihood, being directly engaged by the
members of the society.
Co-operative Industries Corporation, Multan:
This is a federation of 65 industrial co-operative
societies, mainly of weavers, in Multan district. Its prime
objective is to provide raw materials for member societies
and to facilitate marketing of their products. During about
two decades of existence it has done collective business
exceeding rupees one crore.
Womens Co-operatives:
Co-operatives

have

been

organized

among

women from low and middle income groups to supplement

the family income, to promote the spirit of thrift among
them

and

societies

to
also

economise

on

function

to

family

expenditure.

create

These

opportunities

for

employment of women in cottage and small industries, and

to enable them to participate in the activities of industrial
centres and co-operative stores. Thrift societies inculcate
in women the habit of savings. The industrial societies are
functioning

as

women

industrial

centres

for

imparting

training and skills to the members in various kinds of

cottages industries such as carpet making, duree/niwar
making,

painting,

sewing,

cutting,

embroidery,

knitting

work, soap making, fruit preservation, jams, jellies ,squash

making and, type writing. No financial aid is provided from
any quarters to these cooperatives.

30
CHAPTER X
CO-OPERATIVE PROPAGANDA, EDUCATION AND
TRAINING
In a country where the percentage of literacy is
very small, it is difficult to find men who can properly
appreciate co-operation and the people are not therefore in
a position

to take it spontaneously. One of the most

effective methods of making illiterate persons realize the

benefit of co-operation is proper and sustained propaganda.
As a matter of fact, most of the societies in the early years
were formed only after there had been adequate amount of
propaganda and the members were ready and willing to
form

really

remembered

cooperative

that

the

best

society.

It

should

is

the

propaganda

be

actual

achievement of results. The future of the movement does

not

lie

in

over-rapid

expansion

but

in

ensuring

that

whatever new tasks it undertakes they are accomplished in

such a manner that they afford a good example for others
to follow and afford a convincing proof of the benefits one
can derive from co-operation. Suitable films and video
cassettes could be prepared about the efficiently working
co-operative institutions and these could be shown to the
people

on

suitable

occassions.

It

should,

however,

be

emphasized that real and effective propaganda can only he

done through the staff and non-officials actually working in
villages
masses.

and

coming

into

close

contact

with

the

rural

31
Co-operative Education and Training:
One of the most important sectors of the co-operative is
that of education and training. Without imparting adequate
training to its field staff the Cooperatives Department
would not be in a position to provide sufficient guidance
and

have

effective

supervision

over

the

co-operative

movement. Training is therefore, not only given at the

lower level, but in service training and refresher courses
are held for officials throughout their service. Training is
also imparted to the Managers and Secretaries of large and
small co-operative institutions so that they are in a position
to fully understand their rights and obligations and be able
to successfully discharge the duties entrusted to them.
Institutional
Training

training

Colleges,

Hyderabad

and

at

is

imparted

Faisalabad,
the

at

the

Peshawar,

Regional

Co-operative
Quetta

Training

and

Institute,

Bahawalpur and Co-operative Training Centre, Rawalpindi.

Field education is given through a field task force headed
by the Educational Assistant Registrars and Educational
Inspectors. The Punjab Co-operative Union Limited, Lahore
is also engaged in the task of Co-operative Education,
publicity and propaganda. The Union was registered on July
29, 1918. At present membership stands at 160 and Board
of Directors consists of 30 elected members.

32
CHAPTERS Xl AND Xl-A
CLAIM OF THE MOVEMENT ON GOVERNMENT
In

country

which

is

in

the

process

of

development, co-operation can be of real assistance in

bringing about the betterment of the social and economic
conditions of the masses. Not only does it develop self
help but also mutual help. Movement is an organization
which has the greatest number of individuals within its fold
as compared with any other single agency. In a really cooperative institution people get training which aims at
making them really good citizens. So far as the Government
machinery is concerned, while other departments work in
specialized

fields,

the

Cooperative

Movement

has

an

overall planning and aims at utilizing the services and

experience of all departments to the best advantage of
the people. The movement deserves special consideration
from all those who are interested in the betterment of the
masses. The renowned cooperator George Jacob Holyoak
once said:
Co-operation leaves no body out who works
sincerely. It touches no mans fortune; causes
no distrubance in society; needs no trade
unions to protect its interests; accepts no gift
not asks for any favour; keeps no terms with
the idle; breaks no faith with the industrious,
subverts no orders; envies no dignity; and it
means

selfhelp.

selfdependence,

and

such

share of the common competence as labour

shall earn.

33
Problems of Co-operatives :
Some of the problems faced by the co-operatives
are enlisted below:
1. Poverty and Illiteracy: Due to the low literacy
rate

in

the

rural

areas

the

majority

of

the

farmers are unable to make full participation in

the activities of their co-operative societies. A
very hectic effort is required in educating and
modernizing the rural society. A crusade has to
be l1iunchud to bring some radical change in the
social attitudes of the masses.
2. Lack of Good Leadership: It is really hard to
find good

leadership in the

rural areas. The

concept of leadership has not yet gone beyond

the feudalistic hegemony. A lot of work remains
to be done in producing a class of people from
educated small farmers, who could be properly
geared up and groomed to attain a place of
honour and respect and to develop a credibility
in which the poor masses could repose their
trust.
3. Official Control: The supervision of the cooperatives by the Department has exceeded its
limit and is encroaching upon the rights of the co
operators.

This

attitude

needs

immediate

correction.
4. Financial and Managerial Weaknesses: The
main

reasons

perpetual

for

poverty

these
and

set-back
state

of

are

the

paucity

confronted by the small farmer. This financial

dependence has resulted in the shape of poor
rate of literacy, due to which local managers are
not available

* Agricultural
Ahmad.

Cooperatives

in

Pakistan

by

Riazuddin

to

run

34
cooperative

their

societies

effectively,

efficiently and competently. This state of affairs

is due to the co-operators acceptance of the
suppresive control of the Department.
5.

Opposition

from

vested

Interests:

The

landlords, capitalists and middlemen have strong

vested interests in the rural economy and are
opposed to the vigorous and self-- propelling
growth of the co-operative institutions, which is
in

evolutionary

process

of

leveling

up

the

society. In order to keep the authoritative control

over the movement, the Department does not
make any serious effort to build up strong, viable
and

self-sufficient

autonomous

cooperative

institutions.
6. Lack of Consistent Political
Government:
The
interests
of
various
established
varrying

from

and

time

to

Support

governments,

time,

fluctuating

from

and

have

their

been

policies

towards the co-operative movement have been

inconsistent as they had to persue their own
preferences

and

priorities.

This

indifference

towards the movement resulted in dis-interest

from all those agencies which were supposed to
work

for

masses

the

which

betterment
in

turn

reputation

of

agency

bringing

in

the

and

adversely

movement
a

uplift

positive

as

of

affected
an

rural
the

effective

change

in

the

economic life of the downtrodden masses of the

rural area.

35
CHAPTER XII
CONCLUSIONS AND RECOMMENDATIONS
It is appropriate to formulate certain conclusions after
having given the birds eye view of the Co-operative Sector.
Conclusions:
I. In almost all the developing countries the cooperative
movement was introduced by the Government, which did
not

prove

helpful

in

laying

the

foundations

of

the

movement on a solid footing. The Government keeps on

excercising its authoritative influence which arrests the
natural growth of an economic institution like the cooperative movement.
II. The big landlords exploited their dominant positions
in the rural society and misused the facility of interest free
loans primarily introduced to help the small farmers. The
movement at this stage has virtually slipped into the laps
of the big land-lords. The only redeeming feature of this
loaning was that it brought us closer to autarky in food.
III.

Tax

relief

was

not

given

to

the

co-operative

societies. The establishment of the Federal Bank for Cooperatives tied the cooperative institutions to complicated
procedures,

rules

and

regulations.

These

two

factors

discourage expansion of the co-operative fold.

IV. The Co-operatives Department cannot be blamed as
it

36
is bound to abide by and work according to the priorities
fixed by the government which has never duly appreciated
the good work done under very heavy odds. Instead the
governments have always lent very willing ears to the
deficiencies and a few minus points which are agitated by
certain

vocal

and

whenever

they

intending

to

influential

see

put

that

their

factions

cooperative

feet

down

of

our

society

functionaries

on

the

their

are

side

business-tails. They have recourse to this tactic and they

are always successful in achieving their objectives as the
government

have

never

meant

to

apply

cooperative

principles sincerely for the resolution of various problems.

Recommendations:
I. The cooperative movement in this part of the world can
only succeed if the government extends fullest patronage.
The

goverIent

should

assign

the

movement

pre-

determined and well carved out place in the package

containing policies geared to socio-economic development.
The

staff

properly

of

the

trained

Co-operatives
to

cope

with

Department
the

ever

should

changing

be
and

demanding pattern of the movement.

II. District level cooperative institutions, having equal
repre sentation of all the cooperative societies in the
district, irrespective of their categories, shall have to be
established to not only process demands of the member
societies for inputs but also to take up the matters with the
concerned authorities and agencies for the provision of said
requirements.

37
III. In order to eliminate the influence of the big landlords

and

middlemen

it

is

suggested

that

necessary

amendments may be made in the Act to increase the initial

membership at the time of registration from 10 to 100. This
measure would also act as a check on organizing one-man
or one-family Cooperative societies.
IV. The dead and dormant societies in the industrial
sector should be liquidated to be replaced by new ones.
And only those sub-sectors be given recognition in future
plan, the co-operative societies of which would be willing to
obtain loan in cash as well as in kind (Raw Material) in the
ratio

of

50-50

and

sell

their

products

through

the

cooperative consumer stores.

V. The consumers cooperative stores can be run on the
basis of a coupon system. The coupons shall be issued to
the

members

of

the

societies

who

will

purchase

the

required articles of the value equivalent to the sum which

remains unutilized in their maximum credit limits. The
amount utilized in the purchase of daily articles of use shall
be repayable alongwith the crop loan. In urban areas
consumer
supervision

stores
and

can

be

control

organized
of

the

Marketing and Supply Federations.

under

District

the

direct

Cooperative

BIBLIOGRAPHY

1.
Agricultural
Ahmad.

Cooperatives in

Pakistan by Riazuddin

2.

Agricultural Cooperative Movement in Pakistan by

Centre for Administrative Research and Development
Studies, Lahore.

3.

Panel Discussion sponsored by the daily Jang Forum.

4.

Report of the Committee

Cooperative Institutions.

5.

Development Credit and Farm Modernisation an Article

by A. Jamil Nishtar, Pakistan Times 1.11.1984.

on

the

Working

of