TABLE OF CONTENT

• what is cooperative?
• Cooperatives as legal entity
• Cooperative identity
• Consumer cooperatives
 Meaning
 Definition
 Origin and history
 Procedure of consumer cooperatives
 Need & importance
 Objectives of consumer cooperative
What is cooperative?

A cooperative (also co-operative or coöperative; often

referred to as a co-op or coop) is defined by the International
Co-operative Alliance's Statement on the Co-operative Identity
as an autonomous association of persons united voluntarily to
meet their common economic, social, and cultural needs and
aspirations through a jointly-owned and democratically-controlled
enterprise. A cooperative may also be defined as a business
owned and controlled equally by the people who use its services or
who work at it. Cooperative enterprises are the focus of study in
the field of cooperative economics. Cooperatives have a
sponsored top-level internet domain .coop, which identifies legally
registered or recognized co-operatives.
Cooperatives as legal entities

Although the term may be used loosely to describe a way of

working, a cooperative properly so-called is a legal entity owned and
democratically controlled equally by its members. A defining point of a
cooperative is that the members have a close association with the
enterprise as producers or consumers of its products or services, or
as its employees.

In some countries, there are specific forms of incorporation for

co-operatives. Cooperatives may take the form of companies limited by
shares or by guarantee, partnerships or unincorporated associations.
In the USA, cooperatives are often organized as non-capital stock
corporations under state-specific cooperative laws. However, they may
also be unincorporated associations or business corporations such as
limited liability companies or partnerships; such forms are useful when
the members want to allow:

1. some members a greater share of the control, or

2. some investors to have a return on their capital that
exceeds fixed interest,

neither of which may be allowed under local laws for cooperatives.

Cooperatives often share their earnings with the membership as
dividends, which are divided among the members according to
their participation in the enterprise, such as patronage, instead
of according to the value of their capital shareholdings (as is
done by a joint stock company.)

Co-operative Identity
Cooperatives are based on the values of self-help, self-
responsibility, democracy and equality. In the tradition of their
founders, cooperative members believe in the ethical values of
honesty, openness, social responsibility and caring for others.
Such legal entities have a range of unique social characteristics.
Membership is open, meaning that anyone who satisfies certain
non-discriminatory conditions may join. Economic benefits are
distributed proportionally according to each member's level of
participation in the cooperative, for instance by a dividend on
sales or purchases, rather than divided according to capital
invested.
CONSUMER COOPERATIVES
Meaning
A consumers' cooperative is a cooperative business owned by its
customers for their mutual benefit. 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 often also the individuals who have provided the capital
required to launch or purchase that enterprise.

In some countries, they are also known as retail co-operatives or

retail co-ops, though they are not to be confused with retailers'
cooperatives, whose members are retailers rather than consumers.

There are many types of consumers' cooperative. There are

health care, insurance, and housing cooperatives as well as credit
unions, agricultural and utility cooperatives. The major difference
between consumers' cooperatives and other forms of business is that
the purpose of a consumers' cooperative association is to provide
quality goods and services at the lowest cost to the consumer/owners
rather than to sell goods and services at the highest price above cost
that the consumer is willing to pay. In practice consumers'
cooperatives price goods and services at competitive market rates.
The difference is that where a for-profit enterprise will treat the
difference between cost (including labor, etc.) and selling price as
financial gain for investors, the consumer owned enterprise may retain
this to accumulate capital in common ownership, distribute it to meet
the consumer's social objectives, or refund this sum to the
consumer/owner as an over-payment.

Consumer cooperative societies are of a recent origin in this

country. Indian economy being predominantly agricultural, its
production is dependent on the vagaries of the monsoon and very often
there is partial failure of crops in one or more regions. Again, in the
event of such shortfalls in domestic production, the wholesalers and
retailers often create artificial shortages. Apart from that, the
tendency of private trade to increase profit margin is more
pronounced in such situations. The government, therefore has
promoted consumer cooperatives as an alternative channel of
distribution to exercise a healthy influence on individual distributors.
Although consumer cooperatives were organized even earlier, they
increased in number rapidly during the Second World War and during
the immediate post war years owing to the encouragement from the
government.

With the advent of modem market economy the position has

radically changed and growing number of market functionaries have
interposed themselves, adding to the margins at various stages. The
result is that, now there is often a considerable price-spread between
the producer and the consumer. Cooperatives of producers on the one
hand and the consumers on the other, offer one of the practical means
of reducing this price-spread; Of the various measures taken by the
Government to hold the price line, the development of the consumer
cooperatives has by far attracted the greatest attention.
Definition of consumer cooperatives:

According to the Maharashtra co-operatives societies act, 1960.

sec2 (9), defines, a consumer co-operative society as “a society the
object of which is (a) the procurement, production or processing, and
distribution of goods to or, the performance of other services for its
members & also other customers & (b) the distribution among its
members & customers in the proportion prescribed by rules or by by-
laws of the society of the profits accruing from such procurement,
production or processing & distribution.”
A consumer co-operative society is formed for the promotion of
the interests of the consumers where as a producer co-operative
society promotes the interests of the producers.
Origin and History
The consumers cooperative movement owes it origin to the
famous Rochdale cooperative store established in 1844 in Britain.
The success of the consumer movement is so well known, that it
needs no detailed description. The movement has flourished in
other European countries also but it did not make any headway in
this country till the Second World War which gave a stimulus to
this form of cooperation. Acute shortage and high prices of food
grains and other necessities of life during the war and post war
period, made controlled rationing a great necessity. It were the
cooperative institutions which were considered to be the best
agencies to make fair distribution of such goods and check black
marketing. This movement has achieved spectacular success in
some of the western countries like Sweden, Denmark, Finland and
Britain.

In India consumer cooperatives did not make much head-

way before the First World War. It was only during the war
period that some consumer stores were started in Madras and
Bombay. It jumped from 11 in 1914 to 103 by 1920-21. This was a
temporary phase of expansion as it slackened subsequently. It
was only during the Second World War that the store movements
made giant strides.

The reversion to decontrol and the consequent functioning

of the free economy, however dealt a heavy blow to these stores.
The process of disintegration and liquidation which has set at the
time of decontrol, continued unabated up to 1961. The number of
consumer stores fell from 9,757 in 1950-51 to 7,050 in 1960-61,
while the membership fell from 18.45 lakhs to 13.41 lakhs both
recording a fall of about 27 per cent.
 In short, it can be. stated that, the progress of consumer
cooperative stores was quite fair up to 1951-52, when the
government followed a policy of decontrol and de-rationing in view
of the improved position of supplies. The prices of essential
goods began to register a sharp downward trend. The consumer
cooperatives had to suffer a great loss due to fall in prices.

Functions:

1) To establish and to run manufacturing and processing

units for production of consumer goods.
2) To supervise the work of wholesalers.
3) To hold seminars, conferences and to conduct training
of employees of consumers co-operative societies.
4) To make bulk purchases in the state and from outside
the state and to help the affiliated societies.
5) To extend technical guidance to affiliated stores in
grading, packing, standardization, storing, etc.

 Wholesale stores: as per the policies of central

government stores were established where there was
population of more than 50000 people. Presently, in
almost all district places there are such stores.
 Departmental stores: The departmental stores came
into existence in 1966 by establishing a departmental
store or super bazaar in Delhi.
 Besides dealing in important consumers goods there is
newly introduced business like selling of rickshaw
spare parts, cooking gas, tyres, cycles, electricals,
optical goods, etc.
 Primary co-operative stores: The primary co-operative
consumers stores are opened by the consumers in rural
and urban areas. These are the members of central
wholesale store. Generally these stores make supply of
essentialities of life.
 Consumer’s stores for rural populations:
Consumer’s stores are very essential for the village
people but there are difficulties in starting such
stores. The work of these stores is therefore
entrusted to 34000 primary co-operative societies.
 Consumer’s stores of industrial workers: The central
ministry of labour and employment started these
stores in the industries where there are more than
300 workers upto 1971-72 there were 3441 such
stores and they had membership of 20 lacs. The coal
mines workers and railway board has also started such
stores for their employees. Upto 1978 there were
4300 and more stores.
 University and college consumer stores: in order to
provide educational instruments to university and
college students, the central government has
undertaken the programme of developing such stores
in university and colleges. Special grant is given for
this purpose by the government.
Procedures of consumer cooperatives
Minimum five hundred members have to join. They should
collect a minimum share capital of Rupees 25,000. 25% of these
members have to be from the weaker sections of the community.
The proposed society should have adequate shopping space,
situated in a market within the area of operation.

Need & importance of consumer cooperative

1. Supply of things & services as per need: The

consumer co operative societies are formed to satisfy the
needs of goods & services as demanded by the consumers.
There are direct contracts with the producers &
manufacturers of things & the required goods are purchased
directly from them, thereby the consumers can be supplied
with the goods as demanded.

2. Eradication of malpractices of traders: It is found that

there are many malpractices in trading like black marketing,
artificial scarcity, cheating in measurements, hoarding, etc.
proper measurements are not used whereby the consumer
becomes ultimate victim of all these malpractices by the
traders. There is no place for all these things in co-
operative consumer societies & so the consumers are
attracted towards them.
3. Necessity of time: India has adopted financial planning &
there is importance for public distribution of essentialities
of life. The consumer co-operative societies help the
government in distributing these essentialities to rural &
urban areas of our country. These societies have become
very important day by day. Since these societies have been
entrusted the job of distribution, the consumers are saved
from financial exploitation & hardship.

4. Establishment of proper trading system: The consumer co-

operatives societies supply good quality of things at a
reasonable cost by using right measurement & pure things.
Hence from the view point of customers these societies are
very important.

5. Eradication of trader’s chain: There is long chain in between

the producers & the middlemen add their own profit &
expenses. The consumers co-operative society directly
purchases the goods from the producers & the chain of
middlemen can be avoided

6. Consumers satisfy their needs as per their income:

Consumers have to satisfy their needs as per their income.
Due to existence of consumer co-operative societies the
customers automatically learn to satisfy the needs limited
to the income. The habit of saving & economy is inculcated
amongst the consumers.
OBJECTIVES

1. To educate the consumers to keep their needs within the

income limits
2. Stabilization of market rate.
3. To supply the goods & services regularly at reasonable costs.
4. To protect the consumers from black marketing, increase in
market rates, scarcity, cheating & adulteration.
5. To improve the standard of living of customers & improvement in
their hygiene.
6. To supply proper unadulterated goods & to use proper
measurements.
7. To inculcate habit of savings & economy among the consumers.
8. To control the profit making tendency