Business of Farming

• Co-operative


  A voluntary & democratic organization which is owned, controlled, and operated by its members as a group to improve their economic status in a competitive society
• Co-operative


  • A business venture voluntarily & democratically owned, controlled, operated and patronized by its members on a non-profit or cost basis for the economic benefit of all its members
• Principles of Co-operatives

  • Open Membership
  • Joint Ownership
  • Democratic Control
  • Team Management
  • Patron Membership
  • Non-Profit Business
  • Service Investments
• Open Membership


  Membership is open to anyone
• Joint Ownership


  Each member is an owner of the co-operative
• Democratic Control


  Control of the co-operative is based on each member having one vote
• Team Management


  Members operate and manage the co-operative as a team
• Patron Membership


  Members are the customers/users of the services provided by the co-operative
• Non-Profit Business


  Business transactions are non-profit making & geared towards cost recovery, but any profits made are shared equally among all members
• Service Investments


  Members invest in the co-operative to be provided with certain services, not for a profitable financial return
• Functions of Co-operatives


  • Promote voluntary, open membership
  • Generate collective ownership
  • Improve the economic well-being of members
  • Encourage equity in sharing
  • Provide desirable services to satisfy patron owners
• Ways cooperatives can be grouped

  • By the functions
  • By their links to other groups
• Cooperatives grouped by function

  • Produce Cooperative
  • Consumer Cooperative
  • Purchasing Cooperative
  • Processing Cooperative
  • Marketing Cooperative
  • Commodity Cooperative
  • Service Cooperative
• Produce Cooperative


  Produce a range of products which are collectively derived
• Consumer Cooperative

  Organized for the bulk buying of consumer products for the membership
• Purchasing Cooperative


  Engaged in bulk purchasing & supplying of raw materials
• Processing Cooperative


  Packaging, processing or manufacturing of farm products from members
• Marketing Cooperative


  Organized by its farmer members to collect, grade, package and sell their produce
• Commodity Cooperative


  Production of the same commodity so the co-operative is named accordingly
• Service Cooperative


  Provides one or a combination of essential services to members, e.g. credit, farm machinery & equipment, security, insurance
• Cooperatives grouped by links to other groups

  • Local Cooperatives
  • Regional Cooperatives
  • National Cooperatives
• Local Cooperatives


  Offer members representation & services at the village or district level
• Regional Cooperatives


  Provide services & representation at the regional level, based on nominees from local co-operatives
• National Cooperatives


  Supply representation services at national level, through nominees from the regional co-operatives, who are representatives of the various local groups
• Management Problems in a Farmer’s Cooperative

  • Limited Capital: Cooperatives operate with limited amount of capital from its members. They may have to sack credit or ask members for more money to finance necessary services
  • Business Volume: The volume of a business fluctuates between high & low depending on how often the members use the services they have provided for themselves. High levels of business volume help the cooperative
• Membership Issues


  • Every member must demonstrate a sense of commitment, ownership and loyalty
• Local Competition


  • May face competition from local businesses who feel cooperatives are threats to their clients' business. Members of cooperatives need to focus their efforts on good management, greater production and better quality
• Global Issues


  • Issues such as globalization, trade liberalization, competitiveness and quality standards directly affect farmers' cooperatives. They may make it difficult for cooperative managers to meet the challenging task of international requirements to educate, and thus motivate their members
• Price Support


  Farmers can be guaranteed minimum cost-based prices by the government, referred to as guaranteed prices, for selected crops or commodities
• Subsidy


  A financial incentive to farmers or producers for infrastructural development, technical operations, purchasing farm inputs, establishing agricultural enterprises.
• Tax Exemptions


  Exemption of goods from general tax to stabilise consumption
• Purpose of Price Support, Subsidies & Tax Exemptions


  • Speed up the growth of agricultural output
  • Stabilize agricultural production, market prices & farm incomes
  • Increase the local market supply of commodities for home consumption & export
  • Speed up or encourage growth of output of specific commodities
  • Provide a more regular income for farmers
• Farm Records

  Essential data about agricultural enterprises on the farm in written or electronic form