Cooperative for development

Published On: February 21, 2021 07:00 AM NPT By: Narayan Dahal

If proper environment is created for cooperatives to work in remote areas, it would be easier to bring rural areas in mainstream of development.                 

Independent economy of a nation can be possible through proper mobilization and management of time, work, labor and capital. Cooperative acts as a main base for smooth performance and implementation of all these resources. Recent studies show that more than three billion people are associated with cooperatives in the world. It has provided jobs to 250 million people. Millions are in business and production. 

In Nepal, there are around 35,000 cooperatives. Cooperative Act was enacted in 1960. In six decades, various laws, acts, development boards came into effect. Ministry of Cooperative and Poverty Alleviation was formed in 2012.  Today, cooperatives are accepted as inevitable part of economy.

According to the report of Cooperative Division, there are 34, 737 cooperatives in operation in the country.  The number of saving and credit cooperatives is higher compared to others. Saving and credit account for 13917, multipurpose 4193, agriculture 10492, milk 1754, consumer 1475, electricity 467, vegetable and fruits 199, tea 126, coffee 153, herbal 202, bee keeping 112, communication 148, health 128, sugarcane 63, among others. Together, 65, 12340 people are associated with cooperatives as members. Cooperatives employ 61,000 people. Cooperatives have the capital amounting to hundreds of billions of rupees and account for around 20 percent of national economy and five percent of GDP.

Nepal is an agriculture-based, land-locked country with difficult terrain. This has also become an obstacle for easy access of services. It is hard to link rural villages with bank facilities. An individual has to pass through long working procedure of bank to get loan. In this condition, cooperatives can become the best alternative means to create productive and profit oriented environment where we can include our traditional occupation, agriculture and business.

However, despite some positive changes in this sector, public trust in cooperatives is declining. Cooperative Act (2018) helped control and regulate the numbers of cooperatives. Yet, cooperatives have yet to benefit the common people. In 65 years, cooperatives have benefitted mostly those who are at the helm. Politicization, favoritism and nepotism have impacted the sector badly.

 In developed and developing nations, cooperatives have played a significant role in increasing domestic production. In Europe, cooperatives have contributed a lot for food and electricity production, insurance and other sectors. According to the report of International Cooperatives Alliance, potato production in New Zealand (100 percent), agricultural production in South Korea (40 percent), daily services in Finland (33 percent), energy production in the US (13 percent), fish production in Malta (90 percent), agricultural production in India (36 percent) and insurance in Honduras (27 percent) have been supported, served or handled by cooperatives.

If the cooperatives serve the people, government should provide them special privilege. Till 2000, no tax policy was implemented on cooperatives in order to support them. But after 2001, 30 percent tax was imposed on cooperatives of urban area. Instead of imposing tax, the government should bring policies to make cooperative campaign successful.

If proper environment is created for cooperatives to work in remote areas, it would be easier to bring rural areas in mainstream of development. Expanding cooperative in remote areas not only creates jobs but also helps to control internal migration. Moreover, it will create an opportunity for proper utilization of available resources.

We have traditional agricultural practices in Nepal’s rural areas. Cooperatives can help modernize agriculture and production. Refining, storage, supply of goods can be managed in a better way. Subsistence farming can be made profit-oriented and traditional agriculture can be made modern and technology-friendly. Cooperatives can also play a role for providing and managing seeds, pesticides, hybrid fruits and vegetables to the farmers as well as helping them in fishery, bee keeping, animal husbandry and other enterprises.

There still is a lack of proper coordination between producers and consumers. Middle men come in the way. Cooperatives can help break this chain.

Empowerment of farmers, management of market, preservation of seeds, large-scale production of goods, providing trainings to the farmers, all can be realized with the positive intervention of cooperatives.  On the occasion of Poverty Alleviation Day on October 17, Ministry of Cooperative and Poverty Alleviation presented a report which shows that 22.5 percent of poor people were members of cooperatives against 34.3 percent of poor who were non-members.  This shows that cooperatives can work to help alleviate poverty in the country.

Cooperatives can reach where banks have not and provide services to the people which they have not been able to access due to lack of access to banks.

Evidence shows that poverty level is higher in places where there are no cooperatives. Multiple Poverty Index (MPI) of Nepal is 28.62. Study shows that MPI of Karnali and Province 2 is 51.22 and 47.22 respectively where there is less number of cooperative. But on other hand MPI of Bagmati and Gandaki Province is 12.24 and 14 respectively. Cooperatives are in large number in these places.

Cooperatives can create jobs for the youths who have lost jobs and returned to the country after the Covid-19 pandemic. They should work for people of all background and level. Transparency, accountability and systematic management are necessary. Cooperatives should also work to start crop plantation in hundreds of acres of land which lie fallow. Cooperatives should help increase productivity and contribute to the country’s development.

Leave A Comment