Time to reboot Punjab’s cooperatives

A strong cooperative setup can provide affordable medicines, reliable food products, reasonable housing, waste-management services and credit for small enterprises

The cooperative movement in Punjab began long before the Green Revolution turned the state into the granary of India. The state had already built a remarkably dense network of rural cooperatives that had brought credit, seed and fertiliser within the easy reach of all the farmers.

Satnam Singh Sandhu (HT)

When our fathers and even grandfathers went to sow wheat, they did not approach the bank for financial support. Instead they used to walk to the village society, where the secretary knew their name, their land, their word and the antecedents. Both sides understood that the trust was real capital.

In present times, the network still stands, but it creaks due to weathering. Punjab has nearly 3,500 primary agricultural credit societies (PACS) spread in clusters comprising 12,000-plus villages, and supporting lakhs of farmers as its members.

Through the Punjab State Cooperative Bank and the cooperative banks at the district level, short-term crop loans reach the farmers ahead of every season at concessional rates. However, sometimes the delay in payment after sowing leads farmer to get trapped in the moneylender’s interest.

Punjab Markfed, one of Asia’s largest marketing cooperatives, is a prime example of the state’s cooperative success. By procuring grain, processing and marketing value-added products, and providing farmers with a reliable institutional market, it bridges the gap between field and consumer. Milkfed’s Verka collects lakhs of litres of milk from rural households, out of which many of them are small and marginal farmers, and a significant number of them are women who convert a daily surplus into a regular income that pays school fees and electricity bills. Cooperative sugar mills secure the cane-growing belts of Doaba and Majha.

The reach of the cooperative movement does not stop at the village boundary. Instead every booth selling Verka products in urban Punjab, every packet of milk or ghee bought by a family in the cities and towns, every cooperative housing society that has enabled middle-class employees their own home, and every urban cooperative bank that lends to small traders across the state, it’s the cooperative sector at work.

Cooperatives sector institutions are not rural welfare institutions; they are among Punjab’s most widely distributed public enterprises, which the people own themselves, supporting agriculture, rural employment, stabilise household incomes and provide affordable goods and housing, and services to urban consumers.

Where the system faltered

The state’s cooperative structure over the past three decades has gathered weaknesses that can no longer be wished away.

First comes the financial aspect. Overdues and NPAs in several district cooperative banks have weakened their capacity to lend. Recovery has severely suffered, partly because repeated loan waivers announcements by political dispensations in the state have created the perception that repayment can be postponed and waived off. The Punjab State Cooperative Agricultural Development Bank, once an important source of long- term investment credit for tube-wells, tractors and land development, has also lost the strength it used to possess.

When an institutional lender becomes erratic, the farmer comes back to the system of commission agents (arhtiya) leading to a debt spiral and a cause for some of Punjab’s social problems. A strong cooperative credit system is therefore not simply a banking reform; it is an essential instrument of social justice and harmony.

Then comes the weakness in governance. Elections to managing committees are sometimes delayed and the cooperative societies continue to function under administrators for long periods, and boards can become the resting places for political loyalists instead of making them accountable to the members. Audits fall short, and quiescent societies remain in the official records without providing services.

A cooperative ceases to be truly of the people when members lose meaningful role in its functioning. Democratically held elections, professional management, audits in a transparent manner and timely disclosure of accounts must be the non-negotiable principles.

Another key factor for low down is failure to think ahead of the times. Many PACS continue to perform one key task of disbursing crop loans for wheat and paddy and collecting them back. However, the efforts for evolving procurement centres, storage operators, custom-hiring hubs, retail outlets or diversified service providers are lacking. The income base of PACS remains narrow, their manpower is underutilised and their relevance to younger farmers diminished.

Cooperative sugar mills need modernisation and drastic improvements in crushing efficiency. Milkfed needs to strengthen procurement, processing, branding and cold-chain infrastructure to compete with the private dairies. Punjab also requires decentralised storage at the village level so that farmers are not forced into distress sales or compelled to transport produce over long distances.

Sahkar Se Samriddhi: A roadmap Punjab must follow

The good news is that Punjab does not have to invent solutions. Since the creation of the ministry of cooperation in 2021, separating it from the agriculture ministry, a comprehensive architecture for reviving the cooperative sector has been developed under the leadership of Union home minister Amit Shah who also heads the ministry.

Now, the task for Punjab’s is to adopt it swiftly with seriousness. The foremost is the computerisation of PACS under the national project supported by the Centre. Bringing village societies onto the common enterprise resource planning platform, and linking them ith district cooperative banks and NABARD, can make accounts more transparent, improve record- keeping and will help timely audits.

Punjab should ensure that every eligible PACS is connected to the system and the digital interface are actually used rather than installed for compliance. The model bylaws circulated by the Centre allow PACS to undertake more than 25 business activities. A village society can run a Pradhan Mantri Jan Aushadhi Kendra, operate a common service centre, function as a PM Kisan Samriddhi Kendra, can help in soil-testing and issue farm advisories, distribute agricultural inputs, and offer LPG, fuel or other essential services for the households where ever viable.

This diversification can transform PACS from seasonal credit offices into year- round rural economic centres. These cooperative bodies can also become centres for custom hiring of farm machinery, especially useful for small and marginal farmers who cannot afford implements individually. Such services would reduce costs, leads to mechanisation, support diversification and also help in crop residue management.

The Centre’s scheme for establishing grain storage infrastructure through PACS can transform rural Punjab. Village-level godowns, integrated with procurement and scientific storage, would reduce post-harvest losses, storage woes, create rental income for cooperatives and give farmers flexibility over when to sell. The programme should be linked with the broader objectives of the cooperation ministry’s “Sahkar Se Samriddhi” programme.

The state cooperative set up should also make full use of initiatives relating to the National Cooperative Database, the National Cooperative Development Corporation and the formation of new multipurpose cooperative societies, dairy cooperatives and fisheries cooperatives.

The strengthening of dairy cooperatives under the national drive for a second White Revolution can help Milkfed expand collection, improve quality testing, strengthen women’s participation, develop higher-value products such as cheese, yoghurt and packaged protein foods and earn bigger revenues. Cooperatives should also be connected effectively with Farmer Producer Organisations (FPOs), e-NAM, food-processing units and export markets. A farmer’s cooperative should not only help him produce wheat or paddy, it should help him process, brand and sell products with greater value. Punjab’s allied agricultural sectors — horticulture, dairy, beekeeping, fisheries and food- processing offer vast prospects.

Simultaneously, with the active intervention of the central ministry, urban consumers stand to gain. A strong cooperative setup can provide affordable medicines, reliable food products, reasonable housing, waste-management services and credit for small enterprises. When professionally managed, cooperative bodies can combine public purpose with economic efficiency.

Reform, however, must not become excessively under government control, as the cooperatives belong to their people, it members. The government should provide economic support, a regulatory framework and technology driven training. The elected members and professional managers remain responsible for day-to-day operations and political interference must give way to performance-based accountability.

Punjab’s cooperative movement was born from the principle that individual farmers can achieve more by working together. That principle remains as relevant now as it was before the Green Revolution. The lesson is not the abandon the cooperatives, but work for their renewal.

If Punjab embraces digital governance, financial discipline, professional management and diversified business models, its cooperatives can once again become engines of prosperity. Punjab needs a fresh harvest of cooperative reform—and the time to sow it is now.

satnam.sandhu@sansad.nic.in

(The writer is a Rajya Sabha member and chancellor of Chandigarh University. Views expressed are personal.)