Govt Interference in Cooperatives
One of the main reasons for Govt’s interference in the working of the cooperatives is Govt’s participation in the cooperatives’ share capital. Most of the cooperatives are in loss and heavily dependent on Govt’s financial assistance.
When the cooperatives do not return such assistance, the assistance is converted into share capital contribution. In many cooperatives, nearly ninety per cent of the share capital is held by the Govt. Thus, the cooperatives comes under the control of the Government resulting in loss of autonomy of the cooperative.
In most of the State Milk Marketing Federations, barring a few like the Gujarat Federation, the State Government is the major shareholders. The result is that these bodies are being administered as appendages of the Govt.
When the first set of Anand Pattern milk cooperatives were formed in Erode, the local Deputy Registrar (Dairying) insisted that these cooperatives accept financial assistance from the Government in the form of share capital contribution. The spearhead team declined the offer as it affected the autonomy of the cooperatives.
The Deputy Registrar was greatly upset because it was for the first time that such assistance had been declined. He wondered as to how the cooperatives will function without Govt assistance. I told him that the project would be providing “revolving fund” to the cooperatives to ensure regular milk payments and the recurring expenditure, including the staff salary, would be met out the profits earned by the cooperatives.
Further, I said that Anand Pattern cooperative byelaws permitted membership only to milk producers. Greatly upset, the Deputy Registrar remarked: “What will I do with the funds the Govt has allotted to me? I have a target to meet”.
The milk price chart given to the cooperatives for milk payments, had kept a small margin to meet all expenditures and a modest profit also. All the cooperatives organised by the spearhead team had made profits and also paid bonus to its members, regularly.
All these happened without availing the Govt assistance. Availing Govt assistance was more the need of the Deputy Registrar than the cooperatives!
The Erode Milk Producers’ Union retained one rupee per kg fat out of the milk price payable to the cooperatives.
We had explained to the cooperatives that the deduction was being made to build funds in the Union which would be required to buy land for the proposed dairy and also to meet other expenditures. If the Union did not have funds, Government assistance will have to be availed which will affect the autonomy of the Union.
All the affiliated cooperatives graciously agreed to the deduction. By 1980, the Union had a paid up share capital of Rs 26 lakhs, entirely contributed by the member cooperatives. This fund came very handy when the Union had to purchase land for the dairy, cattle feed plant and the chilling centres.
Auditor Shown His Way
Auditors are a class by themselves everywhere.
The auditors who audited the Anand Pattern cooperatives were no different. Some of them were exceptions and did their job very well. But, some were cantankerous and created problems: demanded money from the staff of cooperatives and even taught them how to swindle money.
The spearhead team had trained the cooperative staff to maintain the accounts and the records of the societies correctly and up-to-date. Some of them were able to prepare statement of accounts and balance sheets.
All the cooperatives were under continuous surveillance of the spearhead team. Therefore, the auditors couldn’t expect any monetary dispensation from the cooperatives. However, we encountered a few instances which, as and when happened, were immediately sorted out by the team.
There was a very interesting episode in one of the cooperatives viz Dalvapettai. The auditor involved was a known corrupt fellow and started creating problems in the cooperatives. He had challenged the spearhead team and asked us to catch him if we could.
We were told that he was a notorious character. We had kept track of this auditor wherever he went.
This auditor went to Dalvapettai cooperative for auditing the accounts. When he visited the cooperative, the secretary was busy with milk collection.
The auditor demanded some money from the secretary for audit, threatening him that he would be sent to jail for misappropriation if the money was not paid. The secretary said that he cannot pay any money as he didn’t have any. The auditor said that he will come the next day and that he should keep the amount ready. After the auditor left, the secretary briefed the President, who lived close by, about the incident.
The auditor turned up at the society promptly the next day. He asked the secretary to stop milk collection and demanded the amount. The secretary went out for a while and returned with the President. When the auditor asked money, the President got angry and kicked him and threw him out of the society. The auditor took to his heels and never visited that society again.
He managed for a transfer and moved out of Erode.
I was invited for the bonus distribution function of this cooperative, several months after this incidence. The entire village had assembled for the function.
It was customary to felicitate the guests by garlanding them at such functions. The President was holding the garland to felicitate me when I grabbed it and put it on the President himself.
Everyone got embarrassed. I very coolly told the people who had assembled that the President deserved the garland more than me for the treatment he had given to the auditor who had demanded money for auditing the cooperative. The entire audience got up and gave a standing ovation for the President!
Formation of Erode District Cooperative Milk Producers’ Union
The next step towards implementation of Operation Flood Programme was formation of the Producers’ Union, the apex body of the primary milk producers’ cooperatives to which all primary cooperatives will be affiliated.
The Union will set up milk processing and product manufacturing facilities and provide production inputs like Animal Health, AI, Feeds & Fodder to the producer members. These activities were hitherto being performed by TNDDC.
I met Mr Menezes and explained to him the need for forming the Producers’ Union. Mr Menezes didn’t evince much interest in the formation of the Producers’ Union and advised me not to take up steps which will duplicate the activities of TNDDC.
I told him that formation of Producers’ Union was contemplated in the Operation Flood Programme and was also as per the agreement signed between the Govt of Tamil Nadu and the Indian Dairy Corporation. Further, the “Anand Pattern” was incomplete without the apex body, the Producers’ Union. I told him that we will be submitting the proposal for registration of the Producers’ Union soon.
After the formation of 188 primary milk cooperatives, the Presidents of the societies met and resolved to form the Apex Body, the Erode District Cooperative Milk Producers’ Union. The area of operation of the Union comprised Erode, Bhavani, Gobichettipalayam, Sathyamangalam and Dharapuram talukas of the then Coimbatore district.
The general body unanimously elected nine Directors, from among the society presidents, to the Board of the Union with Mr SK Paramasivan and Mr MM Muthuswamy as the Chairman and the Vice Chairman, respectively. The proposals, along with the bylaws, were submitted to the Deputy Registrar (Dairying), Erode for registration.
The Deputy Registrar (Dairying) forwarded the proposal to the Deputy Milk Commissioner (Cooperation), Madras for clearance, as it was the first Producers’ Union to be formed in the state under the Operation Flood Programme. The Deputy Milk Commissioner, after consultation with the Milk Commissioner, Mr Menezes, discovered a technical hitch in registering the Producers’ Union as another Milk Union, Erode Cooperative Milk Supply Union, already existed in the same area of operation, having more or less similar objectives.
The Cooperative Law didn’t permit registration of another Milk Union, under such circumstances. A solution was found out to overcome this technical hitch: The Erode Cooperative Milk Supply Union should pass a resolution agreeing to convert the Union into a consumers’ cooperative society and issue a “No Objection” for the registration of the Erode District Cooperative Milk Producers’ Union.
The Deputy Milk Commissioner (Cooperation) informed me about this. The Deputy Registrar (Dairying), Erode also conveyed this matter to me, subsequently. This technical hitch, in a way, came handy for the TNDDC to stall the registration of the Producers’ Union. TNDDC wanted “Anand Pattern” to stop at the primary society level.
I met Dr Muthuswamy, the Chairman of the Erode Milk Supply Union and explained to him about the proposal for formation of the Producers’ Union and the resolution required from the Milk Supply Union for registration of the new Union. I assured him that arrangements will be made for supply of adequate quantities of processed milk from the Erode dairy to the Milk Supply union for marketing in Erode town.
He readily agreed and passed the necessary resolution and handed it over to me. Thereafter, I met the Deputy Registrar (Dairying), Erode who told me that the Producers’ Union will be registered only after the Milk Supply Union passed the necessary resolution. He was confident that the Supply Union will not agree and pass such resolution. I asked him whether he would register the new Union if such resolution from the Supply Union was obtained. He said yes and I took out the resolution from my pocket and gave it to him.
He had no option but to register the Union which he did readily. It was sheer luck that the Producers’ Union got registered (February 2, 1975) without further trouble.
I came to know later that the Milk Commissioner was upset that the Deputy Registrar registered the Union without his final clearance. He had remarked: “Madhavan out smarted every one” and got away with the Producers’ Union.
It was a great occasion for the producers. Mr Paramasivan convened the general body meeting of the Union and felicitated all the members for having got the Producers’ Union registered. Erode District Cooperative Milk Producers’ Union had the honour and privilege of being the first Producers’ Union to be registered in Tamil Nadu.
At the request of the Union, NDDB lent my services as its General Manager, on deputation.
After the formation of the Producers’ Union, a small amount (Rs one per kg fat, approximately 7 paise per litre) was retained from the producers’ price, to build up funds in the Union. All the primary cooperatives welcomed the move and wholeheartedly agreed to the decision.
The Union, at a later date, converted this amount into share capital contribution by the affiliated primary cooperatives. By 1979-80, the Union had 200 primary cooperatives affiliated to it with a membership of 26,000 producers and the paid-up share capital had gone up to Rs 26 lakhs.
Daily milk collection was 50,000 litres from 200 cooperatives. All the cooperatives were in profit and disbursed Rs 16 lakh as bonus to their members.