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Tale of a co-operative that significantly diversified its portfolio of activities to serve its members and enhance their benefits, while thriving as a business enterprise.
There are very few successful and lasting agricultural co-operatives in India beyond the well-known success stories in milk and sugar sectors. Serious challenges include their inability to establish member centrality, a limited set of activities, poor access to finance and inconsistent business performance in competitive output markets. The lesser-known journey of Totgars’ Co-operative Sale Society (TSS) is of interest not just because it is a 97-year-old co-operative but also because of its consistent performance and benefits it has provided to its members since. Headquartered at Sirsi, a highland town in Uttara Kannada district of Karnataka, TSS was established in 1923 with a share capital of Rs. 280.00 and 28 members. Its primary objective was marketing the agricultural produce of its members. Its share capital grew to Rs. 25.94 lakhs and the co-operative had 30,000 members and a turnover of Rs. 504 crores in 2018-19. TSS has both Primary Agricultural Co-operative Societies (PACS) and individuals as members. While it has a presence in eleven talukas of Uttara Kannada district, its operations are mainly centred in three talukas – Sirsi, Siddapur and Yellapur.
Diversified portfolio
Over the years, TSS diversified its portfolio of activities, comprising of business and service divisions. Some are directly related to marketing of areca nut and pepper, the predominant crops grown in the region, while others are support services for members. Activities directly related to agricultural marketing include managing sale yard in Sirsi APMC (Agriculture Produce Market Committee), trading of areca nut and pepper, manufacturing and selling value-added products such as sweet supari and providing storage facilities.
Support services cover a broad spectrum: credit, agri-inputs such as fertilisers and pesticides, agricultural implements, extension services, and transport facilities. TSS also runs a rice mill and has a paddy storage facility. It also provides animal husbandry services and manufactures cattle feed, marketed under its brand name.
TSS’s diversification extends beyond agriculture. It runs a supermarket which sells around 8000 stock keeping units, manages a 100-bed multi-speciality hospital, owns a guest house with 62 furnished rooms housed in a four-storeyed building. Additionally, it has an outlet for selling building construction materials and also has a jewellery store for gold and silver ornaments. The supermarket sells practically everything required for household consumption, ranging from perishables such as fruits and vegetables, dairy products, food grains, and packed food items. They also stock grocery items, household consumables such as garments, foot-wears, kitchen utensils, toys, show-piece items and durables such as home appliances, electrical and electronic goods and furniture. TSS runs a health clinic and a pharmacy in its premises. It also provides health insurance to its members with coverage for family members and agricultural labourers employed in their land.
Business and service go hand-in-hand
According to Mr Raveesh Hegde, General Manager of TSS, diversification is undertaken based on two considerations – a) whether it makes a substantial business activity for the co-operative and b) whether it provides significant service to members.
It is normal for TSS members to come to the APMC market with their produce for sale and return with required household items and agricultural inputs, all purchased from the same premise. All these are cashless transactions carried out through their accounts. And the services provided are tightly coupled with members’ patronage, defined as the value of crops sold by them at TSS sale yard. TSS has been consistently registering profits. Its profits for the years 2016-17, 2017-18 and 2018-19 were Rs. 2.03 crores, Rs. 2.06 crores and Rs. 2.10 crores, respectively. All the divisions, except the transport section, were individually in profit.
A member and patronage central co-operative
Members receive benefits in several ways. In the APMC market, TSS is both a commission agent and a buyer. Its sale yard functions throughout the year which provide an assured marketplace to members for selling their agricultural produce. Participation of TSS as a buyer in the APMC market increases competition among buyers, as it purchases the bulk of the market arrival. The co-operative is a dominant player in the APMC market. Members receive payment for their crops sold in TSS sale yard on the same day of the transaction. TSS makes the payment to the members on behalf of the buyer, regardless of who the buyer is. The respective buyers can repay TSS within three days. Arecanut and pepper trading undertaken by TSS and its sale of value-added products help members reach distant markets. Because of these, members make gains in both primary and secondary wholesale markets. Following the co-operative tradition, annual dividends are paid to members. In addition to that, they receive sales incentives based on patronage and purchase incentives based on transactions at the supermarket. They also receive price rebates on several goods. In 2018-19, TSS paid a bonus of Rs. 56.83 lakhs and incentives to the tune of Rs. 96.33 lakhs to its members. Both indirect and direct benefits enhance the net returns to members.
Going beyond agricultural markets
Farmers need simultaneous access to multiple markets – markets for inputs, markets for outputs, markets for consumer goods, insurance markets, and labour markets – for their livelihoods. They face several risks and vulnerabilities, as well. Development agencies such as the World Bank have identified better market access as an essential strategy to improve the conditions of farmers. Building resilience of farmer households is crucial too.
TSS has designed its portfolio of activities to serve as a one-stop solution to the varied needs of its members. Facilities provided by the co-operative go far beyond enabling higher prices for outputs and lower costs for inputs. It also includes consumer goods as well as livelihood services such as health. TSS offers integrated services to its members, enabling access to multiple markets through its diverse business and service activities.
The words of Mr Sreepathi Ramayya Hegde, an octogenarian who has been a member of TSS for the past 60 years succinctly captures this: “TSS gives me everything, I don’t have to go anywhere else”.
In the context of worsening farmer crisis and widespread protests, TSS offers an inspiring model for how a co-operative can help enhance farmers’ welfare while thriving as a business enterprise.
Gopi Sankar G is a doctoral student at the Centre for Public Policy, IIM Bangalore. He has a keen interest in examining the role of farmer-producer owned entities in enabling better livelihood outcomes. This year he has been selected for the Fulbright Nehru Doctoral Fellowship. He can be contacted at gopi.gopikuttan17@iimb.ac.in
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