Co-op Advantage In An Age Of Global Economic Crisis Enhancing Management Capacity of Co-operatives

Sanjeev Chopra, Secretary, Agriculture, GoWB,INDIA Structure of the presentation The Co-op Advantage The Global Economic Crisis with special focus on Globalization and the primary producer Enhancing the management capacity of co- operatives

Sanjeev Chopra, Secretary, Agriculture, GoWB,INDIA The Co-op Advantage Co-operatives are membership based organizations which are based on the economic needs of the community Operate within the framework of state and markets, but State an Markets recognize co-ops, but more as an Emergency Reserve, rather than Mainstream, and this paradigm must change.

Sanjeev Chopra, Secretary, Agriculture, GoWB,INDIA Crisis & Co-operatives When the going is tough, the tough get going ! Co-operatives emerged during crisis, and have always shown innovative ways to deal with conventional problems : The Rochadales, The Raiffesins and Daimler Shultz co-ops Historically, co-operatives have shown their relevance and resilience during crisis Unlike the Wall Street Banks, co-ops, SHGs and mutuals have fared better

Sanjeev Chopra, Secretary, Agriculture, GoWB,INDIA The Why of Global Economic Meltdown Greed : Just Do it : Now / Vow Spend Now, Pay later : credit cards and housing mortgages Leverage : Riding Piggy Back :Have channel, will sell Futures : Booms, Bubbles and Bursts

Sanjeev Chopra, Secretary, Agriculture, GoWB,INDIA The Why of Global Economic Meltdown 2 Regulation : Too close for comfort Hands in glove The ‘Manna’ of the Market Someone else's’ money Obsession with Q1/Q2 and the Daily sensex The state as the savior !

Sanjeev Chopra, Secretary, Agriculture, GoWB,INDIA Globalization Removal/Reduction of barriers to global trade WTO as the lead institution for establishing norms and regulating trade, including Dispute Redressal Enhanced trade on account of substantial reduction in costs of communication and transactions

Sanjeev Chopra, Secretary, Agriculture, GoWB,INDIA Globalization and the Primary Producer Consolidation of Capacities & increasing control of the MNCs on production process Commodity Suppliers versus Brand managers Asymmetry in holding Power of marginal and small farmers Primary producer loses out to everyone else in the value chain

Sanjeev Chopra, Secretary, Agriculture, GoWB,INDIA The primary producer wants An organization to add Value to her produce, on her terms and ensure Value Addition at every stage. An organization she can control, and call her own An organization that can compete with, and deliver Better results than capital driven organizations An organization that is efficient and effective

Sanjeev Chopra, Secretary, Agriculture, GoWB,INDIA Enhancing Management Capacities of Co-operatives An ongoing endeavor ! Highlighted during crisis because primary producers lose access to inputs Falling output prices means higher stockholding/warehousing costs Livelihood based activities cannot be adjusted to ‘market demand’ Differences between the co-op and corporate structure is highlighted in a crisis

Sanjeev Chopra, Secretary, Agriculture, GoWB,INDIA Co-ops and Corporates Co-ops Associations of People People speak in different voices – even the same person changes his voice so often! Rooted to a place – local tradition and continuity plays an important role Corporates Association of capital One language, one voice : more money, higher returns Easily transferable – across countries and continents

Sanjeev Chopra, Secretary, Agriculture, GoWB,INDIA Co-ops and Corporates 2 Size optimality for primary societies Members Involvement in Day to day functions Decision making in Federated structures The Leadership function is provided by the elected Chairman, not the professional Board the more, the merrier De -linking of ownership from professional management Greater space for professional managers in decision making Managing Director,CEO, COO, CIO, CFO are the lead drivers Performance linked Managerial compensation

Sanjeev Chopra, Secretary, Agriculture, GoWB,INDIA Enhancing Management Capacity 1 Strengthening the Board and the professional management Breaking Barriers among the membership, the management and the Board through regular interface and MEP Scenario Building for all the co-op tiers Ability to influence the Policy Regime

Sanjeev Chopra, Secretary, Agriculture, GoWB,INDIA Enhancing Management Capacity 2 Ability to understand and internalize New Technologies New Institutional arrangements Role of Professional management Public opinion Traditional strengths like capitalization of rural economies

Sanjeev Chopra, Secretary, Agriculture, GoWB,INDIA Thank You