Way back down the line of human development, there was an era when man used to hunt for survival. As the job required a lot physical effort and strategy; it wasn’t a piece of cake to do it individually. Soon he realized the benefits of working together and started hunting in groups. He also devised strategy to divide that meat among the group. And that’s where we find the roots of cooperation. Later on, he wanted an efficient utilization system so started choosing a leader still keeping the power divided throughout the community.
The modern day cooperatives are based on the same principles. A specific community of people comes together to put value to their common product. A great example of cooperative model is AMUL (Anand Milk Union Limited). It is also proof of the potential a well-organized cooperative can have. For digging in deep into the concept, consider an area where most of the farmers grow cotton. From years, they are selling it to businessmen and other companies. After a period, the community realizes the profit that the company is making using their raw material. Soon, the farmers decide to establish a cotton mill and directly sell the furnished product instead of selling cotton only. In the process, firstly the farmers will agree upon the decision to sell their cotton to the mill. As the mill will be owned by the farmers themselves, they vote for board members who will act as representatives in deciding policies. One of the members becomes chairperson of the mill to regulate the process.
Later on, chairperson hires employees for the mill including labours and management team. The ownership of the mill is still with the whole community of cotton growing farmers. Afterwards, cotton is collected from the farmers by paying them an amount as per the mill policies. The mill then manufactures fabric from the raw material. When the final product is ready; its value is higher than the value of cotton used. By selling the furnished product, the mill generates profit. This profit gets divided among the community on the basis of each one’s contribution of cotton. So, the cooperative model is profitable to the community as a whole. But, as we try to break it down, there are other factors involved with it.
The first requirement for a successful cooperative is value addition to its raw material. Which means advantage in terms of either if time, from or place should be added to it. The cooperative should also be member central i.e. the power should be divided among its members and there should be a collective decision about policies. Lastly, the members should consider the raw material generation as dominant part over others.
So, the cooperative model helps keeping power with the community. They have freedom to decide how they want to utilize their production. The community also generates profit from cooperatives and gets to decide how the make the best out of it. Cooperatives can be seen as potential sustainable business model for future.
*Nilay likes to not talk, but he absorbs a lot. He was very impressed by the idea of cooperatives of such a large scale which function smoothly like AMUL. This post is his tribute to them. And maybe ants, he may like ants too.