Co-operation · Ch 7 — Processing Co-operative Society
Advantages of a Processing Co-operative Society
Advantages of a Processing Co-operative Society
5. Advantages
Processing co-operative societies bring important benefits to their producer-members and to the rural economy:
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Better and remunerative price for produce. By processing the produce themselves and capturing the value added, members receive a higher, fairer price than they would get by selling raw produce to a private processor or middleman.
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Elimination of middlemen and exploitation. The society deals directly with its members and directly with the market, cutting out the chain of intermediaries who would otherwise take a margin — so members are protected from exploitation and unfair pricing.
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Assured market for raw produce. Members have a guaranteed outlet for their crop or milk, because their own society is bound to accept and process it — this removes the anxiety of finding a buyer, especially for perishable produce.
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Retention of value addition by producers. The profit created by processing stays with the producers themselves instead of flowing to an outside factory-owner — the whole point of the co-operative form.
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Economies of large-scale operation. By processing the pooled produce of many members in one large plant, the society achieves lower per-unit costs in machinery, procurement, storage and marketing than any individual member could on his own.
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Better quality and standardisation. Central processing with grading and quality control produces standardised, better-quality finished goods that fetch a higher price and build market trust.
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Employment and rural development. Processing units create local employment and, especially in the case of sugar co-operatives, often fund schools, hospitals, roads and other amenities — spreading development through the surrounding rural area.
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Access to finance and government support. Registered processing co-operatives can obtain share capital, loans and guarantees from the State Government and co-operative financing institutions, enabling investment far beyond what members could raise alone. …
The fall in cost per unit that comes from operating on a large scale — a processing co-operative pools many members' produce and processes it in one large plant, lowering per-unit cost of mac …
Earning additional income from the secondary materials left after processing — e.g. molasses and bagasse from a sugar factory, or oi …