A brief discussion on Cooperative society
Unlike a Limited Liability Company, members control the company, and no single person is authorized to own a controlling part. Because it is assumed that the majority of the cooperative’s business would be conducted with the patronage of members, the profit or excess is returned to members in the form of patronage reimbursement once all costs have been paid. If cooperatives follow this path, they will get government help and will likely be tax-free. The basic goal of a cooperative firm is to provide excellent service to its members while also returning any surplus or profit to its owners. This post contains A brief discussion on Cooperative society.
Meaning of Cooperative Society:
A cooperative is a type of business in which members voluntarily own, organize, and upgrade it for their mutual benefit.
Characteristics of Cooperative Societies
There are certain characteristics of cooperative societies. These are given below:
According to this philosophy, cooperative businesses should be open to everybody who is interested. There is no limit to the number of people who can join. It is normally available to anyone who wants to participate who has comparable interests.
One man, one vote is implied by this premise. Each member has one vote and is eligible to run for any office. They are on an equal footing. Any key decision is made with the participation of all members.
Limited Return on Capital:
Cooperators should not expect substantial returns on their invested capital because cooperative organizations exist primarily to provide services to their members at the lowest possible cost.
Profit is distributed among members in proportion to their respective contributions. This is intended to motivate people who are able to make a greater contribution to society to do so.
Cash Transaction only:
Cooperative members are expected to buy and sell produce entirely on a monetary basis. This indicates that no credit will be given.
Religious or Political Neutrality:
This means that everybody, regardless of religion, politics, or ethnicity, should be able to join a cooperative society. This idea exemplifies the cooperative’s position as a unifying force in society.
Constant Education of Members:
Simple farm hygiene, animal management, and novel production techniques such as yam and fish farming could be taught to members. Cooperative education also aids in educating members about the value of collaboration.
Types of Cooperative Society
There are some major types of cooperative societies. These are given below:
Producers Cooperative Society:
Producers cooperatives, sometimes known as group farming cooperatives, were formed to help small farmers benefit from large-scale farming, as well as the collective purchase and use of heavy machinery and other equipment. Improved farming methods can be practiced in such civilizations. Members of this society donate money in order to obtain discounted equipment, machinery, and raw materials for the advancement of their creative operations.
Consumers Cooperative Society:
These are more concerned with the low-cost sale of manufactured items to members. Members pool their resources to buy things in large quantities from manufacturers. They cut out the middlemen to purchase these commodities at lower prices, which they then distribute to their members.
Marketing Cooperative Society:
The major goal of this organization is to organize the sale of members’ produce in order to encourage members to grow high-quality crops and to foster a cooperative attitude among the members. In addition, marketing cooperatives provide their member’s loans and savings accounts.
Thrift and Credit Cooperative Society:
The provision of savings facilities and the issuing of loans to members are the goals of a thrift and credit cooperative society. All members’ credit limits are set in relation to their savings. The interest rate levied on loans varies, but it is usually low.
Multipurpose Cooperative Society:
These organizations, as the name implies, perform two or more functions. Most multipurpose cooperatives help members buy farming equipment and other necessities. They act as local banks, allowing members to save and borrow money. They also act as distributors of fertilizers, as well as better seeds and seedlings. Some of them combine production, marketing, and processing into one package.
Housing Cooperative Society:
Housing cooperatives are a special type of service cooperative that offers a unique way to own a home. They make it possible for homeowners to split the costs of homeownership (or building). They’re set up as a corporation by people who want to share and own their housing. The cooperatives own the apartments in a housing co-op, and they are not allowed to sell them for profit. Condominiums, rentals, single-family houses, market rates, and limited equity are some examples of these types of properties.
Agriculture CooperativeSociety :
Its goal is for a group of farmers to create a Cooperative Society in order to expand the size of arable land. Using current agricultural equipment, the yield can be boosted in this way.
Advantages of Cooperative Societies
There are some advantages of cooperative societies that’s help its member. These advantages are given below:
Easy to form:
In comparison to the formation of any other type of commercial organization, the formation of a cooperative society is quite straightforward. Any group of ten adults can start a cooperative society. The procedure for forming a cooperative society is quite simple and straightforward. The formation of a cooperative group does not require any legal procedures.
Encouragement of Savings:
Members of cooperative thrift and credit societies are encouraged to save money. In Nigeria’s rural areas, where commercial banks are scarce, this function is critical. Individuals who are left to their own devices may not be able to accumulate enough money for investing purposes.
Provision of Loans:
Cooperatives can simply and at low-interest rates get loans for agricultural activities or other forms of output. Individual farmers have a harder time borrowing money from banks than cooperatives. This is because they are in a better position than individual farmers to give greater collateral.
Education and Training of Members:
Cooperatives provide education to their members in the areas of goods and service production, distribution, consumption, and marketing.
They are Democratic in Nature:
All cooperative society members have the same right to vote and be voted for. They each have an equal say in how society should be organized. Cooperative societies provide training in self-government and commercial management to their members in this way.
They Prevent Price Fluctuation:
The goal of founding a cooperative society is to preserve the welfare of its members, not to gain money. They purchase the majority of their products in bulk and resell them to members at a discount. As a result, things are sold at low prices.
Avoidance of Cheating and Hoarding:
Cooperative groups are noted for their willingness to help others. The ultimate purpose of cooperatives is member pleasure. They can’t afford to fool their members because they are their immediate clients. Hoarding is likewise frowned upon in today’s culture.
Increased Standard of Living:
Farmers can borrow money from cooperative organizations to expand their production capacity and purchase necessities for their families. Cooperatives also buy and distribute manufactured commodities to their members. All of this is aimed at enhancing members’ living situations.
Promote Unity Among Members:
Cooperative members are familiar with one another. They gather on a regular basis and make decisions as a group. This one-on-one engagement between members fosters interpersonal relationships.
Disadvantages of Cooperative
There are some problems or disadvantages faced by the members of cooperatives society. They are
Low Capital Base:
The majority of rural farmers, who make up the majority of these communities, have a poor background. Another issue is members’ unwillingness to pay their subscriptions.
Despite the fact that cooperatives are not intended to be involved in politics. Many societies have become involved in politics. Some members were forced to declare for a specific political party against their will, resulting in conflict and rifts among them.
Illiteracy of Members:
In Bangladesh, the majority of cooperative society members are illiterate. As a result, the majority of people may be unaware of the possible benefits of cooperating. Apart from the benefits, illiterate members may not grasp how these societies work or what their principles are.
Cooperative officers are chosen from within the membership, which is primarily made up of farmers; they may lack the administrative and managerial skills needed to run the firm effectively.
Possibility of Embezzlement:
Embezzlement of cooperative funds has been widely reported. Some cooperative executives conspire to utilize society’s funds for their own personal gain.
High Rate of Loan Default:
Loan default is extremely common among cooperative members. Loan default occurs both within societies and with loans guaranteed by societies to banks. The majority of loans made by cooperative organizations are made without much in the way of collateral. The majority of members enjoy the loan, but only a few pay it back in full.
Cooperative membership in Bangladesh is still minimal, compared to limited liability companies. Despite the fact that there is no limit to the number of shareholders, only a small percentage of the population participates in cooperative businesses. This issue is most likely caused by a lack of knowledge of cooperative concepts and ideals.
Some suggestions for investigating the prospects of cooperative societies in Bangladesh are as follows:
- If the government takes quick steps to address the aforementioned issues, cooperative organizations can play a significant role in Bangladesh’s social and economic growth.
- Periodic campaign programs on this subject will encourage the general public to form appropriate cooperatives in areas such as agriculture, food distribution and retailing, childcare, credit unions, purchasing, worker-owned, housing, healthcare, energy and telecommunications, and so on, in order to boost the sector, which will ultimately contribute to the economy by creating new jobs and making a significant contribution.
- Proper education and training for management and business skill development can help members maintain the sector in a long-term manner.
- Cooperatives will be able to protect themselves from financial troubles with the support of relevant consulting services and assistance in organizing funds.
- The concerned authority’s promotional activities, such as persuading key government departments in favor of cooperatives in getting concessions and facilities from public agencies, will promote cooperative confidence.
Cooperatives can ensure that everyone has the opportunity to participate fully in the economic and social growth of their community. In a developing country like Bangladesh, it should be viewed as a viable business strategy. It could be a powerful instrument for reducing poverty among the general public. The government should make certain that the relevant authorities are carrying out their responsibilities in order to promote this industry as quickly as possible.
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