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The First Oil Cooperative

M. J. Arul

The first-ever spearhead team for the oil project of the National Dairy Development Board (NDDB) landed in Bhavnagar, a major groundnut growing area of Gujarat, on May 8, 1978. Composed of a team leader, a deputy team leader and four extension workers, the team was to help groundnut growers of the Saurashtra region to organise themselves and form village cooperatives. Such organisation was aimed at enabling the groundnut growers to market their produce at remunerative prices and also increase their production through technical inputs and extension services, which would be made available to the member farmers of Village Oilseeds Growers' Cooperative Societies.

Private trade in groundnut had long been established in Saurashtra and the "oil lobby" wielded enormous economic as well as political power. The traders practised what is known as forward trading, which more often than not resulted in distress sales for the producers (and inflationary purchase for the consumer).

When the six-member team arrived, it was harvest time for the summer crop. On the advice of its management, the team adopted procurement as a practical entry/starting point and chose Kharadpur village as a procurement centre.

Kharadpur already had a service cooperative society, which used to provide loans to the farmers through the District Cooperative Bank and recover the money by collecting their produce and selling it in the open market. Many a farmer in Kharadpur was still in debt to the bank. When the spearhead team entered the village, a rumour was heard that the six new comers to the village were representatives of the bank; and the farmers would not meet them. Some of the team members said amongst themselves, "Nobody here even wants to meet us. And this village already has a cooperative society. Why not we go to another village!"

The team leader went ahead and met a few farmers individually at their homes and talked to them about the new pattern of producers' cooperatives. They liked the idea, but seemed to harbour a suspicion that the bank would unilaterally amortise its loans when they went there to encash the cheques received from the team leader in payment for their groundnut. On being assured by the team leader that he would personally ensure that no such deductions were made, three farmers "took a chance" and came forward to sell their groundnut to the team.

The team's procurement was characterised by strict procedures of quality assessment: The price varied dependent on the percentages of moisture, refraction and shelling in the groundnut pods. To determine the moisture content, the team leader took out a kilogram of groundnut pods from the first farmer's lot, left them in the bright sun to dry and the team proceeded to meet more farmers in the village.

Two hours later the team returns. The team leader weighs the sample of groundnuts that have been drying in the sun. The sample weighs 1.2kg!

The team leader raises his head and sees a large crowd of farmers gathered around him. He observes a singular smile on the face of one bystander, who is the local trader.

Take-off points for discussion

  • Identify the problems faced by the team.

  • How do these problems compare with those in your context?

  • What alternatives are/were open to the team at various points of time?

  • Roleplay the last scene of the case and respond to the situation.

  • What lessons can you draw from the case for your team?

Other cases.