When cooperatives had gone out of fashion, a Keralan cooperative society found a way to keep growing by listening to customers and evolving to fit their needs, as two graduates passionate about rural development explain.
Cooperative form of organisations was a favourite instrument for achieving economic wellbeing in the last century. From the time of Independence, huge public expenditure and investment occurred in cooperatives throughout India’s high noon period of centralised planning and socialist economic policies.
Cooperatives achieved respectable stature and economic viability in some sectors – notably dairy and sugar. However, in general the performance of cooperatives has left much to be desired for many reasons from political capture and misuse, administrative rigidities due to control by state governments to excessive financial leverage. Thus, the overall scenario of cooperatives became pessimistic.
It appeared that around 1991 when the country changed its economic course, the state turned its back on the cooperatives. Around 2000 the World Bank and the government started encouraging the formation of producer companies in preference to cooperatives.
Given this, it is refreshing to learn that as dusk was falling on cooperatives some, nevertheless, remained vibrant. Like the Koliyacode Consumer Cooperative Society (KCCS).
Formed in 1989 by the Late N Velappan Nair, a dedicated man of high integrity, the Koliyacode Consumer Cooperative Society (KCCS) from the Mannakal panchayat in the Thiruvananthapuram district has grown from strength to strength.
In its humble beginnings it started purchasing consumer items like cereals, edible oils and sugar, supplying them to the local population, charging a 6% margin on its purchase price.
Santhosh, the son of the founder and the current president of the KCCS, told us that this had to cover 1% handling losses and all the administrative overheads. As such they incurred losses. His father and some of his close friends who had started the KCCS contributed their own funds to keep it running. In fact the directors took personal loans from a nationalised bank to help KCCS build its working capital.
KCCS built its business by judicious use of a government scheme named Neethi Stores, which was the local term used for fair price retail outlets of consumer goods to serve as a check on inflation. At a KCCS store consumers could buy groceries and other items not supplied as a part of the government programme. Thus, KCCS used the Neethi Stores scheme to expand its business.
Around the turn of the century they started a chit fund scheme as often people drawing a chit did not have adequate security or guarantors – hence could not withdraw the funds. To overcome this, they started a fixed deposit scheme. This proved a success and they used liquid funds available through this activity to give personal loans as well as gold loans to members. All these financial transactions were limited only to KCCS members.
Manakkal is located barely 20 kilometres from Trivandrum city and has excellent road connectivity. Despite this, KCCS found economic opportunity and expanded its retail activity to many other items. They included retail shops in textiles, medicines, white goods and construction materials too.
A few years back, they bought a parcel of land on the highway and started a fuel pump as well.
While they sell to all buyers, only members receive dividends and bonuses from the economic surpluses which KCCS makes. Their membership has grown to 7,000, covering 500 voting members and 6,500 associate members.
KCCS leadership is sensitive to the diverse needs of their community and has undertaken non-transactional activities too. They run a library for students and readers. They have also recently opened a hospital, which mostly provides palliative care by arranging for home visits by doctors, pathology laboratory technicians and the like.
“There are three private hospitals and a medical college within easy reach and so our footfall is not very high. But our unique service is home visits. There are many senior citizens in this community. The children of quite a few of these seniors stay in far off locations. Home visits meet a real need of the elderly people,” explained Arvind Krishnan, one of the doctors.
The fees and charges are way below the “market” rates.
“All I want to see is that the community is served and that we can afford to run the hospital within the surpluses we make in KCCS. We didn’t start the hospital as a money-making unit,” said Santhosh.
Santhosh is a savvy manager with figures at his fingertips and creative expansion plans at the ready.
“I work 8-10 hours a day and have done this without a break for the last two decades. My day ends when each of our units comes and gives me the account for the day’s business and deposits the cash. Each day we do business of around Rs 30 lakhs,” he said.
Most recently they launched a producer company to cater to farmers in the community. They have started to buy and process coconut, selling the coconut cooking oil through their stores. Also, they have a dairy farm, a goatery and layer birds and sell about 500 eggs a day.
Now, they bought a dairy plant and sell standardised milk.
“We are running the dairy farm and goatery to acquire practical understanding of animal husbandry side. This will only be for a demonstration. Soon we will start encouraging our members to take up production of these things when we feel comfortable that we can solve their problems in the activity,” explained Lal, the managing director of the producer company.
With a respectable turnover running in scores of crores, KCCS has now become a solid pillar of local economic development.
Its consistent and admirable performance serves the local community well. The single-minded devotion to ethical business and personal integrity of the founder and the current president are the principal drivers of the success of KCCS.
It indeed is a lighthouse in the otherwise gloomy world of cooperatives.
The lead image at the top of this page shows one of the outlets of Koliyacode Cooperative Society (Photo courtesy authors)
Aabitha Rasheed is an agriculture graduate from Tamil Nadu Agricultural University, Coimbatore. Her interests include the functioning of cooperatives, extension activities and agri business start-ups.
S Aravind is a post graduate of English literature from Sree Sankaracharya University, Kalady, Kerala. He is passionate about the way rural cooperatives function and history. He aims to become a teacher.
