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Marketing system through cooperatives in Bangladesh: Issues and challenges

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Marketing system through cooperatives in Bangladesh: Issues and challenges

What is marketing?

Commodity-based economic activities are widely dependent on marketing system. In this connection we should be clear about marketing and its perspectives. There are many definitions of marketing but one of the simplest suggests that:"Marketing is getting the right product or service in the right quantity, to the right place, at the right time and making a profit in the process". Marketing is about identifying and understanding your customer and giving them what they want. It's not just about advertising and promoting your business. Effective marketing is a result of examining every aspect of your business and how it affects the consumer's end experience. It covers everything you'll need to do in order to deliver your products and services to the consumer including research, planning, pricing, packaging, promotion, selling and distribution.

What is cooperative?

In general conception, cooperative is an economic and democratic institution through which self help and initiative is implemented. But the term cooperative indicates something more than this.  From very beginning of civilization, men used to live in a society. They used to take common action to achieve a specific target. In the pre-civilised society man used to hunt animal with united efforts. In this sense Cooperative is a pragmatic movement. Cooperative movement is also an endeavor of united people, who try to get rid of poverty or to develop their economic condition. Thus, Cooperative is the effective vehicle to drive the different circle of poverty.

In Indian sub continent Cooperative was a British socialist alternative to prevent ruthless and unethical exploitation inbuilt in the capitalist system of economy. It used to provide an opportunity to form the capital for any beneficial venture for its member.  British imperial authority initiated cooperatives for the peasants and occupations of grass-root levels like fishermen, artisans etc. with formal legislation of Cooperative Credit Societies Act , 1904.

Now-a-days, Cooperatives have generally come to be recognised as an important segment of an agricultural marketing structure. In many countries, they have become quite important as a means of achieving greater efficiency as well as a more equitable distribution of the benefits of development. So, it was totally worth to take those countries as idols for Bangladesh, a country highly dependent on her agronomy for achieving development.

Bangladesh was actually inherited with cooperative practices and continuing it since its independence in 1971. However, the impact of this practice made here so far is visibly dissatisfactory. A comprehensive study is a must to unearth the reasons for its failure and point out the solutions. We need to identify the necessity of cooperative marketing, its practicing scenario in our country, challenges to address and lastly the remedial steps to be taken to make the study worthy of everyone's attention. Here is an attempt to contribute to some extent to his end.

Necessity of Cooperative Marketing

A good system of marketing must have two objectives in view: One to assure to the producer a proper return for his labor to enable him to stay in his occupation and the other to assure the consumer that he pays no more than a fair price for the produce he buys. The agriculturist and the producer in most of the underdeveloped countries like Bangladesh is generally a poor man. To fight his poverty two things are necessary. He must either improve his output both quantitatively and qualitatively, or he must be enabled to get a larger share of the final price, paid by the consumer. A proper practice of cooperative marketing can best ensure the poor farmers about these two requirements. It will be clear if we look at the main objectives of cooperative marketing that includes reduction of marketing margins and costs, improving operational efficiency and influencing supply and demand in the market. Efforts to reduce marketing margins originally concentrated on elimination of the middlemen and capturing his profits for the organization's members. This objective stimulated growth of many early cooperatives and provided some balancing of economic power at the marketplace. Improving operating efficiency becomes a companion objective. It was discovered that in order to reduce the marketing margins, efficiencies had to be developed in which the cooperative could do the job more economically than other agencies.

The six "Ps" concerning marketing procedure are as follows:

The following six areas provide a comprehensive framework for developing an effective marketing plan. These areas are often referred to as the "6Ps" or the 'marketing mix':

Product - This covers the combination of goods and services that your business offers. It could include the following characteristics of your good or service: quality, variety, design, features, services, warranty, sizes, packaging, brand name and returns.

Place - How does the consumer access your product or service? Things to think about in this area include: distribution channels, coverage, inventory, transportation, logistics and retail outlet location.

Price - What approach will you take to pricing your product? Will you offer discounts or extended payment periods? What credit terms will you set?

Promotion - Refers to how you communicate with your customers. Most businesses use a mix of advertising, personal selling, referrals, sales promotion and public relations.

People - Your staffs are ambassadors for your business. Think the following in relation to your staff: knowledge, experience, skills, communication, teamwork and attitude.

Process - The processes that you use in the day to day operation of your business have a flow-on effect on the customer's experience, even if it's simply ensuring that orders are effectively managed. Think about the following aspects of business operation: systems, quality control, planning, review, continuous improvement, and documentation and feedback channels.

In the context of market imperfection, a cooperative can serve to improve the marketing system. A cooperative might be organized to purpose one or a combination of the economic objectives, viz (i) provide services at a lower cost, (ii) offer an alternative market outlet to offset monopoly in the local market (iii) provide new or improved marketing services, and (iv) channel technical information, new practices and new inputs to producers and better coordinate production and marketing. There are other advantages also which cooperative marketing confers on the farmer which it is proposed to discuss below:

  1. Economy in the cost of Marketing: When agriculturists combine to form a cooperative sale society, with a view to market their produce collectively, they will be able to eliminate the small assembling merchants and deal directly in the wholesale market and thus be able to economize in the cost of assembling of small lots.
  2. Better prices may be secured: If a marketing cooperative is able to handle a large volume of business as a result of the loyalty on the part of members and other advantages it offers, it is possible to get marketing functions such as storing, and transport performed at a lower cost. When marketing costs are thus reduced, the producer can easily secure a better return.
  3. Improvement in the quality of products: As a marketing cooperative handles a large volume of produces, it will be in a position to grade the products of members and persuade them to grow those verities of products for which there is a great demand in the market. The marketing society by paying the members according to the quality of products holds a direct inducement to them to grow better varieties of products.
  4. Advantage of Collective Bargaining power: A marketing cooperative controls a large volume of a limited supply to a market and so it gets a position to secure advantages which arise from its collective bargaining power also. For instance, it can present the case of the farmers while dealing with outside agencies like the railway, the state and the public to a greater advantage than is otherwise possible for an individual producer.
  5. Steady supplies and stabilization of prices: An important service which a marketing society performs when it operates in the wholesale market is in the direction of stabilizing prices over long periods by adjusting the flow of goods to the market according to demand. When it is thus in a position to control the flow, it will be in a position to even out the seasonal fluctuations in prices also.
  6. Cheaper finance: As a sale society will be in a position to obtain cheaper finance from central financing agencies against the pledge of goods deposited with it by the members, it will be able to reduce the cost of marketing in so far as marketing finance is concerned. This is not possible for any individual farmer.
  7. Business Education: Cooperative marketing teaches farmers business methods and gives them business education. The operation of marketing cooperatives teaches cultivators that agriculture is a form of business and the marketing is closely akin to the problem of production. It thus helps the farmers to earn a better return through running a good business with their farm produces.

These advantages of cooperative marketing are well understood in Bangladesh. But we are yet to get the desired result from it even after so many years of independence. It is a clear manifestation of malpractice with marketing cooperatives. So, at first it is important to know what is going on in the name of cooperative marketing in Bangladesh.

Lot of Challenges to Face

In present context, cooperative marketing is facing challenges or problems from different aspects like organisational structure, legal framework, management etc. These problems mainly liable for like production, transportation, packaging storing etc. The elaboration of these problems requires a different and full-fledged discussion. Here, it is summarized to some key points which are enumerated below.

  1. i) Over-lapping functions of different types of primary cooperative in the same village and union have made it impossible for the cooperative system to have a strong footing or healthy growth from the bottom. Since a considerable number of rural households have multi-occupational needs and interests, it was unavoidably necessary for them to enroll with two or more cooperatives at a time on payment of token shares.
  2. ii) The complicacy of the organisational setup is incommodious to both the people and their cooperatives. It aggravated member's apathy and divided their loyalty to the cooperative system.

iii) Functioning of so many primaries in the same village facilitated some clever people to intrude into the cooperatives simultaneously and pervert the same for their selfish ends.

  1. iv) Absence of interaction and accountability among the cooperative members and managing committees of different tiers is another gloomy fact of the structural problem. Apathy and unawareness of the members, problem of propriety of election and representation in the managing committee. Limitation of autonomy of general body of members and excessive statutory control on the managing committee are responsible for this scenario.
  2. v) The extent of adherence to the six principles of cooperation in Bangladesh, either in the legal framework or in actual practice, was always poor, for which the cooperatives could not assume conceptually workable character to fulfill their objectives.
  3. vi) The nature and extent of government control on the cooperatives are more authoritarian and against the spirit of autonomy in the ordinance of 1984 than its predecessors of colonial regime. Hence, the absence of democratic management has become the most problematic issue for the cooperatives of Bangladesh.

vii) The cooperatives are supposed to serve as a movement for the people and so it should be assisted to develop into a movement of the people and by the people, but, the legal framework for cooperatives in Bangladesh made it something different. In Bangladesh it is paradoxes that the cooperatives had by and large, been administered as a movement of the government and by the government.

viii) In Bangladesh, the autonomy and voluntary leadership a logically by the law for fear of mismanagement and corruption. But, it turned the total movement a futile practice.

  1. ix) Since the number of applications for registration of cooperatives was reduced to ten it is likely that many primaries have been pocketed by local power groups of two or three families and that very few of such cooperatives have served the interests of the poor.
  2. x) The people's ignorance of cooperative methods and of their rights and obligations as members has always been a stumbling-block to member participation necessary for healthy growth of cooperative system. Hasty registration of cooperatives without motivation or observation has put the situation to the worse. Now, cooperative are often organised overnight under duress or compulsion of project fulfillment. All of these factors are jeopardizing the entire movement.
  3. xi) For lack of effective educational programmed, the movement was not properly understood by the people, nor was the popular response to it. As a result good management leaders didn't emerge from amongst the poor and unaware members. This facilitated the managing committee to ignore accountability to the general body of members and eat up lion's share of societies benefits.

xii) A section of concerned government officials are reportedly found to indulge in corrupt practices  with regard to registration of cooperatives, disbursement of loan, supply of irrigation equipment, passing of bills, purchase and sale of goods, audit of societies etc. Such suicidal misconduct has been corroding the movement like a canker.

Concluding approaches

Cooperatives are the basic organisation which can play the vital role to shape out the form of chain marketing. Bangladesh is now in a global economy characterized. It may push us to make wide spread reforms in our economy to cope with the changing scenario of the global economy. However, it may deter our priority of developing the people from grass root level too. But we should keep it in mind that our actual and overall development depends totally upon the development of the marginal people. And cooperative marketing may be termed the best fitted tool of the time, for our economic emancipation as it aims at development from the grassroots level and matches the core spirit of globalisation simultaneously .In fact, cooperatives are something that also may run as private enterprises and go for making profit for its members in an economy led by the philosophy of privatisation. In this backdrop, it is a must for us to take a comprehensive action plan for adoption of a national policy, removal of structural complexity, reorganisation of action plan for adoption of a national policy, removal of structural complexity, reorganisation of the cooperatives, spread of education, revision of legal frame, and work out other measures necessary to transform the cooperatives into an autonomous, self reliant movement of the common people, right now. These steps will certainly enable us to be for all with a view to developing an economic movement by the people for the people and of the people. And, if it comes true the cooperative marketing in Bangladesh is sure to prove itself as an overwhelming success.


Samir Kumar Biswas is a Deputy Secretary at the Ministry of Food and formerly Joint Registrar in the Department of Cooperatives, Ministry of LGRD & Cooperatives.

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