Cooperative prosperity

Print edition : April 22, 2005

The Markfed headquarters in Chandigarh. -

Established in 1954, Markfed, Asia's largest cooperative, continues to be a significant contributor to the socio-economic development of the State.

PUNJAB State Cooperative Supply and Marketing Federation Limited, better known as Markfed, is all set to begin "future trading" to help farmers gain from the variation in the prices of their produce after the procurement season is over, that is, when the cover of the minimum support price (MSP) is withdrawn. S.S. Channi, Managing Director of Markfed, said that to help farmers get better prices the cooperative had decided to provide "future trading" through linkage with the Multi-Commodity Exchange of Mumbai, whose terminal is now functioning at its headquarters.

Channi said that "future trading" would begin this rabi season, when Markfed would accept deposit of produce by the farmers, who would get a warehouse receipt. Charging a much "affordable fees", as compared to the 2 per cent charge levied a month by the arhtiya (commission agent), Markfed would offer a plethora of facilities and benefits to farmers who store their produce with it.

Against the warehouse receipt, Markfed would assist farmers in negotiating loans from banks or other financial institutions. Farmers could sell the produce when they find a satisfactory deal or authorise Markfed to sell after the procurement season is over. Farmers would also be allowed to pool in their produce to make a deal of bulk export.

The unique endeavour, which would be extended to the kharif season and to other crops, would begin with three delivery centres in Ludhiana, Jalandhar and Amritsar. The various facilities under "future trading" would benefit small and medium traders such as flour millers, who find it tough to make bulk purchases of raw materials during the procurement season. This would also bring a stabilising effect in the market, as the prices would be evened out to a large extent.

The scheme would be yet another milestone in the history of Punjab's main showcase brand name, Markfed, which continues to represent the State's voyage towards cooperative prosperity. Even as experts favour unbridled privatisation, the public sector undertaking (PSU) has emerged as a significant contributor to the socio-economic development of the State.

Established in September 1954, Markfed's journey started with 13 members, three employees, one bicycle and a share capital of Rs.54,000. In September 2004, when it celebrated its 50th anniversary, Markfed achieved the status of being Asia's largest cooperative. It has a membership of 3,012 societies, serves more than one million farmers and employs a workforce of 3,000. Its business turnover has reached Rs.11,000 crores.

Finance Minister Surinder Singla, while presenting this year's Budget, said that despite being the State with the most globalised citizens, Punjab had an economy that was least globalised. However, for years, Markfed has been functioning with the motto of "inducing the spirit of global power in the farmers". Its recent decisions and trends have lived up to some expectations about a cooperative functioning in the corporate mode.

While several PSUs face charges of being a drain on public funds, Markfed earned a profit of Rs.20 crores this year as compared to Rs.13.64 crores in the last fiscal. Its canneries obtained the ISO 9001 certification and Global HACCP, which would ensure trust and confidence among overseas customers. Procedures are already in place to ensure complete documentation of the processes followed by the plants to eliminate risk factors.

Noted farm economists G.S. Bhalla and H.S. Shergill are critical of the State government's crop diversification programme as it would not offer a guaranteed market for the farmers' produce if they shifted from the wheat-paddy rotation. They have argued that the much-propounded contract farming model was heavily loaded in favour of the private entrepreneur engaging farmers to produce for agro-based units.

Markfed has envisaged a role for itself to address this problem too. By effecting the movement of 84 lakh tonnes of foodgrain in 2003-04, which included an export component worth Rs.1,250 crores, the cooperative received the status of a "Trade House" within a year. (Other organisations took three years to achieve the status.) Simultaneously, it also announced the modernisation of its first state-of-the-art foodgrain testing laboratory at Ropar, which would help local users and exporters.

In the foodgrain testing laboratory at Ropar.-

By setting up a number of export-oriented units to process basmati rice, cotton, oilseeds, vegetables and fruits, Markfed helps farmers by procuring their produce and then organising their export. Even the Union government has recognised it as Punjab's nodal agency for the export of fruits, vegetables and foodgrain. Its vast range of products have found markets in the United Arab Emirates (UAE), the United Kingdom, the United States, Canada, Germany, Poland, Hungary, the Czech Republic, Slovakia, Afghanistan, Sudan, Yemen, the Philippines, Vietnam, Bangladesh, Indonesia, Korea, Oman, Sri Lanka and Ethiopia.

Markfed has arranged for contract farming in sarson-ka-saag, palak and methi in the areas adjoining its plant in Jalandhar. Last year it contracted an additional 200 acres (80 hectares) for the cultivation of sarson-ka-saag and palak. Farmers reportedly received an extra Rs.10,000 an acre (Rs.25,000 a ha) for cultivating this additional crop, which was followed by their regular cycle of wheat cultivation. Markfed has started supplying dehydrated sarson-ka-saag and palak to the Army Purchase Organisation (APO) for defence personnel posted at high altitudes. The turnover of the Jalandhar plant increased by 50 per cent during 2003-04 and is expected to have doubled by the end of the last fiscal.

Encouraged by the export of about 1.5 million cans containing ready-to-eat sarson-ka-saag and other Indian vegetable curries, Markfed is planning to increase its installed capacity. While consultants from New Delhi approved by the Agriculture Production Export Development Authority (APEDA) have been engaged to upgrade and modernise the system in accordance with world standards, Markfed has reached an agreement with a private company to explore further markets under the brand name "Bindra Curries". This scheme is expected to ensure an additional production of one million cans by the end of 2005.

Another major achievement of Markfed, especially during the past three years, has been the establishment of Agri Export Zones (AEZs) for potatoes and basmati rice. It established a central infrastructure facility at the AEZ and introduced technology for value addition and entered into a joint venture with the Jalandhar Potato Growers Association for the export of 2,000 tonnes of potatoes.

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