Marginal Farmers Largely Outside Cooperatives

Less Than 25% of Marginal Farmers Linked to Cooperatives: An Institutional Oversight

Less than one-fourth of India’s marginal farmers, who make up 60-70% of its agricultural households, are part of agricultural cooperatives. This glaring mismatch, revealed by FEED's latest report, highlights severe institutional barriers in the very system meant to uplift the most vulnerable segment of India's agrarian economy. Even as cooperatives deliver demonstrable benefits—credit access, yield improvements, and income gains—their reach remains limited. This failure to adequately integrate marginal farmers into cooperatives is not merely a technical oversight; it is a structural lapse with social, political, and economic dimensions.

The Institutional Framework Governing Cooperatives

Cooperatives in India operate under a multi-tiered framework. At the base are Primary Agricultural Credit Societies (PACS), grassroots-level institutions registered under respective State Cooperative Societies Acts. PACS serve as the link between marginal farmers and institutional credit, essential inputs like seeds and fertilizers, procurement channels, marketing platforms, and public services. They form the lowest tier of a larger cooperative structure comprising District Cooperative Banks (DCCBs) and State Cooperative Banks (StCBs).

On paper, PACS offer critical infrastructure for rural development. The government has bolstered this system with financial and technical assistance through the National Cooperative Development Corporation (NCDC). Yet, marginal farmers—those cultivating less than one hectare of land—encounter exclusionary barriers. Complex membership procedures, long physical distances to centers, and insufficient capital within cooperatives create a paradox: those most in need are structurally marginalized.

Government Efforts: Progress but Gaps Remain

• Farmer Producer Organisations (FPOs): Focused on small and marginal farmers, the central scheme aims to form 10,000 FPOs, providing equity grants and credit guarantees.
• Digital Agriculture Mission: Seeks to establish farmer registries, land records, and digital infrastructure. Yet, digital adoption by cooperatives remains low in states like Bihar and Tripura, and farmers’ digital literacy—particularly older and women farmers—lags.
• NCDC Initiatives: While NCDC disburses funds and builds capacity, its scope is constrained by uneven state-level implementation and weak institutional coordination.

Despite such efforts, institutional lacunas remain stark: weaker farmers, women, and some caste groups face layered exclusion. This calls into question whether the government’s structural approach genuinely addresses marginal farmers' needs—or merely tinkers at the edges.

The Ground-Level Realities: Social and Structural Exclusions

The FEED report exposes deep fractures within cooperative inclusion. For instance, marginalized farmers must navigate cumbersome membership documentation. The irony here is stark: even as cooperatives emphasize democratic principles like "one-member, one-vote," prevailing power dynamics of caste and class subvert this ideal. In male-dominated boards, only 3,355 out of 21.25 lakh female cooperative members hold directorial positions nationwide. Gender disparity persists across governance frameworks, undermining substantive representation.

Another structural weakness lies in digital infrastructure. PACS, intended to democratize access to the agricultural value chain, suffer from low digital penetration. States like Tripura exemplify failures at the intersection of technology and governance: outdated systems and the absence of farmer-friendly interfaces perpetuate exclusion. Fear of digital systems among rural populations, particularly women, exacerbates this divide.

Even within cooperatives, resource limitations hinder effectiveness. Marginal farmers linked to PACS report improved yields in cases (42%), but such benefits remain uneven, often tied to larger state economies or richer cooperatives. The promise of cooperatives thus slides into elitism rather than universality, sidelining vulnerable stakeholders.

Structural Faultlines: Centre-State Tensions and Financial Weakness

Perhaps the most enduring tension is the uneven role of states in cooperative governance. While PACS function under State Cooperative Societies Acts, central schemes like the Digital Agriculture Mission create overlaps in jurisdiction. States like Bihar lack robust PACS networks, pointing to institutional asymmetries that disproportionately hurt marginal farmers.

Financial constraints further dent cooperative viability. FEED’s findings note limited capital flow within certain cooperatives, reducing their ability to provide credit or reliable procurement channels. Instead of strengthening PACS as inclusive institutions, structural neglect risks entrenching them as emblems of limited ambition.

International Comparison: Kenya’s Model of Inclusivity

India could draw lessons from Kenya’s robust cooperative movement, particularly its Sacco societies. These member-driven entities prioritize micro-lending and savings for smallholders, making financial inclusion more accessible. Kenya’s success stems from simplified procedures and decentralized governance models. In contrast, Indian cooperatives remain tangled in procedural complexities and insufficient outreach.

While Kenya’s cooperatives work directly with marginalized groups, particularly women, India struggles with entrenched patriarchal systems—even within ostensibly progressive institutions like PACS. Structural reforms, including gender quotas and state-monitored resource allocation, remain sorely lacking.

What Success Would Look Like

Institutional reform must begin with streamlined cooperative membership processes. This should involve reduced documentation hurdles and accessible PACS centers across villages. Gender equity should be prioritized—not merely through token appointments but substantial leadership roles for women farmers. Digital education, integrated with cooperative boards, can mitigate infrastructural gaps while widening access.

Metrics for success include higher cooperative enrollment among marginal farmers, gender parity in cooperative governance, and increased financial viability of PACS. Beyond numbers, success cannot simply be measured through yield increases or credit access—it must reflect whether cooperatives actively dismantle entrenched socio-political hierarchies.

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