Governance and Management Innovations in Producer Organizations in India

Abstract

India had thousands of co-operatives at various levels, but more of them have been failures than successes apart from milk and sugar in some provinces. This failure was attributed to political capture and interference, elite capture and mismanagement, or to the very lack of ‘fertile grounds’ in most parts of India, with the exception of Gujarat and Maharashtra. Therefore, in the search for a better form of farmer organization of small producers, the Producer Company (PC) was born as a legal provision in the early 2000s. India is the second Asian country after Sri Lanka to try this form of producer organization. These entities tried in the 1990s had mostly failed in Sri Lanka but in India, there seems a better promise of their success wherein principles of cooperation and corporate entity have been combined so that they could be more relevant entities in a globalized and liberalized market environment. Studies have shown that PCs suffer from many problems: lack of capital, poor governance, poor member engagement, and lack of professional management besides poor market linkages. Since many of the PCs have been facing both governance and management challenges over the years across regions which lead to the aforementioned problems, this chapter examines this issue with the help of case studies of NDDB’s Milk Producers’ Companies (MPCs) in terms of governance and management innovations designed by the promoting entity ((National Dairy Services (NDS) of National Dairy Development Board (NDDB)) and adopted by the individual PCs, which has led to their better performance over the years. It concludes by making suggestions for exploration and adoption of more innovations in governance and management for achieving viability and sustainability of such entities and promoting inclusive and sustainable agricultural and rural development.