Aditya Yadav,Director ICA (Global Board) & IFFCO

Co-operative Trade and E-Business

Agenda A little bit of history Summary Statistics Cooperative trade Benefits Challenges Success Story- IFFCO Role of e-Business in cooperative trade Thanks

A Little Bit of History

The 1840s are known as the “Hungry Forties” with high levels of unemployment and reduced wages. Food adulteration and underweighting by retailers was common practice.

The Pioneers’ society developed a business method to sell good quality produce at full weight and fair prices. These methods were published in 1844 “to arrange the powers of production, distribution, education and government”.

Cooperative movement is a story of humanity and the heartfelt struggle of an inspiring group of people that fought against lost hope in a desperate attempt to build a better life for themselves, a better life for their families and a more hopeful future for everyone.

Rochdale Pioneers

Summary Statistics The biggest 300 cooperatives in the world have a collective revenue of USD 1,600 billion

This is comparable to the GDP of the world`s ninth largest economy.

2.6 Million Cooperatives have over 1 Billion memberships and clients. In France there are 147 million cooperative memberships with a population of 65

million people.

12.6 Million Employees work in 770,000 Cooperative offices and Outlets Together cooperatives employ 12.6 million people roughly 0.2% of the world’s

population.

US$20 Trillion in Cooperative Assets generate US$3 trillion in Annual Revenue. Combined the global cooperative economy is larger than France’s economy right

behind Germany’s economy as the 5th largest economic unit if it were a united country.

High potential to contribute to national GDP (Gross Domestic Product) Cooperative economy comprises over 10% of the GDP in 4 countries in the world (New

Zealand (20%), Netherlands (18%), France (18%) and Finland (14%).

World`s Cooperative Overview

Region No. of Coops

Membership& Clients

(in millions)

Member(%

Population)

Employee

%Population

Employed in Coops

Offices of Coops

Total Assets in

US Dollars(in billions)

Annual GrossRevenue inUS Dollars(in billions)

GrossRev % of

GDP

Africa-Sub Sahara

85,260 18.50 2.73 10.914 0.00 5,844 10.84 .85 0.08

Asia 1,933,299 484.10 12.68 4,306,521 0.11 481,871 3,847.32 653.62 3.25

Caribbean 1,049 3.58 12.94 54,569 0.20 462 5.93 .18 0.13

Europe 356,380 368.00 45.55 5,248,852 0.65 224,593 11,688.16 1,482.48 7.08

Latin America

42,765 44.17 7.81 816,122 0.14 14,913 83.88 18.36 0.33

MENA 162,779 4.53 1.57 37,714 0.01 1,095 31.68 3.61 0.27

North America

31,078 134.72 38.63 1,675,778 0.48 41,750 3,825.83 744.22 4.12

Oceania 1,988 14.14 37.80 460,278 1.23 1,460 113.74 59.54 3.46

WORLD 2,614,598 1,071.79 16.31 12,610,748 0.19 771,988 19,607.42 2,962.89 4.30

Cooperative Trade

The cooperative form of enterprise is specially suited for meeting the collective needs of members, whether they are producers, consumers or workers.

It is the only viable process for Socio Economic Development because it is by the society and for the society.

Service oriented and concern for the society.

One member, one vote - based on equality.

A cooperative can deliver economies of scale by increased buying or selling power and reduced processing or handling costs.

Taxation Benefits depending upon Government Policies from time to time.

Sector-wise Analysis (World Wide)

Sector Totals Cooperatives Members/Clients EmployeesOffices/ Outlets

Assets( in Billion USD)

Annual Gross Revenue( in Billion USD)

Banking/Credit Unions 210,559 703,070,123 2,452,130 296,566 11,262.70 167.41

Insurance 3,644 248,864 961,409 1,361 7,500.07 1,219.47

Agriculture/Grocery 1,224,650 122,120,167 1,181,682 35,386 133.81 337.71

Utilities 1,714 19,858,921 94,882 1,015 141.54 41.94

Grocery/Consumer 81,437 97,869,940 875,181 100,396 243.89 154.57

Worker 84,799 4,369,600 1,218,751 0 1.39 124.82

Housing 15,247 16,383,048 102,823 173 52.41 20.71

Health 1,700 3,441,221 153,180 51 0.49 4.08

Education & Social 87,998 21,876,052 497,445 13,122 0.84 12.31

Purchasing or marketing 41,865 26,256,054 3,402,008 320,599 239.00 736.63

Other or Undefined 760,985 56,296,177 1,671,257 3,319 31.31 143.25

WORLDWIDE TOTALS 2,514,598 1,071,790,167 12,610,748 771,988 19,607.46 2,962.90

Benefits

Support to Small and Marginal Farmers and Consumers Credit Societies provide credit or loans and enable them.

Assured Sources of Good Quality Supplies Cooperatives provide members with a dependable source of reasonably priced

supplies, especially during shortages or emergencies for the benefit of end farmer.

Expanded Markets Through pooling products of specified grade or quality, many marketing

cooperatives can meet the needs of large-scale buyers better than individual farmers.

Local Leadership Development Successful, growing cooperatives often develop leaders by participating in business

decisions on a democratic basis. These leaders effectively pursue community issues with Government and other bodies.

Benefits to MembersBenefits Details

Increased Farm Income

Raising the general price level for products marketed. Lowering the level for supplies purchased. Reducing per-unit handling or processing costs by assembling large

volumes. Developing new markets for products.

Improved Farm Management

Information to members on farm production and management practices.

Advice on the quality of seeds, fertilizers, pesticides, feeding and cropping practices.

Providing market and economic information about various products or enterprises.

Added Community Income

Cash surplus is spent on patronage of local businesses to support economic well-being of the community.

The coops also spend money for supplies, utilities, insurance and local taxes.

Challenges

Challenges Details

Resources Capital: This tendency arises when the disparity between a worker member's expected profit share of income and what they could earn by investing outside the firm (say Bank arte of interest).Human Resource Paucity: Modern day business and services require professionals to manage business. Coops does not give enough incentive to attract and retain them.

Less participation of Youth and Women

Decision Making: Apathy of members to participate in society meetings leaves decisions to a small number of directors, which results in authoritarian structure.

Government Policies Intrusive state patronage and politicisation of the cooperatives, especially financial cooperatives has disruptive effect. Total accumulated losses of the cooperative banking sector, excluding the PACS, amounted to Rs. 91.4 billion

Security and Insurance Coverage

Agriculture largely depends on weather and market situation. Marginal farmer and Agriculture are perceived as high risk insurance. Adequate insurance coverage must be made available to this group.

Scarcity of skill and professional expertise

As the cooperatives are located mostly in sub-urban or rural areas there is always a shortage of skills and professionals.

E-Business in cooperatives

E-business (electronic business) is conducting business on Internet, which includes not only buying and selling but also servicing customers and collaborating with business partners.

The processes and tools that allow an organization to use Internet-based technologies and infrastructure, both internally and externally, to conduct day to day business process operations.

Stands for electronic business and refers to any kind of sales, services, purchasing or commerce on the Internet.

Regionwise E-Business

B2C Ecommerce Sales Worldwide, by Region, 2012-2017

(billion USD)

Regions 2012 2013 2014 2015 2016 2017

Asia Pacific 301.2 383.9 525.2 681.2 855.7 1052.9

North America 379.8 431 482.6 538.3 597.9 660.4

Western Europe 277.5 312 347.4 382.7 414.2 445Central & Eastern Europe 41.5 49.5 58 64.4 68.9 73.1

Latin America 37.6 48.1 57.7 64.9 70.6 74.6

Middle East & Africa 20.6 27 33.8 39.6 45.5 51.4

Worldwide 1058.2 1251.4 1504.6 1771 2052.7 2357.4

Role of E-Business in Coop Trade Lower Input Cost:

Saleable goods can be obtained directly by manufacturer. Cost comes down due to absence of middleman. Less inventory is required. Hence lower capital input.

Wide Accessibility: Physical locations can be accessed by visiting in business hours only whereas e-Business site is

available round the clock. It has global reach. Lower Infrastructure Cost:

Sales, purchases, remittances and document management in electronic form are most efficient cost effective.

Ease of Purchasing: Member can compare products and prices. May take reviews of other users. This will help

member in selecting right product for his need. Product usage directions and precautions are readily available.

Ease of Payment: Members can make electronic payments. This saves Cash handling efforts of member as well as

store . Ease of Sourcing:

Sourcing can be automated by B2B tie up. Purchase Orders will be placed to supplier as soon as re order level is reached. This will reduce lead time to purchase. Inventory levels and ultimately capital cost.

Success Story-IFFCO

IFFCO’s vision -To augment the incremental incomes of farmers by helping them to increase their crop productivity through balanced use of energy efficient fertilizers; maintain the environmental health and to make cooperative societies economically and democratically strong for professionalized services to the farming community to ensure an empowered rural India.

Dr. U S Aswasthi

Success Story-IFFCO IFFCO was established in 1967

Started with 57 member societies. Presently there are around 40,000 member societies representing 55 million farmers.

From an initial investment of USD 0.08 million equity capital has grown to almost USD 100 million

IFFCO`s five fertiliser manufacturing units in India produced around 7.5 million tonnes of fertiliser in the year 2014-15. Total sale of fertiliser that year was 11.1 million tonnes.

IFFCO has 19 associate and subsidiary companies with joint ventures in Jordan, Dubai, Oman, Senegal, Peru, Argentina etc. Leader and visionary

Thank You