Financial Daily from THE HINDU group of publications
Tuesday, Apr 13, 2004
Agri-Biz & Commodities
Rubber cooperatives facing financial crunch
Vipin V Nair
Kochi , April 12
COOPERATIVE societies engaged in procurement and marketing of rubber are finding the going tough, despite price of the commodity ruling steady.
Lack of professionalism, increasing overheads and yesteryears' accumulated losses are blamed for the poor showing of the rubber cooperatives in Kerala, an expert has said.
There are 50-60 rubber cooperative societies functioning across the State. Barely a few can boast of a good track record, says Prof. K K Abraham, President of the Kerala State Co-operative Rubber Marketing Federation (RubberMark), an apex body of rubber marketing societies.
"Actually there is no relation between price of the rubber and performance of the societies. Margins in this business are very thin and the cooperatives are the receiving end of even a small fluctuation of prices in the market," Prof. Abraham told Business Line.
Unlike other agencies, cooperative societies have high overhead expenses, particularly because of increasing wage bills.
"Every time there is a salary increase in the Government, co-operative societies are also having to increase salaries. This is a big expense for many societies," he said.
Most of the societies also failed to adopt innovative measures to keep pace with the time, he pointed out.
Rubber cooperatives lost heavily when price of rubber crashed in the past. For instance, In 1997-98, RubberMark bought about 6,000 kg of rubber at Rs 48 per kg, only to sell them at Rs 28-30 a kg later as a Ministerial Sub-committee asked it not to sell. "The Government said they will make up for the losses but no cooperative got the money," Prof. Abraham recalls.
The poor financials of the societies also deny them the opportunity to get direct funding from National Cooperative Development Corporation (NCDC). In order to get direct financial assistance from NCDC, societies should have a three-year track record of profitability and a positive networth, among other conditions.
"No rubber co-operative have earned profits for three continuous years and NCDC may not be able to fund any of them," Prof Abraham lamented. Moreover, funds released by NCDC two years ago through the State Government have still not reached the societies.
He said NCDC should take a lenient stance towards rubber cooperatives in the State and fund them directly.
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