How can a government control the working of a co-operative society?
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The Government is providing Financial Assistance in the shape of Share Capital Contribution to the Cooperative Societies for strengthening the Share Capital base
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4.1 Agricultural Marketing and the Cooperative Role
Until 1985 Namboard was the monopoly buyer of maize at prices set by the government and the cooperatives were merely agents. The establishment of Namboard was based on the belief that centralized agricultural marketing would streamline the operations, while the promotion of cooperative unions was viewed as a way of protecting the peasant farmers from exploitation.
In 1986, Zambia made its first attempt at implementing the Economic Structural Adjustment Programme (ESAP) by liberalizing agricultural marketing. Namboard’s monopoly was removed in order to enable the cooperatives, millers, and other traders to participate in maize marketing.
Namboard remained the buyer of last resort and a government tool for intervening in the market. Producer prices of all controlled agricultural commodities, except maize for which a fixed price was determined, were set as floor prices. This meant that any price above the floor price was determined by supply and demand, and producers and buyers had the freedom to bargain. It was hoped that marketing costs were going to decline in this system as a result of competition and reduced average transport distances, due to decentralization.
This partial liberalizing did however have the opposite effect. The private traders who were allowed to participate in agricultural marketing demanded adequate compensation for their handling costs, and as a result there was an upward push in the price of maize meal which culminated in serious food riots in 1986. The government responded by nationalizing all maize milling facilities with the aim of controlling milling costs and hence check price increases.
In 1987, the government launched the New Economic Recovery Programme (NERP). Among the major policy changes was the re-introduction of extensive price control and the restriction, once more, of agricultural marketing in maize and fertilizer to PCUs/PCSs and Namboard. In mid-1988 primary marketing of maize was further restricted to PCUs/PCSs only.
In mid-1989, the government announced the dissolution of Namboard and transfer of its agricultural marketing and related functions to ZCF, including fertilizer importation, maintenance of maize strategic reserves, importation and distribution of empty grain bags, and provision of fumigation services. The main justification for the decision was the further streamlining the of the agricultural marketing system by avoiding duplication of responsibilities and double handling.
It was further envisaged that by transferring these functions to ZCF coordination with other cooperatives would be easier and thus the system would be much more efficient. This was not the case, however, as the same problems, such as of late input delivery and late payment to farmers persisted. As the policy framework did not change a decision to merely replace one organization by another could not be expected to solve deep rooted agricultural marketing problems.
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