CHAPTER TWO
2.1 LITERATURE REVIEW
Generally, a cooperative may be defined as an association of persons who pool their resources together on mutual basis to solve specific socio-economic problems, which may include income generating activities. A co-operative may also be defined as a self-help organization.
Co-operative societies represent a strong, vibrant, and viable economic alternative. Co-operative societies are formed to meet peoples’ mutual needs. The societies are based on the powerful idea that together, a group of people can achieve goals that none of them could achieve alone. For over 160 years now, co-operative societies have been an effective way for people to exert control over their economic livelihoods. They provide a unique tool for achieving one or more economic goals in an increasingly competitive global economy. As governments around the world cut services and withdraw from regulating markets, co-operative societies are being considered useful mechanisms to manage risks for members in agricultural or other similar co-operative societies, help salary/wage earners save for the future through a soft-felt monthly contribution that is deducted from source, own what might be difficult for individuals to own by their efforts, strengthen the communities in which they operate through job provision and payment of local taxes. Co-operative societies generally provide an economic boost to the community as well.
2.1.1 Historical Background Of Cooperative Societies In Nigeria
Cooperative society is the organization of people for an improved agricultural production (Strickland, 1934). The orientation and growth of co-operative societies in Nigeria can be traced to the development of agricultural export sector by the Colonial Masters “on the prospects and desirability of Farming co-operative societies in Nigeria†(Nkom, 1984). Among the recommendations made by (Strickland, 2008) was the formation of Agricultural Marketing Co-operative societies with the aim of pursuing the major export crops, like cocoa, cotton, palm produce farms in the country (Ekpere, 1980). The aim of introducing cooperative societies in Nigeria, according to (Strickland, 2002) includes: (a) Farm crop was not only a matter of improving farm crops nor even of (b) Increasing credit to cultivator who wish to change their farming methods.
Co-operative societies have the advantage of improving members’ lifestyle and eradicating diseases, which has direct effects on their living standard and giving them better chance of performance in agricultural production. (Claxton, 2000). It was noted that the origin and development of cooperative society began through the farmer selling their farm produce after harvest, e.g. Cocoa farmer which helped them in getting better prices, reduction of cost of basic necessities such as good seeds, and fertilizer, etc. Since one of the objectives of Farming the cooperative group is to mobilize members in modern agricultural practices and use of agricultural inputs. Also to help pull its members’ resources together for an improved agricultural production and marketing. The organizational structure of cooperative societies is based on their operation, organization, structure, membership, functions and services (Scope) with the main aim of “Collecting, processing and marketing specific commodities and providing with inputs, credit and technical services for the benefits of members in 1936, Major E.FG. Haig was the first person to be appointed the registrar of Cooperative Societies of Nigeria (CSN) with the seat of operation Moor Plantation, Ibadan Oyo state.
2.1.2 Categories of Cooperative Societies in Nigeria
i. Producer’s cooperative societies: The producer’s co-operative societies were established by the small producers. With members of the society producing goods in their houses or at common place. The raw material, tools money etc. are provided to them by the societies. The output is collected by the societies and sold in the market at the wholesale rate. The profit is distributed among the member in proportion to the goods supplied by each member.
ii. Consumer’s cooperative societies: Consumer’s co-operative societies were established to remove middlemen from the field of trade. These societies purchase foods at wholesale prices and sell these goods to the members at cheaper rates than the market prices. However, the goods are sold to the non members at the market rates. The profit, if any, is distributed among the members in the shape of bonus according to their purchase ratio.
iii. Marketing cooperative societies: The marketing cooperative societies were formed by the small produces for the promotion of trade. The two main objectives of these societies are, to sell the good at reasonable prices by eliminating middlemen and to make the ready for the product of the member. These types of societies are formed by the small agriculturalist and artisans.
Theses societies collect the products of its members and make its grading and keep them in warehouses and sell them in the market at whole sale rate when the market is ready for these products. The profit is distributed among the member according to the ratio of goods supplied by them.
iv. Credit cooperative societies: These co-operative societies are formed for the financial help of the members. These societies provide loans to the members at low rate of interest. In rural areas these provide loans to the farmers for the purchase of seeds, fertilizers and cattle. In urban areas these societies provide loans to its members for the purchase of raw material and tools.
