Sunday, February 6, 2011
Consumer cooperatives and Producer cooperatives
Is there a conflict of interest between producer co-operatives (e.g. farmers) and consumer co-operatives? How could cooperatives help people secure their basic needs? These are some of the real world questions when one wants to promote cooperatives and realises about multiple-stakeholders. What are the ways out?
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The main motive of producer co-operatives is to give a high return to the producers, while in case of consumer co-operatives it is all about providing goods to consumers at the lowest possible price. So there is bound to be a conflict of interest which occurs while making sure the needs are met for both the parties. A standardization of products along with prices by common consensus among both the groups can be a viable option in the long run.
There apparently seems to be a conflict of interest between producers cooperative and consumers cooperative but we realize that one of the core principles of cooperative movement is win - win situation for all. In a market system where producers as well as consumers both are cooperatives the overall profit at an optimized level can lead to more profit for both the parties compared to the situation when one of the parties is a capitalist venture. The necessary criteria are that both the parties need to practice fare business and should have a sense of cooperation amongst them as well.
Income distribution within producer cooperatives is structured along egalitarian principles. Members of a consumer cooperative are entitled to receive a patronage dividend. Can we think of a co-operative alliance? If both the employees and the customers are considered patrons of the same cooperative, it will lead not only to profit conflict but also potential conflict on governance and management of the co-operative. So it may not be a feasible option. I think that linkages between SHG’s and co-operatives could be used for accelerating financial inclusion and microfinance which can help the needy.
The conflict will arise only if the two cooperatives cater to same goods or services.Whereas consumer cooperative strives for good quality at lowest price, producers cooperatives strive for profit. Producers cooperatives aim to safeguard interests of farmers offering them reasonable price for products and protect from market fluctuations.
If we wish to safeguard stakeholders interest we need to engage two cooperatives in dialogue and arrive at common issues and its optimal solution like selling the products in consumers cooperative directly avoiding middlemen and inturn consumer cooperative agrees for standard prices for goods.
There could be a conflict of interest between producer and consumer cooperatives as they have different objectives to achieve.while producer cooperatives aim to provide maximum return to the producers while consumer cooperatives has ann objective of providing goods to customers at minimum price possible. Only, if these cooperatives have some cooperative attitude and also realise that they are for the benefit of the people as a whole, they can be helpful to the society
It is bound to have conflict between producer and consumer co-operatives as some objectives of both co-operatives are in exactly opposite directions like farmers wants to maximise prices while consumers would like to minimise. Co-operatives provide common platform, bargaining power to people and hence help people secure their basic needs. Consensus among the parties involved over various issues like prices, quality, purchase of products and standardization of various steps will help to minimize the conflicts. Also a common body can be setup which will look in benefits of both parties and hence maintain the conundrum.
Producer co-opearative aims to benefit it's members by providing maximum return while Consumer co-operative aims to provide goods and services to it's members at the lowest possible price. So the conflict of interest is unavoidable between them. However, co-operative's are known for cooperating with each other and if they engage in proper dialogue a consesus can be reached wherein both the parties would benefit.
The conflict of interest might not always be present. It all depends on the way both the cooperatives perceive their individual and other cooperative’s goals. In cases where both the cooperatives work together to maximise the net benefit, conflicts can be avoided. Cooperatives can help people secure their basic needs by providing not only economic but also social benefits. Getting multiple stakeholders to sit and talk and have a win win approach wherein they look for not only their personal but other’s benefits as well can surely result in a way out of any such conflict.
There is surely a conflict on the basis on which the two co-operatives( producer and consumer co-operatives ) operate. The basic reason of existence for the two are complementary to each other.Multiple Stakeholders are the strength of a co-operative and help in maintaining an equilibrium ( in this case) between the demands of the consumer and the producer co-operative.The consensus on products and prices is a viable option but also has constraints limiting to the participation and readiness for the members to gain a "WIN WIN" condition for both co-operatives.
There is surely a conflict on the basis on which the two co-operatives( producer and consumer co-operatives ) operate. The basic reason of existence for the two are complementary to each other.Multiple Stakeholders are the strength of a co-operative and help in maintaining an equilibrium ( in this case) between the demands of the consumer and the producer co-operative.The consensus on products and prices is a viable option but also has constraints limiting to the participation and readiness for the members to gain a "WIN WIN" condition for both co-operatives.
Consumer cooperatives help to provide best quality goods and services at lowest prices, while producer cooperative is when group of individual come together to buy equipment or goods.Both of them help people to secure their needs, the conflict is thus inherent.Both the parties should learn to cooperate rather than being at conflict because it will be self destructive
Cooperative is for the benefit of its members. Producer cooperative wants to provide maximum benefit to the producer so want to sell their produce at high price whereas the consumer cooperative wants to provide product at less price to its members. This is the conflict between the two. To resolve this both the producer and consumer cooperative have to work together and take the middle way to satisfy both consumers and the producers. Standardisation of the both selling price of producers and cost price for consumers on the basis of market condition can be done.
As long as both the cooperatives want to work in the best interests of its members there is bound to be a conflict of interest between the two cooperatives. But if the cooperatives work for the best interest of the society then a middle path can be found which will benefit both the parties.
It is difficult for both the consumer and producer cooperatives to co-exist in a market. This is the reason why there arises a need for interventions to provide subsidies (in case of consumer cooperatives) and minimum support price (in case of producer cooperatives) to keep the spirit of cooperation alive even in a competitive and conflicting situation. The principle of cooperation between cooperatives also comes into play in such a situation.
Producer Co-operatives aim at profit maximization while Consumer Co-operatives aim to provide consumer the most economic transaction. So conflict of interest is inevitable as the goals are exactly opposite. What can be done is a direct linkage between the two which will reduce cost and also result in co-operation among different types of co-operatives.
This is purely my personal opinion. What I feel is that for any collective action there should not be any incentive if you need people with real passion. Introducing incentive may invite many people who just join just for incentive and never get involved properly. This will become double work and will bring down the morale of the group. For a collective action to be successful we need people with same mindset. Then they will enjoy the work and outcome will be good.
While consumer cooperatives focus on getting goods for their members at the lowest prices possible, the producer coops focus on getting the highest possible price for goods...hence the conflict of interest is embedded in their reasons for coming into being. Cooperatives can help both producers and consumer secure their basic needs by taking advantages of economies of scale, scope and integration. Cooperatives could cooperate amongst themselves and take advantage of the economies mentioned above to create a win-win situation for both (producer/consumer) and capture the market by becoming the most efficient provider of goods/services.
A conflict of interest would be seen if the stakeholders perceive that if I gain, you lose or vice versa. To promote co-operatives, one needs to make people believe that they will all gain rather than one at the cost of the other and also that they would all lose if the latter happens. It is not necessary that whenever there is a transaction between two, one party gains only by exploiting the other which is short-sighted and unsustainable. Through co-operation, all the stakeholders gain in the long term.
The purpose of forming a cooperative is increasing the bargaining power of against that of the respective clients. So it is inherent to have conflict between to the group. The way out for this is that the members of each group do not greediness. This will lead to end of both the cooperatives.
There is a small conflict of interest between producer co-operatives who tries to ensure maximum returns to producers and consumer co-operatives who tries to reduce the producer’s margin and thus offering the consumer the best deal at the lowest cost. Cooperatives use bargaining power due to the volumes they handle (economies of scale) to satisfy the basic needs of the target population. In a scenario of multiple stakeholders, the ideal way a cooperative should do is to maintain a fine balance between the interests of the seller and the consumer(eg: products from poor farmers sold at a premium to rich consumers)
Producer cooperatives has the main concern of equalising the individual utilities where as the consumer cooperatives have main concern as facilitating the goods at minimum price. This leads to a conflict as the two objectives are differing in terms of the interest of the people to whom they are serving. With help of mutual agreement, basic needs of the people can be secure by their inclusion in market mechanism and excluding the external brokers that eat the maximum share of benefit that the individuals can attain.
Consumer cooperatives work to maximise the benefits of the consumers. These cooperatives work to lessen the price of commodities and also try to make the commodities available at all time. Contrarily, producer's cooperative looks after the interest of the producers, which means maximizing profits and better work conditions.
At somepoint of time their interests clash.
The solution is a mediator which will make both the cooperatives to come together on same platform and negotiate which will bring the interests at par with each other.
The chances of conflict of interest between producers cooperative and consumers cooperative are there due to different objectives. The producer cooperative wants to give maximum benefits to their memebers while the consumer cooperative has to give product to the consumers at optimum price.
The only aim of a co-operative is working for its members` interest. Be it a producer or a consumer co-operative. Also a producer co-operative is will work as a consumer one in one or more aspect like for purchase of raw materials. Hence, I don`t see a conflict in their interests. However, if for achieving the betterment of its members the two have to take different routes, then that is a part of business. the underlying interest( betterment of members) still remains the same.
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