Xinjiang Quanliang Dairy Farmers Cooperatives (Case Example)

Lidan Li writes:

After introducing the reform and open door policy, China has established a market economy. The farm cooperatives have emerged in the developed area of China since 1980, while in the Xinjiang Uyghur Autonomous Region of China, a relatively poor region that people there live relying on keeping dairy cattle, cattle, and sheep, the farm cooperatives have just begun in the late 1990s. I’ll take Quanliang  dairy farmers cooperative in Xinjiang Region as an example.

The Motivation of establishing dairy farmers cooperative

First, the dairy farmers need to solve the difficulty of selling products. Before the Quanliang dairy farmers cooperative established, the dairy farmers individually sold their products to nearby factories. While the factories defaulted on a 0.2 million payment for years. Though dairy farmers in Quanliang village were working hard, they still had little income. Second, the dairy farmers need to solve the capital of purchasing agricultural commodities. As dairy farmers used to buy fodder separately, that they often bought at a high price since they have low bargaining power, sometimes even fodder in poor quality. Furthermore, the dairy farmers need to solve the difficulty of techniques. Dairy farmers were keeping livestock in the primitive way, that was ineffective compared with farm using new techniques. Because of the above problems, dairy farmers were living in a low quality life with low annual income.

The function of dairy farmers cooperative

In order to solve the default payment problem, the village head with 18 dairy cattle farmers established a cooperative to provide service for all members. Members voted to elect the one who owned the most dairy cattle as the director. The first mission of the dairy farmers cooperative is to negotiate with the factory to ask for immediate payment.

The dairy farmers cooperative also solved the capital problem for farmers. The cooperative provides agricultural commodities to farmers. They also provide dairy processing and marketing service, which save a lot for farmers. The cooperative has a better bargaining power than individual farmers, so they provide farmers with high quality fodder at a relatively low price. Cooperative members also establish a marketing department that experienced members are in charge of expanding market, selling, and purchasing. As a cooperative, they registered a trademark and began to establish brand reputation. The cooperative trained all their members with new technique products that improving the effectiveness of feeding cattle and producing dairy products.

Women’s influence in dairy farmers cooperative is prominent. In Quanliang dairy farmers cooperative, the director’s wife is responsible for the management and some other activities. She also innovated other female farmers to take more responsibility in the cooperative.

The current problem of dairy farmers cooperative

In Xinjiang, the cooperatives are slowly developed, due to the small scale cooperatives and limited farmer members. In 2006, the farmers cooperative in Xinjiang influenced about 2.53 million farmers, which is only 10.45% of all farmers in this area. Quanliang dairy farmers cooperative has 440 members, which is the largest cooperative in this area, while some other cooperatives have only about 20 members. Due to the limitation of the local economy, the capital of the cooperative is limited. The starting capital of Quanliang dairy farmers cooperative was less than 0.1 million Chinese Yuan (about $15,000 US dollar). The small-scale cooperatives have very limited influence of the industry.

Members have little participation in the decisions of the cooperative. The board of director has made most decisions. As the board of director is usually the members who invest the most capital and most informed and respected farmers. Their decisions are usually agreed by most members. However, with the development of the cooperative, the lack of democracy and the right to vote would damage the relationship between members.

As the Quanliang dairy farmers cooperative is still in its beginning level, the services it provides is limited. The cooperative’s services are relatively low cost services like providing information and training, low cost techniques equipment. They had only purchased storage equipment of dairy because of the capital limit.

The policy of the cooperative is still incomplete. Except the original 18 farmers were providing the initial equity, there is no requirement of membership fee for new members, which also slow down the development of the cooperative. This is due to Xinjiang is still an economical backward area, most farmers can’t afford the membership fee. The only revenue of the cooperative is the service fee from members who has used the service.

 

References:

1.Yanqin Guo & Xiangzhi Kong, The analysis of some problems of the development of Xinjiang farmers cooperatives, 2009.

2.Ri Zheng & Shanshan Luo, The problem and solution of the development of farmers cooperatives, 2005.

3.Donald A. Frederic, Co-ops 101: An introduction to cooperatives, April 1997.

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One thought on “Xinjiang Quanliang Dairy Farmers Cooperatives (Case Example)

  1. tlhill2012 December 16, 2012 at 5:53 PM Reply

    The capital limitations seems quite severe. Is this an issue of the relative poverty of the farmers, such that they have little to contribute? Or lack of access to other sorts of financing such as government investment of bank loans?

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