Effective Co-operative System towards Twenty first Century - a South Asian Perspective (1997)

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This document has been made available in electronic
Format by the International Co-operative Alliance (ICA)
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Dec., 1997
(Source: Co-op Dialogue, Vol.7, No.3, Sept-Dec.1997,
pp.32-40)

Effective co-operative system towards twenty first century
- a South-Asian perspective by Upali Herath*
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Current Economic Environment in Asian Countries
-------------------------------------------------------------
The current situation of co-operatives has to be evaluated in the
context of current socio-economic environment in order to find
causes and effects and also to determine the future role.

Economic Environment
-----------------------------
Asian continent began its journey towards current development stage
after the Second World War. Different countries took different paths-
some were highly dominated by capitalist macro economic policies
and some took socialist and inward looking policies aiming at self-
reliance. There were three economic philosophies adopted in Asia:
capitalistic, socialistic, and mixed. 

Although Japan adopted protectionist approaches at the beginning
towards domestic industries, the overall macro economic policies
encouraged overseas investments and approaching global markets in
all economic spheres. East Asian countries followed suit later, and
adopted outward looking production and market strategies. Foreign
direct investments have been encouraged and the so-called Asian
tigers were able to attract new technology and heavy industries as well
as a agro-  processing industries. East Asian economies were able to increase their share of world exports from 8% in 1965 to 20% in 1994. 

In contradiction, South Asian countries adopted trade policies to
export primary products and import substitution through domestic
industries. Primary commodity prices have been unstable, thus
hindering the stability of these economies. East Asian markets were
more open than South Asia, which were closed. East Asia not only
traded with each other, but also looked for intra-regional trade, which
brought in competitiveness and quality in their products. The ASEAN
organisation, which came in to existence, facilitated the process. South
Asian countries have not been able to even co-operate with each other. 

These trends were further supported by structural reforms in Japan,
South Korea and Taiwan after the Second World War. Land reforms
were carried out like a military operation giving lands to tenants and
putting land ceilings. This was combined with credit reforms, ensuring
small farmer and entrepreneurs their credit needs. These developments
had immediate impact on the agricultural co-operatives and till today,
agricultural co-operatives enjoy monopolies of production.

On the other hand, South Asian economies carried on with the feudal
or semi feudal structures ensuring the traditional absentee landlordism.
Sri Lanka at least had taken bold steps to have land ceilings, but other
countries still remain the same. In such a situation, agricultural
co-operative would not have the potential to grow as one could desire.

A study (1997) conducted by The Human Development Centre in
Pakistan has revealed following facts on the development situation
in South Asia.

- The per capita GNP of South Asia ($309 in 1993) is lower than
any other region in the world. 500 million people live below
poverty line while South Asia has 22% of the world's population.
Nearly 40% poor in the world live in South Asia.

- The adult literacy rate of 48% in South Asia is the lowest in
the world.

- South Asia has increased the military expenditure by 1.6%
every year whereas rich nations reduced the expenditure by 24%.

- East Asia has maintained good governance wherein the state,
business, bureaucracy and civil society have had a nexus and
accountability while maintaining rule of law. South Asia is still
looking for the essential elements of good governance.

Debt trap is another problem of Asian developing countries. Total
long-term debt as a percentage of 64.7% of the GNP in Sri Lanka in
1987 is the highest followed by Bangladesh at 50.6%. Debt servicing
as well as the pressures from monitory organisations has been difficult
for Sri Lanka and Bangladesh for a long period. 

Labour migration to affluent countries as well as traditional commercial
crops have helped these countries to maintain at least minimum level of
foreign exchange balances. However, the social cost of labour migration
has been heavy.

Deficits in balance of trade have been a constant problem faced by South
Asian countries. Their market share in the global trade has been a
negligible 1%. They could not gain any competitiveness. Co-operative
trade has been negligible and confined only to agricultural products
mainly. With the slow economic growth and the transitional issues, the
developing countries in Asia, especially South Asia would have same
problems with the co-operatives in the area of structural adjustments to
the new situations.

On the other hand, they would have opportunities to re engineer their
corporate systems from distribution orientation to market orientation if
they were able to use the present strength under the protected business. 

Social Environment
-------------------------
Social development is means and end of a co-operative society in the
community terms. Therefore, social indicators influence the functioning
of a co-operative.

A co-operative basically depends on the empowered membership and
self-reliance for its survival. Therefore social development levels have
a relationship to the success and failure of a co-operative organisation. 
Success of co-operatives in Japan, Korea, and Singapore are clear
examples. 

Adult literacy rate in South Asia is the lowest in the world, but Sri Lanka
has the highest in South Asia. Its 90% literacy is comparable to developed
countries. Health facilities are available to 93% of the population.
However Sri Lanka has higher rate of deaths  (one half of under five year
deaths) due to malnutrition. The annual birth rate has declined to 1.5%
while other country record a higher rate. 

The Asian countries are still committed to maintain a stable food
security systems irrespective of their developmental level. Japan as well
as Bangladesh in two extremes maintain subsidies, and stockpiling of
food grains as well as regulating market prices for locally produced
essential food products. 

Co-operatives in all countries play a very important role in this activity.
Even with the WTO agreements and related compulsions, so far the Asian
countries have been able to maintain basic needs to the communities. 

With a growing pressure on the international monitory institutions and the
WTO itself, some arrangements acceptable to developing countries could
emerge in the future.

Ethnic conflicts in South Asia have taken a heavy toll on human lives as
well as economic growth. Relatively, military expenditure has increased in
many South Asian countries. 

After the UN Summit on Social Development, the trend to forge alliances
between the governments and the people's organisations would benefit
co-operatives to maintain their social agenda. 

With the adoption of the Principle of Concern for Community, the
co-operatives would need to create balance between the economic
activities and the social agenda. Co-operatives in the social sector such
as health, better living and energy are growing fast at present. 

The recently established Asia Pacific Health Co-operative Organisation
could take a lead in many health care fields. Co-operative youth
organisations are another new phenomenon.

Relevance of Multi purpose Co-operatives (MPCSs) in the
Current Situation.
----------------------------------------------------------------------
Concept of Multi purpose Co-operatives (MPCSs):

Sri Lanka had a single purpose co-operative system with parallel
and vertically federated movement until 1956, when the multi-
purpose co-operative system came into existence. This has a
different development than other countries due to economic and
political reasons. Japan started with single purpose co-operatives,
which had undergone changes in the agricultural co-operative sector
after the 2nd world war. Agricultural co-operatives started merging
and many other services have been added. They have now become
multi-service co-operatives. Sanasa co-operatives in Sri Lanka are
also trying taking the same path, by offering consumer and marketing
services. 

However, there is a basic distinction between a multi service co-operative
and a multipurpose co-operative. Multi-service co-operatives maintain
a single, major purpose of organising a co-operative such as credit,
agriculture or housing, while undertaking related and subsidiary services
to the members as decided by them. These co-operatives still stick to the
basics. 

Multi-purpose co-operatives, on the other hand, are formed to meet
several purposes of equal importance to the members.  Multipurpose
co-operatives as operate in Sri Lanka are formed to meet several
economic and social purposes of members. They provide credit,
agricultural inputs, consumer services etc. having the same importance.
Few co-operatives in India function in the similar lines.

Multi purpose co-operatives have a great relevance to the poor
communities that do not have a higher purchasing power, so those
co-operatives can become viable. Although the 1956 experiment was
based on socialist ideals, the co-operatives could become more viable
than earlier single purpose co-operatives. Royal Commission on
Co-operatives in Sri Lanka in Sixties too considered the viability
factor and suggested further amalgamation. 

These co-operatives in the present context have relevance due to
two reasons:

Firstly, the rural communities could manage their lives better with
integrated and interrelated service system e.g. providing consumer
credit during non-cultivating periods.

Secondly, the bigger co-operatives with larger volume of business
could sustain themselves in a poorer communities. The cost of
operations would become lower in the context of fixed salary
structures for co-operative employees.

Current Thinking of Co-operativism and Multi-purpose co-operatives
-----------------------------------------------------------------------------------
 Co-operative thought and the approaches have undergone tremendous
change during last ten years. When the debate on the identity of
co-operatives and the values has started in 1988, the structures and
the operations of many co-operatives have come to a crisis situation.
Corporatisation of co-operatives have already started in Australia, UK,
USA and Scandinavian countries. The giant co-operatives have already
started declining. In that context, the user owned and user-controlled
co-operatives have become the key word for judging the character of a
co-operative. 

In the mean time, the alarming development has been the adoption of
co-operative strategies to attract the members by the private sector
companies. Multi-nationals such as Makro have started organising
exclusive members clubs and offering over the counter discounts to
regular customers. Than Ho Sen store chain in Thailand has gone
further and started offering vocational training and welfare services to
the identified customers.

Since the adoption of new Co-operative Identity Statement and seven
Co-operative Principles, the size and the functions of co-operatives
have been subjected to further scrutiny. The co-operative movements
in developed countries have still faced the dichotomy of facing growing
competition from the private sector companies for which they had to
have a sound financial base and market strength to face and sustain
competitiveness, while they also had to adhere to the new culture of
co-operatives as expected from the new identity.

The mergers have not yet stopped. Japanese agricultural co-operatives
as well as consumer co-operatives are still undergoing voluntary mergers.
The Co-operative Wholesale Society and The Co-operative Retail Society
in UK have merged half way. Therefore the reinventing co-operatives to
have a new identity in the present context is a complicated exercise for
co-operatives. The multi purpose concept of co-operatives hold validity
due to many reasons:

For the first time, the ICA identity statement defines a co-operative
officially. The definition allows co-operatives to meet common economic,
social and cultural needs and aspirations of the persons associated with the
co-operative.

The multi purpose co-operative would provide opportunity to accumulate
and utilise collective and individual resources by members to meet the
competition from the market.

The same membership could own and use different economic activities
depending on their own interests under one organisation.

The rational use of resources by one organisation would minimise the
cost of operations. 

The possible strategic business alliances between producers and
consumers under one organisation would bring more economic
benefits to both. Competitiveness in prices is a key word for success
in the current market.

Raising capital will be better arranged through an integrated system
of credit, production and marketing in one co-operative. 

However, the multi purpose concept has to be firstly conceived by
the members as an approach for their progress, rather than retaining
a structure created for a different purpose. The forced amalgamation
of small co-operatives in Sri Lanka in 1972 has aimed at using
co-operative as a agent for village level development encompassing
all economic and social activities. The central economic planning
was based on the area of operation of large primary co-operatives
named as multi purpose co-operative. Essentially, the members
themselves have to decide on the form of organisation that they would
like to establish for their own benefit. However, the multi purpose
co-operatives in Sri Lanka are still saddled with the legacy during
distribution oriented closed economy of nineteen seventies.

Another dimension is the pursuance of multiple objectives has the test
of democratic management, social responsibility and the economic
efficiency. Reconciling all these factors is not that easy.

Factors Affecting the Multi Purpose Co-operatives
-------------------------------------------------------------
External Factors
-------------------
Politicisation:
Politicisation of co-operatives exists in Asia in many countries in
different degrees. Agricultural multi purpose co-operatives in Japan
have been identified with the conservative parties such as LDP. NTUC
sponsored co-operatives in Singapore are identified with the government.
This interface with the political system has no specific ground rules other
than the ideal alignment should be through safeguarding the interests of
the co-operative and without compromising on the values the co-operative
believes in.

The degree of politicisation in co-operatives has a pendulum of ideology
of co-operatives and political systems to the criminalisation of politics
in relation to co-operatives. Philippine co-operatives use the concept of
"critical collaboration" with government and the Japanese consumer
co-operatives tend to contest in at least in the local government elections
to win their demands. UK has a visible co-operative party affiliated to
labour party. 

Many countries are now trying to disengage co-operatives from the
extended arm of political system through government machinery. This
has had a slow progress in South Asia due to the close links the
co-operatives have with the food security and the rural economic
development policies.

Level Playing Field:
It is expected that the free market economy would provide equal
opportunities for all entrepreneurs to compete ideally. However,
during the period of economic transition, specially influenced by
the international financing agencies, the experience of the developing
countries has been that external pressures dictate the transition more
than the domestic compulsions. 

It is also expected that sufficient measures by the government have to
be taken to offset the imbalances created when the past social security
systems and the protected economic enterprises are dismantled. 

The governments are unable to disengage themselves from the
co-operatives in developing countries in South Asia still, which has
restricted the co-operatives in making their own critical decisions in
regard to the form of enterprise they would like to have and the culture
they would like to maintain. Although legal provisions have been made
to eliminate the obstacles of the small entrepreneurs, the co-operatives
do not enjoy the facility. 

Using co-operatives as vehicle of maintaining food security system and
as an agent of carrying out poverty alleviation programmes have made
co-operative impotent to take their own path.

The dependence on the distribution system has not only has become
a sickness, but also a reasonable ground for political interference. Low
margins they receive are not in keeping with the private sector in regard
to return on investment.

Structurally, level playing field is created by legislation affecting different
forms of enterprise and their ownership. Some of these legislations may
be discriminatory in order to safeguard the micro enterprises such as
co-operatives in the presence of multinationals and large domestic
enterprises which is justifiable to the extent that these micro enterprises
are owned by economically backward and socially deprived sections of
the community. Therefore retaining the earlier preferences given to
co-operatives can still be justified. 

Regulation of consumption patterns to make them sustainable is an
agenda, which has been endorsed by the governments during social
summit and earth summit. Therefore it is necessary to regulate the market
aggression and the unethical advertising by the private consumer industry,
so that it can pave way to reduce the wasteful consumption from the lower
level of economic groups and encourage saving and economy habits.
Major income of the multi purpose co-operatives comes from the rural
banking system.  Consumer protection laws are always co-operative
friendly, as the co-operatives in actual sense adhere to ethical practices. 

Dark Side of the Market:
The multi purpose co-operatives have been engaged as distribution
agencies for public distribution system and the poverty alleviation
programmes by the governments throughout. They had no options,
other than depending on the margins given and the protection provided
by the government. Due to the rigid nature of documentation and the
scarcity of essential commodities there was no room for any other
incentives, commissions, gifts etc. as practised by the open market
systems. 

Liberalised economies ideally should become more efficient and
accountable to the general public, but the experiences have shown
otherwise. World Bank report of 1992 on governance and development
admits that the corruption in these countries is prevalent and considered
as complex and varied. In East Asian economies except Singapore, the
corruption is an intrinsic factor. Transitional economies of former socialist
countries have experienced worst situations. Large number of assets
belonging to the former collectives and co-operatives in Vietnam has
been sold to private individuals and companies with huge commissions
accrued by the officials and leaders. 

Black economy is currently visible in many developing countries,
especially in the case of India. It has also been found that corruption
is rampant in the countries where the judicial systems are not well
developed or does not enjoy autonomy.

Corruption has been described as "behaviour which deviates from the
formal rules of conduct governing the actions of some one in a position
of public authority because of private rewarding motives such as wealth,
power or status" (Nye JS-1967: American Political Science Review Vol.
LXI No.2 "Corruption and political development: a cost benefit analysis")
However, the long-standing free market economies, which have a tradition
of freed markets with open competition posses in built people's
mechanisms to combat corruption. India has attempted to practice public
interest litigation mechanisms through judiciary, which has brought some
far-reaching results. 

Corruption in the corporate culture has been used to achieve dominance
in the markets and eventually to get hold of the political system for
company's benefit. Better governance and in built mechanisms in the
civil society only would eliminate such domination. 

Cost of corruption has taken tremendous toll in co-operatives. Recently
two large consumer co-operatives in Japan virtually collapsed due to bad
investment in overseas real estate. Several agricultural co-operatives too
had several scandals involving huge sums of money. Some large national
co-operative federations, which had huge profits in the past in India, have
started accumulating losses due to corrupt buying and selling practices by
the leaders and some managers. Few co-operative banks in Maharastra
have collapsed due to bad investments forced by politicians. This
phenomenon has become a major cause of collapse of co-operatives more
than the market competition, especially in the case of newly liberalised
economies. 

The corruption in the market place has negatively influenced large primary
co-operatives in different ways:

-	Unwise and unplanned investments in fixed assets and real estate
	projects;

-	Nepotism through which excess and inefficient manpower is being
	brought;

-	Bad purchase and selling practices which involve commissions;

-	Patronage of political parties through co-operative finances;

- Misuse of co-operative resources for personal and other purposes
	which are unrelated to co-operatives

- Wrong decisions made for the benefit of private parties and
	detrimental to the health of co-operatives;

-	Wilful pay off from co-operative funds to bureaucracy and
	political system for personal benefits.

The co-operatives, as enterprises within a given economic system will
be able to function ethically where there is openness and transparency
in the market. In order to eliminate its own corruption, corporate
governance and democracy would play a major role. When the members
could have an active role in business decision making as in the case of
consumer co-operatives in Japan, corruption can be arrested to a greater
extent.

Internal Factors
-------------------
Corporate structure:
The structure of co-operatives in many developing countries in Asia
including Sri Lanka follows the traditional hierarchical structure for
carrying out their functions. This pyramidal structure has several layers
of management, which results in heavy cost to maintain. A recent study
conducted on some large dairy co-operatives in Gujarat, India has found
that they are unable to increase the price for milk to the farmers due to
heavy overhead costs. The result is the gradual loss of market share to
private vendors. The very purpose of organising dairy co-operatives to
give a better price to the producer has been lost. 

The modern business organisations have started looking towards a more
flattened and net work form of organisation, which is more cost-effective
and efficient in functioning. Some of the features are:

-	Down sizing the organisation into more closely-knit net work
	of independent function based groups. These business units take
	the total responsibility for profitability and the efficiency of the
	unit. This is based on former profit centre concept. The only link
	they would have is the common vision and the corporate plan.
	Swedish Co-operatives started practising this approach way back
	in Nineteen Seventies. The multi purpose Co-operatives having
	several business units could easily introduce the concept.

-	Task orientation in smaller groups. Groups could again break up
	on the basis of different focuses.

-	As a market scale business unit, the small group becomes
	accountable more than before and undertakes teamwork for group
	responsibility.

-	The players in the team would become more career oriented and
	independent in functioning. Partnership for work sharing is
	decided mutually.

-	Developing value added skills would bring more competitiveness.
	The organisational change in the corporate systems has become
	much faster, and the change is a result from the awareness of the
	environmental change. Therefore, the modern organisations have
	become learning organisations. 

Productivity:
Productivity has become a key word in the modern enterprise system in
order to be in competition in the market. Resource productivity is being
measured for re engineering the processes. More productivity from fewer
resources is the prime indicator, which has been used. Productivity
involves labour in the service industry such as in multi purpose
co-operatives or consumer co-operatives. The co-operatives in many
countries have ignored the relationship between worker and the
productivity of the orgnization. 

However, the bottom line is the involvement of workers to reach out
the targets of productivity through training and exploring creativity if
such incentive scheme is to work.

Management Culture:
Management culture of the modern enterprise system has changed
from management to shared leadership. Creation of visions and sharing
it with the work tem and the attempt to realise it has become the
foundation now. 

In contradiction, the management thinking and the culture that exist
in many co-operatives today in developing countries has been adopted
from old enterprise system. Professional managers have adopted the
same theories and principles as well as strategies. In this situation it
easily replaces the member with the customer.

The new co-operative identity statement provides a specific value
system for management of co-operatives. It also provides boundaries
of functioning with the mention of social, economic and cultural
purposes. This criterion flows through the performance of co-operative
organisations as perceived by the members as common needs for them
create the niche market for Co-operatives in a free market economy.
Japanese consumer co-operatives have been practising a unique
management system, which involved members for business decision
making and unanimity in the consciousness in the market environment.
Therefore, they were able to gain a substantial market share in spite of
severe competition from the private sector. The co-operatives in the
emerging market economies would need top managers who consider them
as having a different management culture than the private enterprise
system. The consumer co-operatives declined in numbers as well as
the market share with the loss of such an identity. 

Corporate Governance:
Corporate governance has become vital for the survival of co-operatives
due to the fact that they have become weak and alienated from the user
owners. Large primary co-operatives hitherto functioned as any other
enterprise system with passive shareholders. Stake holders participation
in decision making has become marginal.

A strong factor that hindered an effective governance system is the
involvement of the government in co-operative business. In the case
of India, the government participates as a shareholder too. The other
factors, which obstructed a proper governance system, are:

-	Large membership of the primary co-operative
-	Centralised decision-making process, without delegating to the 	branches.
-	Poor functioning or the absence of functional committees
-	Domination by professional managers in decision making while 	the leadership lacking management competence
- External influence on policy making as in the case of MP of
	the area
-	Absence of intermediary democratic mechanisms such as 	consultative committees or reference groups.
-	Archaic legal provisions barring the management committees and 	general body to make their own decisions without referring to
	the Registrar. 

However, even within the present legal framework, the democratic
control over the affairs of the co-operative is possible. Some successful
attempts have already been made by MPCS in Sri Lanka in this regard.
The devolution of powers of decision making to the branch committee
has shown tremendous potential. Strengthening of a proper
representational system such as Han group system in Japan could bring
more results to co-operatives.

The corporate governance as a total system involves other levels as
well. Secondary and tertiary organisations should be directed by
the owners - primary co-operatives to serve their own needs. At present
in many developing countries in Asia, these federated Co-operatives
either compete with their own members or engage in other businesses,
which are not meeting the needs of their members.

Member Participation:
The primacy of the member in a co-operative is a known factor, but
the actual practice varies from passive participation in the business
affairs to the inactive member ship.  In a successful co-operative
organisation, the members participate in:

*	Capital formation,
*	Creating visions for the organisation,
*	Deciding on the values and ethics of the organisation,
*	Deciding on the nature and the volume of business,
*	Actual business in the co-operative,
*	Taking decisions on the disposal of surpluses of the co-operative.

These functions separate the co-operative from a private enterprise.
Members' role in co-operatives in the future has to change if the
co-operatives are to survive in the open market. 

Within the given framework of limited margins, democratic decision
making process, the labour over capital theory of co-operatives, and
the discouraging policy on accumulation of capital etc. would not allow
co-operative to openly compete with a strong private sector, but would
have its own market share with the members. It is a niche market that a
co-operative has to look for. 

Towards 21st century
--------------------------
Co-operative Identity:
The new co-operative identity statement and specially the seventh
principle- concerns for community would drastically change the
behaviour of co-operatives. In some form, although the seventh
principle has approved the social agenda of current co-operatives,
there will be sustainable development issues such as environment that
are to function as checklist for all activities. 

Therefore one could called it a re-inventing process for co-operatives.
The co-ops should then be more responsive and accountable to the
membership and also display a greater concern for the survival issues
of the human race and the earth such as environment. 

Another factor arising out of the new identity statement is the social
agenda for co-operatives. They should engage in developing human
capital through such services as health care, care for the aged and dead,
literacy etc. Provision of basic human needs would take a prominent
position in co-operatives. 

Which type of Co-operatives?:
The emerging free market environment will provide the basic criteria
for the role of future co-operatives. As an example, if Sri Lanka
government would engage in corporatisation of agriculture by
creating water markets, privatising agricultural extension services,
totally withdrawing subsidies and encouraging commercial crops at
a disadvantage to food security, the co-operatives scattered in the
rural areas would have a vital role to play in helping the farmers
majority of whom live below the poverty line. Therefore, economic
policies of the government are the determinant factor. 

Likewise, if the health care were also withdrawn creating a threat to
the public health, the MPCSS would need to engage in social and
service enterprises more than at present.

However, the viability of a large multi purpose co-operative is still
cannot be questioned. On the other hand, small village level credit
co-operatives are unable to compete with the commercial banking
system without the support of the MPCS based rural banking system. 

Therefore, the situation may develop to such an extent that isolation
would lead to decline in the market. Co-operation among co-operatives
may have to become the Manthra for co-operatives for their survival.

The micro-financing projects supported by the World Bank through
commercial banking system in India has already entered into financing
self-help groups.

The type of co-operative that would survive can be described as:
having fewer layers of organisational structure, more autonomous
and decentralised units, oriented towards producing high value added
goods and services, creating niche markets, quality conscious, more
responsive to members, innovative and user of highly trained and
flexible staff.

Disengaging Governmental Control:
The involvement of government in co-operative affairs would stop
automatically, when the public distribution system has been withdrawn
and when different mechanisms for poverty alleviation programmes have
been found. However, this is not yet to happen as the structural
adjustment programme after economic liberalisation process has not
brought expected positive results.

The only possibility would be a different partnership on equal terms
through which the co-operatives would have say in determining ground
rules of the agreement with government to carry out such schemes. 

Many governments in the Region have changed their legislation's
to liberalize co-operatives, Philippine being the most progressive
legislation. Still the registrars are used to issue directions some of
them can be considered as ultra virus. This legislation has to come to
the equal standing with the company legislation so that co-operatives
too could enjoy the same status as private enterprises. 

Andhra Pradesh State Government in India has adopted dual legislation
to meet the reality - one for the co-operatives, which have not obtained
any government assistance and the old one for the co-operatives, which
have got government funding. Accordingly, Registrars functions too are
changed. 

Social and Economic Justice:
The subject falls into enterprise issues as well as value based issues.
The future co-operatives will be compelled to play a more proactive
role in balancing the imbalances created by the free market economies
by serving the poorer sections of the community.

Misfired calculation of positive results of the open market has seen in
many emerging problems:

-	The unemployment has increased in spite of foreign investments 	and encouragement given to private sector
-	The unskilled labour has got marginalised and displaced
-	The living conditions of the lower 20% of the community have 	gone down further.
-	Health factors such as nutritional conditions are declining
-	Food security for the people below poverty line has been 	threatened
-	Environmental degradation has become alarming  and threatening 	the ecological balance
-	Feminisation of poverty has grown to bigger proportions

Therefore, co-operatives in the future would have to live up to the
principle of concern for community by responding to the community
needs. Safeguarding the micro enterprises and providing services to
these enterprises would strengthen the position of Co-operatives
among the masses. 

Strategic Alliances:
One of the most neglected co-operative business strategies in
developing countries is strategic alliance with other partners.
On the contrary they have ventured into competitive business
with their own constituents. MNCs and TNCs have used this
strategy to strengthen their position in the market. Joint ventures
and partnership enterprises have been used for domination over
the economies. 

The strategies alliances as a strategy has had certain limitations in
the past, but with the new set of principles, the alliances even with
the private sector is become a reality. The partnerships can be forged
in different ways:

-	between producer and consumer co-operatives;
-	between consumer co-operatives and individual producers;
-	Between the co-operative and the manufacturer;
-	Joint buying practices;
-	Joint ventures.

The underlying principle for business alliance would be the member's
service with the values believed by co-operatives.

In Conclusion
------------------
Entrance to the 21st Century with a more open economic environment
would provide large primary co-operatives such as Multi purpose
co-operatives in Sri Lanka more potential for growth and diversification.
With the increasing gap between the poor and the rich would make
co-operatives all the more relevant.

In preparation to the forthcoming millennium, the co-operatives need to
rethink about their present corporate visions, structures and the strategies. 

Repositioning in the market system may be a difficult task for them,
unless they become proactive in their approaches to emerging
entrepreneurial activities. With the gradual withdrawal of government
from co-operatives, the ailing ones would die and the strong would
survive. However, this would set environment for new form of
co-operatives to emerge with a new leadership.  The traditional
leadership would have to change to the changing market environment
to steer their co-operatives or to withdraw from co-operatives
allowing them to survive. 

Eventually, co-operatives continue to remain as the live wire of
poorer section of the deprived community.