Minutes: 29th Meeting (June, 1996)


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           MINUTES OF THE ICA COMMITTEE ON AGRICULTURE 
                    FOR ASIA AND THE PACIFIC
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                   Petaling Jaya, Malaysia
                        12 June 1996

The 29th Meeting of the ICA Committee on Agriculture for Asia and
the Pacific was held in the premises of the Cooperative College
of Malaysia, Petaling Jaya, on 12th June 1996.  17 members from
eight countries attended the meeting.

The meeting was presided over by Dr. Virendra Kumar, Vice
Chairman of the Committee, in the absence of Mr. Nai Soo Lee who
was unable to attend the meeting.

The following persons attended the meeting :

1.    Mr. Yang Deshou, Member for China
2.    Mr. Li Baorong, Member for China
3.    Mr. Rong Jun, Additional Member for China
4.    Dr. Virendra Kumar, Member for India
5.    Mr. Hiroshi Nishido, Member for Japan
6.    Mr. Churll-Hee Won, Member for Korea
7.    Mr. Shil-Kwan Lee, Member for Korea
8.    Mr. Won-Ho Suh, Additional Member for Korea
9.    Mr. Sung-Woo Nam, Member for Korea
10.   Ms. Meriam Abu Bakar, Member for Malaysia
11.   Mr. Filomeno A Bautista, Member for the Philippines
12.   Mr. R.Y. Jacutin, Member for the Philippines
13.   Mr. Lionel Samarasinghe, Member for Sri Lanka
14.   Mr. H.S. Kariyawasan, Member for Sri Lanka
15.   Mr. Hoang Minh Thang, Member for Vietnam
16.   Mr. Vu Luu, Member for Vietnam
17.   Ms. Phung Nghia Ha, Additional Member for Vietnam.


ICA ROAP

18.   Mr. G.K. Sharma, Regional Director
19.   Mr. Malte Jonsson, Senior Development Advisor
20.   Dr. Daman Prakash, Project Director
21.   Mr. Guo Yong Kang, Agricultural Cooperative Development
      Advisor and Secretary of the Committee



Agenda Item No.01:     Welcome by the Host Organisation

Haji Mahmud Yusof, General Manager of ANGKASA, extended a warm
and cordial welcome to the members on behalf of the Cooperative
Movement of Malaysia.  He informed the meeting that ANGKASA has
already nominated a member for this Committee from this year
onwards.

A paper on "Food Security and Family Farming" which is one of the
vital issues currently facing human kind was presented by Mr.
Churll-Hee Won, Vice-Chairman of ICA Agricultural Committee and
Chairman and President of National Agricultural Cooperative
Federation (NACF) of Korea.  The points mentioned in his paper
were Outlook on the World Food Security; Impact of Launch of the
WTO and Expansion of Trade Liberalisation on Agriculture;
Expansion of Free Trade and Korean Agriculture; and The Role of
Agricultural Cooperative in Achieving the Global Food Security. 


The members agreed to the points mentioned by Mr. Won in his
paper and suggested that these can be taken as a base for
discussion on the Agenda Item No.7 on World Food Summit.

Mr. G.K. Sharma, ICA Regional Director for Asia and the Pacific,
welcomed all members of the Committee on behalf of ICA.  He also
extended his sincere thanks to ANGKASA and the Cooperative
College of Malaysia for making all arrangements for the meeting. 
He said that more than 60% of the membership was from agriculture
and most of them were small farmers.  He also said that this
Committee is the oldest Committee of the ICA Regional Office and
four strong countries (China, India, Japan and Korea) were very
active members of this Committee.  Hence this Committee can be
useful to bring all the agricultural cooperatives together.


Agenda Item No.02:     Confirmation of the Minutes of the 28th
                       Meeting held in Seoul on 29-31 August.

The minutes of the 28th meeting held in Seoul (Republic of Korea)
on 29-31 August 1995 were circulated among the members.  No
comments have been received.  The minutes were confirmed.


Agenda Item No.03:     Report on Activities carried out since last
                       Meeting.

The Secretary of the Committee, Mr. Guo Yong Kang, made a brief
presentation about the activities carried out the Agricultural
Project since last meeting in Seoul.  Dr. Daman Prakash made a
presentation on the 10th ICA-Japan Training Course on
Strengthening Management of Agricultural Cooperatives.  He also
informed the meeting that the MAFF has extended this course for
the next year also.

Agenda Item No.04:     4-Year Development Programme of ICA ROAP
                       (January 1997 - December 2000).

Mr. Malte Jonsson, Senior Development Advisor, initiated the
discussion on the 4-Year Regional Development Plan (1997-2000)
of ICA ROAP.  He informed the meeting that earlier we used to
have 3-Year Development Plan and the financial year used to be
July to June.  From 1st January 1997 onwards the financial year
will be calendar year.  He also informed the meeting that
immediately after the Regional Assembly meeting there will be a
Planning Meeting with different donors on 16th and 17th June to
finalise the work plan and budget of ICA ROAP projects.

The Secretary of the Committee, Mr. Guo Yong Kang, outlined the
objectives of the Agricultural Cooperative Development and
requested the participants to give some concrete suggestions so
that they can be incorporated in the 4-Year Development Plan.  

Dr. V. Kumar from India suggested that the ICA ROAP should
support the creation of model joint venture cooperatives on the
basis of the experience of successful cooperatives and thus unite
the cooperative movements through its members and act as the
spokesman on behalf of the cooperatives in the region at
different levels.  He mentioned IFFCO as an example which was
established in 1960 with the efforts of CLUSA.


Agenda Item No.05:     Country Papers : Recent Trends and
                       Developments in the field of Agriculture.

The country papers on Recent Trends and Developments in the field
of Agriculture were presented by the members.


India
-----
      In India, agriculture contributes about 28% to the GDP; and
      about two-third population depends on this sector for their
      livelihood.  The average size of holding is now around 1.5
      hectare.  Approximately 78% of the farm holdings belong to
      small and marginal farmers.

-     The strategy for cooperative development has been to
      provide comprehensive services for strengthening of
      agricultural economy in the country by meeting the needs of
      farmers from production to marketing.

-     The diversified activities undertaken by cooperatives
      include credit, banking, input distribution, production and
      marketing of chemical fertilisers, agro-processing, storage
      and warehousing and mild production, oil processing, cotton
      processing, sugar procession, fish production, etc.

-     The new economic policy of reforms and liberalisation that
      has been introduced in the recent past is against any
      special support to any sector.  The new economic policy
      does not even mention the name of the cooperative
      structure, which has taken deep roots in many areas and has
      been playing significant role in the country.

-     The thrust is being given to the efficiency and
      productivity by generating profits out of investment. 
      Those enterprises which will produce at a minimum cost,
      will survive since they would make profits at the prevalent
      market price.  The cooperatives, therefore, have to fall in
      line with the logic of the competitive economy.

-     Over the years, agricultural cooperative movement has
      expended tremendously and diversified its operations with
      a view to provide large spectrum of services.

-     The cooperative movement in India started as a credit
      movement.  The three-tier cooperative credit structure is
      made up of about 90,000 primary agricultural credit
      societies functions at the village level with a membership
      of about 108.4 million farmers.  There are 28 State Coop
      Banks functioning at the state level with their net work of
      about 700 branches and 352 district level central coop
      banks and their branches.

-     There are 280 sugar factories in cooperative sector, 548
      cooperative spinning mills, 150 oil processing societies. 
      About 60% of sugar, 50% of oil and 11% of textile is
      contributed by the cooperative sector.          

-     The IFFCO and KRIBHCO have performed very efficiently
      during the past 25 years in manufacturing and sale of
      fertilisers.  Today, IFFCO and KRIBHCO taken together have
      a total capacity of 1.532 million tonnes of N and 0.31
      million tonnes of P20 5.

-     In India, marketing cooperatives have emerged as the
      institutions dedicated to work for the benefit of farmers
      and ensuring them remunerative prices for their
      agricultural produce.

-     The major allied activities under which cooperatives are
      involved are dairy, poultry, aqua-culture, pisciculture,
      bee-culture, minor forest produce, horticulture and social
      forestry.

-     To meet the growing demand of fertilisers, IFFCO has taken
      up the expansions of its existing plans, setting up of new
      grass root urea plants inside the country and also to
      participate in join venture outside the country in
      nitrogenous and phosphatic fertilisers.

-     The volume of fertilisers marketed by coops is about 10
      million tonnes.  As a matter of policy, IFFCO and KRIBHCO
      channelises its fertilisers to cooperatives only.

-     Better economic return can be achieved further by
      increasing farm productivity by providing various
      production and extension services and inputs in a cost
      effective and efficient way.

-     The role of agricultural coops is vital for sustainable
      development in the wake of India reaching a degree of
      scarcity in non-renewable land and water endowments.

-     The coops can thrive best in a liberalised environment as
      they neither disturb the existing system nor affect the
      interest of anybody.  Liberalisation of economy policies of
      India and its consequential effect on coops in the emerging
      scenario should, therefore, not be treated as a threat for
      survival and efficacy of coop but as an incumbent action on
      the part of the State and the law to redeem cooperatives of
      its interference and control.


Japan
-----
      The primary agricultural cooperatives (JAs) are
      multipurpose cooperatives that conduct a variety of
      activities.

-     The main activities of JAs are marketing, purchasing,
      credit, mutual insurance, farm guidance and better living
      guidance.  
-     The primary level agricultural cooperatives numbered 12,000
      in 1960, reduced by amalgamation to some 3,000 in 1995.

-     Shift from three-tier to two-tier system through
      realisation of integrated federations.

-     Japanese agricultural cooperative movement are now at a
      turning point which has never been experienced before in
      the history of agricultural cooperative movement in Japan.


Korea (NACF)
-----------
-     The characteristics of Korean agriculture are small size
      farms and dominance of rice cultivation.  Approximately 60%
      of Korean farms are less than 1 hectare.  A serious problem
      is that the farm labour force is deteriorating both in
      terms of quantity and quality, as is reflected by the fact
      that farm labourers over 60 years old increase from 7.8% in
      1970 to 31% in 1995.

-     In late 1991 the government announced a US$ 55 billion ten-
      year plan "Agriculture and Fisheries Restructuring Plan" to
      improve efficiency in agriculture and rural living
      conditions.

-     In 1996 the Ministry of Agriculture, Forestry and Fisheries
      has set the first policy goal at securing stable supply of
      rice, because of the continuing reduction in rice
      production caused mainly by the decrease in the rice
      planted area.  In rent years, many of the rice paddies have
      been converted to other industrial areas due to the
      increased demand for land and high profitability.

-     In 1995 the NACF and its member cooperatives devoted most
      of their efforts to improving the competitiveness of Korean
      agriculture and to the most efficient supply of credits to
      their member farmers.

-     In the midst of growing competition both at home and
      abroad, cooperatives successfully managed to expand overall
      business turnovers during the year.  Total cooperative
      marketing of farm products reached 7.2 trillion Korean Won,
      accounting for 36% of total domestic agricultural
      marketing.

-     Despite the government policies toward banking
      liberalisation and interest-rate deregulation, total
      deposits with the NACF exceeded 26 trillion won in early
      1996, making it the 2nd largest deposit bank in Korea.

-     At the end of 1995 the consolidated balance sheet total
      rose to 48,966 billion won, which was 10,908 biliion won or
      28.7% higher over the previous year.  Total liabilities
      rose from 37,018 billion won to 47,887 billion won, up
      29.4% over the previous year.

-     At the end of 1995 the capital of its member cooperatives
      amounted to 66 billion won, the reserves and surplus
      accumulated to 994 billion won.  The undivided profit was
      shown 19 billion won.

-     As the Cooperative Law revised at the end of 1994, became
      effective on 23rd June 1995, the board members of the NACF
      shall consist of the Chairman and two Deputy Chairmen; 12
      presidents of member cooperatives and 3 representatives
      from outside of the cooperative sector.

-     For the purpose of increasing the efficiency of operations
      through business specialisation, the banking and non-
      banking sectors of the NACF were separately into two
      business headquarters operating independently in matters of
      personnel management and budgeting.

-     On 26th May 1995 the NACF and Seoul City signed an
      agreement to jointly support the organic farms in the area
      around the Paldang Dam which is one of the main sources of
      drinking water for Seoul citizen.  Organic farming in this
      area is expected to not only supply consumers with
      healthier food but also protect rural environments.

-     Kimchi has been enjoyed with rice for over 4,000 years by
      Korean, and is a valuable cultural heritage to be shared
      with other countries.  The brand named NONGHYUP Kimchi was
      exclusively entitled to supply to the family of Olympiad to
      be held in Atlanta this year.

-     The NACF organised the 2nd annual Kimchi making contest on
      21st October 1995 at the Youido Plaza in Seoul.  Over 200
      entrants, including 50 foreigners from 13 countries
      participated in the context.

-     On 1st December 1995 the NACF opened a Kimchi exhibit at
      the NACF Agricultural Museum.  The objective os this
      permanent exhibit of Kimchi is to display its diverse
      preparation methods and the historical changes undergone by
      Kimchi's ingredients during different periods.


Korea (NLCF)
------------
-     Total number of beef-purpose cattle increased by 8.4%.  The
      number of farm operations decreased by 4%.  The average
      herd size per farm enlarged.  Cattle prices has been
      maintained at profitable level.

-     Dairy cattle population showed a slight increase.  The
      number of dairy farms decreased.  The average herd size per
      farm scaled up.  Farmer's milk price is set by the
      government.  Milk surplus pressures on milk processing
      cooperatives and companies with stockpiling of milk powder
      products.

-     Pig numbers increased by 8.5%.  The number of pig farmers
      decreased by 15%.  The average herd size per farm enlarged
      by 28%.  Hog prices showed a slight decrease from the
      previous year.

-     Broiler numbers increased by 9.3%.  Layer numbers increased
      by 5.2%.  The number of total poultry farmers decreased,
      but large farms raising more than 30,000 birds increased by
      20%.  

-     In order to efficiently cope with the changing global
      circumstances toward the unlimited international
      competition under the WTO system, the Livestock Coop Law
      and related regulations were amended as of 23rd June 1995.

-     Two-thirds of board of directors of livestock cooperatives
      shall be selected from member farmers.  Two-thirds of board
      of directors of NLCF shall be selected from the presidents
      of member cooperatives.  The candidate for the chairman of
      NLCF must be a farmer.

-     Member cooperatives can use any financial institutions for
      depositing their idle fund.  Guidelines to operate coops
      can be voluntarily established.

-     More than two specialised coops can be established and
      operated in the same regions abolishing "one cooperative
      for one region principle".  The provincial and regional
      federations of specialised coops can be established.  Newly
      established specialised coops shall not conduct banking
      business.

-     The NLCF is a multipurpose coop organisation undertaking a
      variety of businesses such as livestock production,
      marketing, processing, research and education and banking
      businesses.

-     In order to improve the efficiency and competitiveness,
      NLCF adopted a specialised management system separating
      banking business from non-banking business.

-     Korea Deer Cooperative became a new member of NLCF as of
      1st April 1996.  Total NLCF member cooperatives reached
      191.

-     The NLCF opened a pork slaughtering and processing plant
      with operation capacity of 2,000 pigs per day.  The Kimje
      Meat Processing Plant produces chilled and frozen pork cuts
      and further processed products.  Considerable volume of
      pork cuts is exported to Japanese market.

-     Poultry Integration System is under construction near
      metropolitan area.  Dairy Integration System is under
      construction in Chungnam Province.

Philippines
-----------
-     Philippines is basically an agricultural country of 70
      million people.  However, during the last decade, it has
      transformed itself to an agro-industrial country and
      hopefully will take its place among the newly
      industrialised countries in Asia-Pacific region.

-     The CUP counts for its affiliation - 13 regional
      cooperative unions and 7 national federations.  Among its
      member organisations are credit, consumers, producers, etc.

-     The CDA - the government regulatory agency - has registered
      34,000 cooperative organisations of various types. 
      Significantly 57% or 20,500 of these organisations are
      agriculture-based.

-     Expanded Value Added Tax (EVAT) has removed the tax
      exemption privileges of non-electric cooperatives in 1994. 
      The coop sector made known its protest through policy-
      initiate lobby in the Congress of the Philippines.  A Law
      might be passed soon in both Houses restoring tax exemption
      to cooperatives.

-     Comprehensive Agrarian Reform Law passed in 1987 brought
      about the birth of the agrarian reform beneficiaries
      multipurpose cooperatives.  This Law intend to give land to
      the landless.  The effectiveness of land reform has yet to
      be proved.  This type of coops has to contend with
      stringent government regulations and political constraints.

-     Joint effort of the Cooperative Union of the Philippines
      and Artech of Australia to establish a Strawboard Plant in
      Haib, Philippines, is underway.  This will help the rice
      farmers to improve their economy way of life by increased
      income from their rice.

-     GATT-WTO has encouraged trade liberalisation which also
      resulted to farmers uncertainty.  The threat of strong
      competition from other countries and the lack of
      understanding of the advantages and disadvantages of being
      members of the WTO has compounded their problems.


Sri Lanka
---------
-     Sri Lanka has a separate agricultural sector based on paddy
      cultivation in the dry zone and on the other hand the
      plantation sector which was forcefully introduced by
      imperialists in the hilly part of the Island as well as in
      the costal area.

-     Agriculture as the single largest productive sector in Sri
      Lanka economy accounts for 20.8% GNP.  It employs 46% of
      the labour force, earns 58% of all exports.  The majority
      of the farmers in Sri Lanka are small farmers.

-     In 1911 the Government introduced a Guaranteed Price Scheme
      for paddy.  Today there are 619 societies with 88,436
      members dealing with agricultural production.

-     The 300 MPCs with 2,809,600 members are the main
      agricultural cooperatives in the country.  Prior to the
      formation of MPCs in 1957, the CAPS played a dominant role
      in agril activities particularly in paddy produc-tion.  In
      1957 MPCs and CAPS societies were amalgamated into large
      units.

-     The MPCs in major paddy producing areas perform as
      agricultural coops by way of providing credit, supply of
      inputs and marketing the produce, mainly as agents of the
      Paddy Marketing Board.

-     The MPCs enjoyed the monopoly in paddy purchase upto 1977,
      as agents of the Paddy Marketing Board.  The entire
      procurement of the Paddy Marketing Board were made through
      the cooperatives.

-     The MPCSs in major paddy producing areas operate paddy
      mills.  There are 42 medium scale mills operated by the
      MPCSs.

-     Vegetable Producers' Cooperatives are functioning mainly in
      the country of Sri Lanka.  There are 19 such active
      societies.

-     Sri Lanka Coop Marketing Federation was formed as the
      marketing apex organisation of the cooperatives.

-     The first Coconut Producers' Coop Society was started in
      1940.  There are 11 Coconut Producers' Coop Societies
      operating in Sri Lanka, out of which six of them are large
      scale processing societies.  There are 8 desiccated coconut
      production factories and 7 coconut oil mills operated by
      these societies.       

-     More than 65% of the rubber produced is done by small land
      holders.  The average size of a land is approximately 0.8
      hectare.  The Rubber Producers Coop Societies Union is the
      apex organisation and it provides marketing facilities to
      the member societies.

-     Mahaweli Farmers' Cooperative was organised as a pilot
      project in system "H" area.  There are 21 societies
      operating under this project.

-     Milk Producers' Coops are widely spread through out the
      country.  Today there are 263 primary milk producers coops
      with a membership of more than 58,500 and there are also 4
      secondary level unions.

-     Environment and Sustainable Cooperative Development Project
      aims to develop a model for environmental conservation
      through cooperatives.  This project was initiated with the
      assistance of CCA in two districts.  The project period is
      over now, but NCC is continuing the project experience to
      other districts.

-     There are some significant agricultural development
      projects initiated by the MPCSs with financial assistance
      from the Department of Coop Development and the NCC
      providing skills and management training and education. 
      These projects are Pure and Nutritious Rice and Rice Flour
      Producing Project; and  Seed Paddy Producing Project.


Vietnam
-------
-     The economy of Vietnam is undergoing renovation from
      central planning and control to a market orientation.  The
      task of cooperative restructuring is closely tied to
      restructuring of the agricultural sector that is currently
      in process.  Liberalised market conditions is new policy
      and dominating trend.

-     The National Assembly of Vietnam has approved the new
      Cooperative Law.  The Law concerns all kinds of
      cooperatives.  Passage of the Law will represent an
      important step towards establishing a sound legal basic for
      market-oriented economic growth in Vietnam.

-     In the last few years the situation in agriculture has
      dramatically changed.  Since the government has started to
      implement pro-market policies in the economy, there has
      been a sharp transformation of the social and economic
      environment in the agricultural sector.

-     With the passage of the new land law, farmers have acquired
      individual legal rights over land, though not full
      ownership.  They have become small entrepreneurs who can
      make their own business decision without depending on
      cooperatives.

-     In general, farmers are suspicious of the old cooperatives
      and do not believe they should regain the power over
      agricultural management that they used to have, a feeling
      that is shared even by a number of administrators of old
      cooperatives.

-     The present financial situation of old cooperatives is
      precarious.  They borrowed heavily from State-owned
      financial institutions and now they have no way to pay back
      their debts.

-     From a strictly planned economy, in which agricultural
      cooperatives made all agri-business decisions, the market
      for agricultural products is now without much regulation.

-     Vietnamese farmers have proven themselves capable of taking
      advantage of the opportunities provided by the new market
      environment.

-     Buying inputs and marketing agricultural products are the
      main services provided by agricultural cooperatives all
      over the world.

-     Marketing of agricultural products could be the most
      important activity of the new cooperatives.  Coops can help
      keep agricultural prices less volatile.

-     The new Law will provide a completely new legal framework
      for cooperatives, allowing the replacement of rigid
      administrative and bureaucratic bodies with flexible,
      democratic and efficient legal entities better able to
      serve the needs of independent farmers.

-     One potential difficulty that lies ahead concerns the
      treatment of 'old' cooperatives that continue to exist. 
      Old coops have not been dissolved.

-     Efforts to provide cooperatives in Vietnam will need to
      deal with the fact that most farmers still think of
      cooperatives as having the characteristics they had under
      the old system.  The new Law, therefore, can be only part
      of the Governments strategy to promote cooperation among
      farmers.

-     In a few years the cooperatives can play major role in the
      economic life of Vietnam, especially in agriculture.  The
      emergence of new coops can also be an important
      demonstration that a market-oriented economy need not and
      should not forget the value of solidarity and self-
      improvement.


Agenda Item No.06:     ICA ROAP Review Meeting.

The information given in the Agenda Notes was noted. 


Agenda Item No.07:     Discussion on the World Food Summit.

The World Food Summit is scheduled to be held in Rome (Italy) in
November 1996.  The objective of the World Food Summit is to
renew the commitment of world leaders at highest level to the
eradication of hunger and malnutrition and the achievement of
lasting food security for all.  The ICA is among a selected
member of NGOs which have since been given the opportunity by the
FAO to present a paper for inclusion in the World Food Summit
process.  Therefore, the meeting discussed in detail some common
concern with the food security issue and unanimously adopted the
following Resolution on Food Security and World Food Summit.  The
meeting also requested the Secretariat to send the Resolution to
ICA Geneva for onward transmission to FAO.  The Resolution was
also distributed at the 2nd Regional Assembly Meeting in
Malaysia.


      -------------------------------------------------
      Resolution on Food Security and World Food Summit
      -------------------------------------------------

      "Considering that more than 800 million people are now
      suffering from hunger and malnutrition, we, the
      representatives of 500 million ICA-affiliated Asian and the
      Pacific farmers, are deeply concerned about the present
      food shortage and soaring grain prices in the world market.

      In an effort to overcome the food crisis situation, we are
      willing to participate in FAO's efforts, in particular in
      drafting the Policy Statement and Plan of Action at the
      World Food Summit to solve the global food problems.  We
      hope that the Summit meeting will be in a right track in
      working out an epoch-making solution to the world food
      insecurity and unsustainable development of agriculture for
      both present and future generations.

      In the Asia-Pacific region with over sixty per cent of the
      world's population, food situation is being exacerbated by
      such factors as rapid increase of population and demand for
      more nutritious foods, and shrinkage of agricultural base
      caused by industrialisation and trade liberalisation.  It