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Cooperative and Cluster Farming

B N Shukla1, V Mishra2 and A Shukla1

  1. Research Scholar, ICAR-CIFE, Mumbai
  2. Research Scholar, College of Fisheries, MPUAT, Udaipur



A cooperative is a group of farmers who act together to achieve some common business objective’ (Pomeroy R. S. 2010)’. Cooperative production is generally seen as a means of improving small-holder capacity to improve product quality, as well as their bargaining power, capital investments and management skills (Coles and Mitchell, 2011).  Two aspects of cooperatives are that they (a) are a legal, institutionalized device which permits group action that can compete within the framework of other types of business organization; and (b) are voluntary organizations set up to serve and benefit those who are going to use them.  

Cooperative Farming:

Cooperative farming means bringing together of all the land resources of the farmers in such an organized and united way that they will be collectively in a position to grow on every bit of land. In cooperative farming members must buy a minimum amount of shares to join, have equal voting rights, and are offered services such as competitively priced inputs on credit and extension services. Cooperative farming a state policy was first suggested in 1944 by the advisory Board of Imperial council of Agriculture Research.  The cooperative provides members with a number of important services, including credit for farm inputs, provision of technical advice, a  computerized traceability system, increased market access through developing links with  processors and buyers, and improved quality and safety of shrimp (through an internal  control system).

Cooperative farming where members must buy a minimum amount of shares to join, have equal voting rights, and are offered services such as competitively priced inputs on credit and extension services. Unlike traditional cooperatives, however, profits will be distributed according to the proportion of members’ shares rather than according to patronage (how much they use cooperative services) as with traditional cooperatives. However, as the cooperative has not yet earned any profits, this may change. Because of the way profits are distributed in traditional cooperatives, they often find it hard to increase the level of investment from members, as there is little incentive for members to invest more than the amount required.

 Cooperatives usually have a particular structure requiring many rules and regulations, making them less flexible than associations and increasing their internal administration costs. The cooperative has also increased members’ access to good-quality inputs through negotiation of various partnerships and agreements with input suppliers and has improved the production and income of members.

Advantages and Difficulties of Cooperatives

There are a number of advantages of cooperatives including savings in marketing costs, more effective marketing, opportunities to exploit new markets, and opportunities to increase   bargaining power. There are also a number of difficulties of cooperatives including developing joint responsibility, inefficient management, inadequate membership support and relations, lack of sufficient capital and credit, and relations with the general public. Cooperatives usually have a particular structure requiring many rules and regulations, making them less flexible than associations and increasing their internal administration costs.

Types of Cooperatives

As mentioned above, there are several different types of cooperative which may be applied to aquaculture depending upon the tasks performed:

1. Cooperative Association are those in which farmers producing a common product will form cooperatives to ensure widespread education about production techniques, about market developments, about legislative activities, and about other issues that affect their industry. The Wisconsin Aquaculture Association is an example.

2. Service cooperatives are those that provide their members with specific business services (such as tax reporting or record keeping) or with services they could otherwise not obtain, such as credit and insurance.

3. Purchasing cooperatives are those through which members buy the inputs or supplies they need. By purchasing good together in bulk, members of purchasing (or supply) cooperatives can often secure volume discounts and thereby reduce costs of inputs for their individual members.

4. Marketing cooperatives are those through which members sell a large part or their entire product to the cooperative who markets the product on their behalf. They do not usually handle or process their members’ raw product. A marketing cooperative serves to coordinate supply among many producers to meet larger buyers’ demands for quantities and service, provide the economies of scale to break into new markets and establish high quality standards for all members to follow. By pooling their resources, producers can spread the costs of running effective promotions and hiring competent managers and sales people to market their products. The Noank Aquaculture Cooperative in Connecticut is an example of a marketing cooperative that markets clams and oysters for its members. The Nebraska Sandhills Yellow Perch Cooperative markets both yellow perch fingerlings and adult fish for fillet markets.

5. Farmer’s bargaining groups are a type of marketing cooperative. While they do not actually process or market the product, they negotiate with processors or buyers on behalf of the cooperative members. The members of the bargaining group agree on a price and other marketing conditions they want and bargain with the buyer or buyers as a group.

6. Processing and Marketing Cooperatives These cooperatives transport, process, and markets members’ raw products. This takes significant levels of capital. This capital can be acquired through equity drives of prospective members. This usually is enough to secure a loan for the remaining start-up expenses.

Steps in Starting an Aquaculture Cooperative

  • Assessing the interest of potential members
  • Selecting a steering committee
  • Conducting a cost analysis of the business activity the proposed cooperative would undertake and a feasibility study to determine whether there will be sufficient income to cover those costs
  • Developing a business plan including specific objectives stating exactly what the cooperative aims to achieve year by year and a detailed capitalization strategy.
  • Preparation of legal papers and hold first membership meeting. Electing officers and preparation of by-laws including such items as how profits will be divided, how much of production is to be sold to the cooperative, quality of product.

Cluster Farming

Cluster farming  is defined as a group of min 20 small scale farmers whose shrimp ponds situated preferably in a same locality all ponds dependent on the same water source. Farmers were organized into self-help groups, originally called “aqua clubs” and now legally registered as farmer societies, which have joined to form “clusters” (groups of interdependent shrimp ponds situated in a specified geographical locality, typically comprising farmers who share resources or infrastructure such as water sources). The cluster concept was found to be a practical and effective way to communicate risks and risk management to farmers to reduce risks and maximize returns. All farmers are registered under CAA and also got cluster certification from MPEDA. The cluster farmers should elect their own governing board and prepare their rules and regulations Cluster farmers should maintain all records and documents for the traceability society accounts are audited by MPEDA. In some cases, the term “cluster” is synonymous with FO (i.e. a cluster or group of farmers),whichever way it is used, the term “cluster management” refers to a group of farmers or FOs that collectively implement certain production standards.

Cluster management has been used as a tool by NACA to facilitate the implementation of BMPs for small-scale aquaculture development in a number of countries in Asia (i.e. India, Indonesia, Sri Lanka and Viet Nam) and successful mechanism to empower small-scale rural farmers and to improve aquaculture practices, including those related to health management for the safe movement of live aquatic animals. Cluster management is thus used to enable self-regulation for the implementation of standards at the farm and processing level to ensure responsible and high-quality aquaculture farming in a specific locality. Cluster management can provide mechanisms to introduce standardized, shared and improved methods for aquatic animal health management, including diagnostics, disease control and reporting. In India, NaCSA is facilitating the development of farmer societies made up of between 20 and 75 shrimp farmers to implement BMPs in order to reduce disease risk and increase productivity of shrimp ponds. Cluster management thus seeks to achieve responsible aquaculture production by encouraging farmers to adhere to codes of practice or BMPs as a group and to monitor each other’s activities to ensure that the group complies with the principles of the particular scheme. Through cluster management, small-scale aquaculture farmers have increased chances of achieving priority market access, improved reliability of production and reduced risks such as disease.

The establishment of FOs can be a key element in enabling effective cluster management and maximizing benefits. For example, in the case of NaCSA’s farmer societies in India (so far the best and most widely documented example of successful implementation of the cluster management concept), it is the farmer societies that are registered with the government and not the clusters. The clusters are an informal, unregistered grouping of societies used to enable the specific function of self-regulation and quality management within a specific location. As such all the farmers located within a cluster are not necessarily members of farmer societies, which can present problems when it comes to cluster management.

Cluster Certification:

  • Narurland cluster certification for organic scampi
  • NACA-NAcSA developing “Cluster certification Guidelines”.
  • NAcSA is working with Fair trade Foundation to take up pilot testing of “Fair trade standards for small scale shrimp farmer societies” in India.
  • Independent certifiers showing interest in societies for cluster certification.

Advantages of Cluster farming

  • Enhancing their incomes and bargaining power in markets
  • Clusters improve information exchange and sharing of experience among participants
  • Farming skills and technical knowledge
  • Access to financial services and ability to manage funds
  • Knowledge and tools to use information on markets, services, technologies, and rights
  • Self respect, social esteem, and relationships to authorities and other social factors


Cooperative farming  and Cluster farming  is to enable aquaculture farmers to adopt sustainable and environment friendly farming practices to produce quality and safe aquatic products such as shrimps, scampi and fish for export and domestic markets. These are the new concepts arises for the development of Aquaculture, so there is a need to implement it properly.


Coles, C., Mitchell, J. 2011. Working together horizontal coordination as an upgrading strategy. In: Mitchell, J., Coles, C. (Eds.), Markets and Rural Poverty: Upgrading in Value Chains. Earth scan, Washington DC, pp. 1–20.

Ha, T. T. 2013. The cluster panacea?: Questioning the role of cooperative shrimp aquaculture in Vietnam. Aquaculture 388–391:89–98.

Kumaran. M. (2007). Participatory Technology Transfer Model for Sustainable Coastal Aquaculture, Final Report of the AP Cess funded project, Social Sciences Division, CIBA, Chennai, Report, 136 pp.

Lawless, G., and W. Huges. The Potential Role of coooperatives in Wisconsin’s Aquaculture Industry. University of Wisconsin Center for Cooperatives. 

Pomeroy, R. S. 2010. Cooperatives in aquaculture. NRAC Publication 207.

Shaw, S.A. 1986. Marketing the products of aquaculture. FAO Fisheries Technical Paper 276. Rome.

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