In 1946, Tribhuvandas Patel, a Gandhian close to Sardar Patel and Morarji Desai, went by foot from one village to another to create a cooperative of farmers chanting the mantra of collective action and collective good. After months of campaigning, Patel collected a critical number to set up the Kaira District Cooperative Milk Producers’ Union. Verghese Kurien leveraged the model to establish the efficacy of cooperative action. But Kurien struggled for two decades to set up a national grid to usher in the milk revolution. India depended on imports in the 1950s. And in 2025, India’s Amul is competing in the global markets and its cheese is competing with Swiss brands.
The idea of cooperatives is not new and owes its origins in modern times to Welsh philanthropist Robert Owen. In India, cooperatives were visible in community ownership of resources known, for instance, as the Devarai and Vanarai movements. The formal structures came with the passage of the Cooperative Societies Act in 1904. Over the decades, cooperatives have suffered political piety and economic decimation. The history of India’s cooperative movement is pock-marked with cop-outs.
In 1947, Jawaharlal Nehru said everything else can wait but not agriculture. He declared cooperatives as a template for development. The success of Amul established the idea of cooperatives as a viable format, illustrated in Maharashtra where cooperatives steered change. Yet, vested political interests successfully rendered agriculture into a case of political charity and, verily, the killing fields.
This week, the government unveiled a ‘new cooperation policy’. Dubbed a re-birth of cooperatives, it is ambitious in its intent. The plan is to set up cooperative units in every village across the rural landscape of 6-lakh-plus villages. The mission: create an enabling legal, economic, and institutional framework to deepen the cooperative movement and facilitate cooperatives with systems and technology to emerge as economic entities for creating value. The idea is built around “6 mission pillars, 16 objectives and 82 strategic actions”.
The new policy has arrived at the intersection of political and economic realities. Over 46 percent of India’s workforce is engaged in agriculture and allied activities, and is dependent on one-sixth of the national income. In 2025, Maharashtra has already witnessed 767 farmer suicides. Agriculture, India’s largest private sector, continues to be under whimsical policies and licence raj three decades after the 1991 liberalisation. This is the primary reason India could be stranded in the low-middle income bracket despite its rise in the hierarchy of global economies.
It is not that there are no programmes. There is an array of schemes ranging from PM Kisan and Krishi Sinchayee Yojana to the National Bamboo Mission—in all, there are 28 active programmes for agriculture. The government spends over Rs1.77 lakh crore in fertiliser subsidies; farmer producer organisations have been connected to digital platforms such as ONDC, e-NAM and GeM. Yet, the average monthly household income of farmers is at Rs10,218 only and per capita net value added for rural homes is half the urban average. The political consequence is manifest in the expansion of freebies and clamour among the landholding classes for quotas.
The principal issue is the concentration of workforce over small land holdings—the average holding of the Indian farmer is just 0.74 hectares, rendering it too small to be viable without the scaffolding of policy enabling collective action to harvest value. The worry about the new policy, to paraphrase Milton Friedman’s view on India’s planning process, is that it has too many objectives that could challenge efficient execution.
The creation of cooperative units is a necessary foundation, but not sufficient to propel change. The circumstance calls for focused reforms. This column has argued consistently that cohabitation of small landholdings and low incomes called for cooperatives to achieve scale and enable forward and backward linkages. Globally, farmers are adopting technology to adapt to climate changes—for instance, using AI in precision farming and geospatial data to read conditions.
The good news is that there are a range of existing policies that can be dovetailed to suit the conditions. Agriculture accounts for over 80 percent of water usage. This is not sustainable. India needs to redraw its crop map. In 2020, the RBI created a window for extending credit for solar pumps. Data on its use and traction is sketchy. The new policy speaks about solar and wind power—farmers could be shepherded to offer idle or uncultivable land to cooperatives on lease for solar farms.
The persistence of food price inflation and pernicious distress in farming is caused by poor post-harvest systems resulting in low value realisation. A study by RBI shows farmers’ share in the consumer’s rupee to be about 33 percent for tomatoes, 36 percent for onions and 37 percent for potatoes. Another RBI study shows farmers’ share in consumer paid price is at around 31 percent for bananas, 35 percent for grapes and 43 percent for mangoes.The one district, one product idea can be retrofitted to create a national grid for perishables. Farmer cooperatives should be positioned to enter into contracts with procurers for better returns.
Beyond the sequencing, there is a need for demonstration effect. This needs a champion like C Subramaniam was during the first Green Revolution. The government could rope in startups, invite collaborations for technology and create model cooperatives in each district, and bus farmers to learn the process and impact. Above all, there is a need for greater Centre-state collaboration. The political and economic rationale for a real green revolution is indisputable and merits urgent action.
Read all columns by Shankkar Aiyar
Shankkar Aiyar
Author of The Gated Republic, Aadhaar: A Biometric History of India’s 12 Digit Revolution, and Accidental India
(shankkar.aiyar@gmail.com)