Effects of membership to Rural SACCOs mobilization of resources on income of SSDF

Effects of membership to Rural SACCOs mobilization of resources on income of SSDF

A co-operative society is a voluntary association started with the aim of offering service to its

members. It is a form of business where individuals belonging to the same class join their hands

for the promotion of their common goals. They are generally formed by the people of same class

such as small scale farmers in certain locality. It reflects the desire of the dairy farmers to stand

on their own legs or own merit. The philosophy of the formation of co-operative society is "all

for each and each for all", (Kyamulesire, 2008).

A cooperative society is an organization of people who have voluntarily come together for the

purpose of solving their socio-economic problems through self-help initiatives, mutual support

harvest of their products, the purchase of farm equipment and supplies at the lowest possible

cost, and the sale of their products at the maximum possible price. There are certain

organizations which undertake business activities with the prime objective of providing service

to the members. Although some amount of profit is essential to survive in the market, their main

intention is not to generate profit and grow. They pool available resources from the members,

utilize the same in the best possible manner and the benefits are shared by the members.

Forms of membership in a Rural SACCO

Rural SACCO is one type of a co-operative society that provides financial services in the rural

areas. Producers’ Rural SACCOs are formed to protect the interest of small producers by making

available items of their need for production like raw materials, tools and equipments, machinery

which is offered in form of credit by the Rural SACCOs. Farmers’ Co-operative societies are

formed by small scale farmers to work jointly and thereby enjoy the benefits of economies of

scale. The types of membership traditionally, are those farmers who farm the same kind of

produce which is basically bulked and marketed jointly. Their means of contributing savings are

usually from the proceeds of the sales.

agricultural yields, (Kyamulesire, 2008).

marketing of the goods. Through such facilities they get proper price for the agricultural products

and other goods produced by its members. These societies help their members to set up other

trades and industries such as milk processing plants. Through these cottage industries and small-

scale industries, the income condition of the members is improved and they are able to improve

their standard of living.

Duration of membership in a Rural SACCO

Dairy farmer’s co-operative societies by providing various types of facilities for their members,

improve their standard of living. They also carry out the programme of health, education and

social education. They make arrangements for health and economic facilities, education and

recreation for their members. These societies act as saving agencies and encourage their

members to save a part of their income for their future needs. Through these savings, the

members of such co-operative societies are able to get loans and also invested in treasury bonds,

savings finance small scale farmers ‘expenditure. Invested in shares, they can directly or

indirectly finance the dairy farms. Savings can also be transferred abroad by remittances, giving

rise to a new choice their between consumption and savings (e.g. in the form of purchasing an

their members.

obtain essential services from investor-owned (because the provision of these services is judged

to be unprofitable by the investor-owned), or when investor-owned provide the services at

disadvantageous terms to the Small scale farmer (i.e., the services are available, but the profit-

motivated prices are too high for the farmers).

owned ones. The concept of competitive yardstick implies that farmers, faced with unsatisfactory

performance by credit lenders, may form a cooperative firm whose purpose is to force the IOFs,

through competition, to improve their service to farmers.

small dairy farmers, acts as a large business entity in the market, reaping the significant

advantages of economies of scale that are not available to its members individually. Three

typical examples are a machinery pool, a marketing cooperative, and a credit union.

A family farm may be too small to justify the purchase of a tractor or another piece of farm

machinery for its own use; a machinery pool is a cooperative that purchases the necessary

equipment for the joint use of all its members as needed. A small farm does not always have the

means of transportation necessary for delivering its produce to the market, or else the small

volume of its production may put it in an unfavorable negotiating position with respect to

marketing channels. A small farmer may be charged relatively high interest rates by commercial

SACCOs, which are mindful of high transaction costs on small loans, or may be refused credit

altogether due to lack of collateral; a farmers' credit union will be able to raise loan funds at

advantageous rates from commercial SACCOs because of its large associative size and will then

distribute loans to its members on the strength of mutual or peer-pressure guarantees for

repayment.

Members participation in the activities of the Rural SACCO

Apart from avoiding the difficulty, red tape and sometimes even outright impossibility of

obtaining credit from a SACCO, the answers are many. The credit cooperative satisfies the

requirements of its members without undue complications.

Thus, it provides them with interest on their respective shares and rewards for participating in its

operations. The credit cooperative helps to-prevent or over come poverty. It furthers members'

education, as well as a spirit of mutual aid and self-reliance. This form of cooperative also

encourages productive activity by providing credit required by its members and, in particular,

members know that will receive suitable returns for their effort, in the form of interest on his

savings. Accordingly, in order to encourage savings, it is desirable to pay members interest at a

higher rate than that obtainable at any other type of financial institution. The member will then

realize that it is preferable to save with his/her own cooperative. Cooperatives in many countries

make the mistake of paying interest on their members' savings at a lower rate than that offered

elsewhere.

Cooperative society is often regarded as one of the microfinance institutions that promote dairy

farming entrepreneurship and rapid industrialization. Cooperative financing strategies are very

good at promoting sustainable small scale dairy farming. However the government has not fully

utilized the potentials of cooperative societies in this regards, cooperative societies of today

suffer a lot of setbacks in performing their economic functions. Cooperative societies being

groups are made up of members from other groups. Cooperatives society in agricultural

production had been encouraged among farmers.

Cooperatives all over the world are instruments of social and economic transformation (Ijere,

1992). The relevant social aspects of people from Africa, according to Ijere (1992) are those

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