Disadvantages of Producer’s Cooperative Society
A few small industrialist, labor, or producers establish a cooperative society to gather their limited capability in order to get huge production facilities and this kind of organization is called producers’ cooperative society. As they can’t produce huge products as well as they can’t exist in the competition of selling, so they accumulate their limited ability to establish such kind of organization.
Though it is furnished by huge advantages, to operate the organization it also faces some disadvantages. These disadvantages are mentioned elaborately below:
- Lack of capital:
Lack of capital is the irresistible problem in the case of producers’ cooperative society. The members of these cooperatives are not capitalist. The principle of one-man-one-vote and limited dividends also reduce the enthusiasm of members. For this problem, the organization can’t reach its ultimate goal.
- Lack of motivation:
This business doesn’t operate properly to earn a profit. Besides, the members can’t get the dividend entirely. That’s why they feel a lack of motivation. Absence of such spirit breeds mutual rivalries among the members. Influential members tend to control society’s affairs. It is because there is a dreadfully diminutive relation between effort and reward. Co-operative societies allocate their surplus impartially to all members and not based on the efforts of members.
- Lack of education:
Illiteracy problem also hurts in this organization. Most of the members of this organization are illiterate which is great an alarming condition of the organization. This organization can’t improve rapidly because of suffering this illiteracy problem. Since the funds accessible are partial they cannot assume huge scale operations and is not appropriate in industries requiring large investments.
- Lack of competitive ability
Lack of capital, weakness of the capability, inefficient management, and so on in order to these problems cooperative society can’t compete with the large-scale business. Since the management is taken care of by the managing committee, no individual can be made accountable for in proficient performance.
- Lack of inspiration:
Directors have taken of ability to perform their business perfectly. They don’t get a handsome salary. This problem hampers the improvement of the business. The reason is, in many of the co-operatives there is political intervention and dominion. The members of the ruling party dictate terms and consequently, the reason for which cooperatives are produced is lost.
- Inefficient management:
Actually, such an organization is created and operated by illiterate or less educated, less capable members, labor and small producers who are not experienced in modern technology management. The members of the managing committee may not have the required qualification, skill or experience. Lack of skills results in inefficient management, poor functioning, and difficulty in achieving objectives.
- Lack of Secrecy:
A cooperative society has to offer its yearly reports and accounts with the Registrar of Cooperative Societies. Hence, it becomes moderately complicated for it to sustain the confidentiality of its business affairs. But business secrets cannot be maintained in cooperatives because all members are conscious of the activities of the enterprise. Further, reports and accounts have to be submitted to the Registrar of Co-operative Societies.
- Negligence of duties:
It is another important problem. Members lost their speediness which creates the negligence towards the duties. It hampers the activities of the business. Such disputes affect the functioning of the co-operative societies.
- Government regulation:
Co-operative societies are subject to extreme government guideline which affects their sovereignty and flexibility. Adhering to various regulations takes up much of the management’s time and effort.
At last, we can say, that besides the advantages these organizations have these drastic disadvantages also. So for the better future of the organization, these impediments should overcome at any cost.