Fund-Raising Activities of a Cooperative in the Red River Delta: A Case Study of the Coc Thanh Cooperative in Nam Dinh Province, Vietnam

Abstract

The system of agricultural production in the Red River Delta based on village-level agricultural cooperatives has changed since Resolution 10 of 1988. The function of cooperatives was greatly reduced, and the household came to be considered as an autonomous unit of economy. In the process of change in the cooperatives' function, economic activities took on greater importance. A new law on cooperatives in 1996 also promoted the establishment of new types of cooperatives as autonomous economic organizations. Discussions on cooperatives' function, however, have tended to be too abstract and idealized and to lack specific detail. This paper, therefore, evaluates the economic activities of cooperatives based on an analysis of actual economic activities in one village. Coc Thanh Cooperative (CT) in Nam Dinh Province was chosen for a case study, and its cooperative's economic activities were evaluated from the accounts of revenue and expenditure of the Irish potato business, including the cultivation, and the storage and sale businesses. It was found that the executive staff of CT actively managed the potato business and produced a profit for the whole cooperative. They controlled the material cost and the cooperative's profit according to fluctuations in climatic conditions and market prices in order to generate profits both for the potato farmers and for CT. Besides their regular salary, they received a bonus as reward for managing the potato business. Why did the cooperative manage the potato business as CT's business, rather than leaving it to individual farmers? The advantages of having the potato business run by CT were that it could provide funding and information, function as an arbitrator, operate in line with government policy, and perform welfare works. The disadvantage was its economic inefficiency as a profit-making organization. To improve its economic efficiency as a profit-making organization, CT paid a bonus to the executive staff, thereby motivating them to efficient management. CT was an organization with two purposes : the pursuit of economic efficiency and the promotion of welfare works. Since villagers have to get funds by themselves and do public undertakings and welfare works in their own village, economic activities by farmers' associations such as cooperatives should be promoted.