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Rural Cooperatives and the Crisis of Agricultural Overproduction Populism and Agricultural Cooperatives: USA Experience

By: H.Shirzad[i]

The historical evolution of agricultural system in USA, especially in the end of 19th Century, had led to forming dominated micro-peasant cultures to face the unfair soul of the very nature of the capitalism.

Including price deflation of the crops, economic stagnation, inflation, and rural poverty, these had proven that the current banking system are not only incapable but also has no commitment.

Amid 1877-1898, despite of high quality seed, high level of mechanization, agricultural innovation, and consequently highly yield of agriculture, farmers were suffering from crop deflation. The high rate of immigration, sever frosting of the end of 80s, purchasing the family farms by the companies, and high rate of transportation due to the exclusiveness of the rail transportation.

Therefore, farmers needed to form a farmers' organization to solve their problems. Philadelphia association was the first organization, developed in 1810 that was handling the diary products, vegetable and horticultural cropping.

Grange movement, as one of the first farmers’ organizations developed in 1867 by Oliver Hudson Kelley. Aiming to improve the farmers’ life standards, Grange movement reshaped based Rachedil principles.

After the Civil War, seven States had approved the “Grange Act” to promote a fair farming system among south and north farmers. Consequently, the warehousing and transportation cost was drastically decreased .However, the lack of a scientific and comprehensive accompanied by the demagogic leaders led to fail of Grange in 1881.

In 1875 , the south farmers union, developed Agriculture Supported Community (CSA) and American shareholders association in Wisconsin . Adopting opponent approach of the Grange, these organizations were inhibiting populism and acquiring Parliament political powers.

Through objecting to the monopolism of rail transportation and wheat silages, they united the USA farmers against the discriminatory Laws of trade.

The first assembly of the populist was held in 1892 in Nebraska that issued a statement, demanding the conviction of injustice, bias, moral, economic and political corruption and requesting to end of the domination of elites.

The farmers' delegations by this statement, asked the government to farmers' engagement in the decision-making, decreasing Custom tariffs and nationalization of the railroad.

The national union of farmers was developed in the very nature of the agricultural extension education system in 1902. Along with this the private organization of the USA farmers supported the logistic cooperatives through approval of the Federal and State Act. The largest agricultural of USA including cereal marketing cooperatives, rural insurance companies are the next generation of these two organizations.

They have been providing raw material s for multi-national companies.

The government granted farmers long-term low-interest loans to purchase farms.

In the spring of 1990, the government founded "Farm Credit System" to facilitate purchasing agricultural machinery, development of warehouses, and cold chains. From 1865 to 1920, many of the States approved the "Cooperative Act". The limited shareholding, the membership dependency voting right, and each member is eligible for one vote is the same principles of Rachedil.

When the managers of the American national association allowed farmers to adopt the convergent policy of pricing, many jobbers have tried to fight against it. According to the Sherman Antitrust Act, many marketing agents of the cooperatives were sued and many CEO was arrested.

In 1897, the agriculture sector was exempted from this Act. According to this Act, many farmers' organizations that developed for mutual aims and have no capital are exempted from taxation Act. Approved in 1922, The "Capper-Volstead Code led to forming 12 small and medium credit banks.

Supporting the public capital raising, these banks provided State bonds that led to accelerating the financial sources needed for development of transportation cooperatives and storages.

The strong link of the agricultural cooperatives and market exchange helped to improve agricultural marketing; consequently, in 1945, the crisis of agricultural overproduction was a meaningless concept. By great development of the cooperative movement, a modern institutionalization of pre and post chains of the crops was developed that succeeded to access the emerging markets.



Hossein Shirzad is the deputy minister of Jihad-Agriculture and CEO of CORC [i]

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