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      <H3><FONT color=#0000ff>R127 Co-operatives (Developing Countries) 
      Recommendation, 1966 </FONT></H3></B><FONT size=-2>Recommendation 
      concerning the Role of Co-operatives in the Economic and Social 
      Development of Developing Countries <BR>Recommendation:R127 
      <BR>Place:Geneva <BR>Session of the Conference:50 <BR>Date of 
      adoption=21:06:1966 <BR>Subject classification: Cooperatives <BR>Subject: 
      <B>Social Policy</B> <BR>Status: Instrument to be revised </FONT>
      <P>The General Conference of the International Labour Organisation,
      <P>Having been convened at Geneva by the Governing Body of the 
      International Labour Office, and having met in its Fiftieth Session on 1 
      June 1966, and
      <P>Having decided upon the adoption of certain proposals with regard to 
      the role of co-operatives in the economic and social development of 
      developing countries, which is the fourth item on the agenda of the 
      session, and
      <P>Having determined that these proposals shall take the form of a 
      <P>adopts this twenty-first day of June of the year one thousand nine 
      hundred and sixty-six, the following Recommendation, which may be cited as 
      the Co-operatives (Developing Countries) Recommendation, 1966:
      <P>I. Scope
      <P>1. This Recommendation applies to all categories of co-operatives, 
      including consumer co-operatives, land improvement co-operatives, 
      agricultural productive and processing co-operatives, rural supply 
      co-operatives, agricultural marketing co-operatives, fishery 
      co-operatives, service co-operatives, handicrafts co-operatives, workers' 
      productive co-operatives, labour contracting co-operatives, co-operative 
      thrift and credit societies and banks, housing co-operatives, transport 
      co-operatives, insurance co-operatives and health co-operatives.
      <P>II. Objectives of Policy Concerning Co-operatives
      <P>2. The establishment and growth of co-operatives should be regarded as 
      one of the important instruments for economic, social and cultural 
      development as well as human advancement in developing countries.
      <P>3. In particular, co-operatives should be established and developed as 
      a means of--
      <P>(a) improving the economic, social and cultural situation of persons of 
      limited resources and opportunities as well as encouraging their spirit of 
      <P>(b) increasing personal and national capital resources by the 
      encouragement of thrift, by eliminating usury and by the sound use of 
      <P>(c) contributing to the economy an increased measure of democratic 
      control of economic activity and of equitable distribution of surplus;
      <P>(d) increasing national income, export revenues and employment by a 
      fuller utilisation of resources, for instance in the implementation of 
      systems of agrarian reform and of land settlement aimed at bringing fresh 
      areas into productive use and in the development of modern industries, 
      preferably scattered, processing local raw materials;
      <P>(e) improving social conditions, and supplementing social services in 
      such fields as housing and, where appropriate, health, education and 
      <P>(f) helping to raise the level of general and technical knowledge of 
      their members.
      <P>4. Governments of developing countries should formulate and carry out a 
      policy under which co-operatives receive aid and encouragement, of an 
      economic, financial, technical, legislative or other character, without 
      effect on their independence.
      <P>(1) In elaborating such a policy, regard should be had to economic and 
      social conditions, to available resources and to the role which 
      co-operatives can play in the development of the country concerned.
      <P>(2) The policy should be integrated in development plans in so far as 
      this is consistent with the essential features of co-operatives.
      <P>6. The policy should be kept under review and adapted to changes in 
      social and economic needs and to technological progress.
      <P>7. Existing co-operatives should be associated with the formulation 
      and, where possible, application of the policy.
      <P>8. The co-operative movement should be encouraged to seek the 
      collaboration in the formulation and, where appropriate, application of 
      the policy, of organisations with common objectives.
      <P>(1) The governments concerned should associate co-operatives on the 
      same basis as other undertakings with the formulation of national economic 
      plans and other general economic measures, at least whenever such plans 
      and measures are liable to affect their activities. Co-operatives should 
      also be associated with the application of such plans and measures in so 
      far as this is consistent with their essential characteristics.
      <P>(2) For the purposes provided for in Paragraph 7 and Paragraph 9, 
      subparagraph (1), of this Recommendation, federations of co-operatives 
      should be empowered to represent their member societies at the local, 
      regional and national levels.
      <P>III. Methods of Implementation of Policy Concerning Co-operatives
      <P>A. Legislation
      <P>10. All appropriate measures, including the consultation of existing 
      co-operatives, should be taken--
      <P>(a) to detect and eliminate provisions contained in laws and 
      regulations which may have the effect of unduly restricting the 
      development of co-operatives through discrimination, for instance in 
      regard to taxation or the allocation of licences and quotas, or through 
      failure to take account of the special character of co-operatives or of 
      the particular rules of operation of co-operatives;
      <P>(b) to avoid the inclusion of such provisions in future laws and 
      regulations; (c) to adapt fiscal laws and regulations to the special 
      conditions of co-operatives.
      <P>11. There should be laws or regulations specifically concerned with the 
      establishment and functioning of co-operatives, and with the protection of 
      their right to operate on not less than equal terms with other forms of 
      enterprise. These laws or regulations should preferably be applicable to 
      all categories of co-operatives.
      <P>(1) Such laws and regulations should in any case include provisions on 
      the following matters:
      <P>(a) a definition or description of a co-operative bringing out its 
      essential characteristics, namely that it is an association of persons who 
      have voluntarily joined together to achieve a common end through the 
      formation of a democratically controlled organisation, making equitable 
      contributions to the capital required and accepting a fair share of the 
      risks and benefits of the undertaking in which the members actively 
      <P>(b) a description of the objects of a co-operative, and procedures for 
      its establishment and registration, the amendment of its statutes, and its 
      <P>(c) the conditions of membership, such as the maximum amount of each 
      share and, where appropriate, the proportion of the share due at the 
      moment of subscription and the time allowed for full payment, as well as 
      the rights and duties of members, which would be laid down in greater 
      detail in the by-laws of co-operatives;
      <P>(d) methods of administration, management and internal audit, and 
      procedures for the establishment and functioning of competent organs;
      <P>(e) the protection of the name "co-operative";
      <P>(f) machinery for the external audit and guidance of co-operatives and 
      for the enforcement of the laws and regulations.
      <P>(2) The procedures provided for in such laws or regulations, in 
      particular the procedures for registration, should be as simple and 
      practical as possible, so as not to hinder the creation and development of 
      <P>13. Laws and regulations concerning co-operatives should authorise 
      co-operatives to federate.
      <P>B. Education and Training
      <P>14. Measures should be taken to disseminate a knowledge of the 
      principles, methods, possibilities and limitations of co-operatives as 
      widely as possible among the peoples of developing countries.
      <P>15. Appropriate instruction on the subject should be given not only in 
      co-operative schools, colleges and other specialised centres but also in 
      educational institutions such as--
      <P>(a) universities and centres of higher education;
      <P>(b) teachers' training colleges;
      <P>(c) agricultural schools and other vocational educational 
      establishments and workers' education centres;
      <P>(d) secondary schools;
      <P>(e) primary schools.
      <P>(1) With a view to promoting practical experience in co-operative 
      principles and methods, the formation and operation of student 
      co-operatives in schools and colleges should be encouraged.
      <P>(2) Similarly, workers' organisations and craftsmen's associations 
      should be encouraged and helped in the implementation of plans for the 
      promotion of co-operatives.
      <P>17. Steps should be taken, in the first place at the local level, to 
      familiarise the adult population with the principles, methods and 
      possibilities of co-operatives.
      <P>18. Full use should be made of such media of instruction as text-books, 
      lectures, seminars, study and discussion groups, mobile instructors, 
      guided tours of co-operative undertakings, the press, films, radio and 
      television and other media of mass communication. These should be adapted 
      to the particular conditions of each country.
      <P>(1) Provision should be made both for appropriate technical training 
      and for training in co-operative principles and methods of persons who 
      will be--and, where necessary, of persons who are--office-bearers or 
      members of the staffs of co-operatives, as well as of their advisers and 
      <P>(2) Where existing facilities are inadequate, specialised colleges or 
      schools should be established to provide such training, which should be 
      given by specialised teachers or leaders of the co-operative movement with 
      teaching materials adapted to the requirements of the country; if such 
      specialised institutions cannot be established, special courses on 
      co-operation should be given either by correspondence or in such 
      establishments as schools of accountancy, schools of administration and 
      schools of commerce.
      <P>(3) The use of special programmes of practical training should be one 
      of the means of contributing to the education and basic and further 
      training of members of co-operatives; these programmes should take into 
      account local cultural conditions, and the need to disseminate literacy 
      and knowledge of elementary arithmetic.
      <P>C. Aid to Co-operatives Financial Aid
      <P>(1) Where necessary, financial aid from outside should be given to 
      co-operatives when they initiate their activities or encounter financial 
      obstacles to growth or transformation.
      <P>(2) Such aid should not entail any obligations contrary to the 
      independence or interests of co-operatives, and should be designed to 
      encourage rather than replace the initiative and effort of the members of 
      <P>(1) Such aid should take the form of loans or credit guarantees.
      <P>(2) Grants and reductions in or exemptions from taxes may also be 
      provided, in particular, to help finance--
      <P>(a) publicity, promotional and educational campaigns;
      <P>(b) certain clearly defined tasks in the public interest.
      <P>22. Where such aid cannot be provided by the co-operative movement, it 
      should preferably be given by the State or other public bodies, although 
      it may, if necessary, come from private institutions. Such aid should be 
      co-ordinated so as to avoid overlapping and dispersal of resources.
      <P>(1) Grants and tax exemptions or reductions should be subject to 
      conditions prescribed by national laws or regulations and relating in 
      particular to the use to be made of the aid and the amount thereof; the 
      conditions of loans and credit guarantees may be determined in each case.
      <P>(2) The competent authority should ensure that the use of financial aid 
      and, in the case of a loan, its repayment, are adequately supervised.
      <P>(1) Financial aid from public or semi-public sources should be 
      channelled through a national co-operative bank or, failing that, another 
      central co-operative institution capable of assuming responsibility for 
      its use and, where appropriate, repayment; pending the establishment of 
      such institutions the aid may be given directly to individual 
      <P>(2) Subject to the provisions of Paragraph 20, subparagraph (2), of 
      this Recommendation, financial aid from private institutions may be given 
      directly to individual co-operatives.
      <P>Administrative Aid
      <P>25. While it is essential that the management and administration of a 
      co-operative be, from the outset, the responsibility of the members and 
      persons elected by them, the competent authority should, in appropriate 
      cases and normally for an initial period only--
      <P>(a) assist the co-operative in obtaining and remunerating competent 
      <P>(b) place at the disposal of the co-operative persons competent to give 
      guidance and advice.
      <P>(1) Generally, co-operatives should be able to obtain guidance and 
      advice, which respect their autonomy and the responsibilities of their 
      members, their organs and their staff, on matters relating to management 
      and administration, as well as on technical matters.
      <P>(2) Such guidance and advice should preferably be given by a federation 
      of co-operatives or by the competent authority.
      <P>D. Supervision and Responsibility for Implementation
      <P>(1) Co-operatives should be subject to a form of supervision designed 
      to ensure that they carry on their activities in conformity with the 
      objects for which they were established and in accordance with the law.
      <P>(2) Supervision should preferably be the responsibility of a federation 
      of co-operatives or of the competent authority.
      <P>28. Auditing of the accounts of co-operatives affiliated to a 
      federation of co-operatives should be the responsibility of that 
      federation; pending the establishment of such a federation, or where a 
      federation is unable to provide this service, the competent authority or a 
      qualified independent body should assume the task.
      <P>29. The measures referred to in Paragraphs 27 and 28 of this 
      Recommendation should be so planned and carried out as to--
      <P>(a) ensure good management and administration of co-operatives;
      <P>(b) protect third parties;
      <P>(c) provide an opportunity of completing the education and training of 
      the office-bearers and members of the staff of co-operatives through 
      practice and through critical examination of mistakes.
      <P>(1) The functions of promoting co-operatives, providing for education 
      concerning co-operatives and for the training of office-bearers and 
      members of the staff of co-operatives, and giving aid in their 
      organisation and functioning, should preferably be performed by one 
      central body so as to ensure coherent action.
      <P>(2) The performance of these functions should preferably be the 
      responsibility of a federation of co-operatives; pending the establishment 
      of such a body the competent authority or, where appropriate, other 
      qualified bodies, should assume the task.
      <P>(1) The functions referred to in Paragraph 30 of this Recommendation 
      should, wherever possible, be discharged as full-time work.
      <P>(2) They should be performed by persons who have received training 
      specifically directed towards the exercise of such functions; such 
      training should be provided by specialised institutions or, wherever 
      suitable, through specialised courses in schools and colleges referred to 
      in Paragraph 19 of this Recommendation.
      <P>32. The competent authority should collect and publish at least once a 
      year a report and statistics relating to the operations and growth of 
      co-operatives in the national economy.
      <P>33. Where the services of federations of co-operatives or of other 
      existing institutions cannot adequately meet the need for research, 
      exchanges of experience and publications, special institutions, serving 
      the entire country or several regions, should, if possible, be 
      <P>IV. International Collaboration
      <P>(1) Members should, to the greatest extent possible, collaborate in 
      providing aid and encouragement to co-operatives in developing countries.
      <P>(2) Such collaboration should be envisaged--
      <P>(a) between developing countries;
      <P>(b) between countries of a particular region, especially within the 
      framework of regional organisations, where such exist; and
      <P>(c) between countries with an old-established co-operative movement and 
      developing countries.
      <P>(3) As appropriate, the help of national co-operative organisations 
      should be enlisted for such collaboration, and use should be made, 
      particularly with a view to the co-ordination of international effort, of 
      international co-operative organisations and other interested 
      international bodies.
      <P>(4) The collaboration should extend to such measures as--
      <P>(a) the increased provision of technical assistance to the co-operative 
      movement of developing countries, wherever possible in the form of 
      co-ordinated programmes involving different agencies, both 
      inter-governmental and non-governmental;
      <P>(b) the preparation and supply of information, textbooks, audio-visual 
      aids and analogous material to assist in the drafting of legislation, in 
      instruction on co-operation and in the training of office-bearers and 
      qualified staffs of co-operatives;
      <P>(c) the exchange of qualified personnel;
      <P>(d) the grant of fellowships;
      <P>(e) the organisation of international seminars and discussion groups;
      <P>(f) the inter-co-operative exchange of goods and services;
      <P>(g) the initiation of systematic research into the structure, working 
      methods and problems of co-operative movements in developing countries.
      <P>V. Special Provisions Concerning the Role of Co-operatives in Dealing 
      with Particular Problems
      <P>35. It should be recognised that co-operatives may, in certain 
      circumstances, have a special role to play in dealing with particular 
      problems of developing countries.
      <P>36. Suggestions illustrating the use which may be made of various forms 
      of co-operatives in the successful implementation of agrarian reform and 
      in the improvement in the level of living of the beneficiaries are set 
      forth in the Annex to this Recommendation.
      <P>1. In view of their importance as a means of promoting general economic 
      and social progress and as a means of directly associating the rural 
      population with the development process, as well as in view of their 
      educational and cultural value, co-operatives should be considered as 
      having a vital role to play in programmes of agrarian reform.
      <P>2. Co-operatives should be used as a means of assessing the problems 
      and interests of the rural population in the planning and preparation of 
      agrarian reform measures. They should also serve for channeling 
      information among agriculturists and making the purposes, principles and 
      methods of such reforms understood.
      <P>3. Particular attention should be paid to the development of 
      appropriate forms of co-operatives adapted to the various patterns and 
      phases of agrarian reform. They should enable cultivators to operate 
      holdings efficiently and productively and allow for the greatest possible 
      initiative and participation of the membership.
      <P>4. Where appropriate, suitable voluntary forms of co-operative land use 
      should be encouraged. These forms may range from the organisation of 
      certain services and farming operations in common to the complete pooling 
      of land, labour and equipment.
      <P>5. Wherever appropriate the voluntary consolidation of fragmentary 
      holdings through co-operatives should be encouraged.
      <P>6. In cases where measures are being envisaged for the transfer of 
      ownership or division of large estates, due consideration should be given 
      to the organisation by the beneficiaries of co-operative systems of 
      holding or cultivation.
      <P>7. The establishment of co-operatives should also be considered in 
      connection with land settlement schemes, especially as regards land 
      reclamation and improvement measures and the organisation of joint 
      services and joint farming operations for settlers.
      <P>8. Development of co-operative thrift and credit societies and 
      co-operative banks should be encouraged among the beneficiaries of 
      agrarian reforms as well as among other small farmers for the purpose of :
      <P>(a) providing loans to cultivators for the purchase of equipment and 
      other farm requisites;
      <P>(b) encouraging and assisting cultivators to save and accumulate 
      <P>(c) advancing loans to, and promoting thrift among, agricultural 
      families, including those of hired workers, who normally would not have 
      access to established sources of credit;
      <P>(d) facilitating the implementation of special governmental credit 
      schemes through an efficient channelling of loans to beneficiaries and 
      appropriate supervision of the use made of such loans and of their timely 
      <P>9. The development of supply, marketing or multi-purpose co-operatives 
      should be encouraged for the purpose of :
      <P>(a) the joint purchase and supply of farm requisites of good quality on 
      favourable terms;
      <P>(b) the supply of basic domestic requirements for all categories of 
      agricultural workers;
      <P>(c) the joint conditioning, processing and marketing of agricultural 
      <P>10. Encouragement should be given to the development of co-operatives 
      providing farmers with other services such as the joint use of farm 
      machinery, electrification, livestock breeding, the provision of 
      veterinary and pest control services, facilities for irrigation, and crop 
      and livestock insurance. 
      <P>11. With a view to improving employment opportunities, working 
      conditions and income, landless agricultural workers should be assisted, 
      where appropriate, to organise themselves voluntarily into labour 
      contracting co-operatives.
      <P>12. Agricultural co-operatives of different localities in areas in 
      which agrarian reforms are being implemented should be encouraged to 
      combine their activities where this is economically advantageous.
      <P>13. Due consideration should also be given to the encouragement and 
      development of other types of co-operative activities providing full- or 
      part-time non-agricultural employment for members of farmers' families 
      (for instance, crafts, home or cottage industries) adequate distribution 
      of consumer goods, and social services which the State may not always be 
      in a position to provide (for instance, health, education, culture, 
      recreation or transport).
      <P>14. The interchange and dissemination of information on the methods, 
      possibilities and limitations of co-operatives in relation to agrarian 
      reform should be encouraged by all possible means so that the experience 
      acquired may be made available to the largest possible number of 
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