Why do Some PACS Earn Profit or Incur Loss? An Exploratory Study on the Functioning of PACS in Tamil Nadu

In India the Primary Agricultural Cooperative Societies (PACS) are the base level institutions on which the entire cooperative edifice is built. Though the PACS in Tamil Nadu could provide around 20 loan products, 5 marketing services, and host of other services which includes running Fair Price Shops under Public Distribution System, majority of them could not do their business profitably. This has been due to several factors. The present study was conducted on the business performance of PACS in Theni District. This study found that the growth indicators viz., Share Capital, Deposits, Short term loan outstanding, Jewel loan outstanding, Total loan outstanding, Sale of Consumer Goods and Loan Recovery percentage are the indicators common for loss making as well as profit making societies. Apart from these fertilizer distributions played a major role in the case of profit making societies. This might, probably be due to the fact that in the case of fertilizer distribution, there is no chance of loss, since the demand is uniformly high. Hence, the loss making societies, should concentrate on these factors to revive their functioning pattern.