They are formed by small farmers with the objective of maximizing agricultural output. High fragmentation of land leads to low output, and lack of resources to implement modern methods of cultivation. In the case of co-operative farming societies, land holdings of members are consolidated, modern methods of cultivation adopted and good quality of seeds and fertilizers are used. Since the purchase of seeds and fertilizers and hiring of equipment is done in a centralized manner, the costs are lower. The benefits of collective farming such as lower cost of inputs, implementation of modern methods of cultivation etc. leads to higher productivity and profits which is shared by all the members.
The co-operative movement has played an important role in promoting economic welfare among the weaker sections and the rural community. Political interference and corruption among members of the managing committee in some co-operatives have led to their failure.