Mr. Hem Prakash Verma, Ph. D Research Scholar, Department of Agricultural Extension, Indira Gandhi Krishi Vishwavidyalaya, Raipur, Chhattisgarh, explains in detail about the Farmer Producer Organisation and its status, scope, and the challenges involved.
The status, scope, and challenges faced by the FPOs or Farmer Producer Organisations are too many. The need for FPOs started to cater to the needs of small and marginal farmers in India who constitute more than 80%. They are not getting the correct price for their produce nor are they able to access markets properly. It has become essential that they need to unite to get the prices and market linkages. An FPO is a producer company or a cooperative society and a legal firm that provides for the sharing of profit and benefits among members. Producer Organisations have producer companies that can become members of another producer company. In an FPO, the members are farmers.
Any individual or institution including an NGO or a single person can promote FPOs. In India, there are so many FPOs formed by the promoters such as NABARD, SFAC, government departments, and NGOs. These promoting institutions are called POPIs meaning Producer Organisation Promoting Institutions. They can promote the Producers Organisations in terms of capital and preparing business plans, and capacity building. They provide the inputs and let them know how they should work. FPO is a legal entity formed by farmers of any class who could do collectively any form of agriculture business with sub-groups dealing with one or more than one commodity. As many as 20 members can start FPOs for any commodity purchasing and selling them. The Central Government is supporting new upcoming FPOs from 2021, promotion of 10 thousand FPOs as Central sector Scheme as the Central government promotes FPOs as a central sector scheme. The total budget allotted for FPOs is Rs. 4496 crores for 5 years. The promoting agencies help the farmers with technical, managerial, and financial aspects.
There are many challenges for the existing FPOs and others formed outside the ambit of CCS is same. They are not able to move to the next stage of their life cycle to economically viable business unit to create value for their shareholders and society as a whole. The objectives of FPC include: production, harvesting, procurement, grading, and pooling which helps farmers to have their own business which they are unable to do due to their bargaining nature. With collectivisation farmers can get benefit from FPCs and begin production, harvesting, processing, drying, apart from types of agriculture inputs, generation, transmission, distribution of power, manufacture, sale, supply of machinery and equipment, and consumables mainly to members. They can start their own business and register under FPC Act.
The advantages of FPOs are numerous. There are many reports and studies that have clearly captured and established the positive role of FPOs. The cost of production or cultivation is reduced due to procuring all necessary inputs in bulk or wholesale rates and using custom hiring services of farming equipment. Aggregation of produce and bulk transport reduce marketing costs and enhance the net value accrual to the producer. Building scale through aggregation of commodities lends the advantage to attract traders and processors. Access to modern technology extension services can help in minimising post-harvest losses through joint storage and value addition facilities.
There are a few differences between FPC and cooperatives. The registration process for cooperative studies is done under cooperative societies act, state legislative, or national legislative Act, while for FPOs it comes under Companies’ Act 2013. Membership for cooperatives is open to any individual or cooperative, but for FPO it is only farmer members and agencies. Area of operation for cooperatives is restricted, but FPO can sell its products throughout the country. shares in cooperatives are not tradable, but for FPOs it is tradable within members only. Role of government in cooperatives is significant but minimal in FPOs. Profit sharing in cooperatives limited dividend on capital. In an FPO, it is based on patronage which is the use of service offered by members for participation in its activities and reserves.
FPOs have evolved manifold in India. In 2011, we had 156 FPOs registered and in 2022 it is 7059 FPOs. This data is based on the one issued by PIB. Major chunk of FPOs are seen in Karnataka with 578 FPOs, followed by Maharashtra at 569, and Madhya Pradesh with 550 FPOS. Government of India has initiated schemes for starting 10000 FPOs.
The ecosystem for sustainable FPOs is prepared by NABARD. It means there is a procedure for processing and procurement. Government policies and infrastructure should be there from Central and State schemes., retailing like direct marketing. We can make FPOs at rural points, technical services with inputs from Advisories, agro services, warehouse receipts, crediting guaranty equity from NABARD, banks, NFB, and training and capacity building. These are the ecosystem for sustainable FPOs.
FPOs have the potential to act as catalyst of change in rural economy in India. The aspiration and initial landholding for managerial capacity building and easy access to working capital. Institutional support may support the FPOs, and it is including experts in management team to strengthen the business operations of FPOs and transparency in governance of FPOs. Existing mandatory regulatory compliances appear to be big deterrent for many small FPOs. This needs to be taken care of by the state for the initial years. FPOs may be given preference for participation in government funded schemes to provide market linkage for the farm produces.
Recommendations given by NAARM 2022 for economic viability and long-term sustainability of FPOs, to set up An FPO on the pattern of MSME, and seed fund as one time grant for all the registered FPOs on pre-decided criteria, customised financial products to be created with banks for FPOs, linkage of each FPO with KVK, Agri Universities, development institutions to provide continuous technical support and guidance to FPOs for sustainable working. Regulatory compliances pool of empanelled Cas in each state shall be created for technical and financial support. Common post-harvest infrastructure facilities at the district levels so that FPOs can use the infrastructure for post-harvest work. The marketing problem to be addressed by extended preferential treatment to the FPOs in running schemes like mid-day meal schemes and Poshan Abhiyan. Most of the FPOs can be sustainable by these schemes.
The main challenges include lack of understanding about the business model, since the farmers are not getting or making any business model and the government has supported the creation of FPOs, but there is no specific model for their work. They need appropriate business model to develop the business plan and devise strategies to get maximum benefit from the market, understand the intricacies of the market and consumers’ demand. There are only a few funding agencies such as NABARD, SFAC. The government of India should create some agencies for funding the FPOs to use the capitalisation more for their work. Also, FPOs need good management like CEO and advisory services. They need skilled persons to help in the working pattern. It has been observed that FPOs formed by a few progressive farmers in rural areas support the farmers in their locality by collectivising the operations. It is difficult for them to maintain balance between personal interest and farmers’ interest. Control over the ownership of the FPOs with conflict leads to poor management of FPOs.
FPOs registered under Producer Companies Act 2013 are treated in the same manner as other large companies. Regulatory compliances like book keeping, accounting, taxations are highly demanding for farmers who have never come across such things. So, there is a need for CAs and CEOs. The FPOs have no active business plans, and when they need to plan for the success of the organisation, the government has to provide the business plans to them. It becomes more imminent if the executive members are farmers who are unskilled about different aspects of any business. The business plan provides real guard to organisation to navigate within boundaries, helps in diversity, and scales up business. Without business plans, the activity is limited from buying to selling the inputs and farm products. The FPOs need a different platform for selling of their goods. There is a need for private companies and FPOs for procurement of vegetables. FPOs are more sustainable in establishing linkages for disposal of agricultural produce in large volumes. So, there is a need for strong market linkages by the central and state governments.
A few successful FPOs are Jagannath Crop Producer Company, Odisha, Parshuswamvardhan Producers Company Maharashtra, Koriya Agro Producer Company Limited (KAPCL), and Jai Kopershwarnath Krishi Producer Company Limited (JKKPCL). Many FPOs are being supported by Chhattisgarh. The FPOs with government support are functioning all over the states. The state government has already 146 FPOs through NABARD and NCDC.
What are the main objectives of establishing FPOs? How do FPOs contribute to enhancing farmers’ bargaining power in the market? Would you highlight successful examples of FPOs and their impact on rural communities?
India has about 80% of small and marginal farmers with poor bargaining power. They do not get the correct price for their products. So FPOs help in schemes, collectivisation, and irrigation for farmers’ benefit. They can sell the products in groups and are registered under companies directly to the buyers. The products are directly sold to online platforms like eNAM. They will get benefit from the direct selling of their products as there is no gap between the buyer and seller. There are about 10 FPOs across India and 2 or 3 in Chhattisgarh running successfully and benefiting the farmers. One of the most successful FPC is Sahyadri Farm in Maharashtra. Jagannath Crop Producer Company in Odisha and Vegetable Growers’ Association in Pune are some more successfully running FPOs.
Explain the current trends and status of FPOs in agriculture sector and the key challenges FPOs typically face in their operations. How can FPOs help in mitigating post-harvest losses and improving the agri value chains?
There are 9 thousand FPOs in the country. Karnataka leads the number of FPOs, followed by Maharashtra and Madhya Pradesh. Technical guidance and capital are needed for their operations. Promotional work, capacity building, and trainers are needed for the operation of the FPOs. Central and state Government of India have started the post-harvest manufacturing unit in each district. The FPOs can use these facilities to process their products.
What financial and technical resources are needed to establish sustainable and successful FPOs? What strategies can be adopted to encourage greater participation of women and marginalised farmers in FPOs?
The technical guidance given by POPI like NABARD will provide the total worksheet and planning needed to sustainable development and running of FPOs. POPI has given the technical and financial support to the FPOs. They differ in each area. The Jaipur FPOs sell the seeds only. They need some financial and assistance for their processing unit. Each FPO differs. Government should start the FPOs at the grassroot level in villages to promote SHG women participation and strengthening them.
How can technology and digital platforms be integrated to FPOs for better outreach?
There are so many mobile apps and technology introduced and commercialised by the ICAR. So the FPO member will get benefited from mobile apps, and they need to participate in more training programs FPOPIs have initiated, and they will do the training for the effective use of the technologies.
HEM PRAKASH VERMA
PhD Research Scholar, Department of Agricultural Extension
Room No. 218, Sundaram Boys Hostel,
College of Agriculture, Raipur
Indira Gandhi Krishi Vishwavidyalaya, Raipur- 492012 (C.G.)
Mobile: +91 93400 33529
The status, scope, and challenges faced by the FPOs or Farmer Producer Organisations are too many. The need for FPOs started to cater to the needs of small and marginal farmers in India who constitute more than 80%. They are not getting the correct price for their produce nor are they able to access markets properly. It has become essential that they need to unite to get the prices and market linkages. An FPO is a producer company or a cooperative society and a legal firm that provides for the sharing of profit and benefits among members. Producer Organisations have producer companies that can become members of another producer company. In an FPO, the members are farmers.
Any individual or institution including an NGO or a single person can promote FPOs. In India, there are so many FPOs formed by the promoters such as NABARD, SFAC, government departments, and NGOs. These promoting institutions are called POPIs meaning Producer Organisation Promoting Institutions. They can promote the Producers Organisations in terms of capital and preparing business plans, and capacity building. They provide the inputs and let them know how they should work. FPO is a legal entity formed by farmers of any class who could do collectively any form of agriculture business with sub-groups dealing with one or more than one commodity. As many as 20 members can start FPOs for any commodity purchasing and selling them. The Central Government is supporting new upcoming FPOs from 2021, promotion of 10 thousand FPOs as Central sector Scheme as the Central government promotes FPOs as a central sector scheme. The total budget allotted for FPOs is Rs. 4496 crores for 5 years. The promoting agencies help the farmers with technical, managerial, and financial aspects.
There are many challenges for the existing FPOs and others formed outside the ambit of CCS is same. They are not able to move to the next stage of their life cycle to economically viable business unit to create value for their shareholders and society as a whole. The objectives of FPC include: production, harvesting, procurement, grading, and pooling which helps farmers to have their own business which they are unable to do due to their bargaining nature. With collectivisation farmers can get benefit from FPCs and begin production, harvesting, processing, drying, apart from types of agriculture inputs, generation, transmission, distribution of power, manufacture, sale, supply of machinery and equipment, and consumables mainly to members. They can start their own business and register under FPC Act.
The advantages of FPOs are numerous. There are many reports and studies that have clearly captured and established the positive role of FPOs. The cost of production or cultivation is reduced due to procuring all necessary inputs in bulk or wholesale rates and using custom hiring services of farming equipment. Aggregation of produce and bulk transport reduce marketing costs and enhance the net value accrual to the producer. Building scale through aggregation of commodities lends the advantage to attract traders and processors. Access to modern technology extension services can help in minimising post-harvest losses through joint storage and value addition facilities.
There are a few differences between FPC and cooperatives. The registration process for cooperative studies is done under cooperative societies act, state legislative, or national legislative Act, while for FPOs it comes under Companies’ Act 2013. Membership for cooperatives is open to any individual or cooperative, but for FPO it is only farmer members and agencies. Area of operation for cooperatives is restricted, but FPO can sell its products throughout the country. shares in cooperatives are not tradable, but for FPOs it is tradable within members only. Role of government in cooperatives is significant but minimal in FPOs. Profit sharing in cooperatives limited dividend on capital. In an FPO, it is based on patronage which is the use of service offered by members for participation in its activities and reserves.
FPOs have evolved manifold in India. In 2011, we had 156 FPOs registered and in 2022 it is 7059 FPOs. This data is based on the one issued by PIB. Major chunk of FPOs are seen in Karnataka with 578 FPOs, followed by Maharashtra at 569, and Madhya Pradesh with 550 FPOS. Government of India has initiated schemes for starting 10000 FPOs.
The ecosystem for sustainable FPOs is prepared by NABARD. It means there is a procedure for processing and procurement. Government policies and infrastructure should be there from Central and State schemes., retailing like direct marketing. We can make FPOs at rural points, technical services with inputs from Advisories, agro services, warehouse receipts, crediting guaranty equity from NABARD, banks, NFB, and training and capacity building. These are the ecosystem for sustainable FPOs.
FPOs have the potential to act as catalyst of change in rural economy in India. The aspiration and initial landholding for managerial capacity building and easy access to working capital. Institutional support may support the FPOs, and it is including experts in management team to strengthen the business operations of FPOs and transparency in governance of FPOs. Existing mandatory regulatory compliances appear to be big deterrent for many small FPOs. This needs to be taken care of by the state for the initial years. FPOs may be given preference for participation in government funded schemes to provide market linkage for the farm produces.
Recommendations given by NAARM 2022 for economic viability and long-term sustainability of FPOs, to set up An FPO on the pattern of MSME, and seed fund as one time grant for all the registered FPOs on pre-decided criteria, customised financial products to be created with banks for FPOs, linkage of each FPO with KVK, Agri Universities, development institutions to provide continuous technical support and guidance to FPOs for sustainable working. Regulatory compliances pool of empanelled Cas in each state shall be created for technical and financial support. Common post-harvest infrastructure facilities at the district levels so that FPOs can use the infrastructure for post-harvest work. The marketing problem to be addressed by extended preferential treatment to the FPOs in running schemes like mid-day meal schemes and Poshan Abhiyan. Most of the FPOs can be sustainable by these schemes.
The main challenges include lack of understanding about the business model, since the farmers are not getting or making any business model and the government has supported the creation of FPOs, but there is no specific model for their work. They need appropriate business model to develop the business plan and devise strategies to get maximum benefit from the market, understand the intricacies of the market and consumers’ demand. There are only a few funding agencies such as NABARD, SFAC. The government of India should create some agencies for funding the FPOs to use the capitalisation more for their work. Also, FPOs need good management like CEO and advisory services. They need skilled persons to help in the working pattern. It has been observed that FPOs formed by a few progressive farmers in rural areas support the farmers in their locality by collectivising the operations. It is difficult for them to maintain balance between personal interest and farmers’ interest. Control over the ownership of the FPOs with conflict leads to poor management of FPOs.
FPOs registered under Producer Companies Act 2013 are treated in the same manner as other large companies. Regulatory compliances like book keeping, accounting, taxations are highly demanding for farmers who have never come across such things. So, there is a need for CAs and CEOs. The FPOs have no active business plans, and when they need to plan for the success of the organisation, the government has to provide the business plans to them. It becomes more imminent if the executive members are farmers who are unskilled about different aspects of any business. The business plan provides real guard to organisation to navigate within boundaries, helps in diversity, and scales up business. Without business plans, the activity is limited from buying to selling the inputs and farm products. The FPOs need a different platform for selling of their goods. There is a need for private companies and FPOs for procurement of vegetables. FPOs are more sustainable in establishing linkages for disposal of agricultural produce in large volumes. So, there is a need for strong market linkages by the central and state governments.
A few successful FPOs are Jagannath Crop Producer Company, Odisha, Parshuswamvardhan Producers Company Maharashtra, Koriya Agro Producer Company Limited (KAPCL), and Jai Kopershwarnath Krishi Producer Company Limited (JKKPCL). Many FPOs are being supported by Chhattisgarh. The FPOs with government support are functioning all over the states. The state government has already 146 FPOs through NABARD and NCDC.
What are the main objectives of establishing FPOs? How do FPOs contribute to enhancing farmers’ bargaining power in the market? Would you highlight successful examples of FPOs and their impact on rural communities?
India has about 80% of small and marginal farmers with poor bargaining power. They do not get the correct price for their products. So FPOs help in schemes, collectivisation, and irrigation for farmers’ benefit. They can sell the products in groups and are registered under companies directly to the buyers. The products are directly sold to online platforms like eNAM. They will get benefit from the direct selling of their products as there is no gap between the buyer and seller. There are about 10 FPOs across India and 2 or 3 in Chhattisgarh running successfully and benefiting the farmers. One of the most successful FPC is Sahyadri Farm in Maharashtra. Jagannath Crop Producer Company in Odisha and Vegetable Growers’ Association in Pune are some more successfully running FPOs.
Explain the current trends and status of FPOs in agriculture sector and the key challenges FPOs typically face in their operations. How can FPOs help in mitigating post-harvest losses and improving the agri value chains?
There are 9 thousand FPOs in the country. Karnataka leads the number of FPOs, followed by Maharashtra and Madhya Pradesh. Technical guidance and capital are needed for their operations. Promotional work, capacity building, and trainers are needed for the operation of the FPOs. Central and state Government of India have started the post-harvest manufacturing unit in each district. The FPOs can use these facilities to process their products.
What financial and technical resources are needed to establish sustainable and successful FPOs? What strategies can be adopted to encourage greater participation of women and marginalised farmers in FPOs?
The technical guidance given by POPI like NABARD will provide the total worksheet and planning needed to sustainable development and running of FPOs. POPI has given the technical and financial support to the FPOs. They differ in each area. The Jaipur FPOs sell the seeds only. They need some financial and assistance for their processing unit. Each FPO differs. Government should start the FPOs at the grassroot level in villages to promote SHG women participation and strengthening them.
How can technology and digital platforms be integrated to FPOs for better outreach?
There are so many mobile apps and technology introduced and commercialised by the ICAR. So the FPO member will get benefited from mobile apps, and they need to participate in more training programs FPOPIs have initiated, and they will do the training for the effective use of the technologies.
HEM PRAKASH VERMA
PhD Research Scholar, Department of Agricultural Extension
Room No. 218, Sundaram Boys Hostel,
College of Agriculture, Raipur
Indira Gandhi Krishi Vishwavidyalaya, Raipur- 492012 (C.G.)
Mobile: +91 93400 33529