Agri Business

66% FPCs in Maharashtra have a low paid-up capital

Radheshyam Jadhav Pune | Updated on December 01, 2020 Published on December 01, 2020

The State has 1,940 producer companies registered as of March 2019, of which 36 are women-only FPCs

66 per cent of Farmers Producer Companies (FPCs) in Maharashtra with ‘active’ registration have a low paid-up capital of ₹5 lakh or less, severely limiting their ability to procure bulk inputs, trade in agricultural commodities or initiate processing activities.

Richa Govil and Annapurna Neti, faculty of Azim Premji University, conducted a two-year study of Farmer Producer Companies in India to understand the current landscape, challenges and possible ways forward and have recently summarised findings for Maharashtra.

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challenges faced

The study adds that FPCs in the State face challenges similar to those in the rest of the country, such as a weak sense of ownership among producer-shareholders, under capitalisation, inadequate business skills, poor governance and the lack of an enabling local ecosystem. These challenges are partly a result of incongruities in stakeholders’ differing imaginations of the purpose of producer companies, the study added.

Maharashtra has 1,940 producer companies registered as of March 2019, of which 36 are women-only FPCs. The FPC density (number of FPCs per one lakh agricultural workers) in the State is 7.4, which is almost three times the national average, with the highest being 17.8 in Latur and lowest being 2.1 in Gadchiroli district.

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There is an opportunity of strengthening of FPCs in Maharashtra by promoting and supporting more women-only FPCs, the study stated. Maharashtra has the highest number of FPCs registered. The study adds that enabling most FPCs to reach at least ₹5 lakh paid-up-capital by providing matching equity grants, based on achievement of certain milestones would strengthen the FPCs.

Consolidating FPCs into a two-tier model, comprising multiple supplier FPCs together with a market-facing company at a block or district level, collectively handling multiple commodities, value-addition and marketing would help the FPCs.

The market-facing company can be a producer company or a private company linked with agriculture entrepreneurship schemes. Enabling FPCs to have access to value addition and processing facilities, to improve price realisation and reduce the risk for producers, will help the FPCs, the study added.

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Published on December 01, 2020
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