Can FPOs bring real change on the ground?

Over 180 farmer producer organisations(FPOs) are either in the process of registration or have started functioning in Beed district of Maharashtra. More farmers are joining hands to form FPOs under the Central government’s scheme to promote farmer collectives. However, most of these companies are in the dark about how to leverage economies of scale in production and marketing in order to enhance productivity.

“The government support and subsidies are attracting more and more farmers to form FPOs. But the majority of these companies are not aware of what will they do after registration. Many companies that are operational are only involved in procurement and marketing soya and cotton. There is hardly any company that is into processing and helping farmers to enhance production” admitted the member of an FPC (farmer producer company) in Beed (FPO is an umbrella concept of which FPC is one component).

To succeed, an FPO should tick a few boxes

The government of India’s Central Sector Scheme to form and promote 10,000 FPOs aims to enhance productivity through efficient, cost-effective, and sustainable resource use to ensure income-oriented farming. This would help in the reduction of cost of farm production and enhance farmers’ earnings, thus playing a major role in doubling the income of farmers.

FPO is a generic name, which means and includes farmer producerorganisations incorporated or registered either under Part IXA of Companies Act or under Co-operative Societies Act of the concerned States and formed for the purpose of leveraging collectives through economies of scale in production and marketing of agricultural and allied sector.

Reimagining FPOs to transform lives of marginal farmers

“There are some FPCs involved in cleaning, assaying, sorting, grading, packing process. But there is infrastructure and electricity problem in the region. Storage and transportation facilities are lacking. In fact, when government officials held a meeting of FPCs members and asked what the plan of execution is, there was no answer,” said the founder member of an FPC in Beed.

Findings of study

But this is not the case with FPCs in one district of the State. Maharashtra is a leading State when it comes to the formation of FPCs.

“However, 66 per cent of FPCs 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.

Producer Companies in Maharashtra 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,” observed a study conducted by the Azim Premji University last year. The study added that these challenges are partly a result of incongruities in stakeholders’ differing imaginations of the purpose of producer companies.

‘A clear plan is a must’

“FPCs must have a clear plan. It is important to remember that it is not just another organisation of farmers. We have to have an innovative and entrepreneurial approach. It is challenging to run the FPC in areas like Marathwada and Vidarbha where drought and unseasonal rains disturb agri economy cycle. Otherwise, FPOs would just remain a number without actual change on the ground,” said Shivraj Kharbad, a member of the FPC in Kej taluka of Beed.

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