Finance Minister Nirmala Sitharaman, in her budget speech last Friday, expressed the hope that 10,000 new Farmer Producer Organisations would be formed in the next five years, given the impetus given by the Modi Government to the farm sector.

However, agri experts are of the view that there are many challenges in setting up Farmer Producer Organisations (FPOs). They require an ecosystem of support to prosper. Today hundreds of FPOs have already been set up but few are making profits.

An FPO is formed by a group of farm producers. It is a registered body with producers as shareholders in the organisation. It deals with business activities related to farm produce and works for the benefit of the member producers. The profit is shared among the producers.

Yogesh Thorat, Managing Director of MAHA FPC, told BusinessLine that today the number of small and marginal farmers is rising. To support such farmers, FPOs could be useful. But merely establishing the FPOs will not work, as they require a good ecosystem to operate. These organisations face challenges such as funding, capacity building and value-chain investments. Domestic policies and laws also need to be addressed, he said. MAHA FPC is a conglomerate of farmer producer companies, and is based in Pune.

Thorat pointed out that the success of an FPO will also depend on other players such as banks, retailers and the corporate sector. The value chain required for the development of FPOs cannot be done by one player. In Maharashtra, about 2,500 FPOs are operating but less than 100 make a profit.

Agriculture Consultant Jagadeesh Sunkad said that there are thousands of FPOs in the country but only a few are successful. “In an FPO, business competence will develop when you have corporate skills and leadership. But most of the FPOs depend on Government programmes and have no business acumen,” he said.

In the earlier budgets the farmers were given subsidies, today those subsidies have reached a limit. Now the government will start giving funds to the FPOs but it will not enhance agriculture incomes, he added.

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