Agri Business

Why FPC/FPOs are banking on the corporate–cooperative model after the repeal of farm laws

Radheshyam Jadhav | | | Updated on: Nov 27, 2021
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The Centre’s move to repeal the farm laws is a setback to the FPC/FPO movement, says MahaFPC MD

With its reach in 28 districts of Maharashtra, MahaFPC has 541 shareholder Farmer Producer Organisations (FPOs) which has handled 1.6 lakh tonnes of agri commodities worth ₹650 crore.

Even during the Covid-19 lockdowns, the organisation generated a profit of ₹7.4 lakh in a year, registering a growth of 150 per cent a year-on-year basis. The Centre’s decision to repeal farm laws has dismayed the MahaFPC members.

Investor confidence down

Yogesh Thorat, Managing Director of MahaFPC, says that the FPC/FPO movement has received a major setback as the government decided to repeal farm laws. Investment in the agribusiness infrastructure supply chain would have started with the approval of farm laws. The recent developments have shaken the confidence of investors in agri sector, he says.

“Farm laws facilitated the creation of new markets outside the APMCs and there was a chance to develop the ecosystem around FPCs. The development of electronic platforms beyond e-NAM is slowly taking place, now these platforms will remain stuck in licence raj ,” said Thorat.

He added, “ FPC will have to move towards corporate co-operative model when it comes to HR management, business, marketing, corporate financing, and investment options. What else does reform mean?”

Thorat added, “Let us be very clear that public investment will not bring any reforms in agriculture and other investment avenues must be tapped. Public investment is a powerful tool in the infancy stage and at some point in time, there has to be a market-led system which will pump money in the system.” He added that small and marginal farmers have only one option to survive and that is to use collective power.

Survival mode

In the Ausa taluka of Latur district, about 600 women have joined hands to form a farmer producer company (FPC). “Farming is not easy here. In the last couple of years, there is good rainfall during the monsoon. Otherwise, you have seen what happened in 2016,” says Sangeeta Hankunne, one of the directors of the FPC. In 2016, the district faced acute water scarcity and the government had to send a train to supply water to Latur city. This was India’s first water train.

Women in Latur are confident that they will be able to develop a market chain for their organic produce without middlemen. “We have just started. We decided to form a company as the traditional way of farming and marketing has not helped us to overcome poverty. We have to think in what way we can use land resources to earn maximum profit,” she adds.

Beed-based Sahyadri Balaghat Farmers' Producer Company is closely working with Nashik-based Sahyadri Farms, one of the successful FPCs in Maharashtra. Irfan Shaikh one of the directors of the FPC says that farmers will have to face the market and it is possible only if farmers are united.

Collective power

The Evaluation Report of PricewaterhouseCoopers (PwC) on FPO component titled, ‘Impact Study 7-Enhanced realisation of agriculture produce marketed through PCs/FCSCs under Maharashtra Agricultural Competitiveness Project (MACP)’, revealed that sales through FPCs have resulted in the increased price realisation by members by 22 per cent.

The report also added that the incidence of cost of marketing is 31 per cent lower than other channels and 28 per cent of members have purchased inputs from FPCs resulting in the net savings of ₹1,384 per acre.

Pramod Rajebhosale, CEO – FPC Incubation Center for Horticulture, Sahyadri Farms, says, “With perishable farm produce you cannot control demand and supply. You cannot negotiate in the market in the absence of infrastructure. Farm laws or no farm laws, it doesn’t make a difference to the fact that farmers will have to come together and raise the capital required for reforms.”

Rajebhosale added that the hybrid model of cooperative and corporate is the way forward for FPCs. “ Now big corporate companies are approaching FPCs and farmers are getting better deals because of collective power. This is also helping in product development and extension of agronomy,” he said.

Promoting FPOs

The government of India has approved and launched the Central Sector Scheme of ‘Formation and Promotion of 10,000 FPOs’.

Under the scheme, the government is promoting the formation of 10,000 new FPOs till 2027-28, with a total budgetary outlay of ₹6,865 crore. The government has made provision for financial assistance up to ₹18.00 lakh per FPO for a period of three years for meeting the FPO management cost.

However, FPC/FPO members feel that they have to face a major challenge to create an ecosystem that was possible if farm laws were executed. The corporate-cooperative model is something FPOs/FPCs are banking on to find a way out to make farming sustainable and profitable.

“Everyone glorifies farmers as annadata. But who will ensure that anndata survives? We don’t need sympathy, but support to make farming profitable,” says Mangal Waghmare, a farmer from Latur. Amidst the din over farm laws, her voice remains unheard.

(This is the last part of the five-part series on repeal of farm laws)

Published on November 28, 2021

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