Budget 2019

Budget 2019: Farmer Producer Organisations require ecosystem of support

Rahul Wadke Mumbai | Updated on July 06, 2019 Published on July 06, 2019

A Farmer Producer Organisation is formed by a group of farm producers. Representative image   -  The Hindu

Agriculture experts point out various challenges in setting up the FPOs

Finance Minister Nirmala Sitharaman in her budget speech on Friday hoped that 10,000 new Farmer Producer Organisations (FPOs) would be formed in the next five years.

However, agriculture experts are of the view that there are many challenges in setting up FPOs. Such FPOs require an ecosystem of support to prosper. Today hundreds of such FPOs have already been set up but very few are making profits.

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

Managing Director of MAHA FPC, Yogesh Thorat told BusinessLine that today the number of small and marginal farmers are rising in the country. To support such farmers, FPOs could be useful. But merely establishing the FPOs will not work, as it requires a good ecosystem to operate. These organisations face challenges such as funding, capacity building and value chain investments. Domestic policies and laws also needed to be addressed for growing the FPOs, he said.

Thorat pointed out that the success of FPO will also depend on other players such as Banks, Retailers and 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 are making any profits.

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

Sunkad said that the fundamental issue of developing stable or predictable markets for farmers has not been addressed by the Finance Minister. A stable and predictable market provides good returns to the framers, then they don’t require any subsidies.

Published on July 06, 2019
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