|
|
|
You can get e-magazine links on WhatsApp. Click here
|
|
|
|
|
|
Farmer Producer Organisations: A comprehensive overview and role in agriculture
|
|
Wednesday, 13 November, 2024, 16 : 00 PM [IST]
|
|
Dr A. Aruna Kumari & A Vidhya
|
 Farmer Producer Organisations (FPOs) are legal associations of farmers, registered under various frameworks like the Company Act, Co-operative Society Act, and Trust Act. They aim to empower, alleviate poverty, and advance farmers and the rural poor. FPOs aggregate marginal, small, and landless farmers, improving their income and economic resilience. They offer comprehensive services, including marketing, technical assistance, processing, and essential cultivation inputs. In India, FPOs are considered a crucial tool for uplifting farmers' conditions, as they help them access modern production technologies, market information, and trade commodities on their terms. Established in 2012-13, FPOs consolidate agricultural production and enhance value addition, integrating agri-entrepreneurs and primary producers.
Objectives of FPO’s:
FPOs aim to support small-scale farmers in improving their agricultural output, productivity, and profitability. It assists in selecting suitable crops, facilitating access to advanced technologies, ensuring quality inputs and services, and promoting optimal agricultural practices. The organisation also encourages uniform production, consolidates produce for bulk distribution, oversees harvesting, grading, processing, and marketing strategies, and engages in selling or exporting activities related to primary agricultural products.
Typical Features of FPO’S
This entity functions as a corporate body and is registered in accordance with the Indian Companies (Amendments) Act of 2002. Ownership and membership are exclusively reserved for 'primary producers' or 'Producer Institutions.' Members have the ability to transfer their equity to others. The liabilities of a farmer producer organisation are confined to the value of the issued share capital. At the time of incorporation, the minimum authorised capital must be Rs 5 lakh. A minimum of 10 producers is necessary to establish an FPO, while there is no upper limit on the number of members.
Current Status of FPOs
Farmer Producer Organisations (FPOs) currently function as collectives primarily composed of small and marginal farmers, with approximately 70 to 80 percent of their membership falling into this category. As of now, India boasts around 7,000 FPOs, including Farmer Producer Companies (FPCs), which have been established over the past 8 to 10 years through various initiatives by the Indian government, state governments, NABARD, and SFA organisations. Out of these, approximately 4,800 FPOs are registered as FPCs under NABARD and SFAC, while the remainder are classified as cooperatives or societies. The states of Karnataka, Maharashtra, Madhya Pradesh, Telangana, and Uttar Pradesh collectively represent 40 percent of the total registered FPOs. Additionally, Odisha, Tamil Nadu, West Bengal, Andhra Pradesh, Bihar, Gujarat, Rajasthan, and Jharkhand account for another 40 percent of the registered FPOs in the country. Research indicates that around 60 percent of the registered FPOs have approximately 500 farmer shareholders, while about 10 to 15 percent have more than 1,000 farmer shareholders. Nearly half of the registered FPOs possess an authorised capital nearing Rs 1 lakh.
Benefits of FPO’s
Farmer Producer Organisations (FPOs) and Farmer Producer Companies (FPCs) are aggregators that facilitate sales through electronic trading, distributing funds among their members. The Union Budget for 2017-18 allocated resources for collection, sorting, grading, and packing facilities, as well as personalised dashboards for real-time commodity arrival, quality, and pricing updates. FPOs offer a range of services to their members, including inputs, technical assistance, processing, and marketing. Some FPOs have even provided cash advances to vulnerable communities during the Covid-19 pandemic.
FPOs facilitate connections among farmers, processors, traders, and retailers, enhancing supply and demand coordination. They also provide access to essential business development services, market information, input supplies, and transportation. The approach promotes clusterisation of production, consolidation of supply, optimised production costs, and stabilised prices for produce. It also focuses on increasing efficiency in primary processing and utilising co-products for additional employment and income. FPOs use risk management tools to mitigate operational risks and reduce post-harvest losses through collaborative storage and value addition facilities. Members can access institutional credit against their stock without collateral, thanks to the joint liability inherent in the FPO framework.
Challenges and issues:
FPOs face several challenges in their establishment and sustainability. These include insufficient legal and technical knowledge, a shortage of experienced personnel, financial limitations, restricted access to credit, limited capacity for risk-taking, insufficient access to market information, challenges in direct marketing, inadequate infrastructure for commodity quality enhancement, obstacles in mobilising farmers effectively, limited organisational and management capabilities, a pressing need for incubation and ongoing support, the complexity of managing a larger membership base, the restricted ability of FPOs to generate equity, and limited capacity to independently invest in primary and secondary processing, storage, and custom hiring services. These constraints disproportionately affect small and marginal farmers with fragile financial foundations. The need for incubation and ongoing support is urgent, as well as the complexity of managing a larger membership base within an FPO.
Economic impact of FPOs (case studies)
The study reveals that transitioning to organic chilli farming in Telangana led to a 23.4% decrease in yield for FPO members, mainly due to a 9.06% reduction in input usage. However, FPO members saw a 13.85% increase in gross income per hectare, with a benefit-cost ratio of 2.7, surpassing that of non-members. This is largely due to FPOs’ role in educating farmers about organic practices, offering technical support, and ensuring timely input provision.
The farming community faces challenges due to oppressive practices by commission agents and middlemen, affecting their ability to secure fair prices and profitable incomes. Farmer Producer Organisations (FPOs) can help address these issues by providing education, business planning, and market connections with national and international companies. FPOs offer direct marketing opportunities, reducing transportation costs and achieving better price realisations. Policymakers’ support in FPO operation would greatly benefit the farming community. Encouraging children to engage in agriculture and fostering a love for the field is also crucial. FPOs facilitate direct marketing channels, reducing market intermediaries’ influence and ensuring fair prices and profitable incomes for small and marginal farmers. Members of FPOs typically enjoy greater income, employment opportunities, savings, knowledge, access to technology, processing capabilities, transportation, market access, and storage facilities compared to non-FPO members.
(Dr Kumari is assistant professor (Agricultural Economics), Department of Agricultural and Horticultural Sciences, Vignan's Foundation for Science and Technology Research, Guntur, Tenali Road, Vadlamudi, Andhra Pradesh; Vidhya is a student Bsc (agril), Department of Agricultural and Horticultural Sciences, Vignan's Foundation for Science and Technology Research, Guntur, Tenali Road,
Vadlamudi, Andhra Pradesh)
|
|
|
|
|
|
|
|
|
|