Farmer Producer Organizations
Context:
- Eastern Uttar Pradesh has become a major export centre for fruits and vegetables within the last two years. Progressive farmers have partnered with local FPOs to become change agents.
Introduction:
- By using a multifaceted approach that includes increasing productivity, cutting costs, boosting marketability, crop diversification, risk reduction, and the use of climate resilient technologies, the government has attempted to realise its goal of increasing farmers’ income.
- One of the main issues this sector faces is fragmented holdings. They inhibit investment in agriculture and obstruct economies of scale. Farmer Producers’ Organisations (or Companies) have addressed this issue in recent years.
About FPOs:
- A group of farmers that operate in a certain geographic area or own property together is known as an FPO. It may be registered as a cooperative under the Societies Registration Act or as a company under the Companies Act.
- FPOs have proven to have the ability to spark cluster-based farming by introducing economies of scale in input management, promoting agri-extension, allowing the adoption of new technologies, guaranteeing product quality, and assisting farmers in marketing their harvest.
Governmental programmes:
- The Center’s plan to establish and support 10,000 FPOs calls for farmer cooperation in tasks including input management. This kind of collaboration can help farmers become more skilled, provide value, and build connections with markets.
- A special FPO unit has been established by the Uttar Pradesh government to handle these outfits. The aim is to facilitate scheme convergence, tackle compliance concerns, and offer ongoing assistance to FPOs to enable them to function as catalysts for growth within the rural sector.
- All of the UP’s active FPOs now have a platform thanks to the opening of the FPO Shakti portal. It is a one-stop shop for resolving grievances, establishing economic alliances, and promoting convergence.
- In order to provide a 3% APR subvention for credit given to improve post-harvest infrastructure, the Centre established the Agriculture Infrastructure Fund. For FPOs, this incentive is offered. The UP government lowers the total interest rate on these loans to about 3% by giving FPOs and farm businesses an extra 3% subsidy.
Government initiatives are having an impact:
- FPOs are essential to value addition and agricultural diversity. 1,316 of these businesses, according to UP’s FPO portal, deal in cereals; 378 in horticultural products; 338 in pulses; 231 in oilseeds; 48 in millet products; 101 in medicinal and aromatic crops; and 170 in sugarcane-based products.
- In Uttar Pradesh, 100 FPOs have set up seed processing facilities. Some of these organisations have agreements in place for buy-back programmes with state and national seed corporations, while others sell their seeds on the open market.
- Through FPOs, climate-resilient techniques like direct rice sowing are being implemented.
- After the UP government unveiled its flagship programme, One District One Product, Siddharthnagar district was assigned to grow Kalanamak rice. Now, FPOs are becoming innovation engines. This effort has being led by an FPO. By creating the value chain of high-nutrient agricultural goods including millets, mushrooms, moringa, and fortified cereals, a number of these organisations are attempting to enhance nutrition.
- In Rampur, the district administration and the FPO worked together on the “Aahaar Se Upchar Tak” campaign to provide anganwadi kendras with nutrient-dense goods. The area’s nutritional results improved as a result of their efforts.
Concerns that FPOs face:
- In 2015, a research conducted by the National Bank for Agriculture and Rural Development (NABARD) revealed that hardly 15% of Indian farmers were aware of FPOs. This ignorance may result in limited involvement in FPOs and mistrust of their capacity to produce outcomes.
- According to a 2018 research by the National Council of Farmer Cooperatives, just 30% of FPOs in India have access to financing. The ability of FPOs to invest in infrastructure and other resources may be hampered by their lack of financial resources.
- According to a 2019 Confederation of Indian Industry report, just 40% of FPOs in India have managers who are certified. This lack of managerial abilities may result in ineffective decision-making and poor coordination, both of which may reduce the efficacy of the organisation.
- In India, just 20% of FPOs have access to transportation, processing, and storage facilities, among other essential infrastructure.
Way ahead:
- Numerous FPOs are deficient in technical expertise, competent management, sound financials, credit availability, risk mitigation strategies, and market and infrastructural accessibility.
- They require a great deal of market and pricing data in addition to other knowledge and information technology proficiency.
- As FPOs are scaled up, the aforementioned problems—working capital, marketing, and infrastructure—must be addressed.
- The main issue is getting credit. Structured products are required by banks in order to lend to FPOs.
- They must have connections to input companies, retailers, marketing/processing firms, and technical service providers.
