The liberalization and privatization of Indian agriculture saw the State withdrawing from many productive and economic functions, a space that was readily claimed by the private agribusiness sector. The small farmer found himself at the receiving end – his livelihood threatened in an environment of instability, competition and fragmentation of farm holdings. He faced many issues including lack of access to credit and the market, and technology adoption. But rather than a lone farmer struggling with multiple circumstances beyond his control, could he not become part of a collective for mutual support and collective action? Certainly! This is how the concept of Farmer Producer Organization (FPO) was born.
The concept behind Farmer Producer Organizations is that farmers, who are the producers of agricultural products, can form groups and register themselves under the Indian Companies Act. To facilitate this process, the Small Farmers’ Agribusiness Consortium (SFAC) was mandated by Department of Agriculture and Cooperation, Ministry of Agriculture, Govt. of India, to support the State Governments in the formation of Farmer Producer Organizations (FPOs). The aim is to enhance farmers’ competitiveness and increase their advantage in emerging market opportunities. The year 2014 was observed as the “Year of Farmer Producer Organisations”, and slowly but surely, the concept is catching on. The FPO’s major operations will include supply of seed, fertilizer and machinery, market linkages, training and networking and financial and technical advice.
Field-based evidence already demonstrates that farmers are reaping the benefits of collective action. For example, in Gulbarga district in north Karnataka, which is known as the ‘tur bowl’ of Karnataka, the yield had been was abysmally low owing to use of traditional methods and overuse of inputs. The tur (redgram) farmers never got returns on their investment. Taking note of these problems, a new technology was demonstrated with financial support from SFAC, which helped reduce input cost and increase crop yield. After adopting the new method, one farmer from Gulbarga says that his net increase in income per acre is around 8000 rupees. Another farmer says that he has doubled his income by adopting this new technique, which involved a simple process of growing the seedlings in the nursery, and transplanting them in such a way as to ensure sufficient spacing between saplings and between rows. Farmers have also been able to inter-crop, which earns them additional income. Had these farmers not been part of the local FPO, they would not even have exposure to the new techniques.
A handful of successful examples apart, FPOs need sustenance if it must be mainstreamed in the long run. Help is available through NABARD (National Bank for Agriculture and Rural Development) which is supporting producer organizations, adopting a flexible approach to meet the needs of the producers by setting up the “Producer Organization Development Fund” in April 2011, with an initial corpus of Rupees 50 crore. It provides credit support for financial intervention, market interventions and capacity building in the form of grants, loans or a combination of these.
However, some of the drawbacks that FPOs face is the lack of administrative capacity resulting in poor management of books which leads to issues with accountability and transparency. These factors stand in the way of their accessing finance from banks. To overcome such issues, SourceTrace solutions can help, not only with account management, but also with regard to digitising the traceability / certification process to get premium pricing.
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