The majority of farmers in India has marginal land holdings with low yields. What role can farmer producer organisations play here?
Being predominantly small and marginal (86 per cent), Indian farmers face many challenges that affect viability of farming. A key issue is the decreasing size of land holdings, leading to low marketable surplus. Farmer producer organisations (FPOs) have emerged as a potential tool to transform small-farmer agriculture into a sustainable enterprise by taking advantage of economies of scale. FPOs facilitate access to credit, technology and modern agricultural practices, ensuring that farmers can adopt the latest innovations and best practices for crop cultivation. FPOs generally have an average membership of 300-450 farmers. With this adoption of good agricultural practices, leveraging agri-technologies, better post-harvest operation can be channelised through FPOs.
How many FPOs do we have? Which are the states that have taken a lead here?
We do not have authenticate source of data on the number of FPOs operating in India because multiple agencies are involved in promoting them. However, NABARD started formation of FPOs in 2014-15 and it has promoted more than 7,000 of them across the country. These FPOs have a total membership of 23.44 lakh, of which 18.50 lakh (79 per cent) are small and marginal farmers, which include 31 per cent of women farmer members.
These FPOs are engaged in various business activities such as agri-input, aggregation, value addition, processing and marketing of agri-produce, and custom hiring centre. A total of 1,800 FPOs have availed credit from various financial institutions and 3,500 FPOs have linkage with institutional buyers.
In Uttar Pradesh, Madhya Pradesh, Andhra Pradesh, Odisha, Karnataka, Tamil Nadu, Telangana, Bihar, West Bengal, Rajasthan, Maharashtra and Gujarat, NABARD has promoted highest number of FPOs.
Which are the areas where FPOs typically need handholding?
FPOs typically need support in preparation of business plan, stimulation of business activity, acquiring business licenses, establishing credit linkages and market linkages, and meeting statutory compliances. NABARD, through its training establishments, conducts training programmes for various bank officials, FPOs, producer organisation promoting institutions (POPIs) and NGOs on business planning, financing, capacity building programmes for directors and CEOs, hi-tech agriculture, statutory compliances, and linking FPOs with commodity exchanges.
NABARD organises several meetings with various banks for framing the actions for providing credit to FPOs and availing facilities of credit guarantee scheme. NABARD has developed a guidance note on FPO financing for use by financial institutions. As part of its strategic investments, NABARD has joined Open Network for Digital Commerce (ONDC), facilitating market linkage of FPOs. More than 600 FPOs promoted by NABARD have been on-boarded on ONDC.
Cooperative farming in India hasn’t been very successful. Can FPOs address the shortcomings?
Cooperative farming in India has not been so encouraging mainly because of lack of legal protection, political interventions, limited areas of operation, high level of government control, and limited organisational vision. However, FPOs will address the requirement of quality inputs and collective marketing, which forms major traits of cooperative farming. FPOs registered under the Companies Act provide an enabling environment and legal protection to take independent decision in operation of such members’ institutions.
The central government has a scheme to form and promote 10,000 FPOs. How has this scheme progressed?
The government launched a central sector scheme titled 'Formation and Promotion of 10,000 Farmer Producer Organisations' on 29 February 2020. There are 14 implementing agencies involved; major agencies include NABARD, SFAC and NCDC. NABARD has promoted 1,685 FPOs with a total membership of 3.85 lakh farmers. Under the scheme, a credit guarantee fund for FPOs with a corpus of Rs 1,000 crore with equal contribution from MoA&FW and NABARD has been envisaged under the trusteeship of NABSanrakshan Trustee Private Ltd., a fully owned subsidiary of NABARD. Ninety-one eligible lending institutes have so far on boarded with NABSanrakshan and credit guarantee cover of Rs 213.82 crore has been sanctioned for 918 FPOs.
Bankers Institute of Rural Development, a training establishment of NABARD and designated as nodal training institute under the scheme, has developed various modules for CBBOs, board of directors, CEOs, accountants and stakeholders covering management of FPOs, business planning, marketing, hi-tech agriculture, value chain management, FPO financing, and linking FPOs with commodity exchange.
