Context:

• This article is based on the news “Farmer Producers’ Organisations: Engines of agri-innovation in UP” Which was published in the Indian Express. Eastern Uttar Pradesh has emerged as a hub of vegetable and fruit exports in the past two years. Progressive farmers are associating with FPOs in the region and becoming agents of change.

FPO Shakti Portal

• The FPO Shakti portal has been launched to provide a platform to all active Farmer Producer Organisations in UP. It is a one-stop solution for grievance redressal, forging business partnerships and fostering convergence. 
• As of July 15, close to 1,600 FPOs, with a total turnover of Rs 229 crore have registered on the portal. More than six lakh farmers are associated with these organizations.

What are Farmer Producer Organisations (FPOs)?

• An FPO is a collective of farmers with holdings or works in a geographical cluster.
• It can be registered under the Companies Act or as a cooperative under the Societies Registration Act. 

Why does India need a Farmer Producer Organisation (FPO)?

• Fragmented land holdings preventing economies of scale and discouraging investment in agriculture. 
  • The average size of operational holding has declined to 1.08 ha. in 2015-16 as compared to 1.15 in 2010-11 (Agriculture Census 2015-16).
• Farmer Producer Organisations have demonstrated their potential to trigger cluster-based farming, bringing in economies of scale in input management facilitating agri-extension, enabling technology adoption, providing quality assurance and helping farmers market their produce.
• Current Status:
  • As on 30th June, 2023, 10,000 Farmer Producer Organisations (FPOs) have been allocated to various Implementing Agencies (IAs) out of which 6319 FPOs have been registered across the country.

What are the major challenges in the Farmer Producer Organisations (FPOs)?

Various studies commissioned by NABARD, have established the positive role of Farmer Producer Organisations (FPOs), However, there are challenges and policy gaps in the ecosystem. The important challenges and confronting issues in building sustainable FPOs, are as under: 

• Lack of/ Inadequate Professional Management: Farmer Producer Organisations are required to be efficiently managed by experienced, trained and professionally qualified CEO and other personnel under the supervision and control of democratically-elected Boards of Directors. However, such trained manpower is presently not available in the rural space to manage FPO business professionally.
• Poor Capitalization And Funding Scope: There is a provision of funding support under various government schemes to the Farmer Producer Organisations  promoted by NABARD or SFAC. However, such financial assistance is not available to all the FPOs, particularly outside the ambit of NABARD/SFAC. The average paid-up capital (PUC) of the majority of the FPOs is between ₹1.0 to 3.0 lakhs. 
  • Due to the lack of any collateral assets with the FPOs, financial institutions are hesitant to finance the FPOs.
• Business plan and scaling opportunities: Most Farmer Producer Organisations lack a business plan and long-term vision, so they only buy and sell inputs or farm produce in bulk.
• Lack of  Awareness: Inadequate awareness among the farmers about the potential benefits of collectivization & non availability of competent agency for providing handholding support. 
  • Further, lack of legal and technical knowledge about various Acts and Regulations related to formation of Farmer Producer Organisations  and statutory compliances thereafter.
• Inadequate Access to Infrastructure: Inadequate access to basic infrastructure required for aggregation like transport facilities, storage, value addition (cleaning, grading, sorting, etc.) and processing, brand building and marketing.
• Lack of Risk Mitigation Mechanism: Presently, while the risks related to production at farmers’ level are partly covered under the existing crop / livestock / other insurance schemes, there is no provision to cover business risks of Farmer Producer Organisations.

Also read: Farmers’ Distress Index

Way forward

• Federation of Farmer Producer Organisations: FPO federations foster cross-functional learning through collaboration, knowledge sharing, and collective learning. These platforms let FPOs share knowledge, experiences, and resources to improve learning.
  • For example the Maha FPO Federation in Maharashtra demonstrates the positive impact of such federations.
  • FPO Gateway platform, developed by Samunnati, connected over 5500 FPO.
• Professional Management: It is urgent to train Farmer Producer Organization managers or set qualifications for office bearers. This improves FPO management. An appropriate capacity-building method should be used to enable FPO members and office bearers to make timely and appropriate decisions. 
• Linkage with the financial institutions: Appropriate linkage with the financial institutions and FPO should be strengthened, to promote the establishment of agri-enterprises on a large scale. 
  • Allowing private equity, angel investors and venture capital support to FPOs as the lines of support for start-ups can be introduced.
  • Grameen Foundation launched the second phase of its Market Access eNabled by Digital Innovation in India (MANDI-II) project, funded by a $2-million grant from Walmart Foundation.
  • MANDI-II will aim to address challenges faced by smallholder farmers, especially women, in eastern Uttar Pradesh and West Bengal by building the capacities of farmer producer organisations (FPOs).
• Marketing: Adequate market intelligence, market infrastructure and supply chain should be promoted to get optimum prices for the produce. 
  • Adequate skill-embedded knowledge related to processing, value addition, storage of agricultural products and application of Information and Communication Technology in the marketing of produce should be provided. 
• Foster learning and innovation among Farmer Producer Organisations : By embracing innovation, FPOs can create a competitive advantage that allows them to thrive in the market. They can differentiate themselves by offering unique products, establishing strong relationships with consumers, and building a reputation for quality and reliability.
  • Samunnati, one of India’s largest agri enterprises, has signed an agreement with Singapore-headquartered B2B (business-to-business) SaaS FinTech finbotsAI, to transform credit risk management using artificial intelligence (AI). 
• Comprehensive Policy: A Policy should be developed to establish the FPO as the grassroots organization for extension delivery to scale out the farmers’ agricultural and agri-entrepreneurial knowledge.

Conclusion:

Formation & promotion of Farmer Producer Organisations (FPOs) is the first step for converting Krishi into Atmanirbhar Krishi. This will enhance cost-effective production and productivity and higher net incomes for the members of the FPO.