Farmer Producer Organisations

  Jul 21, 2020

Farmer Producer Organisations

What are FPOs?

Farmer Producer Organisations, (FPO) consists of collectivisation of producers especially small and marginal farmers so as to form an effective alliance to collectively address many challenges of agriculture such as improved access to investment, technology, inputs, and markets.  Small Farmers’ Agribusiness Consortium (SFAC) is providing support for the promotion of FPOs.

The resource agencies leverage the support available from governments and agencies like NABARD to promote and nurture FPOs.

What is current status of FPOs?

According to a 2017 NABARD publication, around 5,000 FPOs are operating in the country, which was formed under various initiatives of the Central Government (including Small Farmers Agribusiness Consortium), State governments, NABARD, and other organisations.

Of these, around 3,200 FPOs are registered as farmer producer companies and the remaining as cooperatives/societies, etc.

However, the beginnings of FPOs have been rather modest and membership is at five lakh only.

What are the importance of FPOs?

  1. Well-organised FPOs engage in providing a range of assistance to farmers like imparting better farm practices, collectivisation of input purchases, transportation, linkage with markets, and better price realisation as they do away with the intermediaries.
  2. A direct selling arrangement provided by FPOs can reduce the cost of marketing by linking farmers more closely to the supply chain and consumers.
  3. A few FPOs like SFPCL, Savitribai Phule Goat Farming Producer Company and Vasundhara Agri-Horti Producer Company have made notable achievements in crop production and allied farm activities; improving quality of production through best farm practices; tapping the unexplored markets; cutting down the intermediaries in the agrivalue chain, and enhancing farmers income.
  4. Some of the best practices followed by the FPOs include maintaining crop maturity indices, documenting plant protection chemicals used, geo-tagging the land under cultivation, and maintaining the traceability of the crop output from the farm until it reaches the final market for sale.

Are there any issues involved?

  1. While resource agencies (RAs) normally have social mobilisation skills, they lack business development and marketing skills, which are critical for the success of FPOs as a business entity.
  2. Focus on management capabilities in the supply chain operations, nuances of market dynamics and linkages, business planning according to market intelligence and market development is clearly missing in the majority of the training programmes associated with FPOs.
  3. The present system suffers from distortions like multiple intermediaries and levies, lack of vertical integration (is the combination in one firm of two or more stages of production normally operated by separate firms), poor infrastructure, restrictions on the movement of agricultural commodities, and so on.
  4. Thus, the limited market choices and lack of transparency have been the major barriers in better price realization for the farmers.
  5. Finding the right markets bypassing the present maze of intermediaries is critical. Many FPOs lack the capacity to manage the supply-chain operations and store the unsold produce, besides faltering in procurement, logistics and price negotiations.