Over 180 farmer producer organizations (FPOs) are either in the process of being registered or have begun operations in Maharashtra’s Beed district. Under the Central Government’s scheme to promote farmer collectives, more farmers are banding together to form FPOs. However, the majority of these businesses are unaware of how to use economies of scale in production and marketing to boost productivity.
‘Government assistance and subsidies are enticing more farmers to form FPOs. However, the vast majority of these businesses have no idea what they will do once registered. Many operational companies are only involved in the purchasing and marketing of soya and cotton.’
‘There are few companies that are into processing and assisting farmers to increase production,’ admitted a member of an FPC (farmer producer company) in Beed (FPO is an umbrella concept of which FPC is one component).
The Central government’s Scheme to form and promote 10,000 FPOs aims to increase productivity by ensuring income-oriented farming through efficient, cost-effective, and sustainable resource use. This would aid in lowering farm production costs and increasing farmer earnings, thereby playing a significant role in doubling farmer income.
FPO is a generic term that refers to and includes farmer producer organizations established with the aim of leveraging farm collectives through economies of scale in the producing, procuring, and marketing of agricultural and allied sectors. It is registered under Part IXA of the Companies Act or the Co-operative Societies Act of the concerned States.
‘Some FPCs are involved in the cleaning, assaying, sorting, grading, and packing processes. However, the region suffers from infrastructure and power outages. Storage and transportation facilities are in short supply. Indeed, when government officials convened a meeting of FPC members and asked what the plan of execution was, there was no response,’ said a founding member of an FPC in Beed.
However, this is not the case with FPCs in one State district. When it comes to the formation of FPCs, Maharashtra is a pioneering state.
‘But even so, 66% of FPCs which are with ‘active’ registration have witnessed low paid-up capital of 5 lakh or less, badly reducing their ability to purchase bulk inputs, trade-in farm commodities, or begin processing activities.’
‘FPOs in Maharashtra face issues similar to those in the rest of the country, such as a lack of ownership among producer-shareholders, under-capitalization, insufficient business skills, poor governance, and a lack of an enabling local ecosystem,’
According to a study conducted last year by Azim Premji University. According to the study, these challenges are caused in part by inconsistencies in stakeholders’ differing perceptions of the purpose of producer companies.
A well-thought-out strategy is essential
‘FPCs must have a well-defined strategy. It is critical to remember that this is not just another farmer organization. We must be innovative and entrepreneurial in our approach. It is difficult to run the FPC in areas such as Marathwada and Vidarbha, where drought and unseasonal rains disrupt the agricultural economy cycle. Else, FPOs would be just a number with no real difference on the ground,’ said Shivraj Kharbad, a member of the FPC in Kej taluka.