In a new move to improve agricultural trade and increase farmers’ incomes, big companies have started buying produce directly from Farmer Producer Organisations (FPOs).
This change follows the government’s initiative to hold weekly webinars connecting FPOs with major companies. Many FPOs didn’t know they could sell directly to companies before. The government believes that if these connections work well, results will be seen in a year or two.
Better Prices for Farmers
A government official said that FPOs got better prices for crops like wheat during the recent selling season because they sold directly to companies. This helped save extra costs, which made it a win-win. The official also said that States may be asked to remove mandi fees for FPOs to help them compete better and improve market infrastructure.
Big Companies Getting Involved
Olam India is one of the leading companies in this model. It has bought over 800 tonnes of maize and more than 3,000 tonnes of wheat from FPOs in Uttar Pradesh and Bihar. While the company didn’t comment, sources say other companies like Britannia, Mother Dairy, and HIL (formerly Hindustan Insecticides) are also joining in.
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The Union Agriculture Ministry has been hosting webinars for over two months, led by Secretary Devesh Chaturvedi. These online sessions allow FPOs to directly talk to company representatives and ask questions. Usually, one or two companies or departments take part each week.
Even though many companies want to work with FPOs in States that allow direct buying, FPOs are still asking for mandi taxes to be removed. One FPO leader in Uttar Pradesh said that buyers don’t pay the mandi fee—it is deducted from the farmer’s payment, which affects their income.
Selling Online Through ONDC
The government is also encouraging FPOs to create their own brands and sell directly to customers online using the ONDC platform (Open Network for Digital Commerce).
Praveen Sinha, Assistant Manager at Olam Agri, said in a recent webinar that there is a 5–6% profit margin between farmers and exporters or processors. He said FPOs can earn this margin themselves if they ensure consistent quality in their products.
Now that the government has met its goal of setting up 10,000 FPOs, it is focusing on helping them increase their earnings with ongoing support.
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