India is having approximately 86.2% of smaller and marginal farmers. The Indian government has been focusing on the lives of smallholder farmers and is developing several options for their upliftment. All these years ‘Cooperative’ was one of the options available for the producers to position themselves as an active player in the supply/value-chain and business ownership. However, the country’s cooperative system had many flaws. Therefore, a new legal entity, “Producer Companies” was introduced with the amendment of Companies Act 1956 during 2002. This model of the Farmer Producer Organization (FPO) under the New Company Act 2002 was like a hybrid between a Private Limited company and a cooperative society. Farmer Producer Organization being a type of Producer Organisation where the members are farmers. Moreover, most of the producer companies are start-ups and promoted by NGOs.
In the recent reforms for the Agriculture sector, the Honorable Prime Minister launched the Central Sector Scheme Formation and Promotion of 10,000 FPOs over 5 years across the country in the announcement made during the budget speech 2019-20. This scheme will be implemented by the three major implementing agencies viz. NABARD, Small Farmers’ Agribusiness Consortium (SFAC) and National Cooperative Development Corporation (NCDC). The scheme aims to promote new FPOs and support their initial financial needs making them more resilient, commercially viable, and stand as a viable business for the farmers.
But some questions arise,
- With all schemes to uplift FPO by providing funds, loans, subsidies, and various grants, are all farmers capable enough to form and run a company under the same Company Act where unlike Producer company, all other companies are more aware of their legal rights, markets, environment, etc?
- Do all FPOs know the essence of the scheme and will get help and support from the government that’s promised to be provided?
- As a company does they have any consultant for the legal processes for long terms?
And the big question is,
- How do they get the best market connections/linkages?
There are many questions that have not been resolved as of now. In this hour farmers require intelligent markets. Many existing FPO/FPC earn profits by selling agriculture inputs to the farmers rather than selling the farmers’ produce in a good market at a better price. The largely ignored agricultural marketing issues have now been looked upon after many years with the emergence of the new reforms. Waiting for the implementation of these reforms, I embrace the changes with the hope of positive outcomes to happen.