Agricultural development is instrumental in supporting about 50 percent of India’s population in terms of income and employment generation, yet it only contributes a dismal 20 percent to the GDP. Agriculture in India is increasingly dominated by small farm holdings and average land holding continues to show a decline over time. Average land holdings of farmers has gone from 2.3 hectares in 1970 to 1.08 hectares by 2016. The total cultivable area has also continued to decline in this period. This translated into a disproportionate situation, and small holding farmers and landless farmers have rose to around 85 percent. Marginal farming also continued to increase in this period. This structural anomaly placed policymakers in a quandary. The vision of the government to increase farmer income, and look to double it, is faced with challenges.
The Cooperative Movement and the Emergence of FPOs
After India gained independence, the concept of economic democracy came forward, targeted toward the rural population. The cooperative movement took root thereafter, and thus began a mass organization of farming communities under its umbrella. These cooperatives tried to address constraints faced by small farm holders and marginal farmers. They managed to bring about a significant change in the lives of small and marginal farmers, but it was not enough to strengthen their bargaining power and improve their economic conditions. Some of the reasons were:
1) Resource constraints (financial, infrastructural, and managerial professionalism),
2) Lack of expertise and capacity building,
3) Interference from government, and
4) Social inequalities and Lack of awareness.
The cooperative movement continued to look for its “Raiffeisen” moment even as the structural inefficiencies of markets, availability of credit, poor investment decisions, unskilled manpower, adoption of technology, and inadequate outreach continued to plague small and marginal farmers.
In this backdrop, the Government of India has been striving in earnest to ensure that the farming community gets a better deal through new-form collectives. The emergence of farmer producer organizations (FPOs) was one of the initiatives sought to correct the anomalies in the system. After all, to herald India into becoming an economic superpower, radical changes were needed. Thus came the shift toward FPOs, and 2014 was christened the “Year of Farmer Producer Organizations,” Undoubtedly, as FPOs evolve, they may encounter issues and challenges in their functioning, but this step was in the right direction. As past experience has shown, developed nations like the European Union, Canada, and Israel have shown a significant rise in farmer income, and FPOs played a major role in this.
What are FPOs?
Technically, an FPO is an entity formed by primary producers, in this case farmers who individually grow their produce and come together for the collective sale of output.
The concept of a Farmer Producer Organisation is to bring together producers, particularly small and marginal farmers, in order to form an effective tool for improved access to investment, technology, inputs, and markets. FPOs can register themselves under the special provisions of the Companies Act, 1956. FPOs are a practical approach to empower smallholder and marginal farmers thereby ensuring their prosperity. In India, where a large population is dependent on agriculture as the primary source of income, an FPO is a means of actively engaging farmers in the development process. It provides an organized system to transfer modern-day technology, absorb them efficiently into rural development programs, monitor their socioeconomic progress, and play a critical role in creating sustainable employment for youth and women, and progress toward reducing poverty for millions of people.
Some Advantages of FPOs
a) Better income for producers. The main objective of an FPO is to ensure better income for the producers through an organized system of their own and provide backward and forward linkages.
b) Credit Access. Member farmers can have better access to credit at lower rates of interest through collective bargaining power.
c) Government Schemes. There is improved access to schemes run by the government like crop insurance or social security since nodal agencies can interact directly through the FPO. Thus the administrative machinery can reach the grassroots level and make the schemes easily accessible.
d) Economies of scale. Aggregation allows farmers to achieve economies of scale and ensures better bargaining power for the inputs or produce in the marketplace.
e) Removal of intermediaries. The supply or demand has a long chain, which leads to reduction in value by the time it reaches the farmer. FPOs can have a better access to markets and producers, making it remunerative for them.
f) Shift to market-oriented agriculture. Through FPOs, farmers have made a shift from production-oriented agriculture to market-oriented agriculture where direct sales to consumers take place without intermediaries.
Also Read – 5 Ways to Boost Agricultural Development in India
Bolstering Farmer Producer Organizations
S M Sehgal Foundation (SMSF) is a public, charitable trust registered in India since 1999. SMSF operations currently span across eleven states, in over 1,300 villages, reaching more than 3.2 million people. The mission of SMSF is to achieve positive social, economic, and environmental change across rural India by addressing critical issues concerning food security, water security, local participation, and information asymmetry, with a focus on the empowerment of women and children.
A dedicated team of experts and field workers work alongside rural communities to create and implement agriculture and sustainable development programs to better manage their water resources and access safe drinking water, increase their agricultural development, strengthen and articulate their vision for village development, positively transform the lives of schoolchildren, and bridge the information divide. A core pillar in every effort is local participation for representation, and promotes inclusion of local knowledge and practices that lead to more equitable and sustained outcomes.
For the last twenty-two years, S M Sehgal Foundation has worked toward rural development in India through various initiatives with a focus on women’s empowerment. S M Sehgal Foundation has a deep footprint in Uttar Pradesh and Karnataka through agriculture and sustainable development projects, and is working to strengthen FPOs in Uttar Pradesh.
Meeting with representatives of Sri Mari Kamba FPO at Malur, Karnataka.
Looking to leverage its past experience, S M Sehgal Foundation is working to strengthen and build institutional capacities of existing farmer producer organizations along with training their member farmers on better agronomic practices and technologies to improve the quantity and quality of their produce. These interventions are complemented to create market and financial linkages.
The overall objective is to strengthen FPOs in Uttar Pradesh and Karnataka under a CSR-supported project with a focus on women’s empowerment. This project will directly impact:
- Ten FPOs in the states of Uttar Pradesh and Karnataka.
- 5,000 smallholder farmers (FPO members).
- 25,000 people, direct family members of the FPO members. In addition, the project will benefit neighboring farmers through demonstrations on improved farm practices and better business opportunities.
Meeting with members of Sangam Samriddhi Farmer Producer Company, Belkhal, Prayagraj.
The initiative will strengthen and activate ten FPOs with approximately 5,000 members to:
- Develop and implement well-defined business plans for the FPOs.
- Increase women’s representation in the FPOs.
- Increase crop productivity of FPO member farmers.
- Reduce irrigation water requirement through adoption of water-saving techniques.
- Increase access to credit of the FPOs from government and other financial institutions.
- Increase access to market linkages for FPOs’ produce.
Also Read – Role of Modern Technology in Agriculture
This transition of the farm sector from traditional methods to modern, technology-oriented production and marketing has led to t necessary relook at government reforms. One of the latest reforms actively promotes farmer producers organizations (FPOs). For government and nongovernmental efforts to succeed, an FPO is the way to actively engage farmers in the development process. Finding strength in numbers is the pathway to agricultural transformation, and the role of the private sector and other intermediaries in this vision cannot be overlooked.
FPOs can transform agricultural development and guarantee food security for future generations in India. While FPOs continue to face several setbacks and are struggling to operate viably, continued support from governments and other organizations can ensure their sustainability in the long run. Their survival and prosperity are also highly crucial to bring about transformation in the food and agriculture sector which is imperative to guarantee food security for future. With the implementation of the right policies, and with the support of all players in the ecosystem, FPOs will soon be able to achieve sustainability and reap optimal benefits for its shareholders.