22 August 2024 : Daily Answer Writing
Q1) What do you understand by Farmers Producer Organisations (FPO’s)? Throwing light upon the various challenges faced by the FPOs, suggest measures to ameliorate the same.
(250 Words/15 Marks)
ANS
Farmer Producer Organization (FPO) is a legal entity (cooperative or company) formed voluntarily by farmers for conducting agricultural operations as a group and sharing of profits/benefits among themselves.
Indian agriculture sector is dominated by small farmers with 86% of individual holdings below two hectares which occupy 47% of the country’s total cultivated area. The production and productivity of these farms are generally low, with limited marketable surplus and low realizations.
In this context, community institutions in agriculture i.e., FPOs, offer small farmers an opportunity in following ways:
- Increasing farmer’s productivity: FPO enhance productivity by ensuring availability of cheap institutional credit and providing a range of assistance to farmers like farm technologies, better farm practices, collectivization of input purchases, transportation, linkage with markets, etc.
- Better income: FPO helps in generating better incomes through benefit of economies of scale, increasing bargaining power of small and by removing intermediaries.
- Resource efficiencies: FPO helps in resource efficiency by bridging gap between primary producers and market and by shifting the responsibility of one or more activities in the value chain from procurement to delivery to famers.
Though FPO has range of advantages, they face range of challenges as described:
- Inadequate Professional Management: FPOs lack experienced, trained and professionally qualified CEO and other personnel. They lack business development and marketing skills, which are critical for their success as a business entity.
- Weak financials: Lack of access to affordable credit for want of collaterals and credit history is one of the major constraints. They have poor resource base and initially are not financially strong enough to deliver vibrant products and services.
- Company regulations: As recommended by Y.K. Alagh Committee, formation of FPOs is allowed under Companies Act. Registering FPO as company is not easy. Ill-equipped and illiterate farmers need to go rigors of company regulations which is taxing for them.
- Lack Risk Mitigation Mechanism: There is no provision to cover business risks of FPOs. They lack management capabilities in supply chain operations, market dynamics and linkages, business planning, etc.
- Inadequate infrastructure: FPOs have inadequate access to basic infrastructure required for aggregation like transport facilities, storage, value addition (cleaning, grading, sorting, etc.) and processing, brand building and marketing.
To address above challenges, following measures are needed:
- FPO Act: J.J. Irani Committee had recommended a special act for the FPOs and de-linking it from the Companies Act.
- Training: Developing proper training programs for FPOs and capacity building of board members especially in villages where local leadership is weak is needed.
- Crop plans: FPO should be provided with scientific and specific crop plans for 3 years.
- Technology: FPOs should work for creating awareness about use of technology in agriculture for timely rain prediction, crop plantation, scientific crop planning etc.
FPOs are important organization for farmers interests. Their success depends upon support by government and transparent working of FPOs. We need a collective effort from center and state to promote FPOs as a beacon of revitalizing the farming sector in India
