Farmer Producer Organisations in India: An Insider’s View

Updated: Aug 25, 2020

Mr. Hiren Borkhatariya, the Manager of Farmer Producer Organisation Facilitation Center, Yuva Mitra and an alumnus of IRMA has been closely involved with the formation and facilitation of many Farmer Producer Organisations (FPOs) across various states in India and is the CEO of

Savitribai Phule Goat Farming Producer Co. Ltd, an FPO completely owned by women. Through an interview with him, we tried to get a closeup view of the FPOs in the country, which has been covered in this first part of the interview. The second part contains the origin story and the achievements of Savitribai Phule Goat FPO and how the scientific and professional management of an FPO not only raises the economic standards of rural women but also creates a powerful social transformation. This is a story of true women empowerment.

Q. Please tell us about your journey - upbringing, background, what brought you to IRMA, and how you got involved with Farmer Producer Organisations (FPOs)?

I was born in a small village in Rajkot, Gujarat. My parents are involved in farming and to some extent, I myself was involved in agricultural activities. I did B.Tech. in Automobile Engineering from GEC Rajkot but soon realised that I would be more fulfilled by working for my own people than in pursuing a hardcore technical career. So, I started exploring different options in the second year. Based on my background and values, I figured I would be a good fit for IRMA. So, I prepared and applied for IRMA and fortunately got in because I hadn’t even applied elsewhere.

At the time, all I knew was that I wanted to work in the development sector but didn’t specifically know in which domain - education, health, or agriculture. But coming from a family involved in farming, I knew a few things about agriculture and had a soft corner for the same.

After joining IRMA, I got exposure to many different areas and ideas through classroom teachings, interacting with many people, and peer learning. I joined NM Sadguru Foundation and was posted in Dahod for my MTS internship. They had promoted 23 FPOs through NABARD, it was mandated that whichever agency promotes FPOs, they should also help prepare business plans for the FPOs. My role in the organisation was preparing business plans for the Farmer Producer Companies.

That’s when I was first introduced to FPOs directly, before that I had studied about them in the Managing Collectives class under Professor Shambu but this was my first experience of directly working in this space with a small organisation. In those 2 months of my internship, I got to know more about FPOs as I delved deeper and began to understand what difficulties the FPOs face, not necessarily in just marketing specifically but as institutions. That's when I decided that I wanted to work in this sector only.

After working in another organisation associated with FPOs, I came across Yuva Mitra which provided the opportunity that I was seeking and I joined the organisation immediately. The Yuva Mitra had formed a Special Purpose Vehicle (SPV), Krushak Mitra Agro Services to tackle the marketing or skill-based challenges faced by FPOs. This was a private limited company where FPOs were shareholders. So, at the time Yuva Mitra had promoted 15 FPOs, some from their own funds, some with the help of National Bank For Agriculture & Rural Development (NABARD).

Q. What does the promotion of FPOs exactly involve?

The FPOs operate on a one member one vote principle to safeguard the interests of small farmers. So, even if a large farmer owns more shares, he/she will still have only one vote. The constraint of FPOs is that only the farmers/producers can be shareholders and so one can’t bring any external investment, one can’t raise capital from anywhere.

That’s where organisations like NABARD and SFAC come in. Organisations like Small Farmers Agribusiness Consortium (SFAC), NABARD and some State Rural Livelihood Missions promote FPOs, some NGOs and Foundations also promote FPOs from their own funds. NABARD appoints NGOs on the field as POPIs (Producer Organisation Promoting Institutions) because NABARD can’t be everywhere but the POPIs on the ground have a good social connection with the local community. They always have some ongoing interventions happening on the ground, the community has a strong bond with them and has trust in them. So, they are the best means of mobilizing the community to form FPOs.

So far, NABARD and SFAC have been giving funds to POPIs for promotion of FPOs for 3 years, this includes covering administrative expenses like the salary of the CEO for 3 years and basic services for FPOs like registration charges, office rent, furniture, training costs for Director and CEO, business plan development cost etc.

The role of POPIs is to mobilize the farmers on the ground and convince them. Then they get the FPO registered, do the legal compliances to complete registration, guide in the selection of a director, undertake the statutory compliances like filing returns, etc. They are also involved in capacity building, training the director and CEO of the FPOs, his/her appointment, business development. The POPI does all this for 3 years.

Q. What goes behind such mobilization of farmers, making them understand about such models and finally build the institution as a legal entity?

This depends on the geography and the community. If the farmers are well off and have a sound understanding of business and a spirit of entrepreneurship, it doesn’t take much time. But for the tribal communities, for whom everything is new, it takes much longer.

The period of 3 years is the project period, this does not mean that the FPO becomes self-reliant within 3 years. After 3 years, the NGO/POPI’s liability is over, they do not remain accountable whether the FPOs are functional or defunct, if they wish they may continue to support otherwise could stop also.

Usually, 3 years are not enough because it takes about 1 to 1.5 years to convince farmers and register the FPOs the right way. Otherwise, to register only 10 farmers are needed, one could get 10 large farmers convinced and register an FPO within a month but the soul of FPO lies in the spirit of ownership among the farmers because it is their own institution. It takes a long time to develop that spirit but to get a formality done on paper doesn’t take long, one just needs 10 farmers.

Q. As you mentioned an FPO takes more than 3 years to become self-reliant but NABARD only extends funds for 3 years. For how long should the support be extended in your opinion?

I think the support should be extended for at least 5 years. The government is going to promote 10,000 FPOs in the next 5 years. In the recently released operational guidelines, they have corrected this and stated that these new 10,000 FPOs will be supported for 5 years not 3 years.

Q. Is this applicable for only the new FPOs or also on the ones that have been already established?

Only for the new FPOs. Also, the FPOs which have been recently registered but whose operational activities have not yet begun will be considered but this is not applicable to the FPOs that have been functional for 3 to 5 years or more.

Q. Do you think the FPOs that have been operational for a few years should also have been considered?

Yes, I think the focus of the government should be more on the old FPOs but this concept of FPOs has come into focus only recently. The successful FPOs are mostly from the dairy sector and a few sugarcane cooperatives. So, everybody is learning from new challenges. NABARD, POPIs, and FPOs are also changing their policies on the basis of their learnings. So this sector is quite new yet and nobody can be really labeled as an expert. Everybody is running on a trial and error basis and learning on the way. E.g, NABARD has extended support from 3 years to 5 years for the new FPOs, another thing they have done is that NABARD will support the FPOs that meet some minimum criteria in terms of turnover and member base for another two years. So many welcome changes are happening already but I think that the existing FPOs which have been supported but are not operational, should also be given more support for capacity building.

Q. It seems there is a dearth of data regarding FPOs. Sufficient data is not available in terms of how many FPOs are currently functional in the country. What can be done to address this and what all should be included in the data?

It is true that there is a lack of consolidated data in this sector. In FPOs also the registering authorities are different. For instance, if you include cooperatives in this sector, then the statewise registration authorities for cooperatives are different. The Registrar of Companies under the Ministry of Corporate Affairs is the registering entity for Farmer Producer Companies. So, the consolidated data is not available, even statewise data is hardly available.

The data of FPOs promoted by NABARD and SFAC is available but there is hardly any data available for FPOs that were formed without their support. We also tried to gather this kind of data, we even filed an RTI but didn’t receive a reply. Also, if one wants to know how many FPOs were registered in a particular year, then the data you get includes all companies including the non-FPO private limited companies, etc. This makes extracting data specific to the FPOs difficult.

As to what should be included in the data, that depends on who the user of the data is. If a business entity wants to use it, they may want to see what the FPO is about, where it is located, what commodities it has, how much surplus is there? If a government agency wants to use, they will probably look for which are the promoting agencies, what is their turnover, how successful is the FPO, their membership base, their operational area, etc.

So, consolidated data could be created including all these factors. Such data is available for FPOs promoted by NABARD and SFAC but sometimes FPOs may not want to share some data. Eg, some progressive farmers in a few states especially Maharashtra are promoting FPOs on their own. 10-12 families come together to form an FPO. they may not want to share some details because essentially an FPO is a business entity, they may not want to divulge some trade secrets in the public domain that might attract competitors, who could make use of this information and establish their own thing there.

Q. You have been associated with Yuva Mitra for many years now. What were some of your learnings, takeaways, and insights?

I gathered in-depth knowledge of the FPO sector after working here. I have been closely associated with the support given to FPOs promoted by Yuva Mitra in terms of technical support, capacity building, marketing, we have also gone to different states to support NGOs so we understand some of their local challenges. The Department of Horticulture of the Karnataka Government promoted 92 to 95 FPOs but they wanted some support to make them more sustainable. So Yuva Mitra and GIZ ran a project together where for 30 FPOs, we conducted assessments on where the lacuna is, in operations, etc., we trained the directors and CEOs and we studied the value chain and prepared value chain based business plans. We do different kinds of projects with the facilitation center but our focus is on creating an enabling environment around the FPOs.

For instance, we worked with another civil society organisation of the Government of India which serves mostly in the tribal belts in central India. So the partners of the organisation wanted to promote FPOs in the states of Madhya Pradesh, West Bengal, Jharkhand, and Odisha but they didn’t have the necessary knowledge, so Yuva Mitra provided them with some support services like preparing and communicating the proper method of community mobilisation, registration process, business plan development, training, and capacity building of promoting staff, directors and CEOs. We gave them this kind of support to promote 18 FPOs. We also help individual FPOs with these services.

We are also trying to develop the knowledge base associated with this sector. Training and capacity building is a major part of promotion because we get the ownership and leadership of the FPO from here. We are trying to standardise the training programmes for FPOs. The roles, responsibilities, and skills of a CEO change over time as the FPO matures and evolves. As the training needs of the Directors and CEOs change over the period of time, training should be a regular process rather than a one-time affair. For this, we have a full-fledged training center from where we conduct training for directors, CEOs, and POPI staff, etc.

There are different challenges in different states with respect to FPO promotion, so one model does not work everywhere, so we need area and community-based action plans and strategy. Eg, In Maharashtra in 2017 with GIZ we did an FPO assessment study. Total 130 FPOs of Maharashtra were covered. We held meetings with all the stakeholders of every FPO - CEO, director, members and did an assessment of what their current position is, what kind of support do they need, what challenges and bottlenecks they have in progressing etc. This also is a great learning resource. So, this is a comprehensive study and is useful for others who want to learn about this sector. Many other organisations are also building a knowledge base in terms of reports, training modules, etc. We are also trying to centralise this data through our facilitation center. We are trying to do our best even though we are at a nascent stage and have resource constraints.

In the second part, we will take you to a journey on how Savitribai Phule FPO is creating an impact by empowering rural women.

Read the second part here: The Story of an FPO Empowering Rural Women

Stay Tuned for more such stories from Rural India :)

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