A conducive ecosystem for Farmer Producers Organisations

They facilitate aggregation of resources of small and marginal farmers with better scale of operation and efficiency

Published - January 28, 2022 01:28 am IST

On New Year’s Day, when Salem’s Veerapandy Kalanjia Jeevidam Farmers Producer Company was showcased nationally as one of the success stories of Farmer Producers Organisation (FPO), the development did not cause any surprise. For, Tamil Nadu had been identified by the National Bank for Agriculture and Rural Development (NABARD) as one having a conducive ecosystem for the formation and nurturing of FPOs.

That day, the Salem FPO’s director, R. Shanthi, 39, who did not study beyond high school, interacted with Prime Minister Narendra Modi and explained that her organisation was “fully owned and operated by women,” with 2,211 shareholders from 152 villages spread over the Sankagiri, Makudanchavadi, Veerapandi and Panamarathupatti panchayat unions.

The five-year-old FPO, according to the NABARD in its State Focus Paper for 2022-23, turned the COVID-19 pandemic into a business opportunity and achieved a turnover of ₹18.28 crore during 2020-21 as against ₹1.10 crore in 2018-19. The company earned a net profit of ₹37.26 lakh during 2020-21. Its activities include procurement, processing, value addition and marketing of groundnut, millets, black gram and chilli, besides processing of pulses and oilseeds. What was more fulfilling for the firm at the peak of the first wave was that “we distributed 82,000 food kits, each worth ₹3,000, mostly to our own members, whose movement was hugely confined by the restrictions. We allowed our members to pay us in instalments as we knew their livelihood opportunities were terribly hit,” explains R. Poongodi, another director.

Thoothukudi, a district where water is scarce, has seen the emergence of many FPOs, regarded as the best performers. One such is Vizhuthugal Agricultural Farmers Producer Company of Vilathikulam. Set up in 2015, it deals with dry chilly and lemon. It is the market integration partner for a primary processing centre (PPC), which has an auction hall and a cold storage of 10 tonnes capacity. The facility can handle four tonnes a day. “We have given the PPC to another FPO on lease to run it,” says Soundararajan, director of the firm. Both FPOs have been backed by the NABARD, and supported by resource institutions for professional expertise.

According to the Department of Agricultural Marketing and Agri Business (DAMAB), a number of FPOs, including Tamil Nadu Banana Producer Company and Virudhai Millets Farmers Producers Company (FPC), are involved in the export of produce. The State boasts of having 716 FPOs.

Explaining the importance of FPOs, a veteran administrator says there are two basic features of the farm sector. One is the strong attachment of the farmers to land which, in turn, comes in the way of land consolidation in the conventional sense. This leads to fragmented land ownership, an obstacle to enhancing productivity. To overcome these problems, FPOs offer a durable solution, as they can facilitate aggregation of resources of small and marginal farmers with better scale of operation and operational efficiency.

Having realised the significance of FPOs, the State government has been supporting them through the DAMAB. The Tamil Nadu Small Farmers Agri Business Consortium is the nodal agency for FPOs. Two years ago, the State unveiled a policy document on FPOs, besides a scheme for providing access to adequate and affordable financing to FPOs. This year, the State has decided to make use of the Central sector scheme for promotion of 10,000 FPOs across the country. As a result, 50 have been formed, of which five have been given equity grant of about ₹24 lakh. Besides, 13 FPOs are being set up through the Tamil Nadu Irrigated Agriculture Modernisation Project. A senior official says the government has decided to give preference to FPOs while allotting shops in select municipal corporations so that FPOs can market value-added products.

The FPOs face several challenges, says A.P. Karuppaiah, president of the Confederation of Farmer Producer Companies of Tamil Nadu. Calling for strengthening the wing that deals with FPOs, he says the government should take steps for common branding and standardisation of FPO products. It can utilise the FPOs’ services for procurement of paddy or pulses which can be used for the PDS.

K. Ramasamy, former Vice- Chancellor, Tamil Nadu Agricultural University, wants the government to commission a comprehensive survey of overseas market for produce and encourages FPOs to channelise their operations on the basis of its findings. An official of NABARD says each organisation and its mentor-institution should analyse the strengths and weaknesses in the area where they operate to carry out business activity suitably.

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