Sunday, 18 October 2015

FPO GRID : Innovative Market Delivery System

Farmers Producers Organization (FPO)

Farmers Producers Organization is new generation cooperatives or u can say it is a hybrid cooperative graduating by amalgamation of positive characteristics of cooperative system and corporate model both. In 2002, the Government of India has amended Company Act 1956 and a new chapter IX has been incorporated in Indian Company Act which paved way to establish "Producers Company Limited" as a differentiated company of the farmers by the farmers for the farmers. Although FPOs can also be registered under Cooperative and Trust Acts but the degree of freedom under Indian Company Act, 2013 is found much more.
Primary producers‟ organisations or collectivities are being argued to be the only institutions which can protect small farmers from ill-effects of globalization or make them participate successfully in modern competitive markets (Trebbin and Hassler, 2012). Producers‟ organizations not only help farmers buy or sell better due to scale benefits but also lower transaction costs for sellers and buyers, besides providing technical help in production and creating social capital. In Mozambique, where 80% farmers are small holders and only 7.3% were members of any farmer organization in 2005, the membership in a farmers‟ organisation led to 50% increase in profits for small farmers from the crops handled by the organization (Bachke, n.d.). It is also argued that co-operatives or such collectivities are needed for small farmers as they help realize better output prices and credit terms and, thus, can help eliminate interlocking of factor and product markets into which small farmers are generally trapped (Patibandla and Sastry, 2004).

Accessibility of markets for agricultural and agricultural allied sectors inputs / produces by the farmers and farmers producers organizations is the biggest challenge for the sustainability of Farmers Producers Organizations (FPOs) due to strong inter-mediators playing in the field of agriculture and allied sector. Appreciable margins are being taken away by these players due to unorganized farmers. Hence, there is need to provide a platform to these FPOs to compete with these players. A FPO-GRID / F-GRID would provide a innovative platform for forward and backward linkages to the FPOs.

What is FPO-GRID ?

A FPO GRID would be networking of existing / newly formed FPOs within particular geographic locations. It may be a networks of FPOs within the State or in two or more States come together without graduating it into any higher level federation/s.

Importance of FPO-GRID ?
  1. It will provide easy market assess to newly growing FPOs with minimum efforts and low transaction cost.
  2. One more level mediator can be reduced outside the District/Division.
  3. Most of the FPOs are graduating for doing business of specific commodity like seed production, dairy, poultry, banana, mushroom etc. Hence, during lean period and when there is no own surplus produce are available for marketing, in that period produce / products of other FPOs can be traded through the APMC- Mandi Samiti.
  4. Provide a platform to undertake trading business of agriculture produces/inputs of other FPOs in own area this will give additional margins to FPOs.
  5. Ultimately it will increase economic size of the business, lowering risk, increase margin and a vibrant marketing network can emerged in due course which is necessary for the sustainability of the FPOs.

Example of Trading Business of other FPOs.

Banana produce of Kushinagar Banana Producer Company Limited in District Kushinagar can be traded by FPOs in Lucknow, Kanpur, Ghaziabad, Noida, Ludhiana etc. and can earn additional margin as a commission agent.
Kinnoo produce of FPOs in Haryana can be traded by Kushinagar Banana Producer Company Limited in Gorakhpur Mandi ( KBPCL, Kushinagar is planned to undertake trading of Kinnoo in Month of December 2015).
Mango produce of FPOs in Lucknow and Hardoi can be traded by FPOs in Kanpur, Ghaziabad, other cities  and can earn additional margin as a commission agent.

Actions Need to be taken :

  1. All the stakeholder especially Producers Organization Promoting Institutes  are requested to think and incorporate trading business in their business model.
  2. All FPOs are requested to take licence of prominent APMC Mandi in their regions. (Kushinagar Banana Producers Company Limited has already registered as a traders in Gorakhpur Mandi ).
  3. Build up data base regarding produces available for sale in future.  
  4. Government Promoting Agencies are required provide grant support for development of a intranet for all the FPOs registered in UP/other States so that they can share the availability of supply of their produces / products and updated Mandi rates of respective regions.
  5. Intranet would also help in extension of technology transfer, bankable model projects, synergy of Centrally and State Sponsored schemes and awareness of other innovative products.
  6. These FPO would be our future partners / helping hands of Governments / Corporate / Financial Institutes, who can help in outreaching our developmental and promotional activities at gross root level as well as they will act as a agricultural extension agencies which is very week and require extra momentum in INDIA.