The future of farmer producer companies could be brightened

Source– The post is based on the article “The future of farmer producer companies could be brightened” published in the mint on 28th September 2022.

Syllabus: GS3- Agriculture

News– The article explains about Farmer Producer Companies (FPC) in India. It analyses the challenges faced by these FPCs and possible solutions to address these issues.

What are the issues faced by the farming sector?

70% of farmers are small and marginal. They have disadvantages in terms of scale, potential risk and bargaining power.

The average monthly income is almost 10000 per month at current prices.

Almost half of farmers are facing debt issues.

Most farmers are rain-fed and exposed to climate risk.

What are Farmer Producer Companies?

They were introduced in the 2000s as potential solutions to challenges faced by the farming sector. They operate on the basis of the welfare model of collectivization.

They function under the Companies Act, 2013 where shareholding farmers pool their resources for better market linkages.

By 2019, 7374 FPCs have been formed.

A central sector scheme was launched in 2021 to promote 10000 FPCs.

Additional funding is provided through the Small Farmers Agribusiness Consortium, NABARD and schemes like the Agriculture Investment Fund.

What are the challenges before FPCs?

First issue is related to raising capital from its members. High income states like Haryana and Punjab have better scope for raising capital. In states with lower per capita income like Odisha, it is difficult to raise capital. 65% of FPCs were operating on meagre share capital before the pandemic.

Second issue is that they cannot absorb public funding equally. There is a role of business development service providers, knowledge partners, and technical institutes to nurture FPCs. Small FPCs find it difficult to engage with these entities.

Smaller FPCs face issues in hiring full staff for operations that impact their branding and customer outreach.

Third issue is related to dominance of male. Women farmers face issues in providing share capital. They are represented by their male proxies.

What are the possible solutions?

Better coordination- There is a need for policy platforms like POSHAN Abhiyan for inter-agency convergence.

Capacity building– The capacity of FPCs for absorbing public funds should be strengthened. Government officials and cluster-level federations set up under the One District One Product scheme can mentor FPOs.

Better incentives- FPCs must enable farmers access to entitlements like PM Fasal Bima Yojana, PM krishi Sinchai Yojana, KCC.

Women participation– They need to be given equal priority in these FPCs.