Indian agriculture severely faced problem due to this lockdown by hampering on supply chain, production, harvesting etc. Farmers from small and marginal land holding face various challenges in having access to inputs and marketing facilities. In the last several years Government of India has encouraged farmer producer organizations (FPOs) to help small and medium farmers. There are number of study have been conducted on impact of FPOs on farmers income and their standard of living. This paper tried to capture insights of FPOs operating in Bihar and its challenges. Paper also suggested some measures to improve the condition of FPOs.
Farmer Producer Company is considered to be the best way to help, organize and formalize Indian farmers. In this process farmers set up businesses and collaborate with related farmers using shared resources.
Agriculture in India
Nearly 67 percent of the people in India depend on agriculture
Agriculture is backbone of Indian economy
Gross Value Added by agriculture, forestry and fishing is estimated at Rs 18.55 lakh crore
significant Contribution to the Gross Domestic Product (GDP) about 13 % (decreased from more than 50% of GDP in the 1950s to 13.4% in 2020-21)
Farmer Producer Organization (FPO)
It is formed by a group of farmers through agriculture and allied activities.
FPOs is a registered body and a legal entity. It can be registered under the Cooperative Societies Act / Company act / Society Registration act
Producers are shareholders in the organization.
The minimum number of farmers needed to build an FPO in the plain land is 300, and in the hilly areas it will be 100 and there no any restriction on maximum number of members.
It deals with business activities related to the agriculture production and marketing of farm product.
Mainly FPOs works for the benefit of member farmers.
Part of the profits were shared among member farmers.
The remainder is added to the business funds with the owners of the expansion.
Consolidation of agro producers, especially small and marginal farmers, into producer organizations
Most appropriate institutional form to mobilize farmers and build their capacity to collectively leverage their production and marketing strength by Department of Agriculture and Cooperation, Ministry of Agriculture, Government of India
Utilize combined resources to work in cooperation with related farmers
Literature
Garg, studied the performance of a Farmer Producer Company, in Madhya Pradesh using 21 different financial ratios, he found that the company was only performing satisfactorily in case of liquidity
Chauhan, studied 18 FPOs in Madhya Pradesh, financial performance of the companies was found below the desired standards, decisions in the companies are taken by other professionals as the role of BOD member is very low, due to the fact that they are illiterate and unaware of various business regularities
Singh & Singh (2013) studied the performance of 25 Farmer Producer Companies from the states of Madhya Pradesh, Maharashtra, Gujarat and Rajasthan, Apart from the financial performance, the study found that there were very few genuine FPCs operating; other FPCs are owned and controlled by professionals and businessmen who are not producers
Current Status of FPOs in Bihar
Discussion
Social and Economic factors play important role in to improve any institutional performance. There is various critical influence on performance and development. Therefore, Social and economic factors such as age, gender, education, land holding, occupations and experience in agriculture are played importantly in determining the impact of FPOs.
Majority of the farmers ere men (86%) and (14%) women. It shows that women participation in agriculture activity is much less than men. Although there are large number of women agriculture labor is working in agriculture land. Age group wise approximately (44%) were in 46- to 45-year-old. However about 30 % in in age groups of between 36- to 45-year-old and only 6% is above 55-year-old and about 20% account below 35 year of age group farmers. Similarly educational level of farmer is very low. Mostly are illiterate which account about 46% and only 10% are graduate level passed farmers rest are higher secondary level passed. This shows that farmers not able to produce more by using agri-knowledge and gain profit.
Most of the farmers ere small and medium-sized farmers 50% farmers have between 1-to-2-hectare land holding and about 26 % farmers having less than 1 hectare land to cultivate agriculture produce. Only 6% farmers holding more than 4-hectare land. 0.39-hectare land is average holding in Bihar which much less than national average. It found that more than 50 % of farmers have agriculture as primary occupation and about 26% farmers indulge in agriculture with allied activity like fishing, dairy and cattle. Only 16% farmers carrying other business along with agriculture activity. Even after FPO formed annual income of farmers are very low which is about 80% farmers have less than 2 lac annual income and about 13% farmers have 2 to 4 lac annual income and only 3% farmers have more than 4 lac annual income.
Organizational Structure of FPOs
Challenges for FPO In Bihar
- Technical Skills
- Inadequate Professional Management
- Weak Financial Structure
- Inadequate Access to Credit
- Inadequate Access to Market and Infrastructure
Policy Suggestions for FPO In Bihar
- FPOs can improve their financial performance by managing their operating finances, better debt management and increasing their sales.
- FPOs should use their well-defined resources to maximize their profits and should increase their market share to increase their efficiency
- Appropriate management and technical training skills can be provided by Govt., Resource Centers, and Agricultural Universities to raise awareness among farmers about the benefits of FPOs.
- FPOs can improve points of product integration, farm technology transfer, input supply and credit to raise better prices and market competition.
- Appropriate provision in the Indian Government's grain procurement policy requiring the purchase of agricultural products directly by FPOs under the MSP program.
- The Ministers / Departments concerned may be authorized to implement all “Farmer Programs” through FPOs in order to provide efficient services and improved outcomes.
- The process of issuing the various licenses required to conduct business operations by FPOs, may be simplified to make it a single national license
Conclusions
There are number of small and marginal farmers are increasing in the country.
Finance Minister Nirmala Sitharaman in her last budget speech hoped that 10,000 new Farmer Producer Organizations (FPOs) would be formed in the next five years.
It deals with Agri business activities related to the Agri products and it works for the benefit of the member of FPOs.
Only establishing the FPOs will not work, as it requires a conducive Agri business environment to operate.
Domestic policies and laws also needed to be addressed for growing the FPOs.
Raising credit is a huge issue for FPOs as three year balance sheet is needed to get Credit from formal Financial Organizations like Banks.
Bringing in private investment would help in building better organizational capabilities.
Success of FPO also depends on other factors such as Banks, Retailers and Corporate sector.
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