However, India, an agri-based economy, cannot afford to miss the development bus, FPOs, as they integrate the entire value chain activities, apart from enhancing collective bargaining power and income levels of the farmers. As per Tata Cornell’s data, the number of FPOs has reached almost 33,000, but the sustainability of most of these entities is a big question mark since two-thirds of these were established recently driven by incentives offered by the central government.

 

Policy Initiatives

 

According to various field studies, a little over one-tenth of the FPOs in India are operationally viable and financially sustainable. Against this backdrop, the following policy initiatives may take FPOs to the next orbit.

 

Leadership & Governance

 

Sahyadri FPO in Maharashtra is smiling today with an annual turnover of over Rs 800 crore mainly because of good governance and great leadership. Vilas Shinde is its founder chairman with a laser focus on ‘farmers first’ to get them their righteous due while doing business in a commercial manner. No wonder, Sahyadri FPO now has more than 18,000 farmer members from 124 villages cultivating 31,000 acres and producing more than 1,000 tonnes of fruits and vegetables daily and exporting Geographical Indication-certified grapes to 42 countries. As such, FPOs require visionaries like Verghese Kurien, Tribhuvandas Patel (Amul), and Viswanath Reddy (Mulkanoor Cooperative) to take them to the next level.

 

Training & Capacity building

 

Most FPOs fail as they do not have the capacity to chalk out a competitive business strategy, bandwidth to comply with the regulatory framework and skillsets to market their agri produce. Mere formation of FPOs will not be the panacea to eliminate the evils in agriculture. Customised and continuous capacity building of all stakeholders is crucial. Governments, NGOs and extension training institutes can play a vital role in the training and development of quality human resources.

 

Focus on Convergence

 

The development ecosystem requires organic convergence of FPOs, SHGs, and cooperatives; and bringing various schemes and programmes of the central and State governments, and other agencies under one umbrella in terms of planning, implementation and monitoring. Convergence helps in the optimal utilisation of resources, effective implementation of programmes, and creation of durable assets which will facilitate the sustainable development of FPOs.

 

Tie-up with Agri Startups

 

As agri startups and FPOs are the new-age entities meant for making agriculture a viable proposition, a symbiotic relationship is required between them to have better access to inputs, data, technology, credit, insurance and advisory services. Agri startups like KhetiGaadi and BharatAgri, Fasal, and FPOs may collaborate for a win-win situation.

 

Promotion of Women FPOs

 

Though the majority of rural women are involved in hard labour — sowing, weeding and transplanting etc, hardly 13% own the land. ‘Feminisation of agriculture sector’ is an emerging phenomenon. In order to achieve gender equity, enhance incomes of the poor households and make women partners in progress, there is a compelling need to promote women-only FPOs. Dev Bhumi Natural Products Producers Company (Uttarakhand), Savitribai Phule Goat Farming FPC (Maharashtra) and Jeevika FPO (Bihar) are a few entities that empower women in this context.

 

Think Digital

 

If truth (Satya) triumphs in Satya Yug, chant (Mantra) in Treta Yug, strategy (Tantra) in Dwapara Yug, and machine (Yantra) in Kali Yug, FPOs may capitalise on machine learning, artificial intelligence and blockchain technologies for leveraging the entire supply chain from ‘farm to fork’ to make themselves future ready.

 

Financial Assistance

 

A recent study by the National Institute of Rural Development & Panchayati Raj reveals that hardly 40% of the FPOs located in Telangana, Karnataka, Odisha, Uttar Pradesh and West Bengal avail agricultural value chain activities. They mainly depend on the local market for selling their agri-produce without any value addition. Hence, a majority of them in these States are not commercially viable and financially sustainable. Commercial viability refers to the economic size of landholdings, procurement of inputs at reasonable rates and marketing of output at remunerative prices. On the other hand, financial sustainability mainly deals with profitability, liquidity and solvency of FPOs.

 

Most of the FPOs are unable to access institutional finance due to low capital base, lack of credit track record/credit rating, non-maintenance of proper books of accounts and absence of collateral security, etc. From the banks’ point of view, standard credit assessment models for FPOs are still evolving due to the absence of farmer-level data. By taking a cue from the self-help group bank linkage programme, the Reserve Bank of India may be sensitised on this issue for credit enhancement to FPOs through customised products.

 

Further, a granular database of the FPOs should be developed, and members may be encouraged to strengthen their financial resources through higher contributions. Alternatively, FPOs should be enabled to raise capital through equity shares with differential voting rights. They should be allowed to mobilise capital from the Social Stock Exchange under a lenient compliance framework.

 

Agriculture is key to fulfilling half of the 17 Sustainable Development Goals. Green Revolution 1.0 transformed India from a food deficit to a food surplus country; from subsistence farming to sustainable agriculture; consumption-based economy to an export-oriented economy. Green Revolution 2.0 may be achieved through policy focus on collectives like FPOs, collaboration with agri startups, conservation of water, disaster management through insurance and climate-resilient technologies, formal credit and (export) markets through value-addition.

 

The power of innovation coupled with the power of aggregation will solve most of the problems in agriculture. Therefore, strengthening FPOs by ensuring their commercial viability and financial sustainability has the potential to improve the lives and livelihoods of 12.6 crore small and marginal farmers across India.