Farmer Producer Organization emergence as a parallel movement to cooperatives in India. It has a case study of a successful FPO from Maharashtra, India. The presentation was made in International Conference in Kyrgyztan in May 2021.

1. Greetings from India!!
WELCOME
to
A presentation on
“Farmer Producers Organizations of India – Replicable
Model of collectives of small landowners”
FOR
KYRGYZ NATIONAL AGRARIAN UNIVERSITY, KYRGYZSTAN
BY
Dr D V Deshpande
Former Director of the Bankers Institute of Rural Development (BIRD) Lucknow
and Former Professor of VAMNICOM (Vaikunth Mehta National Institute of
Cooperative Management),
Pune ( India) email: dvdesh@gmail.com
And Dr S K Wadkar, Assistant Professor, VAMNICOM , Pune (India)

2. India and the neighboring countries
including Kyrgyzstan
India key stats:
• Population: 1.3
billion
• Among the top 3
producers of
most of the
agricultural
commodities in
the world

3. Important Features of
Indian Agriculture
• India is predominantly agricultural country as
over 50% population continues to be
dependent on agriculture for livelihood
• The number of agricultural households is huge
at 90.2 million
• Indian agriculture is dominated by small
landholders as 781 million comprising 87% are
small landholders (less than 2 ha.)

4. Issues faced by small farmers
• Lower scale of operation – small marketable surplus- hence
generally poor
• Have to purchase inputs at high price and are forced to sell
produce at lower price
• Exploitation by intermediaries in procurement and
marketing
• Lack of capital and education coupled with poor access to
adequate information
• Lack of access to credit and insurance services
• Little value addition
• Vulnerability to risk in agriculture including natural
calamities (yield risk) and market risk (prices)

5. The Solution -
Collectivization of
farmers into groups
5
Backward Linkages:
Seeds and Fertilizers
Credit and Insurance
Technical Knowledge
Extension & Advisory Services
Forward Linkages:
Collective Marketing
Value addition and Processing
Market led agriculture
production
Collective
Helps in
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6. Models of Small farmers’ Collectives
• Cooperatives – Started in 1900s
• Self-Help Groups (SHGs) – Started in
1980s
• Farmers Producers Organisations
(FPOs) – Since 2000

7. Benefits of Collective action
• Expands access to markets & finance: reduces transaction
costs, Increases bargaining power, Strengthens forwards &
backward linkages
• Enhances ability to manage natural resources
• Improves access to agri-infrastructure, information and
knowledge
• Helps in participating and benefiting from value addition by
adopting “Value Chain approach”
• Strengthens voice and power in policy processes
• Tackles social issues- empowers small farmers
• Improves access to rights and entitlements

8. What is Farmers Producers Organisation
(FPO)?
• It is an organisation of farmers - who are also actual
producers of a specified commodity
• Legal form can be:
i. Producer Company under Indian Companies Act
ii. Cooperative under Cooperative Societies Act/
Autonomous or Mutually Aided Cooperative Societies
Act/ Multi-State Cooperative Society Act
• These organizations can be created at the village, block,
district or province (State) level depending upon the need
of the producers considering the DEMAND POTENTIAL TO
ADOPT VALUE CHAIN APPROACH to enhance
farmers’/producers’ economic and social benefits.
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9. FPO Ecosystem
A. Promotional Support
B. Financial support
C. Risk mitigation

10. A- Promotional support- formation,
training, guidance
• National level policy of Government of India
• Supporting Institutions: Small Farmer Agri Business
Consortium (SFAC)
• National Bank for Agriculture and Rural Development
(NABARD)
• National Cooperative Development Corporation
(NCDC)
• State (provincial) Government - Agri./ Horticulture
• Empanelled Agencies – Non Govt Organisations
(NGO)/ Civil Society Organisations

11. B. Financial Support
• Equity grants provided by Government
through SFAC
• Credit provided by NABARD, banks , Non
Banking Finance Companies
C. Risk Mitigation:
– Credit guarantee fund created by Government and
NABARD
– Crop/ asset insurance by Insurance companies

12. 12
Status of FPOs as on
31st December 2020
8000 producer
companies registered
4.6 million members
estimated
582 average number of
shareholders per PC
92% farm-based
3% FPOs of women
members
~50% of PCs are in 4 states
79% of PCs are aged 3 years or less
49% of PCs have paid-up capital of Rs. 1
Lakh or less.
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13. A Case of FPO- Devnadi FPO- Nashik
(India)
PICTURE OF ITS INPUT SHOP

14. Devnadi Valley Agricultural Producer company
Ltd. – Nashik district, Maharashtra
• The company formed in 2011 by 11 progressive farmers
with the support from a local NGO called Yuva Mitra.
• The share capital mobilized by company at INR 10/- per
share and raised paid-up capital of INR 0.1 million – now
it is about INR 1 million from 950 farmers
• The Company has a Board of Directors (honorary)–
elected by the members and 10 staff members
including Chief Executive Officer (CEO), account officer, 3
agronomists, lab assistant, 2 procurement assistant and
2 supporting staff
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15. Business Operating Systems:
Focus- fruits, vegetables, dairy
Backward Linkages of the Company
• Input Services: Bulk purchase of seeds, fertilizers,
insecticides, pesticides, agricultural tools and equipment’s,
etc. and selling it to members and non-members.- it saves
around 30-40% of input costs.
• Extension and Advisory Services:
– Training, demonstration, technology transfer, hand holding and
other extension services
– Crop and animal insurance to mitigate risks
– Established ‘soil and water testing lab’ with support from
‘Mahindra Smruddhi’ and ensures adoption of recommendation
to maintain soil and water quality.
– Runs ‘information centers’ to create awareness about State and
Central governments schemes & programmes, weather &
market prices, and has facilitated rights and entitlements from
social welfare department to the eligible member farmers
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16. Contd…Forward Linkages provided by the FPO
• Purchase of vegetables from members and
engaged in selling into the local markets, Nashik
city and Mumbai markets- ensured continuous
flow of income to members
• Due to the success, the younger generation
started looking at agriculture as a business
profession, which is not the case in many parts of
the country
• The FPO has good turnover of INR 32 million
(USD 0.4 million) in 2019-20 with a nominal profit
of INR 79715 (approx. USD 1000)
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17. The Key Success Factors behind Devnadi FPO
• Proactive & honest Leadership by the Chairman
• Responsive to members’ needs and aspirations
• Keeping governance and management function
separate
• Quality extension & Advisory services
• Decision making in the interest of members
• Transparency in all business affairs
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18. Areas of concern in FPO sustainability
1. Process adopted in the formation of FPOs
2. Identification of viable Business Potential for FPOs
3. To what extent are the FPOs models able to ensure adoption of
appropriate technology and practices by the farmers in a
flexible manner?
4. Are the FPOs model able to ensure the use post-harvest
technology for the management of seasonal agro-produce?
5. How far the FPOs models are able to establish market linkages
to increase farmers share in consumer Rupees?
6. How far the issues of sense of belongings and ownership,
management and control addressed to ensure sustainability of
efforts undertaken and delivering benefits to the stakeholders
including the members, farmers, consumers etc.?
7. FPOs capability on Financial management and fulfillment of
Compliance requirements
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19. Key aspects for Replicability & Sustainability of
FPO in any Country
• Have a supporting ecosystem for:
– Promoting
– Financing
– Marketing
– Risk mitigation
– Compliance
• Standardization of the process
• If any one would like to have training programme, or visit to
successful cases kindly feel free to contact me or NABARD or
BIRD or VAMNICOM
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20. THANK YOU!
Namaste –Indian way of thanks & greeting
20
D V Deshpande
Email: dvdesh@gmail.com