Long Post Warning: This is a lengthy post – will need about 15 minutes or more to go through it in details.
The objective of this article is to help every single Farmer Producer Organisation (FPO) succeed, which indirectly means that the farmers will also become happy, wealthy and powerful again. (Eg. Help FPO generate more than 1Cr per year turnover on an average.).
In order to do so, the status of FPOs have been studied and reported independently. The scope of the study has primarily been in Tamil Nadu, while the discussions with FPO counterparts in other parts of the country also reflect more or less the same scenario.
Note: To learn more about FPOs, please visit SFAC website at http://sfacindia.com/FPOS.aspx or NABARD website at https://www.nabard.org/
DISCLAIMER: Just like how there are few corrupt politicians in Indian politics, there are a few bad apples in the FPO system also. This post is aimed at identifying them in the FPO and provides recommendations to weed them out, thereby helping us improve the revenues coming into the FPO and to the farmer. This post cannot be thought of as representing every single FPO.
1. BOARD OF DIRECTORS and CHAIRMAN
If you take any FPO as a sample and study their board of directors and chairman, you will notice that, they are usually the richest people in the nearby villages. Hence the Board of Directors in an FPO have an unshakeable power in the FPO.
You will also notice that before the FPO came into existence, in most of the cases, the board of directors and chairman were doing some business (eg. giving micro loans to farmers, renting out machinery to farmers, selling seeds to farmers etc) which is now getting disrupted because of the formation of the FPO.
The above situation presents a case for conflict of interest in the FPO.
BOD and Chairman (or any of their immediate family members) cannot be involved in any such business while they are in such a post in the FPO.
Usually, this person is the son of one of the poorer farmer member of the FPO or appointed by the RI (if the FPO is run by a RI).
Typically, is a Agri graduate with very less knowledge/awareness on technology or business administration.
- Cannot be from one of the villages in the FPO
- Should be hired from outside by the RI and placed in the FPO. (Highly recommend Agri Universities to have specific course for grooming FPO CEOs and then RI hirings be made using campus interviews from these universities).
- Should be measured every quarter using parameters such as revenue, profits, planning for next quarter, short term / long term roadmap etc.
3. RESOURCE INSTITUTION
Usually, RIs are well-oiled machinery and have mastered the art of getting regular revenues from the FPO.
They get paid irrespective of the outcome in the FPO.
They usually manage a bunch of FPOs.
RIs are not usually held accountable for the success/failure of the FPO.
- Performance Based Incentive: RIs should be paid only based on a % of the revenues in the FPO.
- Performance of RIs should be displayed online and considered in the RI recruitment process, every time before a new FPO is allocated to an RI.
4. AGRICULTURE OFFICER
In many cases, the AO directs the FPO on where to buy from and where to sell.
This also impacts the revenue and growth of the FPO.
- AOs should be help accountable for the success of the FPO.
- The information should be published online at district, state and national level on AO’s performance.
5. BUDGET ALLOCATION IN FPO
Typically about 1Cr. is spent on each FPO over a three year period. The split up is approximately as follows:
CEO Salary: Rs.30,000 * 36 months = Rs.10.8 Lakhs
Block Representative Stipend: Rs.4,000 * 20 people * 36 months = 28.8 Lakhs
RI Expenses: Rs.30,000 * 36 months = Rs.10.8 Lakhs
FPO Matching Contribution in Year One: Rs.10 Lakhs
FPO Subsidy/Grant in Year Two: Rs.20 Lakhs
FPO Subsidy/Grant in Year Three: Rs.20 Lakhs
Total Approximate Allocation per FPO: Rs.1 Crore
Number of FPOs planned between 2020 and 2024: 10,000
Total Crs. planned to be spent: Rs.10,000 Cr.
6. FPO ANNUAL TURNOVER
Based on a study of FPOs in Tamil Nadu that have crossed 3 years of their lifetime, between 2014 and 2020, most of the funds allocated have not given their results expected. Out of 500+ FPOs, less than 10 have crossed 1Cr. turnover per year.
If the average FPO has 250 members in it, this means each farmer has not even made a turnover of Rs.40,000/- per year through the FPO.
It is quite obvious that most of the farmers are selling their produce outside the FPO. In most cases, it is also evident that these sales are happening directly to someone directly/indirectly related to someone in the FPO, as they are the middlemen in this.
- Farmers cannot sell to any member (or immediate family member) of the FPO.
- RI should be held accountable for the performance of the FPO.
- AO should be held accountable for the performance of the FPO.
This post is just the tip of the iceberg. The ideal solution will require an in-depth research on each section listed above, studying it in detail and coming up with the right corrective action to make the members in the eco-system perform at their optimal level. We hope the above information is useful for decision makers to help improve the situation of farmers in India.