Question – “The right approach is through Farmer Producer Organizations, instead of APMC mandis, to help the farmers.” make a comment. Also tell how it (FPOs) is helpful for small and marginal farmers?

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Question – “The right approach is through Farmer Producer Organizations, instead of APMC mandis, to help the farmers.” make a comment. Also tell how it (FPOs) is helpful for small and marginal farmers? – 10 June 2021

Answer – 

In order to increase the income of the farmers, access to the mandis and better price availability of the crop produce, the government has taken the initiative to form an FPO i.e. Farmer Producer Organization. The responsibility of organizing these organizations has been given to Agriculture Department, Horticulture Department, Animal Husbandry Department and NABARD Bank in each district.

Farmer Producer Organizations are voluntary organizations controlled by farmers, whose members are active participants in policy formulation and decision making. Farmer Producer Organization (Farmer Producer Company) is a group of farmers engaged in agricultural production activities and carrying out commercial activities related to agriculture.

Objectives of Farmer Producer Organization:

It was created for the purpose of grouping the small scale producers especially small and marginal farmers so that the interests of the farmers can be protected. It will provide advice and technical assistance to the farmers in terms of supply of seeds, fertilizers, machines, market connections. It will also provide training, networking, financial and technical advice to the farmers. Its main responsibility is also to try to solve those challenges in terms of ensuring the availability of credit and access to the market to the farmers. 

Benefits of Farmer Producer Organization:

  • Addressing the challenge of average holding size: It is noteworthy that the average holding size in India has come down from 2.3 hectares in 1970-71 to just 1.08 hectares in 2015-16. Also, the share of small and marginal farmers in the agriculture sector has increased from 70% in 1980-81 to 86% in 2015-16. FPOs can encourage farmers to go for group farming and address productivity challenges arising from small size of holdings. Apart from this, agricultural innovation and increase in productivity will also help in additional employment generation.
  • Availability of agricultural finance: Generally, farmers have to depend personally on moneylenders or banks for finance for agriculture, as a result the pressure of repayment of loans is also personal. Many times due to this pressure farmers take steps like suicide.
  • Availability of agricultural finance: Generally, farmers have to depend personally on moneylenders or banks for finance for agriculture, as a result the pressure of repayment of loans is also personal. Many times due to this pressure farmers take steps like suicide. FPOs can provide low cost and quality inputs to the member farmers. This will enable members to save in the form of time, transaction cost, distress sale, price fluctuations, transportation, quality maintenance etc.
  • Social impact: A social capital will develop in the form of FPOs, as FPOs are able to remove gender discrimination, and can improve the participation of women farmers in the decision-making process of the organisation. It can help reduce social conflict as well as promote better food and nutrition in the community.
  • Being an empowered organization, the farmers as a member of the FPO will get better bargaining power, which will enable them to get a fair advantage of buying or selling their crop products at competitive prices. At the same time, farmers will get freedom from the web of middlemen.

FPO appears to be an important institutional mechanism to organize small and marginal farmers. Aggregation can overcome the constraint of small holding size. They cannot compete with large corporate enterprises in bargaining so the real hope lies in Farmer Producer Organizations (FPOs), which allow members to interact as a group, and help small farmers market both input and output. In addition to expanding across the country to benefit the smallholders in particular, FPOs should be encouraged by policy makers and other stakeholders.

Finally, we must remember that farmers always want a higher price for their produce, but high food prices can also haunt poor consumers. The art of policy making is to balance the interests of producers and consumers within reasonable financial resources.

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