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Operation Greens | aims to ensure right price for farmers | promote FPO | Government Policies

Operation Greens | aims to ensure right price for farmers | promote FPO | Government Policies

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  • GS 3 || Economy || Agriculture || Agricultural Production & Productivity

Why in the news?

Operation Greens ensure right price for farmers

  • It is a type of producer organization. Most of the members of this organization are small farmers.
  • It aims to promote farmers and provide the right assistance.

What are the different supporting organizations of FPOs?

  • Various organizations across the nation are helping the FPOs.
  • It includes names like NABARD, Government Department, Ministry of Rural Development’s Deendayal Antyodaya Yojana- National Rural Livelihood Mission (DAY-NRLM)

Benefits of FPO:

  • Cost of production can be reduced
    • Bulk input order
    • Aggregation of produce
    • Bulk transport reduces marketing cost
    • Post-harvest losses can be minimized
  • Easy Access to modern technologies
  • Easy communication for dissemination of information
  • Easy Access to financial resources
  • Advantage of economies of scale for farmers as well as traders
  • FPOs may take up activities for value addition which fetch a higher price for the farmers’
  • FPO formation facilitates utilization of pre and post-harvest infrastructure like green houses, mechanized farming, etc.
  • FPO can expand its business activities by opening of input stores, custom centres etc. Improved bargaining power and social capital building

Concerns:

  • Many of the critical woes of this sector still remain unaddressed. These include
    • difficulties in securing institutional finance,
    • inability to operate in the regular agricultural markets and
    • The lack of legal recognition under the contract farming regulations.
  • Moreover, the task of promoting these organisations has been entrusted to parastatals like the National Bank for Agriculture and Rural Development (Nabard) and the Small Farmers Agribusiness Consortium (SFAC) which have their own limitations in ensuring effective hand-holding.
  • The banks are usually wary of granting loans to the FPOs as they do not have assets of their own to serve as collaterals.
    • Consequently, the FPOs have to rely on loans from non-banking financial companies or microfinance companies to raise working capital at very high interest rates.
    • The facility of cheap bank loans with liberal subvention of interest by the government that is available to individual farmers is denied to the FPOs, though they are purely farmers’ organisations.
    • Worse still, many other kinds of concessions, tax exemptions, subsidies and benefits provided to cooperatives, startups or other grassroots farm bodies have not been extended to the FPOs.
  • They also usually face resistance in operating at the regulated mandis because of the resistance offered by the licensed traders and their cartels who wield significant hold over these markets.
  • These issues need to be addressed expeditiously to enable the FPOs to perform to their full potential for the benefit of the farmers.
  • Example: SFAC reported that the state wise progress of farmers mobilization under FPO promotion (as on 31.03.2019) was found out that Madhya Pradesh ranks highest in farmers mobilization upto149000 farmers followed by Karnataka state (127500 farmers). The state lowest in farmers mobilization was Goa with 1810 farmers and Mizoram with 2700 farmers.It was also revealed that till March 2019,highest number of registered FPOs was Madhya Pradesh with 143 numbers followed by Karnataka state with 125 registered FPOs. The lowest states with only 1 registered FPO were Mizoram, Jammu (Division) and Srinagar (Division).

What has been done till now?

  • NABARD’s:
    • Producers Organization Development Fund (PODF)
    • Producers’ Organization Development and Upliftment Corpus (PRODUCE) Fund
  • GOI Central Sector Scheme :
    • “Formation and Promotion of Farmer Producer Organizations (FPOs)” with a clear strategy and committed resources to form and promote 10,000 new FPOs
  • C Rangarajan:
    • FPOs have to be encouraged by policy makers and other stakeholders apart from scaling up throughout the country to benefit particularly the small holders.
  • National Commodity and Derivatives Exchange (NCDEX), and the various State Governments and NGOs are part of FPO.
  • Several of these FPOs have been successful in making agriculture profitable for thousands of farmers. The Indian Government introduced a new Central Sector Scheme that aims to create and promote 10,000 FPOs.
  • Under the new scheme, the members of FPOs can avail relevant benefits such as Credit Guarantee Fund and advisory services from Cluster Based Business Organization (CBBO) and the National Project Management Agency (NPMA).

Road ahead for FPO:

  • While FPOs continue to face several setbacks and are struggling to operate viably in many countries, continued support from governments and other organizations can ensure their sustainability in the long run.
  • Their survival and prosperity are also highly crucial to bring about transformation in the food and agriculture sector in developing and underdeveloped countries, which is imperative to guarantee food security for future generations.
  • With the implementation of the right policies, and with the support of all actors in the ecosystem, FPOs will soon be able to achieve sustainability and reap optimal benefits for its shareholders.

Additional info:

Small Farmers Agri-Business Consortium (SFAC):

  • The Government established Small Farmers’ Agri-Business Consortium (SFAC) as a Society in 1994 to facilitate agri-business ventures by catalyzing private investment through Venture Capital Assistance (VCA) Scheme in close association with financial institutions.
  • The setting up of State level SFAC as counterpart agency of Central SFAC for agribusiness projects was part of the Scheme.
  • The Scheme envisaged a corpus contribution from Central SFAC of 50 lakh to each State which establishes a State Level SFAC.
  • The role of State SFACs is to aggressively promote agribusiness project development in their respective States. The main functions of SFAC are:
  1. Promotion of development of small agribusiness through VCA scheme;
  2. Helping formation and growth of Farmer Producer Organizations (FPOs) / Farmer Producer Companies (FPCs);
  3. Improving availability of working capital and development of business activities of FPOs/FPCs through Equity Grant and Credit Guarantee Fund Scheme;
  4. Implementation of National Agriculture Market (e-NAM) Electronic Trading platform.
  • SFAC is one of the Central Procurement Agencies for pulses and oilseeds under Price Stabilization Fund of Department of Consumer Affairs.

Mains oriented question:

What are farmer producer organizations (FPOs)? Can FPOs help alleviate rural distress? (200 words)