jointly organized by - cuts citee department of agriculture, government of bihar and mr. nilesh...

Jointly Organized by:

CUTS International & Indian Grameen Services (IGS-BASIX)

Venue:

Hotel Chanakya, Patna

On 12/22/2015

PROCEEDINGS OF STAKEHOLDER CONSULTATION ON

FARMER PRODUCER ORGANIZATION (FPOs) - OPPORTUNITIES & CHALLENGES

Indian Grameen Services Page 1

Background:

Globalisation and liberalization together have brought changes in market scenario and

corporate sector confined to the town and city are trying their best to have access to the

rural market as 80% of the total market of food products is there in the villages. At the same

time changes and diversification in food products, processing and competitive market with

increasing trend of capturing market share among the companies have also helped

evolving this kind of situation. On the other hand increasing demand of such food products

is also motivating these corporate sectors to enter into agreement with the farmers and get

quality produce in required quantity.

Most of the major corporate houses of the country are venturing into the agri-business

sector, especially with regulations allowing the corporate sector to enter into direct

contractual arrangements with farmers. One of the triggers for this newfound interest in

agribusiness by the corporate sector is the change occurring in the retail markets, where

consumers are making dramatic shifts from purchasing at neighbourhood kirana stores to

shopping at supermarkets, malls and food plazas, enabling development of food supply

chains from the farms to consumers.

With increase in population, there is continuous increase in demand of food products. Yet

the farmers are in distress, as witnessed by the large number of farmer-suicides. One

explanation for this is that the farmer disposes off his produce in unprocessed form and

value addition in agricultural commodities happens only after sale by the farmers. One

possible solution may lie in aggregated functioning through Farmers Producers Organization

[FPOs] to foster public private partnership.

During the last decade there has been a growing interest from Govt. and nongovernmental

organizations in promoting small farmers’ organizations. These organizations have been

playing the important role of creating strong supply chains and linking farmers to the

market. FPOs have opened new vistas in the agribusiness sector with input and out market

on large scale.

FPOs face a number of challenges and hurdles as they grow in number and scale. There are

also opportunities that arise from collective functioning. These opportunities and challenges

have to be addressed systematically by bringing together all stakeholders viz. Government,

NGOs, FPOs, private sector, aggregators and service providers in order to ensure quality,

quantity and market for remunerative prices for the produce. Against this backdrop,

Consumer Unity and Trust Society (CUTS) and IGS organized day-long Stakeholder

Consultation was organized in Patna, Bihar to understand the issues and challenges ahead

specific to the State and do the advocacy for the appropriate policies for the smooth

functioning of FPOs in the State.


Proceedings:

The Stakeholder Consultation workshop commenced with a welcome address by Mr. Arijit

Dutta, Managing Director, Indian Grameen Services (BASIX). This was followed by Mr.

Sourabh Kumar, Policy Analyst, CUTS International welcoming the participants and

explaining the mandate of CUTS. He explained that the objective of the workshop was to

discuss the operational and policy level issues with respect to FPOs and to bring all

stakeholders together on a common platform in order to create an enabling environment

for the organizations of small farmers. He expressed the need to discuss the challenges and

opportunities that FPOs encounter or may face in future and the role of the government

sectors, banks, NABARD, private sectors and NGOs.

Mr. Arijit Dutta, Managing Director, IGS giving welcome speech to the participants.

Mr. Sudhir Kumar Mishra, Deputy Director, Department of Agriculture, Government of Bihar

also addressed the participants. Mr. Mishra narrated the importance of Trust, Technology

Transfer and Transparency in FPOs. He said that future of FPOs is based on trust and

transparency. He also elaborated the government schemes for FPOs.

The workshop discussion was divided in three sets

Sensitize FPOs on government schemes

Key challenges for FPOs

Conclusion


Mr. Sudhir Kumar Mishra, Deputy Director, Department of Agriculture, GoB.

Sensitize FPOs on Government Schemes

The main objective of the workshop was to disseminate the information regarding

government support to FPOs. Invited resource person Mr. Sudhir Kumar Mishra, Deputy

Director, Department of Agriculture, Government of Bihar and Mr. Nilesh Kumar Mishra,

Assistant Manager, Nabard have shared their experienced about schemes and support for

existing FPOs in Bihar. The FPOs will get support at three levels from NABARD i.e. credit

support, capacity building and market linkage. Mr. Nilesh Kumar narrated that every FPO

will get support of credit through soft loan from NABARD. He also stated that capacity

building is core portfolio of NABARD, so the existing interested FPOs need to send their

name for capacity building with the help of parental organization. On the other hand reach

of extension services and schemes also need to reach majority of the farmers as it is limited

to the few farmers of few villages. In this era of globalization and liberalization, only that

organization will prosper which have access to the changing environment of technology,

improved practices with market information. So there is great need to make such

environment available to the farmers and farmer organizations from sustainability point of

view.

Key Challenges of FPOs

Key challenges of FPOs basically divided in two parts as per discussion with stakeholders in

workshop:

Finance


Marketing and

Capacity Building

A. Finance

Small farmers’ membership in cooperatives is 3% in Bihar against 30% at the national

level; membership of this group in Self Help Groups [SHG] is 0.8% in Bihar against 4.8

% at the national level; membership in registered organization is 0.3% in Bihar and

2.2 % across the nation. These statistics are indicative of the position of small and

marginal farmers in Bihar. There should be three or four schemes exclusively for

small and marginal farmers because the issues and concerns of this group are

different from that of other farmers.

The State Level Bankers’ Committees should track the flow of credit to this group.

Commercial banks are not keen to finance small and marginal farmers.

Requirements of a professionally produced Business Plan tend to discourage the

small farmers who have no access to the resources required to produce such a Plan.

Currently only selected groups with the appropriate political connections have

access to credit. The government should provide some guarantee to cover this risk.

FPOs in Bihar have lack of fund to regulate their activities in smooth manner. Share

capital in many FPOs has within 1-2 lakhs, so it restrict for large business. The

government should provide working capital support to FPOs to regulate their

activities.

The administrative cost of FPOs is Rs. 40000- 50000 per month, which is not bearable

by FPOs due to lack of fund or insufficient income flow in the beginning. It hampers

the growth of FPOs, so government and agencies should give handholding support in

administrative cost of FPOs for minimum 5 years.

B. Marketing

Marketing is another concern of FPOs. It is difficult for the FPOs to compete with

traders who control large part of the value chain with their network of retail shops,

access to funds and infrastructure. FPOs are also unaware about proper market to

sell their output and take remunerative price. The FPOs need handholding support in

market linkages, established ones enjoy enormous power from the linkages and

relationships built up over several years and sometimes several generations.

Farmers of North Bihar are facing problem of no entry of fruits and vegetable loaded

truck to the Patna mandi as one lane of the Mahatma Gandhi Setu is not operational

and at the same time heavy refrigerated van is also not allowed to cross the bridge

and hence fruit marketing (Litchi) is badly affected. it takes hours to cross the bridge


too. It is a major concern for Farmers from North Bihar. The farmers of North Bihar

are not able to sell their produce (Fruit) in outside market and take remunerative

price, so the Government of Bihar should take initiative and give permission to fruits

and vegetable trucks to enter into the Mandi through giving relaxation in no entry

timing.

There is a wide price variation between the rural areas and the town/city. However

many small and marginal farmers find it easier to sell in the village haat. There are

1500 haats in Bihar. These should be developed and at least basic facilities made

available.

Lack of basic infrastructure is another bottleneck of FPOs. The existing FPOs of Bihar

has involved in business activities, they collects goods produce from farmers in one

place and sell in remunerative market. But the FPOs is facing a problem of collection

of goods for long time due to non- availability of warehousing. Warehouse in Bihar is

controlled and managed by government officials, so the government should take

initiative and give subsidies grant to FPOs for construction of warehouse. It will

increase the business volume of FPOs and also helpful in remunerative price from

market.

The FPOs do not get fertilizers direct from company. So the government should

take initiative in licensing policy and make the process easy for FPOs to take license

and purchase fertilizers directly from input company (IFFCO is not supposed to

market fertilizers other than co-operative).

Delay in issuance of input license also affects the business of the FPOs (Katihar-

Masahi katihar agro producer company limited)

After getting APMC act repealed, the condition and functioning of Market yard has

gone down drastically. Even the maintenance of the market yard (road, Building,

cleanliness) is not done properly and number of buyers and sellers has also come

down significantly affecting the overall marketing of produce. Govt. should come out

with such facilitation/regulation that is helpful for farmers and functioning of market

yards.

C. Capacity Building

Most of the FPOs in Bihar are run by 8th or 10th pass farmer who are incapable to take

decision and make better plan for wellbeing of FPOs in short span of time. They have lack of

leadership initiative to run the FPOs in professional manner. FPO requires an external agent

to mobilize the director and chairman in professional manner. Continuous hand-holding is

required to build capacities. The sustainability of the organization will be at stake without

this investment of time and resource. The process of planning, resource allocation and


market linkages is too complex for farmers to handle by themselves. The promoters,

however, will have to vigilant about providing support and guarding against taking over the

decision- making role. Farmers who were 7th and 8th class pass could take up leadership role

and marketing responsibilities when they are trained properly and regularly at work rather

than class room training, so that they are capable to stand and star on their own. The

promoting organization has to assist the FPO to make access to input suppliers and facilitate

aggregated market.

Currently farmers have least access to the extension services. KVKs, created to provide

farmers access to appropriate technology, is usually too far for the small and marginal

farmer to contact. There is need to raise productivities and generate marketable surplus and

this can happen only when the farmers have the access to the technology and improved

Agri practices and can be ensured through the extension services. The facilitating NGO has

to fill this gap. Lack of basic infrastructure is another bottleneck in formation of FPOs. Roads,

access to power, storage, market yards, ripening chamber are required for marketing. One

of the bottlenecks in formation of FPOs is the large amount of complicated documentation

that is required. The farmers can neither understand them nor manage to deal with them.

The Chairman and CEOs of FPOs expressing their views

Conclusion

To strengthen the agriculture sector, there is need to have strong farmer producer

organization working closely with market to safeguard the interest of the small and marginal

farmers.


At the same time all stakeholders are playing their role effectively to enabling such

environment in which FPOs are functioning well and meeting the marketing requirement

with quality and quantity. For this support agency need to provide:

Govt. to play role of facilitator instead of regulator

Market (Local Haats and Market yards) should be developed in such a way with basic

amenities that it attracts more numbers of buyers and sellers.

Reach of extension services need to be maximized so that the S&M farmers have

access to the technology and improved practices.

Initial Financial and hand holding support to be extended for five years so that

capacity of FPOs is built properly.

District Agriculture Office, ATMA and KVK should provide timely technical and non-

technical support to strengthen the FPO through timely issuance of input license,

training on technology and improved practices.

Govt. and private investment need to be encouraged for infrastructure and

processing plants.


List of Participants:

Sl. No.

Name Designation Organisation Contact No. E-mail ID

1 Sudhir Kumar Mishra

Deputy Director Department of Agriculture (Govt. of Bihar)

9431818928 [email protected]

2 Sourabh Kumar Policy Analyst CUTS 7891469886 [email protected]

3 Arijit Dutta Managing Director

Indian Grameen Services


4 Suraj Kumar Ray Sr. Manager Indian Grameen Services


5 Hareshwar Prasad Singh

Assistant Vice President



6 Siromani Devi President

Purnea Mahila Kisan Producer Company Ltd., Purnea

9801468328

7 Ratna Devi Vice President


8 Soni Devi Treasurer


9973428345

9 Rahul Kishor Gautam

Assistant Manager



10 Rajesh Kumar Sharma

Area Accountant

Action for Social Advancement (ASA), Purnea


11 Jitendra Yadav President Gurua Agro Producer Company Limited, Gaya

9955821202

12 Anil Prasad President Bankey Dham Agro Producer Company Limited, Gaya

9430971609

13 Lal Babu Ram Chairman

Adarsh Farmer Producer Company Ltd., Kudhani, Muzaffarpur

9006416315

mailto:[email protected]














14 Panchanan Ingle Sr. Manager EDA Rural System Pvt. Ltd.


15 Rajendra Mandal Chairman

Mansahi Katihar Agro Producer Company Ltd., Katihar

9931638443

16 Jay Prakash Ray CEO

Prakash Agro Producer Company Ltd., Hajipur (Vaishali)


17 Arun Kumar Tiwari CEO

Baba Someshwar Nath Agro Producer Company Ltd., Areraj, E. Champaran


18 Vivek Kumar CEO

Bapudham Agro Producer Company Ltd., Chhota Bariyarpur, E. Champaran


19 Rajesh Kumar CEO

Baudhi Devi Agro Producer Company Ltd., Chakiya, E. Champaran


20 Bhanu Pratap Singh Branch Manager

IG International Pvt. Ltd., Patna


21 Rama Shankar Shah Trader Maa Mundeshwari Fruiti

9334144217

22 Swatantra Singh Trader IG International Pvt. Ltd., Patna

7858020884

23 Dileep Pal Dealer

Prakash Agro Producer Company Ltd., Hajipur (Vaishali)

9934424530

24 Mahesh Prasad Singh

Dealer (Kisan Club)

Bagwan Budh Krishak Club (ATMA)

9801209588

25 Baiju Lal Singh Chairman Farmers Club, Diggha Fatehpur


26 Dharmendra Sriwastwa

Sr. Manager Indian Grameen Services






















27 Shanti Bhushan Assistant Manager



28 Abhishek Kumar Assistant Manager



29 Kanhai Kumar Assistant Manager



30 Nilesh Kumar Assistant Manager

NABARD, Patna 9155616414 [email protected]

31 Tapan Kumbhkar Office Assistant Indian Grameen Services

9234475994

32 Sunil Kumar Sinha Executive - Accounts



33 Anil Kumar Singh Director Assign technosoft Ltd.


34 Ashish Kumar Singh Marketing Executive

Assigntechnosoft Ltd.


Acknowledgement:

This document has been produced by Indian Grameen Services, Bihar with the financial

assistance from CUTS International, Jaipur under the project entitled Sustainable

Development Investment Portfolio (SDIP) funded by Department of Foreign Affairs and

Trade (DFAT), Government of Australia. The views expressed here are those of IGS, Bihar

and can therefore in no way be taken to reflect the positions of CUTS International or

DFAT.



















jointly organized by - cuts citee department of agriculture, government of bihar and mr. nilesh...

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