FARMER PRODUCER ORGANIZATIONS & AGRI -MARKETING ...

FARMER PRODUCER ORGANIZATIONS & AGRI -MARKETING:EXPERIENCES IN SELECTED STATES, RELEVANCE AND THEIR PERFORMANCE IN PUNJAB

Satish Verma

NABARD RESEARCH STUDY - 11

(Affiliated with Indian Council of Social Science Research, New Delhi)

Published by:

Centre for Research in Rural and Industrial Development Sector 19-A, Madhya Marg, Chandigarh

©CRRID February 2020 All Rights Reserved

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DISCLAIMER

This study has been supported by the National Bank for Agriculture and Rural Development (NABARD) under its Research and Development (R&D) Fund. The contents of this publication can be used for research and academic purposes only with due permission and acknowledgement. They should not be used for commercial purposes. NABARD does not hold any responsibility for the facts and figures contained in the book. The views are of the authors alone and should not be purported to be those of NABARD.

About NABARD Research Study Series

The NABARD Research Study Series has been started to enable wider dissemination of research conducted/sponsored by NABARD on the thrust areas of Agriculture and Rural Development among researchers and stakeholders. ‘Farmer Producer Organizations and Agri-Marketing: Experiences in Selected States, Relevance and their Performance in Punjab’ is the eleventh in the series. In recent years, Farmer Producer Organisations (FPOs) have emerged as an important institutional mechanism for aggregation and improving economy of small holders. This study attempts to identify the factors that sustain FPOs and make them successful as also look at the reasons for poor performance of some FPOs through a field study of 19 FPOs in the states of Punjab and Madhya Pradesh. Complete list of studies is given on the last page.

FOREWORD

Agriculture and allied sectors provide employment to about 44 percent of the workforce

of the country and contribute about 16 per cent of national income. This mismatch between share

in national income and employment is a source of persisting income disparity between income of

non agricultural workers and income of agriculture workers and farmers. Even in absolute term,

income per farmer from agriculture sector is found low. Major reason for this is scale of

production. Average size of land ho lding in the country is only 1.08 hectare (2015-16) and it is

further shrinking. Likewise, herd size of dairy unit, which is integral part of all farms, is also

very small. This small size of farm business in crops and livestock keep the base of farmers

income and their bargaining power in input and output transactions very low.

Small scale of farm operators in the country has received lot of policy attention from time

to time. The country has supported and promoted farmers cooperatives in a big way in almost all

the states to help producers in getting easy access to institutional credit and inputs and in

improving marketing of farm produce especially milk. These institutional mechanisms have

helped farmers in significant ways. However, cooperatives remain in the control of bureaucracy,

and in most of the cases members of cooperatives have little or no involvement in decision

making, management, operations and business models of cooperatives.

In recent years, Farmer Producer Organisations (FPOs) have emerged as important

institutional mechanism for aggregation and improving economy of small holders. The concept

of FPO was introduced in the early 2000 which defines Producers Organization as a legal entity

formed by primary producers, viz. farmers, milk producers, fishermen, weavers, rural artisans,

craftsmen. The ownership control is always with members and management is through the

representatives of the members. Provisions were made in Part IXA of Companies Act 1956 in

year 2003 for Producers group to register and create Farmers Producer Company. This provision

has equipped group of small farmers to conduct like a business organisation.

At the level of Central government, SFAC and NABARD are promoting Farmers

Producers Organizations (FPOs) in the country. Latest data shows that SFAC promoted 769

ii

FPOs with membership of about 7.48 lakh farmers, while NABARD promoted 2154 FPOs till

March 2018. According to NABARD, 5000 FPOs are in existence in the country at present of

which 3200 are FPCs.

These FPOs are benefiting their members through bulk input procurement and distribution,

aggregation and marketing of output, agro processing, and by helping their members take high

paying activities like fruits and vegetable production, dairying, organic farming, seed production

and marketing, and other allied activities. Some success stories of FPOs documented by SFAC

(available at: http://sfacindia.com/FPOSucessStory.aspx) provide convincing evidence of

substantial increase in income of smallholders through FPOs. However, the penetration of FPOs

in the country is quite low with miniscule coverage of farmers. An important hurdle in expansion

of FPO is provision of credit to them by financial institutions. As FPO shows lot of promise for

raising income of small holders, they should be given strong support and attention.

Based on the experience of FPOs in helping farmers raise their income, the Cabinet

Committee on Economic Affairs headed by the Prime Minister in its meeting held on 19th

February, 2020 has approved creation of ten thousand more FPOs in the country with a total

budgetary provision of Rs. 4496.00 crore for five years (2019-20 to 2023-24) with a further

committed liability of Rs. 2369.00 crore for period from 2024-25 to 2027-28 towards

handholding of each FPO for five years from its aggregation and formation.

In order to achieve the required outcome from the initiative for creation of FPOs it is

extremely important to learn from the experience of FPOs already created in the country. We

need to identify the factors which sustain FPOs and which make successful FPOs. Also, it is

equally important to identify reasons for poor performance or failure of some of the FPOs.

Besides, there is a need for understanding functioning of FPOs and widespread dissemination of

information related to various types of FPOs to motivate and attract farmers to come forward to

join FPO and make them successful. This book precisely focuses on all such issues. The

manuscript is based on field study of 19 FPOs; 16 in the state of Punjab and 3 in the state of

Madhya Pradesh. It provides detailed account and in-depth analysis of various activities and

functioning of selected FPOs and also document response of members of FPOs on important

parameters related to functioning and performance of sample FPOs. The author finds that milk

FPOs are performing better than agri-business FPOs – a trend consistent with success of

cooperatives in dairy sector.

An important inference that follows from this study is that despite the need and relevance

of FPO model in Indian context, their performance cannot be taken as granted. Among the

sample FPOs, there are more cases of poor delivery as compared to the success. The roles of

resource institute and CEO of FPO are found critical in success of FPO and in deriving benefits

for the members. SFAC and NABARD invest a few lakh Rupees in handholding, capacity

building and nurturing each FPO in the initial years of their formation. This investment goes

waste if FPOs do not serve the intended purpose. Thus, it is very important to ensure

sustainability of FPOs. The author needs to be congratulated for listing pragmatic suggestions

and preparing recommendations for sustainability of FPOs in Punjab based on actual experience

in the field.

21 Feb. 2020 Ramesh Chand New Delhi Member

NITI Aayog

ACKNOWLEDGEMENTS

At the outset, I acknowledge my gratitude to National Bank for Agriculture and Rural

Development for reposing confidence in me by sanctioning a research study on “Farmer

Producer Organizations & Agri-Marketing: Experiences in Selected States, Relevance and Their

Performance in Punjab”. Originally proposed as a scoping study, its subject boundaries expanded

with the objectives that are very comprehensive.

At the conceiving and designing stage, the study benefitted greatly from the inputs and

interactions provided by Dr. G. M. Ghole, Shri K. S. Raghupathy, Shri Dinesh Raina, and

Dr. B. D. Nayak, the then Chief General Manager, General Manager, Deputy General Manager

and Assisstant General Manager respectively, NABARD (Punjab). Subsequently, the study has

had the benefit of discussions and valuable inputs from Shri Deepak Kumar, former, and Shri J.

P. S. Bindra, the present Chief General Manager and other officials in NABARD (Punjab) that

are profusely acknowledged.

Shri N. P. Mohapatra, CGM (DEAR), NABARD, Mumbai and his team of officials,

notably, Shri B. V .S. Prasad (GM) and Dr. Vinod Kumar (DGM) have been very supportive and

also have made useful suggestions towards improving the content of the manuscript. It is, indeed,

with their active involvement that the manuscript could assume its present form. For all these, I

express my heartfelt gratitude.

Thanks are also expressed to Dr. Rashpal Malhotra, Executive Vice Chairman, and

Dr. Sucha Singh Gill and Sukhpal Singh, former Director Generals, CRRID for insightful

interactions that have greatly enriched quality of the study. Contributions by Dr. Tara S. Nair,

Professor, Gujarat Institute of Development Research, Ahmedabad and consultant of the study

are also thankfully acknowledged. I extend thanks to Shri Gurkanwal Singh, Former Director,

Department of Horticulture, Shri S. K. Jha, Manager (AEZ), Markfed, Chandigarh, Shri Aslam

Mohammed, Secretary Market Committee (Apni Mandi), Chandigarh and Dr. Kalpna Pokhriyal,

SFAC, New Delhi for providing valuable information for the study. I also put on record my

appreciation for cooperation from Shri Yogesh Dwivedi, CEO, MBCFPCL, officials of ASA and

Varutti (Bhopal, Madhya Pradesh) during course of the study. I also put on record our

appreciation for the POPI/CEO and BOD and the farmer members of the FPOs studied in Punjab

and Madhya Pradesh without whose cooperation the study would not have seen light of the day.

Efforts made by the field staff to collect data from the respondents in Punjab and Madhya

Pradesh and from other official and non-official sources are thankfully acknowledged. Thanks

are also due to the Center for Research in Rural and Industrial Development (CRRID) for

making available all the requisite logistics for completion of the study.

Above all, the relentless and ungrudging efforts by S. Gurjot Singh, Data Entry cum

Computer Operator, RBI Chair, CRRID, for typing the manuscript and occasionally giving his

advice on giving shape to the report, are appreciably acknowledged.

Finall the financial assistance received from Research and Development Fund of National

Bank for Agriculture and Rural Development (NABARD) towads publication of Study Report is

gratefully acknowledged.

February 2020

Satish Verma RBI Chair Professor

EXECUTIVE SUMMARY

1. Marginal and small farmers are the major beneficiaries of the FPOs. They sold mostly a

single crop through the FPO. Proportion of produce sold through the nascent and

emerging FPOs (PRODUCE) is meager, and small in mature (10 per cent in Dhira Patra)

in Punjab. The Narsingh in Madhya Pradesh handled sale of 42.67 per cent of the

farmers’ produce, largest in any of the selected ones.

2. Farmer members have benefitted by way of reduced cost of production, price gains and

higher net earnings from sales through FPO both in Punjab and Madhya Pradesh. A

subtle trend seems taking place in diversification towards produce basket crops post FPO.

3. A couple of FPOs sold farmers’ produce to commission agents, which may be risky.

Marketing, however, remains a challenge for the FPOs. Many farmers in nascent and

emerging FPOs perceive individual marketing rather than the FPO channel as income

enhancing.

4. Improved access to quality seeds and other agri-inputs has accrued post FPO. Farmers

have benefitted from dissemination and transfer of new production technology through

FPO.

5. FPOs should be promoted in a cluster mode such that centralized services such as

agricultural machinery bank, testing, processing, storage and packing facilities etc are

created with government support at a focal point in the cluster.

6. Meetings of the FPO institutions as General Body, Board of Directors, Project

Monitoring Review Committee etc should be held regularly. The FPO should have at

least one woman member in the BOD. Moreover, the FPO should develop good rapport

with the village/block/state functionaries.

7. No significant value addition in supply chain including in mature FPOs is taking place.

8. The FPOs should contain FIGs, each of 15-20 members. Avenues should be found to

credit link members of these FIGs. Repayment should be the joint responsibility of the

FIG as in case of the SHG, with FIG/FPO as the guarantor. Collateral requirements for

such loans may be carefully worked out.

9. All PRODUCE Fund FPOs registered under any legal provisions should be made eligible

for financial assistance under the SFAC’s EGF and CGF schemes. Provisions of the

schemes need to be revisited.

10. Role of POPI as well as the CEO is critical for success of the FPO. An incubation centre

should be set up in the state for training and capacity building of young farmers and

graduates in agriculture to run farmer collectives.

11. The FPOs should explore possibility of contract farming and tie-ups for bulk supplies.

12. The FPOs should concentrate on marketing from the nascent stage. In this context, some

target be prescribed for sale of farmers’ produce through the organization, say 10 per cent

in nascent, 15 per cent in emerging, and by the time these complete three years, it should

be a minimum of 25 per cent.

13. Following recommendations of the committee of MLAs (2018) constituted by Hon’ble

Speaker, Punjab Vidhan Sabha to examine the causes of economic distress leading to

indebtedness and suicides by farmers/farm labourers in Punjab should be implemented.

(i) Farmer Producer Organizations (FPOs) should be integrated in the state

agricultural policy. The agricultural policy should be implemented through the

FPOs.

(ii) The Department of Agriculture should provide maximum information for

setting up of Farmer Producer Organizations, and with appropriate leadership

and the steps, should associate small farmers of upto 5 acres of land with

FPOs.

(iii) The FPOs be given license to sell their crops directly in the APMCs.

14. An umbrella organization of FPOs in Punjab on the lines of MBCFPCL in Madhya

Pradesh should be setup that will nurture the FPO after the POPI exits. This should be

called the Punjab Consortium of Farmer Producers’ Company Limited (PCFPCL).

CONTENTS

List of Tables xvii

Abbreviations xxi

Abbreviations used for the FPOs xxiii

Chapter 1 Introduction 1

1.1 Farmer Producer Organizations: Rationale and Purpose 1

1.2 Promotion of FPOs 2

1.3 Review of Existing Studies 2

1.4 Agriculture in Punjab: Some Issues 4

Chapter 2 Methodology 6

2.1 Objectives of the Study 6

2.2 Conceptual Framework and Methodology 6

2.2.1 Selection of Sample FPOs 8

2.2.2 Selection of Farmer Members 9

2.2.3 Case Studies 9

Chapter 3 Profile of the Agri and Milk FPOs in Punjab and Madhya Pradesh 14

Section 3.1: Background Characteristics of the Farmer Members 14

3.1.1 Gender 14

3.1.2 Age Profile 14

3.1.3 Educational Qualification 14

3.1.4 Motivational Reasons/Factors for Joining the FPO 14

Section 3.2: Profile of the Selected Agri FPOs and Their Institutions in Punjab and Madhya Pradesh

14

3.2.1 Formation of the FPO 14

3.2.2 Ecosystem of the FPO 15

3.2.2.1 Socio-Economic Background of the POPI Official 15

3.2.2.2 POPI and the FPOs Promoted 15

3.2.2.3 Board of Directors 15

3.2.2.4 Chief Executive Officer 16

3.2.3 Institutional Support 16

3.2.3.1 Handholding Staff 16

3.2.3.2 Trainings/Workshops Organized 16

3.2.3.3 Technical Agency Support 17

3.2.4 Sales and Net Earnings by the FPOs 17

3.2.4.1 Nascent FPOs 17

3.2.4.2: Emerging FPOs 17

3.2.4.3 Mature FPOs 17

3.2.5 Market Linkage 18

3.2.6 Bank Linkage 18

3.2.7 Future Business Activities Planned 18

3.2.8 MIS and Monitoring 19

Section 3.3: Profile of the Selected Milk FPOs and Their Institutions in Punjab

19

3.3.1 Basic Characteristic Features of the Milk FPOs 19

3.3.2 CEO Qualification 19

3.3.3 Board of Directors 20

3.3.4 Institutional Support 20

3.3.4.1 Handholding Support 20

3.3.4.2 Training/Workshops Conducted/Organized 20

3.3.5 Shareholding by the Farmer Members 20

3.3.6 Business Activities of the Milk FPOs 20

3.3.7 Monitoring of the FPOs 20

Chapter 4 Benefits and Costs of Agri-FPOs in Punjab & Madhya Pradesh 38

4.1 Beneficiary Farmers and the FPO Sales Channel 38

4.2 Diversification of Crops 38

4.2.1 Number of Farmer Members Producing the Crops 38

4.2.2 Area under Crops 39

4.3 Cost of Production 39

4.4 Percent Benefit or Loss of Price from Sale through FPO 39

4.5 Produce Sold through the FPO 40

4.6 Net Earnings of the Farmer Members 40

4.7 Net Earnings per Quintal 41

4.8 Incremental Net Earnings from Sale through FPO 41

4.9 Freedom from Arhtiya/Moneylender 42

Chapter 5 Access, Support and Activities of the Agri -FPOs in Punjab and Madhya Pradesh

49

5.1 Farmers’ Perception about Incremental Incomes Due to FPO Activities

49

5.1. 1 Market Linkage/Sale of Produce 49

5.1.2 Better Price Realization 49

5.1.3 Adoption of New Technology 50

5.1.4 Value Addition (Processing, Testing, Packing etc) 50

5.1.5 Economy of Scale 50

5.1.6 Reduction in Cost of Production 50

5.1.7 Government Subsidies and Concessions 51

5.2 Aggregation, Procurement and Value Addition by FPOs 51

5.2.1 Aggregation and Transportation 51

5.2.2 Value Addition Activities by the FPO 51

5.3 Production Related Support Activities of the FPOs 52

5.3.1 Access to Quality Seeds and Inputs 52

5.3.2 Introduction of New Crops/Varieties and New Cropping Practices 52

5.3.3 Availability of Farm Machinery 52

5.4 Purchase of Agricultural Inputs Through FPO 53

5.5 Sharing of Technology 53

5.6 Farmers Availing FPO Facilities 53

5.6.1 Testing Facility (Soil) 53

5.6.2 Processing Facility 54

5.6.3 Marketing Facilities 54

5.7 Economic Gains 54

5.7.1 Price Gains 54

5.7.2 Regularity of Payment 54

5.7.3 Productivity 54

5.7.4 Profit/Bonus 54

5.7.5 Capital Investment 55

5.7.6 Employment Opportunities 55

5.8 Marketing, Processing and Storage 55

5.9 FPO’s Support Activity 55

5.9.1 Access to Training and Extension Services 55

5.9.2 Bank/Credit Linkage 55

5.9.3 Procurement of Foodgrains 56

5.9.4 Dependence on Moneylender 56

5.10 Knowledge/Awareness Generation about Ecology, Cooperative Philosophy and Financial Literacy

56

5.10.1 Cooperative Philosophy and Community Organizations 56

5.10.2 Ecological and Post Harvest Management 56

5.10.3 Bank Schemes, Savings and Financial Literacy 56

5.11 Community and Social Development 57

5.12 Record Keeping and Payments 57

5.13 Governance, Management and Feedback 57

5.13.1 Training and Exposure Visits 57

5.13.2 Attendance in General Body Meetings 57

5.13.3 Governing Body Members 57

5.13.4 Farmers Feedback on FPOs’ Institutional Support 58

5.13.4.1 Decision Making in FPO 58

5.13.4.2 Working of the FPO 58

5.13.4.3 POPI’s Handholding Support 58

5.13.4.4 CEO’s Role 58

5.14 Government Policy and Support 59

Chapter 6 Farmers’ Benefits, Institutional Access, Activities, and Support in Milk FPOs in Punjab

69

6.1 Number of Farmers Selling Milk Pre and Post FPO 69

6.2 Number of Milch Animals and Cropped Area 69

6.3 Price of Milk Realized 69

6.4 Gross Income Realized from Sale of Milk 69

6.5 Farmers’ Perceptions about FPOs Contributions in Income Enhancement

70

6.6 Institutional Access and Knowledge/Awareness 70

6.6.1 Production Practices and Quality Inputs 70

6.6.2 Marketing, Processing and Storage 70

6.6.3 Institutional Access 71

6.6.4 Economic Gains 71

6.6.5 Awareness About Cooperative, Financial and Ecological Matters 71

6.6.6 Awareness About Community and Social Development 72

6.7 Satisfaction with FPO Arrangements 72

6.7.1 Collection/Transport of Milk to Processing/Sale Point 72

6.7.2 Grading, Measuring and Testing Arrangements 72

6.7.3 Value Addition 72

6.7.4 Record Keeping and Payment 72

6.8 Participation in Governance 73

6.9 Decision Making and Institutional Support 73

6.9.1 Decision Making 73

6.9.2 FPO Working 73

6.9.3 POPI’s Handholding Support 73

6.9.4 CEO’s Role 73

Chapter 7 Institutional Credit Flow to Marginal and Small Farmers Through FPOs

82

7.1 Financing Working Capital Requirements of the FPOs 82

7.2 Credit Linkage of Farmer Interest Groups (FIGs) 82

7.3 Producer Organization Development Fund (PODF) and Small Farmers’ Agribusiness Consortium (SFAC) Schemes

82

7.3.1 PODF Scheme 83

7.3.2 SFAC Schemes 84

7.4 Credit Linkage of Farmers Through FPOs 85

Chapter 8 Successful and Unsuccessful Agri-FPOs in Punjab and Madhya Pradesh

87

Section I: Successful and Unsuccessful Agri-FPOs 87

8.1 Nascent or Incubation FPOs 87

8.1.1 Dholewal FPO 87

8.1.2 Darapur FPO 88

8.1.3 Qadian FPO 88

8.1.4 Sujanpur FPO 89

8.1.5 Kiratpur Sahib FPO 89

8.2 Emerging FPOs 89

8.2.1 PRODUCE Fund Emerging FPOs 89

8.2.1.1 Bathinda Farmer Producer Company 89

8.2.1.2 Global SHGs 90

8.2.2 SFAC Non-PRODUCE Fund Companies 90

8.2.2.1 Jalandhar Vegetable Company 90

8.2.2.2 Sangrur Vegetable Company 91

8.3. A Matured FPOs in Punjab 91

8.3.1 Lambra Kangri Society 91

8.3.2 Dhira Patra Society 91

8.3.B Mature FPOs in Madhya Pradesh 92

8.3.3 Narsingh Farmers Company 92

8.3.4 Dada Darbar Company 92

8.3.5 Kisan Ekta Company 93

8.4 Successful and Unsuccessful Milk FPOs 93

8.4.1 Bathinda Milk Producer Union (MILKFED FPO) 93

8.4.2 Young Innovative 94

8.4.3 Progressive Dairy Solution 94

Chapter 9 Case Studies 105

Section 9.1: Unati Cooperative Marketing cum Processing Society Ltd, Talwara

105

9.1.1 Historical Background 105

9.1.2 Background Characteristics of the Farmers/Collectors 106

9.1.3 Agri-Produce Activities of the Farmers/Collectors 106

9.1.4 Activities and Support of the Unit 106

9.1.5 Knowledge/Awareness Programmes 107

9.1.6 Participation and Feedback 107

Section 9.2: The Citrus Estate, Chaunni Kalan (Hoshiarpur) 107

9.2.1 Historical Background 107

9.2.2 Progress of the Citrus Estate 108

9.2.3 Observations from Field Survey 109

9.2.3.1 Background of the Farmer Members 109

9.2.3.2 Agri-Produce Activities of the Farmers 109

9.2.3.3 Activities and Support of the Estate 109

9.2.3.4 Participation and Feedback 110

Chapter 10 MARKFED Bio-Tech Joint Venture Initiative 115

Chapter 11 Conclusions and Recommendations 117

11.1 Benefits and Costs 117

11.2 Role and Support System of Various Agencies 118

11.3 Opportunities and Challenges in the Agricultural Value Chain 120

11.4 Enhancing Institutional Credit Flow through FPOs 121

Milk FPOs 122

Case Studies 123

11.5 Factors Contributing to Success of FPOs in Punjab and Madhya Pradesh

123

11.6 Recommendations for Sustainability of FPOs in Punjab 124

References 126

xvii

List of Tables Page No.

Table 1.1 Business Activity and Number of Farmer Members of PRODUCE Fund FPOs in Punjab

5

Chart 2.1 Perceived Stages in the Life Cycle of FPO 10

Table 2.1 Sample FPOs in Incubation or Nascent Stage: Punjab (PRODUCE Fund) 11

Table 2.2 Sample FPOs in Emergence/Growth Stage: Punjab (PRODUCE Fund) 11

Table 2.3 Sample FPOs in the Emergence/Growth Stage: Punjab (SFAC) 12

Table 2.4 Sample FPOs in the Stage of Maturity: Punjab 12

Table 2.5 Sample FPOs in the Maturity/Business Expansion Stage: Madhya Pradesh 12

Table 2.6 FPOs Chosen for Case Studies: Punjab 13

Table 2.7 Overall Sample Selected According to FPO Category 13

Table 3.1 Number of Farmer Members According to Source of Motivation- Agri and Milk FPOs

22

Table 3.2 Vital Statistics of the Selected Agri FPOs in Punjab and Madhya Pradesh 23

Table 3.3 Number of Agri-FPOs Promoted by the POPI and the Distance from Head Office in Punjab and Madhya Pradesh

24

Table: 3.4 Distribution of Board of Directors of Agri-FPOs According to their Land Size and Crops

25

Table 3.5 Profile of the CEO of Agri-FPOs 26

Table 3.6 Staff Deputed by POPI for Handholding Support in Agri-FPO 27

Table 3.7 Training/Workshop Needs and the Programmes Organized by Agri-FPOs 28

Table 3.8 Support of the Technical Agencies in Agri-FPOs for Organizing Training and Other Programmes

29

Table 3.9 (a) Cost, Price, Sales Realization and Net Income (Rs.) of the Nascent Agri-FPOs in Punjab in 2015 & 2016

30

Table 3.9 (b) Cost, Price, Sales Realization and Net Income (Rs.) of the Emerging Agri-FPOs in Punjab in 2015 & 2016

30

Table 3.9 (c) Cost, Price, Sales Realization and Net Income (Rs.) of the Mature Agri-FPOs in Punjab in 2015 & 2016

31

xviii

Table 3.10 Agri-Produce Sold by the CEO Family Through the FPO in 2016 31

Table: 3.11 Market Linkage of the Agri-FPOs 32

Table 3. 12 Financial Position of the Agri-FPOs (in Rs.) 33

Table 3.13 Future Business Activities Planned by the Agri-FPOs 34

Table 3.14 Monitoring of the FPOs 35

Table 3.15 Vital Statistics of Milk FPOs 36

Table 3.16 Financial Position of the Milk FPOs 36

Table 3.17 Cost, Price, Sales Realization and Net Income of the Milk FPOs in 2015 & 2016

36

Table 3.18 Monitoring of the Milk FPOs 37

Table 4.1 Category-wise Number of Farmers Who Sold Produce through FPO and the Direct Channels

42

Table 4.1 (a) Number of Farmers According to the Sales Channel- Crop-wise 42

Table 4.2 Pre and Post FPO and Crop-Wise Distribution of Number of Respondent Farmers

43

Table 4.3 Pre and Post-FPO Total Cropped Area (Acre) by Selected Farmer Members of the FPO

44

Table 4.4 Percent Change (+ increase/ - decrease) in Cost of Production of Crops when Sold through FPO as well as Directly Over Pre FPO Level

45

Table 4.5 Percent Benefit (+) or Loss (-) of Price Per Quintal of the Crop Sold through FPO Compared to When Sold Directly

45

Table 4.6 Per cent of Total Produce Sold through the FPO 46

Table 4.7 Net Earnings Pre and Post FPO by the Farmers 46

Table 4.8 Per Quintal Net Earnings (Rs.) from the Crops Sold Through the FPO and Directly

47

Table 4.9 Incremental (+ higher/ - lower) Net Earnings from the Crops Sold through the FPO over the Pre FPO Level and that Sold Directly

48

Table 5.1 Farmers’ Perceptions about FPOs’ Income Enhancing Activities 60

Table 5.2 Farmers’ Satisfaction with FPOs’ Aggregation and Transportation Activities 60

Table 5.3 Value Addition (Processing, Testing, Packaging etc) Post FPO 61

xix

Table 5.4 Access to New Production and Practices (including Inputs) 61

Table 5.5 Purchase of Agricultural Inputs Through FPOs 62

Table 5.6: Farmers’ Satisfaction with Sharing of Technology 62

Table 5.7 FPOs’ Testing, Processing and Marketing Facilities 63

Table 5.8 Improved Economic Gains Realized by the Farmers Post FPO 63

Table 5.9 Farmers’ Response on FPOs’ Marketing, Processing and Storage Facilities 64

Table 5.10 Institutional Access to Training, Credit Linkage and Procurement 64

Table 5.11 FPOs’ Contributions in Knowledge and Awareness Generation about Ecology, Cooperative Philosophy and Financial Literacy

65

Table 5.12 FPOs’ Contributions in Community and Social Development 66

Table 5.13 Record Keeping and Payment by the FPOs 67

Table 5.14 Attendance in General Body Meetings 67

Table 5.15 Farmers’ Feedback on FPOs’ Institutional Support 68

Table 6.1 Number of Respondent Farmers in the Selected Milk FPOs 74

Table 6.2 Number of Milch Animals/Total Cropped Area (Acre): Milk FPOs 74

Table 6.3 Price Per Ltr (Milk)/Qtl (Crop) Realized-Pre and Post-FPO 75

Table 6.4 Pre and Post-FPO Gross Income Realized from Sale of Milk Per Month (Rs. Lakh)

75

Table 6.5 Farmers’ Perceptions About Milk FPOs’ Contributions in Higher Incomes 75

Table 6.6 Access to New Production Practices and Quality Inputs 76

Table 6.7 Improved Access to Marketing, Processing and Storage etc 76

Table 6.8 FPOs’ Contributions as Improved Institutional Access 77

Table 6.9 Economic Gains Post FPO 77

Table 6.10 Awareness Generation About Cooperative, Financial and Ecological Matters 78

Table 6.11 Awareness About Social Issues, Quality of Life and Participation in Democratic Institutions

79

Table 6.12 Satisfaction Status with FPO Arrangements Regarding Aggregation of Produce

80

xx

Table 6.13 Members’ Participation in FPO Governance 80

Table 6.14 Feedback on Decision Making and Institutional Support 81

Table 8A Benchmark Norm for Best Responses 87

Table 8.1 General Information about the FPO and its Institutions 96

Table 8.2 Economic Activity of the FPOs- A Synoptic View 97

Table 8.3 Agri- Business Through the FPO and Farmers’ Benefits 98

Table 8.4 Access, Support and Other Activities of the FPO 100

Table 8.5 Participation and Feedback of the Farmers 102

Table 8.6 Banking Activities and Financial Performance of Lambra Kangri Society 103

Table 8.7 Successful, Partially Successful, and Unsuccessful Milk FPOs 103

Table 9.1 Area, Cost, Price, Yield and Sales Value of the Crops by the Farmers/Collectors

111

Table 9.2 Financial Assistance to Citrus Estate, Chaunni Kalan Hoshiarpur 112

Table 9.3 Progress of the Citrus Estate Hoshiarpur 112

Table 9.4 Machinery/Implements Available with the Citrus Estate for Use by the Farmers

112

Table 9.5 Number of Tests Performed in Leaf and Soil Lab 113

Table 9.6 Net Receipts of the Citrus Estate During 2014 and 2016 113

Table 9.7 Area, Cost, Price, Yield and Sales Value of the Crops by the Farmers/ Collectors

114

Table 10.1 Monthly Sales of Fruits and Vegetables by MARKFED Bio-Tech 116

xxi

Abbreviations

APMC Agricultural Produce Market Committee

ASA Action for Social Development

BoD Board of Director

CCL Cash Credit Limit

CEO Chief Executive Officer

CGF Credit Guarantee Fund

DAPCL Dungariya Agro-Producers Company Limited

DPIP District Poverty Initiative Programme

EGF Equity Grant Fund

ELI Eligible Lending Institution

e-NAM e-National Agricultural Market

FAPRO Farm's Produce Promotion Society

FC Farmer Club

FIG Farmer Interest Group

FPC Farmer Producer Company

FPO Farmer Producer Organization

FWWB Friends of Women’s World Banking

GST Goods and Service Tax

IGS Indian Gramin Services

ISAP Indian Society of Agribusiness Professionals

KAFRO Kandi Area Fruits and Herbal Processing Society

KCC Kisan Credit Card

KVK Kisan Vikas Kendra

MBCFPCL Madhya Bharat Consortium of Farmer Producers’ Company Limited

MILKFED Milk Producers' Federation Limited

xxxii

MIS Management Information System

MOU Memorandum of Understanding

MSP Minimum Support Prices

NABARD National Bank for Agriculture and Rural Development

NABFINS NABARD Financial Services Limited

NVI National Vegetable Initiative

PACS Primary Agricultural Credit Society

PC Producer Company

PDFA Progressive Dairy Farmers Association

PMRC Project Monitoring Review Committee

PODF Producers Organization Development Fund

POPI Producer Organization Promoting Institution

PRODUCE Producers Organization Development and Upliftment Corpus

RKVY Rashtriya Krishi Vikas Yojana

RKVY Rashtriya Krishi Vikas Yojana

RSA Resource Support Agency

SARDS Surksha Agriculture and Rural Development Society

SBI State Bank of India

SDTT Sir Dorabji Tata Trust

SFAC Small Farmers’ Agribusiness Consortium

SHG Self Help Group

SNF Solids-not-fat

SSM Sadha Shiv Modern

SUTS Skill Up-gradation Training Services

UNDP United Nations Development Programme

VGAI Vegetable Growers Association of India

xxiii

Abbreviations used for the FPOs

Sr. No.

Abbreviation Name and Address of the FPO

1. Dholewal Dholewal Grain Producer Company Ltd., Vill. Dholewal, Tehsil Khamano, Dist. Fatehgarh Sahib

2. Darapur Farmer Producer Organization, Vill. Darapur, Tehsil Khadoor Sahib, Dist. Tarn Taran

3. Qadian Farmers Producer Organisation, Village & P.O.- Kahlwan, Qadian,Dist-Gurdaspur

4. Sujanpur Sujanpur Fruit & Vegetable Co-operatvive Society, Village and P.O. Sujanpur, Dist-Pathankot

5. Kiratpur Sahib Kiratpur Sahib Kisan Mitra Agro Producer Company Ltd., c/o Gurbaksh Singh Majhed, Dashmesh Market, Kiratpur Sahib, Tehsil - Anandpur Sahib, Dist- Ropar

6. Bathinda Farmers Bathinda Farmer Producer Company Limited, V & P.O. Behman Diwana, Tehsil & Dist. Bathinda

7. Global SHGs Global SHGs Farmer Producer Organization, Dhashmesh Nagar, Vill. & P.O. Ayali Khurd, Ludhiana

8. Jalandhar Vegetable Company Jalandhar Vegetable Grower Producer Company, Vill & P.O. Bilga, Tehsil Phillaur, Dist. Jalandhar.

9. Sangrur Vegetable Company Sangrur Vegetable Grower Producer Company, H. No. 10, Vill. Abbas Pura, Malerkotla, District Sangrur

10. Lambra Kangri The Lambra Kangri Multi Purpose Cooperative Service Society Ltd., V & P.O. Lambra Kangri, Dist. Hoshiarpur

11. Dhira Patra Farmers Help Society, Vill Dhira Patra, Dist. Ferozepur

xxiv

12. Narsingh Company Narsingh Farmers Crop Producer Company Limited, Purana Beej Nigam, chandan Devi School, Platform no. 2 ke pas, Rausra, Distt Narsingpur - 487001

13. Dada Darbar Company Dada Darbar Farmer Producer Company Pvt. Ltd., Near Co-operative Council, Vill.-Devri, Post-Saikhera Distt Narsinghpur

14. Kisan Ekta Company Kisaan Ekta Sumrudhee Producer Company Limited, 90, Bandapur, Gram - Heerapur Distt Sehore

15. MILKED FPO/Bathinda Milk Producer Union

The Bathinda Dist. Cooperative Milk Producers' Union Ltd., Burj Mehma, Vill. Burj Memha, Dist. Bathinda

16. Young Innovative Young Innovative, Vill. Sahari, Tehsil Dhariwal, Dist. Gurdaspur

17. Progressive Dairy Solution Progressive Dairy Solution Ltd, SCF 9, 2nd Floor, Block F near Orient Cinema, BRS Nagar, Ludhiana

18. Unati The UNATI Cooperative Marketing cum Processing Society Ltd. , 5 Km, Talwara Milestone, Near Mukerian Hydel Power House No. 1, Talwara, Dist. Hoshiarpur

19. Citrus Estate Citrus Estate, Vill. Chhouni Kalan, Dist. Hoshiarpur

Chapter 1

Introduction

Agricultural sector in India has long been distressed. Low incomes, fragmenting holdings, d e c l i n i n g p r o d u c t i v i t y, c r o p f a i l u r e s a n d depeasantization characterize agriculture in the country. The small holding character of Indian agriculture is much more prominent today and is a cause of worry. Small and marginal farms accounted for about 85 per cent of operational holdings in 2010-11, up from 62 per cent in 1960-61. The average size of holding was estimated at 1.16 hectare. Marginal and small farmers have also been hit the hardest with high incidence of indebtedness and suicides. Whereas, on the one hand, rising costs of cultivation have eroded farmers' incomes, they also have suffered depressed prices in seasons of glut in the market. Crop prices sometimes fall so low that the farmers are forced not to sell any produce in the market as they do not expect to recover even the costs of marketing. Farmers often end up getting merely a fraction of the price that the consumers pay, while the middlemen appropriate much of the value created through supply chain. Under such conditions, organizing farmers for market linkage both for inputs and outputs assumes special significance.

1.1 Farmer Producer Organizations: Rationale and Purpose

The genesis of promoting and strengthening producer organizations lies in the felt need to address the challenges faced by the marginal and small farmers in accessing markets, realizing the right price for their produce, procuring quality inputs at affordable prices and accessing technology. The concept of farmer producer organization (FPO) was introduced in the early 2000s as an “effective means of improving incomes of the farmers by providing improved access to quality inputs, efficient technologies, credit and market besides raising their bargaining power and building viable scale to participate directly in the value chain”

a(NABARD ). These organizations offer “small farmers to participate in the market more effectively and collectively; they are in a better position to reduce transaction costs of accessing inputs and outputs; obtaining the necessary market information; securing access to new technologies; and to tap into high value markets, allowing them to compete with larger farmers

and agri business” (Stockbridge et al, 2003, quoted in Salokhe, 2016). Justifying these organizations, a UNDP Policy Paper observes that “FPOs give small farmers bargaining power in the market place, enable cost effective delivery of extension services, and empower the members to influence the policies that affect their

alivelihoods”. NABARD summarizes the rationale and justification of organizing marginal and small farmers in producer organizations under following heads.

1.Expands Scale of Production that lowers cost of inputs and the business transactions due to economies of scale, and at the same time enhances capacity of the producer organization “to maintain consistency in the supply of agriculture produce, both in terms of quantity and quality” (ibid).

2. Improves Market Access of the farmers by enabling them to build adequate scale as per the needs of the buyers. Farmers will reap benefits of accessing higher value markets requiring bulk and continuous supplies and realize better price of the produce.

3. Increases Bargaining Power by “aggregating and improving the quality of their products or by spreading production between individual members over the whole season, [and thus] producers can meet the precise demands of buyers and, therefore, negotiate better price” (ibid). By pooling their resources, the farmers can invest in processing, storage and transport facilities and choose when and where to sell.

4. Improves Access to Services by making services cheaper for the group. At the same time, it makes easier for the businesses and service providers to work with marginal and small farmers. Indeed, working as a group is more credible and also lends higher profile to the group.

5. Specialization, by bringing together the resources and expertise of a large number of members with distinctive abilities and specializations to be harnessed for the mutual benefit of the group. Dissemination of latest technology and the skills by the progressive members in the group will set examples for others to emulate.

1

6. Cooperation creates solidarity, builds social capital and instills a sense of belongingness amongst the members that will strengthen their confidence to face collectively 'the emerging risks and challenges of the market' and promote their participation in local governance and democratic institutions.

FAO (Corporate Document Repository) suggests that success of the farmer organization 'can be evaluated by measuring the members' productivity, increase in their net income, and the net reduction in the cost of cultivation due to bulk purchases of inputs by the organization'. Therefore, continuous monitoring and periodic evaluation of these organizations is highly warranted.

aProducer organizations, according to Nayak (Baseline Study), is a 'generic name' that represents broadly 'large cooperative, PACS, SHG, Federation of SHGs, CIG, Farmer Clubs, PC etc'. Viewed so, the producer company has existed in India for more than 100 years- the Primary Agricultural Credit Society (PACS) being the earliest form. But the term got popularized when the producer companies with membership limited to primary producers were created in pursuant to an amendment in the Indian Companies Act (1956) recommended by a committee headed by Y. K. Alagh (2000), and are registered under the provisions of part IX A, Chapter One of the Act. Nair (2012) describes producer company as “a registered body formed by a group of shareholding producers engaged in farm or non-farm activities with the purpose of deriving individual and mutual benefit through business activities relating to the primary produce/product, the profits of which are partially shared and partially used to build capital reserve for the organization”.

Another issue sometimes debated is whether an FPO is a private or a public limited company. A private limited company has a minimum of two and a maximum 50 members, while a public limited has a minimum of seven members. In the former case, shares can be transferred on price consideration to a member of the company only, while in a public company these can be transferred to any person, need not necessarily to be a member of the company. So, from the point of view of ownership of the shares, a producer company is a

private limited company; but from the point of view of membership, it is a public limited company. Hence, it may be viewed as a hybrid organization in the context.

1.2 Promotion of FPOs

The state of Madhya Pradesh is the first to have organized farmer producer organizations under the District Poverty Initiative Programme (DPIP) implemented during 2002-11 with support from the World Bank. With the active intervention of the Small Farmers Agri Business Consortium (SFAC), Ministry of Agriculture, formation of FPOs received a great impetus. SFAC's involvement with FPOs started in 2011-12 under two Central Government Schemes - the National Vegetable Initiative for Urban Clusters (NVIUC) and the Integrated Development of 600,000 pulses villages in rainfed areas. As of end April 2018, SFAC had promoted about 847 FPOs, 144 of them in Madhya Pradesh. NABARD on its part created the Producers Organization Development Fund (PODF) in 2011 as a dedicated fund to support FPOs with credit support, capacity building and market linkage support. Subsequently, the Central Budget 2014-15 announced the creation of another fund, the Producers' Organization Development and Upliftment Corpus Fund (PRODUCE fund) to establish 2000 FPOs in the country over 2015-16 and 2016-17 and address their initial financial requirements.

NABARD (Punjab) has setup 69 such organizations in the state and has the target to setup

1another 25 FPOs during 2017-18 . Till ending November 2016, a total of 32 FPOs had been registered with agriculture produce/inputs as the produce basket, 28 in milk and milk products and nine in other and allied agriculture. These FPOs had a total membership of 2991 farmers (Table 1.1).

1.3 Review of Existing Studies

Literature on FPOs in India is sparse, except a few case studies detailing experiences of a limited number of the FPOs. Most of the analysis discussing benefits and costs is hypothetical (Prasad, 2013). Some studies, however, broadly indicate increase in production and net return to farmers, reduced gap in availability of inputs, market linkage for forward and

1Proceedings of the State level Workshop on Promotion of Farmers' Producer Organization organized by NABARD (Punjab) on August 09, 2017, Chandigarh.

2

backward integration, employment generation, 2 a

reduction in migration etc as gains of the FPO . Nayak argues for a debate on mainstreaming the ideas of size and scale as applied in industrial corporation “in the domain of agricultural economic systems…”. On the other hand, some realize that “size and scale do matter in transforming small scale farming into business venture…” (INFAI, 2013). Building capacity and winning confidence of the farmers are two keys to success of the farmer producer organizations.

Many researchers and the institutions are unanimous in their view that 2-3 years of handholding support is insufficient for up-scaling the capacity of a producer organization to that of a business enterprise. Citing experiences of most promoting institutions, UNDP (Policy Paper) underlines need to provide a minimum 5 to 7 years of handholding support to these institutions to enable them to initiate business

aoperations. Nayak (Baseline Study) regards even 8 to 10 years of support as insufficient.

Improving financial performance of the produce organization including that of the very successful producer cooperatives is another most

achallenging issue facing these organizations. Nayak observes that, “financial performance by the member farmers, including those of very successful producer cooperatives, has not been significant”. Nair (2012) in a study on Mentoring Farmer Producer Organizations observed very few examples of successful producer organizations in India. In a study of the organization and performance of selected producer companies (PCs) registered before 2008 in the states of Rajasthan, Gujarat, Madhya Pradesh and Maharashtra, Singh and Tarunvir Singh (2013) observed that financial performance of most of the PCs in Madhya Pradesh was weak, and were operating either with losses or with very low profit. But in Gujarat, these were doing better in terms of business volumes as well as profits. In Maharashtra, all were into losses while in Rajasthan these had modest profits. Shortage of working capital, lack of access to loans from banks, lack of government guarantees for bank loans, poor professional management, difficulty of managing the accounts and paper work, and getting registration etc are some of the

problems highlighted in the study. Bikkina, Rama and Vaibhav (2015) point out that the real challenge facing the FPOs is to raise sufficient capital and maximize the benefits.

Nair and Rohit (2014) studied aggregation, organization and market integration of FPOs in India through a case study of Dungariya Agro-Producers Company Limited (DAPCL), Dungarpur, Rajasthan. The study brought out the advantages as well as limitations of the FPOs. The authors pointed out that aggregation of “primary producers can lead to economic and developmental gains to them while the market players can reap the benefits of better contracts, superior product quality, closer supervision and higher return on investment”. But the major limitation is that “FPOs have largely limited their objective to collective purchase of inputs. Very few have moved upward to the processing stage. Success stories are more in the case of FPOs dealing with one crop or product. In small holder agriculture, single product FPOs may not be seen as viable economic units”. Nair (2012) made similar observations in another paper and brought out the challenges that the FPOs pose to the mentoring organizations, which include “(i) lack of market awareness of members of FPOs; (ii) absence of business skills and exposure to formal and complex contract-based business transactions amongst farmers; (iii) unclear regulatory environment; (iv) difficulty in making timely working capital available…”.

High attrition rate, lack of skills and proper marketing facilities and defective institutional structure are the operating problems that restrict the capacity of producer organizations to handle business activity efficiently. Defused focus on marketing, dependence of the farmers on middlemen rather than the FPO for sale of produce, lack of funding for handholding support are the other major factors that restrict the working of the FPOs (Nair, 2012). While counting lessons from a

3number of studies, Singh emphasized working capital shortage and lack of access to loans from banks and other financial institutions, besides others, as the major issues that these organizations face. 'Product focused rather than producer/farmer focused' business strategies of the producer organizations also restrict their

.2http://gvtindia.org/templates/theme1/files/About_Farmer_Producer_organization_and_Present_Status_2.pdf3https://emnet.univie.ac.at/uploads/media/Singh1_01.pdf

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performance and viability. While drawing conclusions from a study of 9 PCs by NABCONS (2011), Singh further highlights that the major problems these organizations face include poor professional skills and vision of the PCs, low equity base, inability to attract capital or credit from external sources/agencies, poor marketing and value addition expertise and no or poor business plans.

As an evolving sector of agricultural activity, there is need for more systematic enquiries on FPOs, especially with a regional focus and in a comparative perspective. The present study is an attempt to address this need by examining the performance of FPOs in Punjab.

1.4 Agriculture in Punjab: Some Issues

The Agr icu l tura l Produce Marke t ing Committee Act (APMC) in Punjab mandates farmers to sell their produce only in government grain markets (called the mandis). An amendment in the Act has allowed farmers to sell their produce directly in the whole sale grain market, but, because of the hardships created, only a couple could do so. Hence, trade in agricultural produce in these mandis continues to be done through the commission agent (middlemen or Arhtiya). These mandis are manifested with several imperfections leading to asymmetric information, thus harming the interest of the farmers. Moreover, the government or its agencies procure only wheat and paddy at the specified minimum support price (MSP), whereas no other crop is procured at the specified support price in the state. Such a situation serves best the interests of a limited group of traders (commission agents), incapacitating the farmers to fetch an optimal price of their produce. Moreover, by interlocking a number of professions including money lending, the commission agent has made the farmer dependent on him for loans (Verma, 2015). In other words, because of the virtually mandatory provisions of the APMC, the commission agent dominates the grain and vegetable markets in the state.

The marginal and small farmers bear high cost of machinery and other equipments that they hold independently. Punjab is a typical case of over-tractorization. On marginal and small farms, machinery

4remains un/underutilized for most part of the year . This

has adversely affected viability of farming in the state. Moreover, these tractors are loan financed and involve liability of payment of interest and the principal amount, and because of their underutilization, comprise a drag on meager farm incomes. Further, new technology is costly and is beyond the reach of marginal and small farmers because of their limited financial resources and low risk bearing capacity. Under these circumstances, the idea of collectivizing farming activities sounds viable. By organizing into producer organizations, the farmers will have the opportunity of using the costly farm machinery and other technology on sharing/ custom hiring basis at minimal costs.

Sale of spurious agri inputs has been another cause of farmers distress in Punjab, as well as in a number of other states. In Punjab, this has happened particularly in cotton growing areas. In 2014, spurious pesticides caused destruction of “cotton crop over two-third of the total 4.50 lakh hectare. The total loss was Rs. 4,000 crore which triggered farmers' suicides in the cotton belt of Punjab” (Hindustan Times, July 26, 2016). The Chief Minister of Punjab ordered a “crack down on the sale of spurious pesticides and seeds to cotton farmers in the state” (Hindustan Times, April 3, 2017). Out of a total of 34 samples of pesticides, almost 24 failed (The Tribune, August 10, 2017). In 2015, the cotton crop had failed in the state when a pesticide scam of Rs. 1700 crore was unearthed. In a study on Sub-Standard Spurious/Counterfeit Pesticides in India, 2015-Repor t , FICCI poin ted out tha t non-genuine/illegal pesticides constituted about Rs. 3200 crore in 2013, which comprised approximately “25% by value and [about] 30% by volume of domestic pesticide industry”. A collective approach to purchase quality inputs like seeds, fertilizers, and chemicals from the dealers at concessional prices would induce farm incomes. This is contrary to the individual approach of the small farmers that carries a risk of low quality and high price of agricultural inputs. Best quality seeds and other required inputs play a significant role in increasing farm productivity. The collective strength applied in the form of FPO thus, helps in ensuring the quality and low cost of agricultural inputs as well as its timely availability.

Sharing of advanced technology and best

4According to one estimate, Punjab has about 5.5 lakh tractors whereas its requirement is merely 80,000 to 90,000.

4

practices by progressive farmers initiate a process of social learning in the group. These farmer bodies have collective strength for efficient access to direct purchase from the manufacturers and suppliers by getting licenses for acquiring these inputs at competitive and concessional rates. The benefit of using quality inputs

by the farmer members in a group can definitely change their perception. This will help in gaining confidence and credibility of FPO as the most appropriate institution for collectively leveraging their production. They gradually become socially and economically active and vibrant persons in the society.

Table 1.1: Business Activity and Number of Farmer Members of PRODUCE Fund FPOs in Punjab

Sr. No. A. Agricultural Produce

/Inputs/Machinery

Type of Business Activities No. of FPOs

No. of Farmer

members 1 Vegetables and fruits Aggregation, Marketing,

Cultivation 17 592

2 Organic-Wheat, Gur, Haldi Organic produce 1 50 3 Haldi, Honey, vegetable Handi Processing 2 100 4 Wheat, Paddy Production, Marketing 1 58 5 Pulses, Oilseed, Seed Cultivation 2 110 6 Potato, Wheat Agri-Production 1 50 7 Pickles, Chutny, Masala Value Addition, marketing,

Processing, Sale 1 50

8 Processed Food Direct Retail 2 120 9 Potato Seed Direct Retail 1 54 10 Pulses, Flower Direct Retail 1 56 11 Exotic vegetables Direct Retail 1 58 12 Agric Input, pesticides,

SEEDS, Fertilizers Sale 1 50

13 FARM Machinery, Farm Inputs, Biomass

Supply Trading services 1 57

Total A 32 (46.38)

1405 (46.97)

B. Milk & Milk Products 1 Milk Procurement, marketing 27 1023 2 Milk and Milk Products Aggregation , Processing,

Marketing 1 52

Total B 28 (40.58)

1075 (35.94)

C. Others and Allied Agriculture 1 Honey Production and Retail 3 163 2 Dairy and Honey Production 1 50 3 Goatry Rearing 2 100 4 Vermi-Composting Production 1 65 5 Poplar Wood Timber and Agric Cultivation 1 55 6 Grocery Product Supply, Trading and Retail 1 78 Total C 9

(13.04) 511

(17.08) Grand Total A+B+C 69

(100.00) 2991

(100.00) Source: Culled from the list provided by NABARD, Punjab. Note: Figures in brackets are percentages.

5

2.1 Objectives of the Study:

The main objective of the present study has been to examine the business activities and performance of farmer producer organizations in Punjab. The study looks at the experience of Madhya Pradesh, the pioneering and the most active state in the FPO promotion, to better contextualize the findings from Punjab, especially of FPOs that have acquired some maturity in operations.

The following are the specific objectives of the study:

1. Compare the successful & unsuccessful Producer Organizations/co-operatives in the state Punjab and Madhya Pradesh.

2. Examine relevance and performance of FPOs set up under PRODUCE & non PRODUCE Fund in Punjab with respect to:

a. Cost and benefit to farmer producers,

b. Role and support system of various agencies,

c. Opportunities and challenges in the agricultural value chain with respect to activities like aggregation, sharing of technology, testing, storage, processing, warehousing, marketing etc.

3. Suggest ways and means to increase the share of institutional credit flow to small and marginal farmers in rural areas through Producers Organizations.

4. Make recommendations for sustainability of the recently established FPOs in the state of Punjab.

Finally, income tax and the recently announced Goods and Service Tax (GST), effective July 1, 2017, are likely to have a bearing on the balance sheet and hence the business performance of the FPOs. The study does not reflect on these issues as the GST was implemented much later than when the study was conceived and sanctioned, while implications of income tax for the FPOs do not fall in the approved terms of reference of the study. However, it is added that some of the FPOs studied submitted income tax return during the financial year 2015-16. In the Union Budget

2018, 100 per cent tax deduction for five years has been granted to Farmer Producer Companies with annual turnover of below Rs. 100 crore.

2.2 Conceptual Framework and Methodology:

Any farmer producer organization goes through a life cycle from its genesis till attaining maturity. At each stage of the life cycle, the organization would require specific support in terms of financial and technical resources. It is commonly accepted that FPOs go through three distinct stages in their evolution into robust business entities, viz., incubation, emergence/ growth, and maturity (UNDP-Access Development Services, 2014).

Incubation or nascent stage is the stage when the FPO struggles hard to establish its basic operations and hence requires significant handholding and institutional support not only to mobilize farmers but to develop awareness about the new institution among them, build their capacities of management and governance (through training and exposure visits etc.), register the entity, help establish proper systems and processes, and develop business plan. The financial demand of a nascent stage FPO is mainly for meeting costs related to these activities. These are regarded as promotional costs and are met usually by the sponsoring institution through grants. As a producer organization matures, its challenges and funding requirements transform into those of aggregation, gaining access to markets, and credit linkage for financing of its operations. An organization in this stage of emergence and growth works towards creating basic infrastructure, mobilizing equity support, implementation of business plan, institutionalization of credit access, and arranging funds for meeting operational expenses.

Business expansion marks the maturity stage of the life cycle of an FPO as it endeavours to attain financial and operational sustainability. In this stage, the organization aspires to improve quality by introducing new technology and mechanized operations, and requires financing for setting up the processing units, processing/grading/sorting yards, godowns, cold storage, transport etc. Their working

Chapter 2

Methodology

6

capital requirements are also higher during this phase. Access to full scale institutional finances in this stage is very critical for meeting their needs for short term working capital and term loans.

While deciding on the sample FPOs to study, we have largely followed the above criteria so that the strengths and challenges of the sample organizations could be logically related to stage of organizational growth and evolution. We have also considered the national promotional schemes/agencies under which the FPOs have received promotional and business development support. Since NABARD and SFAC are the two prominent support institutions for FPOs, we have, as far as possible, selected FPOs from among their beneficiaries. It may be noted that both NABARD and SFAC follow a graduated approach to supporting FPOs. NABARD, for instance, has linked release of its promotional grant to FPOs subject to completion of specified deliverables as well as satisfactory utilization of funds released in installments earlier. As per its guidelines, the deliverables for laying down the basic processes of FPO are expected to be completed within one year of signing the Memorandum of Understanding (MOU) with the POPI. However, NABARD gives 18 months to the supported FPO to submit the annual report, which may be seen as the incubation stage. By this time the FPO would have applied for input licenses, made efforts to gain access to credit as per plan, held buyer-seller meet, and prepared list of shareholders with crop details. NABARD expects that within 2 years of signing MOU, FPO should start aggregating produce, create basic infrastructure, establish market linkage, and train CEO, Board of Directors and the farmers. Within 30 months of signing the MOU, according to NABARD scheme, an FPO should emerge and start growing to be able to receive support of its own. It should by then have mobilized equity, satisfied statutory compliances, implemented business plan, and institutionalized market linkage and credit access. It should attain the stage of maturity within three years from signing MOU with all approvals in place and activity poised for expansion.

As per SFAC guidelines, there are 7 milestones in the development of an FPO (Ministry of Agriculture,

2013). Stage one, the pre-project implementation phase, lasts three months. This is followed by a phase of mobilization of farmers and farmer interest groups (FIG) and actual initiation of farmer participation in FPO activities that will be completed by six months. By the time the FIGs complete one year, the business plans of the collectives aggregated through FIG level exercise would be ready. Stage four that sets in after 18 months would see the formation of FPO in terms identification of promoters, initiation of statutory processes and induction and training of members and promoters. By the completion of 24 months, FPO will be physically established, systems set up and business and marketing plan ready. In another six months the business plan will be implemented and by the end of the third year, the FPO will move towards sustainable operation.

Distinctively, NABARD provides promotional grant of Rs. 9.06 lakh per FPO in phases spread over 36 months, while SFAC does not provide any such promotional grant directly except distributing/spending funds made available by the concerned state government. In Punjab, SFAC farmer producer companies (FPCs) have been distributed a sum of Rs. 1600 lakh under the National Vegetable Initiative (NVI)- (RKVY) Rashtriya Krishi Vikas Yojanascheme. Of this amount, Rs. 125.76 lakh was allotted to ACTECH and International Traceability System Ltd. (SFAC hired two firms) for online survey and formation of Farmer Interest Groups (FIGs, 293 formed) and FPOs (seven). Another Rs. 1412.24 lakh was allotted to FIGs for production of hybrid vegetable seeds and Rs.

562.00 lakh to SFAC for the training of farmers .

The study's primary focus is to understand the FPOs in Punjab. However, we have also included a sample of mature FPOs from Madhya Pradesh to benchmark the FPO performance in Punjab and draw some comparative lessons. The trajectory of evolution of FPOs in both the states has been different. NABARD signed the first MOU for promoting a FPO under PRODUCE Fund in Punjab on March 11, 2015. In other words, any new FPO established under PRODUCE Fund by NABARD in Punjab was upto one year and three quarters (21 months) old as on ending November 2016 (cutoff date for selecting the FPOs for study).

5Department of Horticulture, Government of Punjab, S.A.S. Nagar (Official communication dated January 31, 2017).

7

http://rkvy.nic.in/

However, there are some producer organizations that had already been existing in Punjab and had later been

6federated as FPOs under the PRODUCE Fund . None of the SFAC promoted FPCs in Punjab entered the stage of

7business expansion . However, a few non-PRODUCE Fund FPOs (registered by the individuals) in the state of Punjab had attained maturity or business expansion stage.

Madhya Pradesh, on the other hand, is the first state in India that used Private Companies Act and promoted a total of 17 farmer producer companies under the MPDPIP project (Singh & Singh, 2013). Most of these private companies were registered in 2006 and were supported by Action for Social Advancement (ASA). During the second phase (2008-11), Sir Dorabji Tata Trust (SDTT) supported six of the DPIP private companies. Since then, the SFAC has promoted a total of 110 farmer producer companies in two phases (2011 and 2013) in Madhya Pradesh. Action for Social Advancement (ASA), Indian Gramin Services, Access Development Services and Vrutti Livelihood Resource Centre are prominent NGOs that were involved in FPC promotion in the state. The Madhya Bharat Consortium of Farmer Producers' Company Limited (MBCFPCL) promoted jointly by Madhya Pradesh Rajya Ajeevika Forum and SFAC had 65 FPOs as shareholding

8members as on January 4, 2017 is a state-level federation of FPCs. In short, FPOs belonging to different life cycle stages are present in Madhya Pradesh.

Based on these considerations and intensive discussions with the concerned officials, a scheme to classify FPOs on the basis of life cycle stage was drawn. Accordingly, the NABARD FPOs that had completed 18 months from signing the MOU/registration till end November 2016 have been considered to be in the incubation stage. FPOs supported under the PRODUCE fund by NABARD that are in operation for more than 18 months and up to 30 months have been regarded as emerging and growing. All the SFAC FPCs in Punjab (seven in all), irrespective of their age have been treated as emerging as none of them had clearly

started business activities at the time of the survey. All FPOs above 36 months of their registration have been classified as mature ones (Chart 2.1).

The study followed qualitative and exploratory approach to studying FPOs using a combination of data collection tools. Broadly, it was designed as an enquiry having four components. The first component was the detailed study of the profile, activities and institutions of the FPO. The second component analyses the benefits and costs out of the FPOs, while the third analyses farmers' perceptions about their contributions and challenges (access, support and activities). The fourth component examines institutional credit flow to marginal and small farmers through FPOs.

2.2.1 Selection of Sample FPOs:

We considered the following additional facts while selecting the sample of FPOs in Punjab for the study.

Till November 30, 2016, a total of 69 FPOs had been registered under PRODUCE Fund by NABARD in Punjab. Of these, 32 FPOs were found dealing in crops like wheat, paddy, vegetables, fruits, pulses, and oil seeds, 28 in milk; three in honey, two in goatry, one each in dairy and honey, vermi-compost, poplar wood and grocery products.

We have concentrated in this study primarily on the 32 FPOs dealing with agri-produce considering the diverse problems they face relating to production, agri-inputs, aggregation, technology, processing, value addition, marketing, credit linkage etc. Majority of the members in these FPOs are marginal and small farmers who are more susceptible to multiple risks that may emanate from crop failures, seasonal variation in prices, lack of storage and warehousing facilities, poor or no value addition, poor market connectivity, lack of awareness about institutional credit facilities and so on.

Of the 28 milk FPOs, 25 have been promoted by Milk Producers' Federation Limited (MILKFED), two by SUTS (Skill Up-gradation Training Services) and one by SARDS (Suraksha Agriculture and Rural

6As per the data made available by NABARD (Punjab), five such organizations had been federated.7It may be noted that even the Majha Seed Producer Association, district Tran Taran (Punjab) that was registered under the Society Act 1860 way back in 2011 and had been federated as a PRODUCE Fund FPO since 19.07.2015, had failed to reach the business expansion stage as yet.8The MBCFPCL was established on September 18, 2014. As on March 6, 2017, this number was 68.

8

Development Society). Given the market conditions of demand, supply and price of milk and milk products, the business models of these FPOs face few challenges, and are largely stable. Therefore, merely for studying their business model, one incubating and one emerging (both under PRODUCE Fund) and one mature (non-PRODUCE Fund) FPO dealing with milk and milk products have been selected in Punjab for the study. All the FPOs dealing with other products have been excluded from the study.

Following purposive sampling, six FPOs in the nascent/incubation stage have been selected in Punjab for study. All of them have been supported by NABARD under PRODUCE Fund (Table 2.1). It may be noted that, except the Dholewal Grain Producer Company Ltd. which was originally registered on May 13, 2015 as a private company and federated later (by MOU on February 10, 2016) as FPO under PRODUCE Fund, all other incubation stage FPOs selected for study are newly established ones under the Fund. Most of the FPOs in this category are dealing with vegetables. As mentioned earlier, one FPO aggregating milk was included in this category.

As for FPOs in the emergence/growth stage in Punjab, we have selected three promoted by NABARD and supported under PRODUCE Fund (Table 2.2) and two by SFAC (Table 2.3).

It was found that none of the PRODUCE Fund FPOs in Punjab are in the maturity or business expansion stage. Also, no list of mature producer organizations in Punjab is available. Therefore, a blend of purposive and snowball sampling was adopted to select three mature FPOs in the state, each of which represents a distinct legal form of organization – a cooperative society (the Lambra Kangri Multi-purpose Cooperative Service Society Ltd or LKMCS, Hoshiarpur), a registered society (Farmers Help Society or FMS, Dhira Patra, Ferozepur) and a public limited company (Progressive Dairy Farmers Solutions Ltd. or PDFS, Ludhiana). In 2015-16, the LKMCS posted a net profit of Rs. 31.99 lakh. During the same year, the FMS reported a turnover of Rs. 17.77 lakh, while PDFS' sales realization stood at Rs. 798.23 lakh. The details of the sample FPOs are provided in Table 2.4.

As mentioned earlier, we have included a

sample of mature FPOs from Madhya Pradesh to benchmark the FPO performance in Punjab. In order to identify the sample FPOs in Madhya Pradesh, we have gone through the lists of FPOs maintained by SFAC and the MBCFPCL. After discussions with the officials and other NGO stakeholders, three mature FPOs - all members of MBCFPCL - were selected for detailed study (Table 2.5).

The Narsingh Farmers Crop Producer Company was setup under first phase of the District Poverty Initiative Project (DPIP) of the Government of Madhya Pradesh, while the other two were promoted by SFAC through NGOs.

2.2.2 Selection of Farmer Members

From each of the se lec ted producer organization, 15 farmer members with the help of the POPI/CEO were selected randomly for the study. They were selected on the spot at the time of survey and were interviewed through a structured schedule of questions. All the selected respondents willingly participated in the survey. The interviews were conducted in a transparent and enabling environment.

2.2.3 Case Studies:

In addition to the above, we have undertaken two case studies of FPOs to explore deeper into the working of farmer business organisations.

(Ii) The Unati Cooperative Marketing cum Processing Society Ltd, which is a cooperative network of about 351 nominal members with a core management group of 14 promoters that have expertise in the fields of bio-technology, food sciences, agronomy, soil sciences etc.

(ii) The Ci t rus Es ta te es tab l i shed by the Government of Punjab through the Department of Horticulture in the kinnow growing area of Hoshiarpur, which has a total membership of 298 farmers (small and marginal 162 or 54.36 per cent, and medium and large 136 or 45.64 per cent). The Estate is different from other FPOs in the state in that it has received substantial state grants under the state plan (Rs.530 lakh) as also

9Rashtriya Krishi Vikas Yojana (Rs. 451 lakh) . The Citrus Estate thus is a special case of FPOs in Punjab (Table 2.6).

9

Table 2.7 summarises the sampling plan of the study.

Thus, a total of 17 FPOs have been studied in detail along with 255 farmer members. In addition, case studies of two FPOs were conducted. Two pre-tested questionnaires– one unified for the POPI/CEO/FPO,

and the other for farmer members were used. Also, a number of functionaries in regional office NABARD and the Department of Horticulture and Punjab Mandi Board, Government of Punjab, MBCFPCL, officials of ASA and Vrutti (Bhopal, Madhya Pradesh) were consulted.

9On May 8, 2017, the Chief Minister (Punjab) gifted one tractor (Sonalika) to the Estate (Hindustan Times, May 9, 2017).

Chart 2.1: Perceived Stages in the Life Cycle of FPO

Months 36

Approvals of FPO activities, business expansion, Audit & preparation of Balance Sheet, P&L a/c, Project Completion Report

30

Equity mobilization, statutory compliances, implementation of business plan, institutionalizing market linkage & credit access

18 months- 30 months for NABARD and all the SFAC FPOs in Punjab (irrespective of their age)

24

Aggregation of produce, creation of basic infrastructure, market linkage, training of CEO/BDO & farmers

18

Applied for licenses for input, access to credit as per plan, buyer-seller meet, list of

shareholders prepared with crop details, annual report finalized

12

CEO appointed training of CEO, Business plan & MIS prepared

Upto 18 months for NABARD FPOs

6

3

Constitution of BOD, training of BOD, completions of statutory processes & application for registration Cluster identified, baseline done farmer database computerized & awareness meeting and exposure visit conducted

Nascent and Incubation Emerging and Growing Business Expansion

Stage Stage Stage

Onwards of

36 months

(SFAC FPCs

for Madhya

Pradesh

only)

10

Table 2.1: Sample FPOs in Incubation or Nascent Stage: Punjab (PRODUCE Fund) Sr. no.

POPI Name and Address of FPO Months Since MOU/Registration,

whichever later, till 30.11.2016

Number of

Farmer Members

Produce Basket

Business Activities

1 2 3 4 5 6 1 SARDS

Dholewal Grain Producer Company Ltd., Vill. Dholewal, Tehsil Khamano, Dist. Fatehgarh Sahib

10 60 Wheat, paddy

Cultiva- tion & marke-

ting

2 SARDS Farmer Producer Organization, Vill. Darapur, Tehsil Khadoor Sahib, Dist. Tarn Taran

12 67 Vege-tables

Vege- table Cultiva-

tion 3 ISAP

Farmers Producer Organisation, Village & P.O.- Kahlwan, Qadian,Dist-Gurdaspur

8 52 Vege-

tables & fruits

Aggrega- tion & marke-

ting 4 ISAP

Sujanpur Fruit & Vegetable Co-operatvive Society, Village and P.O. Sujanpur,Dist-Pathankot

8 55 Vege-

tables & fruits

Aggrega- tion & marke-

ting

5 Yuva Mitr

Kiratpur Sahib KisanMitra Agro Producer Company Ltd., c/o Gurbaksh Singh Majhed,Dashmesh Market,Kiratpur Sahib, Tehsil - Anandpur Sahib, Dist- Ropar

6 52 Vege-tables

Marke- ting

6 MILK-FED

The Bathinda Dist. Cooperative Milk Producers' Union Ltd., BurjMehma, Vill. BurjMemha, Dist. Bathinda

8 70 Milk Procure-

ment

Table 2.2: Sample FPOs in Emergence/Growth Stage: Punjab (PRODUCE Fund) Sr. no.

POPI Name and Address of FPO

Months Since MOU/Registration,

whichever later, till 30.11.2016

Number of

Farmer Members

Produce Basket

Business Activities

1 2 3 4 5 6 1 Ambuja

Bathinda Farmer Producer Company Limited, V& P.O. Behman Diwana, Tehsil & Dist. Bathinda Pin- 151001

30 212

Seed, fertilizers

& pesticides

Agri- input sale

2 Global

Global SHGs Farmer Producer Organization, Dhashmesh Nagar, Vill. & P.O. Ayali Khurd, Ludhiana

20 51 Pickle & Spices

Processing, marketing and value addition

3 SARDS

Young Innovative, Vill. Sahari, Tehsil Dhariwal, Dist. Gurdaspur

20 114 Milk &

Milk Products

Marketing

11

Table 2.3: Sample FPOs in the Emergence/Growth Stage: Punjab (SFAC) Sr. no.


Months Since Registration till

30.11.2016

Number of

Farmer Members

Produce Basket

Business Activities

1 2 3 4 5 6 1 ACTECH

Jalandhar Vegetable Grower Producer Company, Vill& P.O. Bilga, Tehsil Phillaur, Dist. Jalandhar.

40 1962

(FIGs= 103)

Vege-tables

Product- ion and

Marketing

2 ACTECH Sangrur Vegetable Grower Producer Company, H. No. 10, Vill. Abbas Pura, Malerkotla, District Sangrur

39 1565

(FIGs=68) Vege-tables

Product- ion and

Marketing

Note: FIGs= Number of Farmer Interest Groups

Table 2.4: Sample FPOs in the Stage of Maturity: Punjab Sr. no.


Registration to 30.11.2016

(months)

Number of

Farmer Members

Produce Basket

Business Activities

1 2 3 4 5 6 1 - The Lambra Kangri Multi

Purpose Cooperative Service Society Ltd., V & P.O. LambraKangri, Dist. Hoshiarpur

208 (since conferment of multipurpose

status)

1421 Credit, Seed,

Fertilizers, Bio-Gas

Credit, Agri-inputs, Agri-

machinery, Health Services, Bio-Gas

2 - Farmers Help Society, Vill Dhira Patra, Dist. Ferozepur 56 40

Agriculture Producer, Haldi, Honey and Milk

and Milk Products

Processing and Marketing

3 - Progressive Dairy Solution Ltd, SCF 9, 2nd Floor, Block F near Orient Cinema, BRS Nagar, Ludhiana

82 400 Milk and Milk

Products

Aggregation, processing &

marketing of milk and milk products

Table 2.5: Sample FPOs in the Maturity/ Business Expansion Stage: Madhya Pradesh Sr. no.


Months Since

Registration to

30.11.2016

Number of

Farmer Members

Produce Basket

Business Activities

1 2 3 4 5 6 1 District

Poverty Initiative Project (originally promoted by DPIP)

Narsingh Farmers Crop Producer Company Limited, Purana Beej Nigam, chandan Devi School, Platform no. 2 ke pas, Rausra, Distt Narsingpur – 487001

130 2872

Sugarcane, Pigeonpea,

Paddy, wheat, Black Gram, Green

Gram & Horse Gram

Production, Aggregation, Processing, marketing

2 Action for Social

Dada Darbar Farmer Producer Company Pvt.

68 1270 Soybean,Wheat, Paddy Gram &

Production, Aggregation,

12

Sr. no.


Months Since

Registration to

30.11.2016

Number of

Farmer Members

Produce Basket

Business Activities

Advancement (ASA promoted SFAC company)

Ltd., Near Co-operative Council, Vill.-Devri, Post-Saikhera Distt Narsinghpur

Pigeon Pea

Processing, marketing

3 Indian Gramin Services (IGS promoted SFAC company)

Kisaan Ekta Samruddhi Producer Company Limited, 90, Bandapur, Gram – Heerapur Distt Sehore

45 700 Sarwati Wheat,

Soybean ,wheat, &Gram

Production, Aggregation, Processing, marketing

Table 2.6: FPOs Chosen for Case Studies: Punjab

Sr. no.

POPI Name and Address of FPO Months Since

Registration to

30.11.2016

Produce Basket

Business Activities

1 2 3 4 5 1 - The Unati Cooperative Marketing cum

Processing Society Ltd. , 5 Km, Talwara Milestone, Near Mukerian Hydel Power House No. 1, Talwara, Dist. Hoshiarpur

162

Fruit, Vegetables and Herbs Processing

Processing and Marketing

2 - Citrus Estate, Vill. Chhouni Kalan, Dist. Hoshiarpur

111 Fruits

(Citrus)

Promote and propagate citrus plantations and

citrus based industry

Table 2.7: Overall Sample Selected According to FPO Category

Produce Basket

NABARD Sponsored FPOs in Punjab Matured stage FPOs in

Total Incubation and Early

Stage

Emerging and Growing Stage Punjab

Madhya Pradesh

PRODUCE Fund

Non-PRODUCE Fund SFAC

No.

of

FP

Os

No.

of

farm

er

mem

ber

se

lect

ed

No.

of

FP

Os

No.

of

farm

er

mem

ber

se

lect

ed

No.

of

FP

Os

No.

of

farm

er

mem

ber

se

lect

ed

No.

of

FP

Os

No.

of

farm

er

mem

ber

se

lect

ed

No.

of

FP

Os

No.

of

farm

er

mem

ber

se

lect

ed

No.

of

FP

Os

No.

of

farm

er

mem

ber

se

lect

ed

Agriculture Produce & Other Related Activities

5 75 2 30 2 30 2 30 3 45 14 210

Milk 1 15 1 15 - - 1 15 - - 3 45 Total 6 90 3 45 2 30 3 75 3 45 17 255 Case Study - - - - - - 2 30 - - 2 30

13

Gender, age, educational status, motivational factors to join the FPO and several other background characteristics of the farmer members, POPI, CEO, members of the BOD and other institutions have a bearing on the performance of the FPO. In this backdrop, Section 3.1 in this chapter concentrates on the background profile of the respondent farmers of the selected agri and milk FPOs. Section 3.2 brings out details of the selected agri-FPOs, their institutions and the activities. It discusses the socio-economic background of the POPI, the CEO, the members of the BOD, the vital statistics and the activities of the selected agri-FPOs including handholding support, sales, net incomes etc. Similar information about the milk FPOs is discussed in section 3.3.

Section 3.1: Background Characteristics of the Farmer Members

T h i s s e c t i o n d i s c u s s e s b a c k g r o u n d characteristics of the farmer members of both the agri as well as the milk FPOs.

3.1.1 Gender:

Farmer members of the FPOs both in Punjab and Madhya Pradesh were mostly males− the proportion of female members being merely 5 per cent in agri and nil in milk FPOs. In Madhya Pradesh too, their proportion was negligible (6.66 per cent).

3.1.2 Age Profile:

Farmer members interviewed both in Punjab and Madhya Pradesh belonged to all the age groups. However, they were a little older in Punjab than in Madhya Pradesh.

3.1.3 Educational Qualification:

Quite a high proportion of the respondent farmers were literate- their proportion being about 90 per cent both in Punjab and Madhya Pradesh. In Punjab, however, the literacy level of the farmer members was relatively higher. In short, farmers of all education backgrounds in both the states were participating in the FPOs.

3.1.4 Motivational Reasons/Factors for Joining the FPO:

Counseling by the POPI/BOD in NGO/state promoted FPOs and group leader in others motivated a large proportion of farmers to become members. Almost similar is the case in Madhya Pradesh (Table 3.1).

However, in mature agri FPOs in Punjab, three farmers became members due to economic reasons likeeconomy of scale in purchase of inputs and five for better credit linkage. That means POPI/CEO/BOD and such other peers as the group leaders played a significant role in inducing membership of the FPOs. In other words, membership was mostly demand driven by the FPOs rather than supply driven by the farmers. This was true in case of all FPO categories, both in Punjab and Madhya Pradesh.

Section 3.2: Profile of the Selected Agri FPOs and Their Institutions I Punjab and Madhya Pradesh

In this section, profile of the FPOs dealing with agricultural crops is discussed.

3.2.1 Formation of the FPO:

Following a baseline survey of a cluster of villages/blocks, the POPI initially mobilizes at least 50 farmer memberships that should increase gradually to an optimal size (say 500 to 1000) over a period of three years. However, the membership of PRODUCE Fund FPOs at the time of survey was 50 to 70 only, that is barely above the benchmark for registration.

The selected FPOs were registered either under the Indian Companies Act 1956 (five in Punjab and all the three in Madhya Pradesh) or the Society Registration Act 1860 (five in Punjab) or the Cooperative Societies Act 1950 (one) (See Table 3.2). Thus, very few were registered under the Cooperative Societies Act.

Cluster of villages, produce cluster and the small and marginal farmers or some combination of these were the criteria followed for forming the FPOs (Table 3.2). However, produce cluster was the major consideration while forming an FPO in Punjab

Chapter 3

Profile of the Agri and Milk FPOs in Punjab and Madhya Pradesh

14

(including PRODUCE Fund). The Dholewal FPO though claimed cluster of villages as the consideration for forming the producer organization, witnessed yet ita decline in number of villages by 50 per cent from four at the time of registration to two at present. Same is the story of the Qadian FPO. In the rest PRODUCE Fund FPOs, the number of villages increased (Table 3.2). However, in non- PRODUCE Fund FPOs (Jalandhar and Sangrur), requisite information could not be obtained, while the Dhira Patra Society (a mature one) reported a decline of 25 per cent in number of villages over time.

Regarding acreage under the FPO, it either increased or remained the same (except in Jalandhar Vegetable Company that could not provide data). But, the number of farmer members increased in all the PRODUCE Fund as well as the mature FPOs in Punjab and Madhya Pradesh. In this sense, the PRODUCE Fund FPOs were making some progress.

Marginal and small farmers comprised a dominant proportion of membership of FPOs in Punjab. They comprised 60 per cent or above in PRODUCE Fund and SFAC FPOs, except in Kiratpur sahib where it was less than 50 per cent (precisely 46.15 per cent) in Punjab. In Dhira Patra mature society, it was less at nearly one-third (32.50 per cent) (Table 3.2). Overall, their number in the FPOs increased phenomenally over time.

The survey also revealed that increase in membership in these FPOs was due mainly to the counseling by the POPI/CEO/BOD. Counseling by an FPO member or benefit of being a member did not emerge as a significant contributory factor.

3.2.2 Ecosystem of the FPO:

3.2.2.1 Socio-Economic Background of the POPI Official:

Mostly, FPO is promoted by a Producer Organization Promoting Institution (POPI) and is supervised and guided by its staff and an experienced and qualified CEO who nurture it ordinarily for a minimum period of three years towards maturity. In addition, there is a provision for a Resource Support Agency (RSA).

Most of the POPI officials in Punjab were more than 40 years of age; while in a couple of PRODUCE

Fund FPOs, they were older than 50 years. They were mostly post-graduate both in Punjab and Madhya Pradesh; in PRODUCE Fund FPOs, most of them were degree holders in agriculture or related disciplines. Some POPI officials in Punjab were doing farming or some other activity also; but none in Madhya Pradesh. All the POPI officials in Punjab (except those of mature FPOs) had experience in organizing and guiding farmer interest groups as JLGs, farmer clubs, SHGs, farmers' cooperatives etc, besides being educationally qualified and experienced.

3.2.2.2 POPI and the FPOs Promoted:

The Memorandum of Agreement mandates that it will be the responsibility of POPI to deploy experienced and qualified manpower to supervise and guide the FPO. Interestingly, the SARDS and ISAP (POPIs) promoted 14 and 13 FPOs respectively in Punjab, but each appointed only one official to supervise and guide these. The range of distance of the FPOs was 2 to 200 km in case of those promoted by SARDS and 10 to 100 km in case of ISAP. Each of the other FPOs selected in Punjab (including SFAC) had one POPI official. Nevertheless, these POPI officials visited each FPO at least once in a month (ISAP official twice or thrice).

Moreover, the POPI officials had wide ranging experience of promoting and supervising a number of SHGs/JLGs/FCs/FIGs etc. For instance, the ISAP-POPI official had ten years experience of supervising farmer organizations in Rajasthan and Himachal Pradesh. The SARDS official had six years experience of handling similar organizations in different districts in Punjab. The Yuva Mitr POPI official had two years experience. The POPI officials of emerging PRODUCE Fund FPOs also had similar experience of seven to nine years. In Madhya Pradesh, the official in Narsingh FPO had nine years' experience of handling the FPOs (Table 3.3). Thus, the POPIs that promoted FPOs in Punjab were qualified and experienced.

3.2.2.3 Board of Directors:

All the nascent and emerging FPOs selected had five members on the Board of Directors (BOD), while the Kiratpur Sahib (nascent) had ten. The mature FPOs had five or more members (Lambra Kangri (8), Dhira Patra (11), Narsingh (8), Dada Darbar (5), and

15

Kisan Ekta (6)) in the BOD. Indeed, as per the Indian Companies Act 1956 (as amended in 2013), the Society Registration Act (1860) and the Cooperative Societies Act (1950), the minimum number of members of BOD is five the requirement that all the FPOs satisfied. —

Table 3.4 also depicts that members of the BOD produced crops that fall in the produce basket of the FPO. But, representation of marginal and small farmers in the BOD of some of FPOs was less than their proportion in total membership. For instance, the proportion of marginal and small farmers in total membership in Darapur was 70.15 per cent, but their representation in BOD in the FPO was merely one-fifth. Likewise, in Sujanpur, their proportion was 92.73 per cent while their representation in the BOD was merely two-fifth. In emerging Produce Fund Bathinda Farmers, there was no representation of marginal and small farmers in the BOD. In Madhya Pradesh, except the Narsingh wherein 62.50 per cent of the members of BOD were marginal and small farmers, it was quite low in Dada Darbar (20 per cent) and Kisan Ekta (33.33 per cent). The FPOs, indeed, setup primarily for the werebenefit of marginal and small farmers. Therefore, it will be in the fitness of things if NABARD prescribes a minimum of 60 per cent memberships for marginal and small farmers in FPO's BOD.

3.2.2.4 Chief Executive Officer:

Chief Executive Officer (CEO) is a paid employee of the FPO and is entitled to salary. Table 3.5 presents a profile of the CEO of the selected agri-FPOs.

All the CEOs were educationally qualified (higher secondary/+2 or above). Some of these had a degree in agriculture also. Prior to joining as CEO, many of them were students, employees or the farmers. Thus, they lacked professional experience at the time of joining except in Dada Darbar wh already had the ere heexperience as CEO of a FPO.

Their (or their family) farms were mostly small in size. The CEO of the Dholewal FPO, however, was previously a student and owns (may be with the family) a medium size farm of 15 acre. The CEOs cited saving the farmers from exploitation by the commission agent/arhtiya/moneylender, farmers' interests, qualified in agricultural production technology etc as the motivating factors for joining the FPO. Some CEOs had

no prior experience of being a member of any farmer group in any capacity, though a few had been working as member or had initiated such groups in the past (Table 3.5). As a matter of fact, CEO is the lynch pin of the FPO as the farmer members generally lack knowledge about agri-business and the governance. Since CEO is a paid employee, therefore, utmost care should be taken in appointing the CEO with active involvement of the main stakeholders as POPI, BOD and representatives of the farmers. Indeed, it is CEO's responsibility (along with the POPI) to develop the FPO into a viable and sustainable business enterprise.

3.2.3 Institutional Support:

3.2.3.1 Handholding Staff:

POPIs lend handholding support generally for three years. Under the NABARD PRODUCE Fund provisions, POPI is entitled to compensation @ Rs. 50,000 per annum towards meeting the administrative and local resource person expenses. At the time of survey, support staff, except in Sujanpur and Kiratpur Sahib nascent FPOs in Punjab, had been deputed (Table 3.6). However, in Madhya Pradesh, only Narsingh provided this information. The Dada Darbar being in red and the Kisan Ekta defunct, this information in their case was not available. Table 3.6 also shows the expenses incurred on the staff deputed for extending handholding support by the POPI.

Most of the FPOs (except Sujanpur and Kiratpur Sahib) had some paid staff. But these spent mostly on the salary of the POPI official. Many of the PRODUCE FPOs did not have an accountant or a field assistant. That is why, most of the PRODUCE FPOs could not maintain accounts properly and got these audited.

3.2.3.2 Trainings/Workshops Organized:

FPOs assessed training needs of the stake holders by holding consultations mainly with the farmer members (Table 3.7). These seldom consulted the national level institutions like NABARD/BIRD, technical universities or other FPO (s)/POPI (s)/lead farmers in the area for this purpose. Training/workshop programmes and the exposure visits organized for the farmers, CEO and BOD played a crucial role in success of the FPO. It is, indeed, by sensitizing these institutions through the capacity building programmes that the FPO

16

can grow as a composite group for wellbeing of the members on sustainable basis.

Some agenc ies tha t o rgan ized these programmes also charged . Whereas organizing such 10

programmes should be the responsibility of the RSA, it is felt that FPO institutions as well as NABARD should play a proactive role in assessing the needs and organizing the training and similar programmes.

Table 3.7 shows that the PRODUCE Fund FPOs organized capacity building and training programmes regularly. Except the Sujanpur, all other PRODUCE Fund FPOs organized four to five training programmes/exposure visits for the BOD/CEO/ farmers. However, Sujanpur and Dholewal FPOs did not organize any exposure visit so far.

3.2.3.3 Technical Agency Support:

Support availed from technical agencies by agri-FPOs for organizing trainings, workshops, exposure visits and exhibitions by the FPOs are reported in Table 3.8.

Like in mature FPOs in Punjab and Madhya Pradesh, the PRODUCE Fund FPOs (nascent and emerging) laid more stress on organizing trainings/ workshops on value addition. But, value addition is not a deliverable activity in the nascent stage. The nascent Qadian, Sujanpur and Kiratpur Sahib FPOs organized market linkage training programmes/exposure visits that were more meaningful and useful at this stage. The Dholewal organized one programme each in democratic functioning and diversification. NABARD/ BIRD (Lucknow) organized a number of these programmes followed by the State Department of Agriculture/Horticulture and the Kisan Vikas Kendras (KVKs). Extension services availed from agriculture or similar technical universities by the FPOs in Punjab were less in number than in Madhya Pradesh. Support of the MARKFED, banks and SFAC in training activities was minimal (Table 3.8). Indeed, MARKFED has the mandate to make arrangements for “procurement, marketing, trading, processing/ manufacturing, agricultural products and also grading

and packing activities of agricultural products and also supply of goods on cooperative basis and to act as agent to its constituents and other persons and institutions”. In this sense, a proactive role in marketing and training is expected from MARKFED. Banks should organize training programmes in bank linkage of the FPO and its stakeholders. These should also give them training in availing new credit lines from other sources as well. SFAC should also play a proactive role in market and credit linkage of the FPOs.

3.2.4 Sales and Net Earnings by the FPOs:

3.2.4.1 Nascent FPOs:

Table 3.9 (a) presents amount paid by the FPO for purchase of the crop (s) from farmers, other costs incurred, sales realization and net income by the nascent FPOs. Dholewal FPO did not report any sales. The rest nascent FPOs reported sales (and net incomes also) for 2016 (Darapur for 2015 also). Net income earned by the Darapur, Qadian and Sujanpur was praiseworthy that varied between nearly 10 to 20 per cent of sales realization. The Kiratpur Sahib FPO reported nil net income. In this context, Darapur, Qadian and Sujanpur FPOs can be regarded as successful, while the Kiratpur Sahib partially.

3.2.4.2: Emerging FPOs:

The PRODUCE Fund emerging FPOs also reported sales and net incomes- the Bathinda Farmers for the years 2015 and 2016 and the Global SHGs for the year 2016 (Table 3.9 (b)).

Sales realization by Bathinda Farmers dipped in 2016, and its net income rapidly such that as proportion of sales realization it fell from 6.15 per cent in 2015 to 3.06 per cent in 2016. Sales realization of Global SHGs in 2016 was though lower, but its net income was relatively higher both in absolute (Rs. 1.11 lakh) and in relative terms (35.69 per cent).

3.2.4.3 Mature FPOs:

The mature FPOs too reported positive net income in both the years in Punjab and Madhya Pradesh (Dada Darbar and Kisan Ekta in 2015 only). Net income

10CEO of Qadian FPO revealed that the Department of Horticulture, Centre for Excellence for Vegetables (Indo-Israel Project, Kartarpur in Punjab) charged Rs.1000 per person for attending the training programme organized by it. Likewise, the Punjab Horticulture Post Harvest Technology Centre, PAU, Ludhiana organized a training programme in packing, value addition of vegetables and charged Rs. 2000 per person sponsored by the FPO or the company, but not from the individual farmers.

17

as proportion of sales realization by both the mature FPOs in Punjab was much higher than that in Madhya Pradesh in 2015 a 2016 (See Table 3.9 (c)). nd

An aberration noted is that the CEO of some FPOs (or their families), besides selling direct in the market, sold their produce through the FPO also (Table 3.10). This was happening in almost all the FPOs, including the mature ones both in Punjab and Madhya Pradesh (Narsingh Company). But this practice should be discouraged because of the potential threat of conflict of interest. In the initial stages, a peer farmer member discharging the duties as CEO may be unavoidable (or even desirable), but he/she may be allowed till registration of the FPO and not beyond.

Overall, these FPOs, except Dholewal, reported net incomes (zero by Kiratpur Sahib) that as proportion of net sales were higher than the corresponding figures for the FPOs in Madhya Pradesh. But the volume of their business was very low. These FPOs should maintain proper accounts. Moreover, the practice of CEO and his/her family selling the produce through the FPO should be allowed till desirable as it may be inappropriate both for him as well as the producer organization.

3.2.5 Market Linkage:

In Punjab, FPOs were selling primarily through three channels: direct sale in the mandi; through the commission agent; and through the FPO channel (Table 3.11). Of these three channels, sale through the commission agent is risky as is evident from the experience of Darapur. This FPO, at the time of survey, had an overdue amount of about Rs. 14.00 lakh against a commission agent on whose instructions the crop was transported to Ghajipur and Okhla (New Delhi), besides Chandigarh. Nevertheless, a number of FPOs in Punjab were selling directly in the mandi or at some FPO sale point or Kisan Haat/Kisan mandi/Kisan Mela etc. In Madhya Pradesh, on the other hand, some of the FPOs obtained market license as 'whole sale trader'. These FPOs sold either directly in the mandi and/or procure foodgrains on behalf of the government agency like SFAC, NAFED etc. The later arrangement entitled the FPO a commission @ 1.50 per cent, which was shared between the FPO and MBCFPL on 50:50 basis, and was crucial for FPO sustainability. In addition, these FPOs

had market networking with other FPOs also.

Direct sale by the FPO, indeed, is safe. Therefore, it is suggested that the market committee in Punjab should give preferential treatment to the FPOs in allotment of the grain and vegetable market licenses. This will enable the FPOs to sell their produce directly and also earn commission on sale of produce that these may mediate (including for procurement) as in Madhya Pradesh; but it requires amendment in the state APMC Act.

3.2.6 Bank Linkage:

Except the Sujanpur FPO, all the FPOs were bank linked. Besides, they were also maintaining some equity fund (Table 3.12). On this account, the PRODUCE Fund FPOs except Sujanpur, were progressing in a satisfactory way.

Equity fund of the PRODUCE Fund nascent and emerging FPOs was comparatively less, while that of the SFAC private companies in Punjab and the mature ones in both the states was large. The PRODUCE Fund FPOs in Punjab should raise more equity fund from the members.

3.2.7 Future Business Activities Planned:

The PRODUCE FPOs are supposed to prepare business plan before the completion of first year of the MOU. Only the Dholewal and Kiratpur Sahib FPOs in the nascent and the Global SHGs in the emerging category had planned some future business activity like crops identified to be produced, aggregation, development of collection centre, value addition, farm machinery, transport etc. But the other nascent FPOs (Darapur, Qadian and Sujanpur) had not prepared any business plan. In the mature category, the Lambra Kangri and Dhira Patra in Punjab and the Narsingh in Madhya Pradesh had prepared business plans for the next year (Table 3.13). It may be noted that these activities involved creation of huge infrastructure which was beyond the means of these FPOs. The Dhira Patra Society could develop infrastructure by obtaining government assistance particularly for purchase of machinery and also availed subsidy. It is, therefore, suggested that the government must come forward for creating such facilities that will help aggregation, value addition and marketing of the produce of the FPOs.

18

3.2.8 MIS and Monitoring:

The NABARD list of deliverables mandates the FPOs to prepare their MIS (Management Information System). Except Qadian and Sujanpur (nascent) and the Global SHGs (emerging), all the remaining PRODUCE Fund FPOs had prepared MIS of the producer organization and the farmer members. Regarding the business support initiatives, some PRODUCE Fund FPOs had applied for the licenses, while the Bathinda Farmers had obtained all and had also fulfilled the statutory compliances . Interestingly, the accounts

11

books even of the emerging FPOs were under preparation at the time of survey. The profit loss account ha been prepared by the Darapur, Qadian and Sujanpur dFPOs in nascent and the Bathinda Farmers in emerging category. However, the progress of mature FPOs in Punjab and the Narsingh in Madhya Pradesh in these respects was satisfactory. The detailed statistical information is given in Table 3.14.

The FPO is monitored by a Project Monitoring Review Committee (PMRC) which is constituted by the POPI and comprises representatives of NABARD, government officials, line departments and others as its members. This committee is required to meet quarterly to review the progress, guide the project execution and make recommendations for release of grant to POPI/FPO. It is the duty of POPI to hold its meetings regularly. The survey reveals that, as on the date of survey, meeting of the Project Monitoring Review Committee in case of some of the nascent FPOs had not been held, while in other cases (except Global SHGs), it was not held regularly.

Likewise, meetings of the Board of Directors (except in case of Global SHGs) and the General House of the FPO were not held at regular intervals. Moreover, the FPOs did not display their physical and financial activities in Panchayat Office/District Community Centre. Besides being a requirement, this is essential for winning and retaining the confidence and interest of the farmer members in the FPO.

It was also observed that the village/block/state

functionaries were mostly neutral as regards activities and working of the FPO. Management of the FPO should develop good rapport with these functionaries as they can play a crucial role in FPO's sustenance. In this regard, NABARD and the state should play a proactive role.

Section 3.3: Profile of the Selected Milk FPOs and Their Institutions in Punjab

Three milk FPOs studied are MILKFED (nascent) and the Young Innovative (emerging) both PRODUCE Fund, and the mature Progressive Dairy Solution.

3.3.1 Basic Characteristic Features of the Milk FPOs:

The MILKFED nascent FPO is a cooperative society, the Young Innovative a society, and the Progressive Dairy Solution a private company.

Produce and/or the farmers' category (marginal and small) was/were the criteria adopted by the milk FPOs for membership. These were operating in one block/district. While the nascent milk FPO was operating in the same village as at the time of registration, the emerging had since extended its operations to double and the mature to two and a half time the number of villages at the time of registration. Membership in the nascent FPO increased overtime from 50 to 70 in nascent, 50 to 112 in emerging, and 10 to 400 in mature. The reason for low increase in MILKFED FPO (nascent) is that it was a single village based society, while others were found extending their activities to other villages also. Table 3.15 presents vital statistics of these FPOs.

3.3.2 CEO Qualification:

The CEO in a l l the mi lk FPOs was educationally qualified. In MILKFED FPO (nascent), the CEO was selected after discussions and consent of majority of the members. In Young Innovative (emerging), the CEO was appointed as per the procedure laid down by NABARD. The mature milk FPO had its own management.

11The Dholewal FPO has been issued license dated February 8, 2017 by Punjab Mandi Board, Chandigarh to operate in Khamano Mandi, and the Qadian FPO has been issued ‘Kutcha Arhtiya’ license dated February 28, 2017 by Market Committee, Qadian to operate in the vegetable market.

19

3.3.3 Board of Directors:

Each selected milk FPO had five members in the BOD, with one woman member in nascent MILKFED FPO. The members of BOD in PRODUCE Fund nascent and emerging FPOs were elected by oral voting by the members present in the meeting. In the mature Progressive Dairy FPO, the Chairman was a permanent member of the BOD. Tenure of each of the rest four was two years. Two of these were elected rotationally every year in the annual general meet of the shareholders by casting of votes. However, all the members of the BOD in the emerging FPO were marginal and small farmers. For the nascent and mature milk FPOs, such data was not available.

3.3.4 Institutional Support:

3.3.4.1 Handholding Support:

One resource person each in the nascent and emerging milk FPO was provided by the POPI and were paid salary of Rs. 1.20 lakh and Rs. 0.48 lakh respectively per annum. The mature FPO had all the technical and administrative staff that lent handholding support to the FPO.

3.3.4.2 Training/Workshops Conducted/Organized:

For assessing training/workshop needs of members, the nascent and emerging FPOs consulted farmer members, while the mature consulted in addition the Board of Directors.

None of the milk FPOs had organized any training/workshop/exposure visit for the CEO. The emerging and mature milk FPOs organized trainings/ workshops for the members of the BOD and of the FPO. The MILKFED FPO did not organize any training/ workshop, except one exposure visit for the farmer members. The emerging FPO did not organize any exposure visit for the shareholders. Largest numbers of these programmes were organized by the mature and least by the nascent FPO. Moreover, except a training programme in market linkage by NABARD and another in value addition by KVK in the emerging, no other training/workshop was organized by the nascent and mature FPOs till the date of survey.

3.3.5 Shareholding by the Farmer Members:

All the members in the selected milk FPOs were shareholding members. In nascent MILKFED FPO, each member had one share of Rs. 100/-. In the emerging, while each BOD member had shares worth Rs. 1000/-, others had shares worth Rs. 500/- each. However, such distribution was not available for the mature FPO though the aggregate value of shares reported was Rs. 213.50 lakh (See Table 3.16).

3.3.6 Business Activities of the Milk FPOs:

In the nascent (MILKFED) FPO, depending on the season (lean/peak), the daily milk collection was merely 160-260 litres. In Young Innovative (emerging), the daily milk collection increased overtime and now aggregated 400-450 litres. The daily milk collection in the mature Progressive Dairy was about 25,000 litres in

12lean and 50,000 litres in peak season .

The emerging FPO realized net earnings of Rs. 3.77 lakh in 2016, while the mature Rs. 17.61 lakh in the same year. Indeed, net earnings of the mature FPO in 2016 was larger by Rs. 12.13 lakh than in 2015 (Rs. 5.48 lakh). The nascent milk FPO, on the other hand, did not register any net earnings in 2016, though its business in terms of the value of milk purchased from the farmers (Rs. 16.62 lakh) was slightly larger than that in the emerging one (Rs. 16.23 lakh). The sales realization of the emerging FPO (Young Innovative) was relatively higher; and hence despite higher costs, it could register positive net earnings of Rs. 3.77 lakh. Table 3.16 presents FPOs’ net earnings during 2015 and 2016.

The nascent milk FPO sold whole of the produce to the MILKFED, while the emerging directly in the market and the mature under a brand name, La Pure. While the future business activity planned by the nascent FPO was to aggregate the produce (milk), that by the emerging was to aggregate as well as to process it. Thus, the emerging FPO had planned to expand its activity to processing also. The mature FPO, on the other hand, was a well established one and was already into aggregation and value addition.

3.3.7 Monitoring of the FPOs:

It is satisfactory to note that all these FPOs had

12 st th st stLean season period extends from 1 April to 30 September and peak season from 1 October to 31 March.

20

prepared MIS of the producer organization as well as the farmer members. These had prepared future business plans. Only the mature FPO had prepared the annual report, procured statutory compliances and had implemented the business plans. Auditing of accounts was regular in mature milk FPO, while it was not done in nascent and emerging ones. However, the emerging FPO had prepared profit and loss accounts as well as the project completion report. Table 3.18 presents monitoring features of the FPOs.

In the meeting of Project Monitoring Review Committee held in December 2016 for all the five MILKFED (Bathinda) FPOs , it was decided to setup 13

automatic milk collection units for testing of fat and SNF for each FPO for improving aggregation, marketability/ acceptability of the business in the village. To mobilize farmers to join the FPO, each farmer was provided 2 kg of mineral mixture. In addition, CEO of each milk FPO and the POPI resource person were appointed. It also approved the FPO budget for the next three years (2016-17, 2017-18 and 2018-19). As regards the emerging Young Innovative FPO, the committee recommended that it should increase milk collection by 25 per cent every year in next 3-5 years. The committee was also informed that the FPO had selected the sale points and it

had also contacted sweet shops for supply of milk. The FPO was also advised to open an input store for sale of feed and calcium. The committee was informed that the FPO had already tied up with Tiwana Feed for this purpose. The nascent MILKFED FPO, on the other hand, had planned to expand business to cattle feed, ghee, mineral mixture, and seed in next three years. The matured milk FPO, however, was successfully taking care of its business.

T h e n a s c e n t F P O ( M I L K F E D ) f a c e d competition from private players that sometimes raised their milk purchase price and hence discouraged farmers to become members of the FPO. In order to overcome this difficulty, the FPO provided technical input and extension services to the farmers, viz. good quality cattle feed, mineral mixture, artificial insemination services, besides arranging animals' health camps. The Young Innovative (emerging), besides facing competition from the private milk vendors operating in the neighbouring areas, was likely to face competition from the corporate giant AMUL (Anand Milk Union Limited) that had setup a collection centre at a distance of about 3 to 3.50 km from the FPO's sales point. However, the FPO had to innovate to expand its business, besides obtaining brand for its products.

13MILKFED Bathinda had setup five FPOs, one each in the village Reond Kalan, Gandu Kalan, Talab Wala, Behmin Diwana and

Burj Mehma.

21

Table 3.1: Number of Farmer Members according to Source of Motivation- Agri and Milk FPOs

Source Nascent or Incubation

Stage

Emerging and Growing Stage

Matured or Business

Expansion Stage

Milk FPOs

PRODUCE Fund

Private to

SFAC

Punjab Madhya Pradesh

Nascent or Incubation

Stage

Emerging and

Growing Stage

Matured or

Business Expansion

Stage Counseling by the POPI/BOD

42 (56.00)

25 (83.33)

27 (90.00)

1 (3.33)

29 (64.44)

9 (60.00)

12 (80.00)

6 (40.00)

FPO has NABARD Support

2 (2.67)

3 (10.00)

1 (3.33)

1 (3.33)

0 (0.00)

1 (6.67)

0

(0.00)

0 (0.00)

Motivation by FPO

15 (20.00)

2 (6.67)

2 (6.67)

5 (16.67)

12 (26.67)

4 (26.67)

3 (20.00)

0 (0.00)

Motivation by Farmer Group Leader

13 (17.33)

0 (0.00)

0 (0.00)

9 (30.00)

2 (4.44)

1 (6.67)

0 (0.00)

9 (60.00)

Economy of Scale in Purchase of Inputs

0 (0.00)

0 (0.00)

0 (0.00) 3

(10.00) 0

(0.00)

0

(0.00)

0 (0.00)

0

(0.00)

Better Credit Linkage with Institutional Sources

0 (0.00)

0 (0.00)

0 (0.00) 5

(16.67) 0

(0.00)

0

(0.00)

0 (0.00)

0

(0.00)

Any Other 3 (4.00)

0 (0.00)

0 (0.00)

6 (20.00)

2 (4.44)

0

(0.00)

0 (0.00)

0

(0.00)

Total 75

(100.00) 30

(100.00) 30

(100.00) 30

(100.00) 45

(100.00) 15

(100.00) 15

(100.00) 15

(100.00)

Note: Figures in brackets are percentages.

22

Tab

le 3

.2:

Vit

al

Sta

tist

ics

of

the

Sel

ecte

d A

gri

FP

Os

in P

un

jab

an

d M

ad

hya

Pra

des

h

Sr.

N

o.

Part

icu

lars

PR

OD

UC

E F

un

d N

asc

ent

P

RO

DU

CE

F

un

d E

mer

gin

g

SF

AC

Em

ergin

g

Matu

re

Matu

re

(Mad

hya

Pra

des

h)

Dholewal

Darapur

Qadian

Sujanpur

Kiratpur Sahib

Bathinda Farmers

Global SHGs

Jalandhar Veg. Co.

Sangrur Veg. Co.

Lambra Kangri

Dhira Patra

Narsingh Co.

Dada Darbar

Co.

Kisan Ekta Co.

1

Reg

istr

atio

n a

s1

C

S

S

Coo

p.S

C

C

S

C

C

S

S

C

C

C

2

Cri

teri

a fo

llow

ed

for

form

ing t

he

FP

O2

CV

P

P

, M

SF

C

V, P

P

M

SF

P

P

P

C

V, P

, M

SF

P

C

V,

MS

F

CV

, P

, M

SF

M

SF

At

the

tim

e of

Bas

elin

e S

urv

ey

3

No.

of

Blo

cks/

Dis

tric

ts

3 1

1

1 1

3 2

4

8 1

1

3

1

1

4

No.

of

vill

ages

4

1

4

1 5

31

6 6

42

2 8

25

4

4

5

Acr

eage

(are

a)

30

N.A

50

85

30

5460

N.A

100

3250

N.A

276

5600

N.A

N

.A

6

No.

of

farm

er m

ember

s

10

7

21

24

10

212

21

1962

1565

NA

30

1190

N

A

11

7

% o

f m

argin

al &

sm

all

farm

ers

80.0

0 71.4

3 100.0

0 91.6

7 N

A

NA

N

A

97.0

0 88.8

8 N

A

33.3

3 N

.A

N.A

N

.A

At

the

tim

e of

Su

rvey

(en

d N

ovem

ber

2016)

8

No.

of

Blo

cks/

Dis

tric

ts

3 1

1

1 1

3 2

6

8 1

1

3

1

1

9

No.

of

vill

ages

2

6

2

8 6

31

11

100

42

2 6

25

20

31

10

Acr

eage

(are

a)

450

N.A

100

196

240

5460

N.A

0

3250

N.A

406

5600

N.A

N

.A

11

No.

of

farm

er m

ember

s

67

67

52

55

52

212

51

1962

1565

14

21#

40

2872

1270

700

12

% o

f m

argin

al &

sm

all

farm

ers

62.6

8 70

.15

100.0

0 81.8

2 46.1

5 N

A

NA

97.0

9 88.8

8 N

A

32.5

0 N

.A

70.0

0 N

.A

Per

cen

tage

Incr

ease

sin

ce R

egis

trati

on i

n

13

No.

of

Vil

lages

-5

0.0

0 500.0

0 -5

0.0

0 700.0

0 20.0

0 N

A

83.3

3 1566.6

7 N

A

NA

-2

5.0

0 N

A

400.0

0 675.0

0

14

Acr

eage

under

FP

O

1400.0

0 N

A

100.0

0 130.5

9 700.0

0 N

A

NA

-1

00.0

0 N

A

NA

47.1

0 N

A

NA

N

A

15

Far

mer

mem

ber

s

500.0

0 857.1

4 147.6

2 129.1

7 420.0

0 415.0

9 142.8

6 N

A

NA

N

A

33.3

3 141.3

4 N

A

6263.6

4 16

Mar

gin

al

&

smal

l fa

rmer

s 525.0

0 840.0

0 147.6

2 131.8

2 N

A

NA

N

A

NA

N

A

NA

90.0

0 N

A

NA

N

A

Not

e: 1C

= P

riva

te C

ompa

ny;

S=

Soc

iety

; C

oop

S=

Coo

per

ativ

e S

ocie

ty

2

P=

Clu

ster

of

Pro

du

ce; C

V=

Clu

ster

of

Vil

lag

es;

MS

F=

Mar

gin

al a

nd

Sm

all

Far

mer

s.

#

Agr

icu

ltu

ral=

320

an

d N

on-a

gric

ult

ura

l= 1

101

.

23

Table 3.3: Number of Agri-FPOs Promoted by the POPI and the Distance from Head Office in Punjab and Madhya Pradesh

Particulars

PRODUCE Fund Nascent PRODUCE

Fund Emerging

SFAC Emerging

Mature Mature

(Madhya Pradesh)

Dh

olew

al

Dar

apu

r

Qad

ian

Su

jan

pu

r

Kir

atp

ur

Sah

ib

Bat

hin

da

Far

mer

s

Glo

bal

S

HG

s

Jala

nd

har

V

eg. C

o.

San

gru

r V

eg. C

o.

Lam

bra

K

angr

i

Dh

ira

Pat

ra

Nar

sin

gh

Co.

Dad

a D

arb

ar C

o.

Kis

an E

kta

C

o.

Name of POPI

SA

RD

S

SA

RD

S

ISA

P

ISA

P

Yuv

a m

itra

Am

buja

Glo

bal

AC

TE

CH

AC

TE

CH

- -

DP

IP

AS

A

IGS

Number of FPOs Promoted

By POPI agency 14 14 13 13 1 2 1 2 2 1 1 5 - 5

By POPI official 14 14 13 13 1 1 1 1 1 - 1 1 - 1

Distance of the FPO Promoted

Minimum distance (in Km.)

2 2 10 10 - 7 - - - - - - - 13

Maximum distance (in Km.)

200 200 100 100 - 32 - - - - 15 - - -

Number of visits by POPI Offici al to the FPO in a Month

Number of visits 1 1 3 2 1 1 1 1 1 - - 1 - 1

Note: 1SARDS= Suraksha Agricultural and Rural Development Society; ISAP= Indian Society of Agriculture

Professionals; Ambuja= Ambuja Cement Foundation; ACTECH= ACTECH Information Systems Ltd.;

DPIP= District Poverty Initiative Project; ASA= Action for Social Development; IGS= Indian Gramin

Services.

24

Tab

le:

3.4

: D

istr

ibu

tion

of

Board

of

Dir

ecto

rs o

f A

gri

-FP

Os

acc

ord

ing t

o t

hei

r L

an

d S

ize

an

d C

rop

s

Lan

d S

ize

PR

OD

UC

E F

un

d N

asce

nt

P

RO

DU

CE

Fu

nd

E

mer

gin

g

SF

AC

Em

erg

ing

M

atu

re

Mat

ure

(M

adh

ya

Pra

des

h)

Dh

ole

wa

l

Dar

ap

ur

Qad

ian

S

uja

np

ur

K

irat

pu

r S

ah

ib

B

ath

ind

aF

arm

ers

Glo

bal

S

HG

s J

ala

nd

ha

r V

eg. C

o.

S

an

gru

r V

eg. C

o.

La

mb

ra

Kan

gri

D

hir

a P

atra

N

arsi

ng

h C

o.

Dad

a D

arb

ar

Co

.

Kis

an

Ek

ta

Co

. No. of Members

Major crops

No. of Members

Major crops

No. of Members

Major crops

No. of Members

Major crops

No. of Members

Major crops

No. of Members

Major crops

No. of Members

Major crops

No. of Members

Major crops

No. of Members

Major crops

No. of Members

Major crops

No. of Members

Major crops

No. of Members

Major crops

No. of Members

Major crops

No. of Members

Major crops

No

land

-

- -

- -

- -

- -

- -

- -

- -

- -

- 3

-

- -

- -

- -

- -

Bel

ow

5

acre

5

Wheat, Paddy, Sugarcane other

veg.

1

Peas, Tomato

4

Wheat, paddy, other veg.

2

Wheat, paddy, other veg. fruits

2

Wheat, maze

- -

3

-

NA

NA

2

other veg.

- -

1

Wheat , paddy

5

- 1

-

2

-

5-1

0 a

cre

- -

1

Peas, Tomato

- -

3

Wheat, fruits

7

Wheat, maize, other veg.

1

- 1

-

NA

NA

3

other veg.

5

- 1

Wheat , paddy

2

- 1

-

2

-

10

-15

acr

e

- -

2

Peas, Tomato

- -

- -

1

Wheat, maize, other

veg.

3

- -

-

NA

NA

- -

- -

4

Wheat ,

paddy

- -

- -

- -

15

-20

acr

e

- -

-

- -

- -

- -

1

- -

-

NA

NA -

- -

- 3

Wheat

, paddy

- -

- -

2

-

20

and

ab

ov

e

- -

1

Peas, Tomato

1

Wheat , paddy

other veg.

- -

- -

- -

1

-

NA

NA

- -

- -

2

Wheat ,

paddy

1

- 3

-

- -

Tot

al

(Wo

men

) 5

(0

) -

5

(0)

- 5

(0

) -

5

(1)

- 1

0 (0

) -

5

(0)

- 5

(1

) -

NA

N

A

5

(0)

- 8

(2

) -

11

(0)

- 8

(1

) -

5

(1)

- 6

(1

) -

25

Table 3.5: Profile of the CEO of Agri-FPOs

Particulars

PRODUCE Fund Nascent PRODUCE

Fund Emerging

SFAC Emerging

Mature Mature

(Madhya Pradesh)

Dh

ole

wa

l

Da

rap

ur

Qa

dia

n

Su

jan

pu

r

Kir

atp

ur

Sa

hib

Ba

thin

da

F

arm

ers

Glo

ba

l S

HG

s

Ja

lan

dh

ar

Veg

. Co

.

Sa

ng

rur

Veg

. C

o.

La

mb

ra

Ka

ng

ri

Dh

ira

Pa

tra

Na

rsin

gh

Co

.

Da

da

Da

rba

r C

o.

Kis

an

Ek

ta

Co

.

A. Educational Quali-fication of the CEO

HS HS MT PG PG1 Grd2 Dip3 PG4 UG PG MT PG PG5 NA

B. Previous Activity of

the CEO@

S* F F E** S* TAI 0 NA NA 0 F F CEO NA

C. Operational size of

Cultivable land of CEO and his family (Acre):

15 6 3 3.5 3 0 3 NA NA 8 NA 4.75 1.25 NA

D. Motivation to Act as CEO: Farmers’ interests 0 0 Yes Yes 0 0 0 NA NA Yes Yes 0 0 NA Qualified in agri-Production technology

0 0 0 0 Yes Yes Yes NA NA 0 0 0 0 NA

Has relevant marketing experience

0 0 0 0 0 0 0 NA NA 0 0 Yes Yes NA

To save farmers from exploitation by the Commission Agent/Arhtiya/Money- lender

Yes Yes 0 0 0 0 0 NA NA 0 0 0 0 NA

Motivated by the POPI official

0 0 0 0 0 0 0 NA NA 0 0 0 0 NA

E. If has been previously

a member of a farmer group, then its

nature?#

0 FIG FC 0 0 0 0 NA NA 0 0 0 0 NA

F. Worked in leadership

capacity$

0 IIG IG IIG 0 0 0 NA NA 0 0 IIG IIG NA

Note: MT= Matriculation; HS= Higher Secondary; Grd= Graduate; PG= Post Graduate; UG= Under Graduate; PG1= Msc. Agriculture; Grd2= Bsc. Agriculture; Dip3= Diploma in Agriculture; PG4= MBA Marketing; PG5= Master of Commerce.

@ S*= Student; F= Farming; E**= Employee; TAI= Trade in Agri. Inputs; Y= yes; NA= Not Applicable. # FIG= farmer Interest group; FC= Farmer Club. $ IIG= Initiated and leader of the Group; IG= Initiated the Group.

26

Tab

le 3

.6:

Sta

ff D

epu

ted

by

PO

PI

for

Han

dh

old

ing

Su

pp

ort

in A

gri-

FP

O

Par

ticu

lars

P

RO

DU

CE

Fu

nd

Nas

cen

t

PR

OD

UC

E F

un

d

Em

erg

ing

S

FA

C E

mer

gin

g

Mat

ure

M

atu

re

(Mad

hy

a P

rad

esh

)

Dholewal

Darapur

Qadian

Sujanpur

Kiratpur Sahib

Bathinda Farmers

Global SHGs

Jalandhar Veg. Co.

Sangrur Veg. Co.

Lambra Kangri

Dhira Patra

Narsingh Co.

Dada Darbar Co.

Kisan Ekta Co.

1 R

eso

urc

e P

erso

n

Nu

mb

er

1

1

1

- -

1

- 1

1

1

N

A

1

NA

N

A

Nu

mb

er

of

FP

Os

bei

ng

serv

ed

2

2

13

- -

1

- 1

1

1

N

A

1

NA

N

A

Sal

ary

per

an

num

(R

s.)

48

000

(2

40

00)

48

000

(2

40

00)

20

000

0 (1

53

84.6

2)

- -

39

600

0 -

18

000

0 1

80

000

27

000

0 1

20

000

48

000

0 N

A

NA

2 A

cco

un

tan

t

Nu

mb

er

- -

- -

- 1

-

- -

2

NA

-

NA

N

A

Nu

mb

er

of

FP

Os

bei

ng

serv

ed

- -

- -

- 1

-

- -

1

NA

-

NA

N

A

Sal

ary

per

an

num

(R

s.)

- -

- -

- 9

72

00

- -

- 5

81

712

NA

-

NA

N

A

3 F

ield

Ass

ista

nt

N

um

ber

-

- 1

-

- -

- -

- 7

N

A

1

NA

N

A

Nu

mb

er

of

FP

Os

bei

ng

serv

ed

- -

5

- -

- -

- -

1

NA

2

N

A

NA

Sal

ary

per

an

num

(R

s.)

- -

12

000

0 (2

40

00)

- -

- -

- -

61

440

0 N

A

48

000

0 (2

40

00)

NA

N

A

4 O

ther

Sta

ff

Nu

mb

er

- -

- -

- -

1*

- -

6

NA

9

**

NA

N

A

Nu

mb

er

of

FP

Os

bei

ng

serv

ed

- -

- -

- -

1

- -

1

NA

1

N

A

NA

Sal

ary

per

an

num

(R

s.)

- -

- -

- -

60

000

-

- 4

44

000

NA

9

00

00

NA

N

A

Tot

al:

Per

F

PO

/Per

A

nnu

m

(Rs.

)

24

,00

0 2

4,0

00

39

,38

4.6

2 -

- 4

,93

,20

0 6

0,0

00

1,8

0,0

00

1,8

0,0

00

19

,10

,112

1

,20

,00

0 5

,94

,00

0 N

A

NA

Not

e: 1

. F

igur

es i

n br

acke

ts r

epre

sen

t am

ount

spe

nt p

er a

nnum

on

han

dhol

ding

sup

port

per

FP

O.

2.

* C

ompu

ter

Ope

rato

r; *

*Loc

al R

esou

rce

Per

son

s.

27

Table 3.7: Training/Workshop Needs and the Programmes organized by Agri -FPOs

Particulars

PRODUCE Fund Nascent PRODUC

E Fund Emerging

SFAC Emerging

Mature Mature

(Madhya Pradesh)

Dh

olew

al

Dar

apu

r

Qad

ian

Su

jan

pu

r

Kir

atp

ur

Sah

ib

Bat

hin

da

Far

mer

s

Glo

ba

l S

HG

s

Ja

lan

dh

ar

Veg

. Co

.

Sa

ng

rur

Veg

. C

o.

La

mb

ra

Ka

ng

ri

Dh

ira

Pa

tra

Na

rsin

gh

Co

.

Da

da

Da

rba

r C

o.

Kis

an

Ek

ta

Co

.

How do you assess the training needs of the FPO?

Baseline Survey Yes Yes Yes Yes Yes Yes Yes Yes Yes NA 0 0 Yes NA

Consultation with FPO farmer members

0 Yes Yes Yes Yes Yes Yes 0 0 NA 0 Yes 0 NA

Consultation with board members only

0 0 0 0 0 0 0 0 0 NA 0 0 0 NA

Consultation with lead farmers in the area

0 0 0 0 Yes 0 0 0 0 NA 0 0 0 NA

By consulting other FPO/s 0 0 0 0 0 0 0 0 0 NA 0 0 0 NA

By Consulting other POPI/s 0 0 0 0 0 0 0 0 0 NA 0 0 0 NA

By guidance of NABARD/BIRD

Yes 0 0 0 0 0 0 0 0 NA 0 0 0 NA

By attending workshops/seminars

0 0 0 0 Yes 0 0 0 0 NA Yes 0 0 NA

By visiting technical institutions (Agriculture University, GADVASU, KVI’s, RUDSET)

0 0 0 0 0 0 0 0 0 NA Yes 0 0 NA

By reading resource materials 0 0 0 0 0 0 0 0 0 NA 0 0 0 NA

Cumulative number of Trainings/Workshops organized for Members of BOD 1 1 1 1 1 1 1 - 2 - - 1 3 NA CEO of the FPO - 1 1 - - - 1 - - - - - 2 NA FPO members 3 - 1 1 2 2 1 1 1 1 5 1 2 NA

Cumulative number of Exposure visits organized for Members of BOD - - 1 - 1 - - - 1 - - 1 - NA CEO of the FPO - - 1 - - - - - - - - - - NA FPO members - 3 - - 1 1 1 - - 1 - 1 - NA

28

Tab

le 3

.8:

Su

pp

ort

of

the

Tec

hn

ical

Agen

cies

in

Agri

-FP

Os

for

org

an

izin

g T

rain

ing a

nd

oth

er P

rog

ram

mes

Sr.

n

o.

Age

ncy

PR

OD

UC

E F

un

d N

asc

ent

P

RO

DU

CE

Fu

nd

E

mer

gin

g

SF

AC

E

mer

gin

g

Ma

ture

M

atu

re

(Ma

dh

ya P

rad

esh

)

Dholewal

Darapur

Qadian

Sujanpur

Kiratpur Sahib

Bathinda Farmers

Global SHGs

Jalandhar Veg. Co.

Sangrur Veg. Co.

Lambra Kangri

Dhira Patra

Narsingh Co.

Dada Darbar Co.

Kisan Ekta Co.

1

NA

BA

RD

T

rg./

wrk

p.

in

dem

ocr

atic

fu

nct

ion

ing

of

the

FP

O

Trg

./w

rkp

. in

va

lue

add

itio

n

of

cro

ps

-

Trg

./w

rkp

. in

d

emo

crat

ic

fun

ctio

nin

g o

f th

e F

PO

- N

A

Trg

./w

rkp

. in

val

ue

add

itio

n o

f cr

op

s

NA

N

A

Trg

./w

rkp

. in

va

lue

add

itio

n

of

cro

ps

- T

rg./

wrk

p.

in v

alu

e ad

dit

ion

of

cro

ps

- -

2

BIR

D

- -

Fie

ld v

isit

s an

d

Dem

on

stra

tio

ns

Trg

./w

rkp

. in

m

arke

tin

g li

nka

ge

- N

A

- N

A

NA

- -

- -

3

Agr

icu

ltu

re &

H

ort

icu

ltu

re

Un

iver

siti

es

- -

- -

Exh

ibit

ion

an

d K

isan

M

elas

N

A

Trg

./w

rkp

. in

val

ue

add

itio

n o

f cr

op

s

NA

N

A

Trg

./w

rkp

. in

va

lue

add

itio

n

of

cro

ps

Trg

./w

rkp

. in

va

lue

add

itio

n

of

cro

ps

Trg

./w

rkp

. in

val

ue

add

itio

n o

f cr

op

s -

-

4

Dep

art

men

t o

f A

gri-

cult

ure

/Ho

rti

cult

ure

- T

rg./

wrk

p.

in

valu

e ad

dit

ion

o

f cr

op

s

Fie

ld v

isit

s an

d

Dem

on

stra

tio

ns

Trg

./w

rkp

. in

va

lue

add

itio

n

of

cro

ps

- N

A

- N

A

NA

T

rg./

wrk

p.

in

valu

e ad

dit

ion

o

f cr

op

s

Trg

./w

rkp

. in

va

lue

add

itio

n

of

cro

ps

Trg

./w

rkp

. in

val

ue

add

itio

n o

f cr

op

s

Trg

./w

rkp

. in

va

lue

add

itio

n

of

cro

ps

Trg

./w

rkp

. in

val

ue

add

itio

n o

f cr

op

s

5

Kri

shi

Vik

as

Ken

der

-

Trg

./w

rkp

. in

va

lue

add

itio

n

of

cro

ps

Fie

ld v

isit

s an

d

Dem

on

stra

tio

ns

Trg

./w

rkp

. in

va

lue

add

itio

n

of

cro

ps

- N

A

- N

A

NA

T

rg./

wrk

p.

in

valu

e ad

dit

ion

o

f cr

op

s

Trg

./w

rkp

. in

va

lue

add

itio

n

of

cro

ps

Trg

./w

rkp

. in

val

ue

add

itio

n o

f cr

op

s -

Trg

./w

rkp

. in

val

ue

add

itio

n o

f cr

op

s

6

MA

RK

FE

D

-

- -

- -

NA

-

NA

N

A

- -

Trg

./w

rkp

. in

M

arke

tin

g L

inka

ge

- -

7

SF

AC

-

- -

- -

NA

-

NA

N

A

- -

Trg

./w

rkp

. in

M

arke

tin

g L

inka

ge

- M

arke

tin

g li

nka

ges

8

Ba

nk

s &

O

ther

F

ina

nci

al

Inst

itu

tio

ns

Div

ersi

-fi

cati

on

-

- -

- N

A

- N

A

NA

-

- -

- -

9

AT

MA

-

Trg

./w

rkp

. in

va

lue

add

itio

n

of

cro

ps

- -

- N

A

- N

A

NA

-

Trg

./w

rkp

. in

va

lue

add

itio

n

of

cro

ps

Fie

ld v

isit

s an

d

dem

on

stra

tio

ns

- -

Not

e:

Trg

.= T

rain

ing;

Wrk

p.=

Wor

ksh

op

29

Table 3.9 (a): Cost, Price, Sales Realization and Net Income (Rs.) of the Nascent Agri-FPOs in Punjab in 2015 & 2016

Particulars A: PRODUCE Fund Nascent

Dholewal Darapur Qadian Sujanpur Kiratpur Sahib Crop Crops

Nil Peas & Tomato Other Vegetables Wheat & Fruits Wheat, Other

Vegetables & Maize Year

2015 2016 2015 2016 2015 2016 2015 2016 2015 2016

A. Cost (amount paid for purchase of the crop/s)

- - 1565782 1400000 - 300000 - 500000 - 281922

B. Other costs (Total ):

- - 120000 134025 - - - - - -

Aggregation of produce - - - - - - - - - -

Value addition - - - - - - - - - -

Storage - - - - - - - - - -

Transportation costs - - - 63000 - - - - - -

Contingent expenses - - - 71025 - - - - - -

C. Sales Realization (Total) - - 2006682 1760000 - 380000 - 550000 - 281922

D. Net Income (C-A-B) - - 320900 225975 - 80000 - 50000 - 0

E. Net income as %age of sales realization

- - 15.99 12.84 - 21.05 - 9.09 - 0.00

Table 3.9 (b): Cost, Price, Sales Realization and Net Income (Rs.) of the Emerging Agri-

FPOs in Punjab in 2015 & 2016

Particulars B: PRODUCE Fund Emerging SFAC Emerging

Bathinda Farmers Global SHGs Jalandhar Veg. Co. Sangrur Veg. Co.

Crop Agri-Input Other Vegetables NA NA Year 2015 2016 2015 2016 2015 2016 2015 2016

A. Cost (purchase) price 21,89,085 17,97,870 - 2,00,000 NA NA NA NA B. Other costs (Total ): - - - - NA NA NA NA

C. Sales Realization (Total) 23,32,519 18,54,545 - 3,11,000 NA NA NA NA

D. Net Income (C-A-B) 1,43,434 56,675 - 1,11,000 NA NA NA NA E. Net income as proportion of sales realization

6.15 3.06 - 35.69 NA NA NA NA

30

Table 3.9 (c): Cost, Price, Sales Realization and Net Income (Rs.) of the Mature Agri-FPOs in Punjab in 2015 & 2016

Particulars C: Mature Mature (Madhya Pradesh)

Lambra Kangri Dhira Patra Narsingh Co. Dada Darbar Co. Kisan Ekta Co. Crop

Credit (Loans) Milk Products And

Agri Produce Jaggery & Arhar Paddy Wheat & Soyabean

Year 2015 2016 2015 2016 2015 2016 2015 2016 2015 2016

A. Cost (purchase) price 3,95,82,923 4,17,07,914 9,28,105 14,38,891 76,98,086 9,77,20,126 7,17,823 30,860 12,07,598 -

B. Other costs (Total ):

1,80,00,172 1,92,54,055 - - - - 3,04,203 - - -

C. Sales Realization (Total) 2,15,82,751 2,24,53,859 10,13,466 15,95,733 78,11,205 9,79,57,321 10,55,544 - 12,67,283 -

D. Net Income (C-A-B) 35,82,579 31,99,804 85,361 1,56,842 1,13,119 2,37,195 33,518 - 59,685 -

E. Net income as proportion of sales realization

16.60 14.25 8.42 9.83 1.45 0.24 3.18 - 4.71 -

Table 3.10: Agri-Produce Sold by the CEO Family Through the FPO in 2016 (Amount in Rs.)

FPO Sold Through FPO Other Channel (Crop) Amount Total (Crop) Amount Total

PRODUCE Fund Nascent Dholewal

- - - Wheat Paddy

250000 400000

650000

Darapur Peas 20900 20900

Wheat Paddy

230000 230000

Qadian Other Vegetables

50000 50000 Wheat Paddy 80000 80000

Sujanpur Wheat, paddy, other vegetables

20000 20000 Wheat paddy 30000 30000

Kiratpur Sahib - - -

Wheat Maize

10000 4000

14000

PRODUCE Fund Emerging Bathinda Farmers - - - - - -

Global SHGs Other

vegetables 72000 72000 Maize 50000 50000

SFAC Emerging Jalandhar Veg. Co. - - - - - - Sangrur Veg. Co. - - - - - -

Mature Lambra Kangri - - - - - -

Dhira Patra Wheat Other

vegetables

360000 50000

410000 - - -

Mature (Madhya Pradesh)

Narsingh Co. Arhar Pulses

212500 90000

302500 - - -

Dada Darbar Co. - - - - - - Kisan Ekta Co. - `- - - - -

31

Table: 3.11: Market Linkage of the Agri-FPOs PRODUCE Fund Nascent

% Sold Dholewal Co. Darapur Qadian Sujanpur Kiratpur Sahib

Co. A. Within the state

(i) Sale point - Direct sale in Mandi (29%)

thr’ commission agent (70%)

Direct sale in mandi (70%)

Direct sale in mandi (90%)

Location - Chandigarh Local Local Local (ii) FPO’s sale

point - Kisan Haat (30%) Kisan Haat (30%)

Shop (10%)

Location - Local Local Local B. Outside the state

Sale point - thr’

Commission agent (71%)

- - -

Location - Delhi &

Uttrakhand - - -

PRODUCE Fund Emerging SFAC Emerging

% Sold Bathinda Farmers

Co. Global SHGs Jalandhar Veg. Co. Sangrur Veg. Co.

A. Within the state

(i) Sale point Shop (100%) Exhibitions & Kisan Melas

(85%) - -

Location Local Local - - (ii) FPO’s sale

point - 15% - -

Location - Local - - B. Outside the state Sale point - - - -

Location - - - -

Mature Mature (Madhya Pradesh)

% Sold Lambra Kangri Dhira Patra Narsingh Co. Dada Darbar Co. Kisan Ekta Co. A. Within the state

(i) Sale point -

thr’ commission agent (70%) &

Exhibitions (10%)

Direct sale in mandi (17.8%) & SFAC

procure-ment (56%)

Direct sale in mandi (20%) & SFAC

procurement (80%)

-

Location - Local Local Local - (ii) FPO’s sale point

100% 20% FPO to FPO

(26.20%) -

-

Location Local Local - - - B. Outside the state Sale point - - - - - Location - - - - -

32

Table 3.12: Financial Position of the Agri-FPOs (in Rs.) FPO Cash Bank

Balance Inventories

& Receivables

Equity fund No. of Shareholders

PRODUCE Fund Nascent Dholewal - 30000 - 96800 67 Darapur - - - 34500 62 Qadian - 11000 12000 51 Sujanpur - - - - - Kiratpur Sahib - 42000 - 92000 52

PRODUCE Fund Emerging Bathinda Farmers - 82000 - 162000 162 Global SHGs 51000 - - 51000 51

SFAC Emerging Jalandhar Veg. Co. - 710000 - 710000 735 Sangrur Veg. Co. - 600000 - 600000 1565

Mature Lambra Kangri - 775800000 - 2847000 212 Dhira Patra - 320000 40000 1119000 23

Mature (Madhya Pradesh) Narsingh Co. - 4206898 289200 1190 Dada Darbar Co. - 51000 332000 - Kisan Ekta Co. 24528 818716 - 922000 -

33

Tab

le 3

.13:

Fu

ture

Bu

sin

ess

Act

ivit

ies

Pla

nn

ed b

y t

he

Agri

-FP

Os

Act

ivit

y

PR

OD

UC

E F

un

d N

asc

ent

PR

OD

UC

E F

un

d E

mer

gin

g

SF

AC

E

mer

gin

g

Ma

ture

M

atu

re

(Ma

dh

ya P

rad

esh

)

Dholewal

Darapur

Qadian

Sujanpur

Kiratpur Sahib

Bathinda Farmers

Global SHGs

Jalandhar Veg. Co.

Sangrur Veg. Co.

Lambra Kangri

Dhira Patra

Narsingh Co.

Dada Darbar Co.

Kisan Ekta Co.

1.

Cro

ps

iden

tifi

ed t

o b

e p

rod

uce

d W

hea

t,

Pad

dy,

M

aize

-

- -

Wh

eat,

O

ther

V

eget

able

s,

Mai

ze

Wh

eat,

P

add

y,

Cot

ton

Wh

eat,

P

add

y,

Cot

ton

Foo

d

Gra

ins,

O

ther

V

eget

able

s,

Pic

kle

s &

S

pic

es

- -

-

Wh

eat,

O

ther

V

eget

able

s,

Mil

k &

M

ilk

pro

du

cts

Pu

lses

-

-

2.

Ag

greg

atio

n o

f th

e p

rod

uce

Y

es

- -

- Y

es

- Y

es

- -

Yes

Y

es

Yes

-

-

3.

Dev

elop

men

t of

th

e co

llec

tion

cen

tre

Yes

-

- -

Yes

-

Yes

-

- Y

es

Yes

Y

es

- -

4.

Val

ue

add

itio

n

Sor

tin

g Y

es

- -

- -

- Y

es

- -

Yes

Y

es

Yes

-

-

Cle

anin

g Y

es

- -

- -

- Y

es

- -

Yes

Y

es

Yes

-

-

Pro

cess

ing

- -

- -

- -

Yes

-

- -

Yes

Y

es

- -

Pac

kin

g Y

es

- -

- -

- Y

es

- -

Yes

Y

es

Yes

-

-

Gra

din

g Y

es

- -

- -

- Y

es

- -

Yes

Y

es

Yes

-

-

Sto

rage

-

- -

- -

- Y

es

- -

Yes

Y

es

Yes

-

-

5.

Far

m m

ach

iner

y

- -

- -

- -

- -

- Y

es

Yes

-

- -

6.

Tra

nsp

ort

Yes

-

- -

- -

Yes

-

- Y

es

Yes

-

- -

7.

Cre

dit

link

age

- -

- -

- -

- -

- Y

es

- -

- -

8.

Ass

ista

nce

fro

m o

ther

in

stit

utio

ns

Yes

-

- -

- -

Yes

-

- Y

es

Yes

-

- -

9.

E-m

ark

etin

g

Yes

-

- -

- -

- -

- Y

es

- -

- -

34

Tab

le 3

.14:

Mon

itori

ng

of

the

Agri

-FP

Os

Sr.

n

o.

In R

esp

ect

of

PR

OD

UC

E F

un

d N

asc

ent

P

RO

DU

CE

Fu

nd

E

mer

gin

g

SF

AC

Em

ergi

ng

M

atu

re

Ma

ture

(M

ad

hya

Pra

des

h)

Dholewal

Darapur

Qadian

Sujanpur

Kiratpur Sahib

Bathinda Farmers

Global SHGs

Jalandhar Veg. Co.

Sangrur Veg. Co.

Lambra Kangri

Dhira Patra

Narsingh Co.

Dada Darbar Co.

Kisan Ekta Co.

1

(i)

MIS

of

the

FP

O

Yes

Y

es

- -

Yes

Y

es

- -

Yes

Y

es

Yes

Y

es

Yes

-

(ii)

M

IS

of

the

Far

mer

M

embe

rs

Yes

Y

es

Yes

Y

es

Yes

Y

es

- Y

es

Yes

Y

es

Yes

Y

es

- -

2

Bus

ines

s pl

an p

rep

ared

Y

es

Yes

-

- Y

es

Yes

-

- Y

es

Yes

Y

es

Yes

-

-

3

Bu

yer-

sell

er

mee

t or

gan

ized

- -

Yes

-

- Y

es

- -

- -

Yes

Y

es

Yes

-

4 A

pp

lied

/ob

tain

ed l

icen

se f

or

the

inp

ut

S

eeds

A

ppli

ed

- -

-

Applied

Obtained

- -

App

lied

O

btai

ned

-

Obtained

- -

Pes

tici

des

- -

- -

- -

- A

ppli

ed

- -

-

Fer

tili

zers

-

- -

- -

- -

Obt

aine

d

- -

-

5

Ann

ual

rep

ort

fin

aliz

ed

- -

- -

- Y

es

- -

- Y

es

Yes

Y

es

- -

6

Sta

tuto

ry c

ompl

ian

ces

-

- -

- Y

es

Yes

-

- -

Yes

-

Yes

-

-

7

Impl

emen

tati

on

of

busi

ness

pl

an

- Y

es

- -

Yes

Y

es

- -

- Y

es

- Y

es

- -

8

Bus

ines

s ex

pan

sion

pla

ns

- Y

es

- -

Yes

Y

es

- -

- Y

es

Yes

Y

es

- -

9 A

ud

it/v

erifi

cati

on

of F

PO

acc

oun

ts b

oo

ks

F

req

uen

cy

- -

- N

ot

done

ye

t

Not

do

ne y

et

- N

ot d

one

ye

t

Not

do

ne

yet

- R

egul

ar

Reg

ular

R

egul

ar

- -

Rea

son

N

ot y

et

prep

ared

-

Not

yet

pr

epar

ed

- N

ot y

et

prep

ared

Pre

par

atio

n

unde

r pr

ogr

ess

Not

yet

pr

epar

ed

- -

Acc

ount

s ve

rifi

ed

- A

ccou

nts

veri

fied

-

-

10

Pro

fit

and

loss

acc

oun

t -

Yes

Y

es

Yes

-

Yes

-

- -

Yes

-

Yes

Y

es

-

11

Pro

ject

co

mpl

etio

n re

port

-

- -

- -

- -

- -

Yes

-

Yes

-

-

35

Table 3.15: Vital Statistics of the Milk FPOs Sr. No. Particulars

Nascent Emerging Mature

MILKFED Young

Innovative Progressive

Dairy

1 Registered as1 CS S C

2 Criteria for Selection of Farmers2 P MSF P, MSF

At the time of Registration

3 No. of Blocks/ Districts 1 1 1

4 No. of villages 1 2 2

5 No. of farmer members 50 50 10

At Present

6 No. of Blocks/Districts 1 1 4

7 No. of villages 1 4 50

8 No. of farmer members 70 112 400

Note:1CS= Cooperative Society; S= Society; C= Company. 2P= Produce; MSF= Marginal and Small Farmers.

Table 3.16: Financial Position of the Milk FPOs

(in Rs.) FPO Cash Bank

Balance Inventories

& Receivables

Equity fund No. of Shareholders

Nascent MILKFED - 44349 125000 7000 70

Emerging Young Innovative

- 50331 - 59000 112

Mature Progressive Dairy - - - 21349850 400

Table 3.17: Cost, Price, Sales Realization and Net Income of the Milk FPOs in 2015 & 2016

(Rs.) Particulars MILKFED Young Innovative Progressive Dairy

Crop Milk

Milk and Milk Products

Milk

Year 2015 2016 2015 2016 2015 2016

A. Cost (purchase) price -

16,62,240

- 16,23,000 5,24,26,903 8,12,36,341

B. Other costs (Total ): -

42,000

- 77,150 2,23,000 3,47,000

C. Sales Realization (Total) - 17,04,240 - 20,77,040 5,21,01,739 7,98,22,720

D. Net Income (C-A-B) - 0 3,76,890 5,48,164 17,60,621

36

Table 3.18: Monitoring of the Milk FPOs Sr. no. In Respect of

Nascent Emerging Mature

MILKFED Young

Innovative Progressive

Dairy 1 (i) MIS of the FPO Yes Yes Yes

(ii) MIS of the Farmer Members Yes Yes Yes 2 Business plan prepared Yes Yes Yes 3 Annual report finalized - - Yes 4 Statutory compliances - - Yes 5 Implementation of business plan - - Yes

6 Audit/verification of FPO account books

Frequency - Not done yet Regular

Reason - - -

7 Profit and loss account - Yes Yes

8 Project completion report - Yes Yes

37

FPO is an organization of primary producers of mainly the produce basket crops, and is assigned the task of improving the farmers' lot. It is organized on the principle of collectivization for mutual benefit of the farmers. Its operations are geared to reap the bargaining benefits of collective purchase/sale of the inputs/ outputs for the farmers. Moreover, the FPO mobilizes pro-actively the farmers to reorient their cropping pattern in favour of the produce basket crops and to fetch remunerative prices. Since, farmers in SFAC FPOs (non-PRODUCE Fund) did not report any sale through the FPO, therefore, this column has been left blank in the tables that present data on crops. Moreover, relevant data on crops in both the seasons, rabi and kharif, were collected and have been reported in tables in this chapter. However, to simplify matters, discussion was restricted mostly around rabi season crops (2015-16). In this chapter, an attempt has been made to examine the benefits and costs of agri-FPOs to the respondent farmers.

4.1 Beneficiary Farmers and the FPO Sales Channel:

The number of farmers who sold produce through the FPO channel was small (Table 4.1).

During rabi season (2015-16), out of 75 respondents in nascent FPOs, 23 (30.67 per cent) sold crop through the FPO, while this number was five (out of 30 or 16.67 per cent) in PRODUCE Fund emerging and nil in SFAC companies. In mature FPOs, this proportion was slightly higher at one-third (10 out of 30) in Punjab and a little over two-fifth (19 out of 45) in Madhya Pradesh. Thus, the proportion of farmer members who sold through the FPO was larger in Madhya Pradesh than in Punjab.

Farmers who sold produce through the FPO channel both in Punjab and Madhya Pradesh were mostly marginal and small (Table 4.1). The semi-medium, medium and large farmers, on the other hand, preferred direct channel for sale of their produce. However, their participation in FPO sales is critical.

All the respondent marginal and small farmers in Darapur, 71.43 per cent in Kiratpur Sahib and 41.67

per cent in Sujanpur sold a crop through the FPO. In PRODUCE Fund emerging Global SHGs, all the farmers who sold their produce through the FPO were marginal and small. In mature Dhira Patra (Punjab), this proportion was 83.33 per cent, and almost hundred per cent in Narsingh and Dada Darbar in Madhya Pradesh.

The farmers in nascent category in Punjab produced more than one crop, but none sold all their crops exclusively through FPO channel. They also sold through direct channel, but rarely in both. This means that the FPO channel was slowly gaining popularity in the state of Punjab. Details are shown in Table 4.1 (a).

4.2 Diversification of Crops:

One of the tasks of FPOs was to promote diversification towards produce basket crops. Two indicators used in this context are (i) number of farmers growing the produce basket and other crops, and (ii) acreage under each crop, pre and post FPO.

4.2.1 Number of Farmer Members Producing the Crops:

'Vegetables and fruits' comprised the produce basket of majority of the selected nascent and emerging FPOs in Punjab. The number of farmers producing traditional crops (wheat and paddy) post FPO in these categories though remained more or less same (slightly higher in case of paddy), yet the number of farmers growing produce basket crops (other vegetables, peas, potato etc) and selling through the FPO increased. For instance, in nascent category, 20 farmers sold 'other vegetables' pre FPO whose number rose post FPO to 28 or by 40 per cent (10 sold through the FPO). This trend was witnessed in other FPOs also though at a smaller scale (Table 4.2).

In Madhya Pradesh, the FPOs dealt mostly with pulses besides wheat. Post FPO, during 2015-16, larger number of farmers shifted to cultivation of the crop 'Arhar'. Also a number of farmers shifted post FPO to cultivation of ladyfinger and many sold through it.

In short, the number of farmers producing and selling the produce basket crops through the FPO compared to the pre FPO level went up.

Chapter 4

Benefits and Costs of Agri-FPOs in Punjab & Madhya Pradesh

38

Unfortunately, these FPOs could not make any dent as regards the number of farmers producing wheat-paddy crops in Punjab. These crops, of course, comprised the produce basket of at least one FPO (Dholewal) in the state, but it failed to induce even a single farmer to sell these, or any other, crop/s through it.

4.2.2 Area under Crops:

Wheat is one of the produce basket crops of all the selected mature FPOs in Madhya Pradesh, where acreage under it went up post FPO. But, in Punjab, this was not a crop in the produce basket of the FPOs (except Dholewal). Here, acreage under wheat post FPO was smaller (Table 4.3). That is to say, the trend in acreage under wheat post FPO was as per the produce basket of the FPOs in the respective states. It augurs well with diversification particularly in the state of Punjab.

'Peas' — a produce basket crop — bagged larger area post FPO in nascent category in Punjab. The crop grown on nearly three-fourth of the land under it was sold through the FPO. In PRODUCE Fund emerging category, the area under 'other vegetables' post FPO grew by 35.42 per cent to 13 acre from 9.60 acre pre FPO (including in both the seasons), of which the crop grown on 5 acre (41.67 per cent) was sold through the FPO. In the mature category in Punjab, the farmer members sold a number of crops, namely, wheat, paddy, potato, tomato and 'other vegetables' through the FPO (Dhira Patra). Overall, while the acreage post FPO under wheat and paddy was smaller, it was larger in case of 'other vegetables' (Table 4.3). Thus, a subtle trend in diversification towards the produce basket crops (vegetables) in these FPOs was noticed in Punjab.

4.3 Cost of Production:

Cost of production is an important element that, inter alia, determines net earnings of the farmers. Table 4.4 presents cost of production of the crops sold through the FPO as well as when sold directly over pre-FPO level, as revealed by the farmers at the time of survey.

Wide variations in cost of production of crops across the FPOs and the selected states were noticed. However, cost of production of six out of 10 FPO crops (i.e. those sold through FPO) in rabi and kharif seasons (except orange and jaggery in which case it remained same) was less than the pre FPO level in Punjab, as is

indicated by the negative percentage change against the crops below the column 'per cent change of cost of production of crop sold through FPO over pre FPO level' (Table 4.4). This was true for 'other vegetables' also in all the categories (except in rabi season in PRODUCE Fund emerging). Further, in case of 'other vegetables' in emerging and the mustard in mature category, cost of production when sold through the FPO was higher than the pre FPO level; but, more importantly, it was less when compared with that sold directly. Only in case of peas (nascent category), cost of production post FPO, both when sold through the FPO or directly, was higher; and very high when the crop was sold through FPO. On the whole, cost of production of most of the FPO crops (i.e. crops sold through FPO) was less than the pre FPO level as well as when compared with that sold directly. A similar trend was observed in Madhya Pradesh i.e. lower cost than the pre FPO as well as that when sold directly in case of rabi crops (Wheat, Gram and Arhar); and was comparatively higher for kharif crops (Jaggery, Urad and Moong).

4.4 Percent Benefit or Loss of Price from Sale through FPO:

Table 4.5 shows per cent benefit (+) or loss (-) of price of the crops sold through the FPO compared with the pre FPO level as well as that when sold directly. The plus sign (+) before the figure in the table indicates higher FPO price than when the same crop was sold directly and hence indicates benefit, while the minus sign (-) represents loss.

The farmers in nascent category in Punjab sold mainly 'peas' and in small quantity 'other vegetables' through the FPO. Table 4.5 shows that the farmers in nascent category in Punjab who sold 'peas' through FPO (in rabi season) incurred loss as the price realized turned out to be less than that fetched by selling directly in the market by 7.84 per cent. However, in case of 'other vegetables', it was higher by 4.00 per cent in rabi and 6.97 per cent in kharif season. In the PRODUCE Fund emerging category (Global SHGs) also, the farmers benefitted by selling 'other vegetables' through the FPO as it fetched price higher than that received by selling directly in the market by 57.89 per cent in rabi and 80.00 per cent in kharif season.

In mature category (Dhira Patra) in Punjab,

39

price realized by sale of wheat through the FPO was higher by 72.48 per cent than the price fetched by selling it directly. This could be because wheat sold through the FPO was organic. In case of 'other vegetables' too, price realized when sold through the FPO was comparatively much higher (+42.24 per cent) and represented farmers' benefit. Further, the farmers sold paddy through the FPO that fetched comparatively a higher price (+25.36 per cent). In Madhya Pradesh too, farmers benefitted on the crops that they sold through the FPO (Narsingh) as it fetched higher price than that realized by selling directly, e.g. wheat (+7.35 per cent), gram (+2.83 per cent), arhar (+4.42 per cent), urad (+16.87 per cent) and moong (+3.24 per cent).

An examination of field data (not reported here) revealed that the farmers incurred loss of 6.67 per cent in price of the crop 'peas' in Darapur and almost 50 per cent in Sujanpur (both nascent PRODUCE Fund) by opting to sell these through the FPO rather than directly in the market. In the later FPO, the farmers likewise incurred loss of 60 per cent price on 'other vegetables' also. The farmers, thus, benefitted price gain by selling through the FPO on almost all the crops, except in a few cases. Price of vegetables, being perishable, is generally volatile. But the FPO will have to be vigilant about the market mood and sell farmers' produce at optimum price. In this context, the FPOs should explore possibility of contract farming and tie-ups for bulk supplies.

4.5 Produce Sold through the FPO:

Table 4.6 shows per cent of total produce by the farmer members sold through the FPO. Rest of the produce was sold by the farmers directly in the market. In PRODUCE Fund category, the proportion of produce sold through the FPO in rabi season was 7.32 per cent in nascent and 1.14 per cent in PRODUCE Fund emerging ca tegory. For mature FPOs in Punjab , the corresponding figure was 11.71 per cent (Dhira Patra) and 12.45 per cent in Madhya Pradesh.

Crop-wise, the nascent FPOs handled sale of 73.62 per cent of the produce of 'peas' and 6.76 per cent of 'other vegetables' in rabi season. The PRODUCE Fund emerging handled 15.58 per cent of the produce of 'other vegetables' in this season. In mature category, produce of diversified crops was sold through the FPO−

8.85 per cent of the produce of wheat, 16.04 per cent of 'other vegetables', and 91.15 per cent of mustard in rabi season in Punjab, while the corresponding figures in Madhya Pradesh were 8.00 per cent of wheat, 36.12 per cent of gram, 62.26 per cent of arhar and whole of mustard (See Table 4.6). Overall, the selected nascent FPOs handled sale of 7.32 per cent of the produce, the emerging (PRODUCE Fund) 1.14 per cent, the mature in Punjab 11.71 per cent and 12.45 per cent in Madhya Pradesh in rabi season (See Table 4.6).

In kharif season, the corresponding figures were very low in all the FPOs, including in Madhya Pradesh. Following reasons explain the very low proportion of produce sold by the farmers through the FPO.

(Ii) The number of farmer members who sold through the FPO was small.

(ii) The farmers in nascent and emerging categories sold merely a single crop through the FPO, and the rest direct in the market.

(iii) These FPOs did not deal with wheat and paddy which were the principal crops in Punjab that comprised 98.26 per cent of total food-grain production in 2016-17 (Government of Punjab, Economic Survey, 2016-17, pp. 218-19). The FPOs should deal with wheat, paddy and other crops as well.

4.6 Net Earnings of the Farmer Members:

Two comparisons of net earnings by the selected farmers viz. (Ii) percentage increase in net earnings post FPO (col. 6) and (ii) percentage share of net earning from FPO sales (col. 7) were attempted. The values thus obtained are shown in Table 4.7. While calculating these figures, data for all the crops grown by the farmer members were considered and are reported in Table 4.8.

It may be seen from the Table 4.7 that the farmers in non-PRODUCE Fund emerging category registered largest increase in net earnings post FPO (162.86 per cent) by selling directly in the market. The increase in net earnings of the farmers by over one and half times in these FPOs was due primarily on account of sale of 'other vegetables'. Indeed, the area in which these FPOs were operating was known as the

40

'vegetables hub' in Punjab. In other FPO categories, increase in net earnings, compared to the pre FPO level, was comparatively small, viz. 20.31 per cent in nascent, 2.24 per cent in PRODUCE Fund emerging, and in the mature 80.03 per cent in Punjab and 34.30 per cent in Madhya Pradesh (col. 7, Table 4.7).

Contribution of sales through FPO in total net earnings of the farmers post FPO was low in PRODUCE Fund nascent (2.49 per cent) and the emerging categories (2.14 per cent) (col. 6, Table 4.7). In mature category, it was 17.41 per cent in Punjab and almost similar (17.16 per cent) in Madhya Pradesh. In short, whereas sales contribution of PRODUCE Fund FPOs' in net earnings of the farmers in Punjab was low; it was relatively high in mature FPOs at about 17 per cent both in Punjab and Madhya Pradesh. In other words, while the FPO sales contribution in net earnings of these farmers was moderate, it was trivial in PRODUCE Fund categories in Punjab. This was due primarily to low quantum of produce sold through the FPO in PRODUCE Fund and moderate in mature category in Punjab.

4.7 Net Earnings per Quintal:

The farmers would sell through the FPO if they find comparative advantage in doing so. One way of assessing the comparative advantage was to examine net earnings gained per quintal from the produce sold through the FPO vis-à-vis that from directly in the market. Table 4.8 reveals that net earnings of the farmers in nascent category from sale of 'peas' through the FPO amounted to Rs. 467.46 per quintal, whereas direct sale fetched them net earnings of Rs. 607.44 per quintal. On that account, their loss of earnings from sale of 'peas' through the FPO rather than directly was nearly Rs. 140.00 per quintal (i.e. Rs. 607.44 − Rs. 467.46). The comparative loss of earnings in this way aggregated Rs. 2.33 lakh on 1666.77 quintals of 'peas' sold through the FPO. Since, 11 members sold peas through the FPO, therefore, the average comparative loss of earnings per farmer on this account was about Rs. 21,182. This loss accrued primarily because of high cost of production of

14this produce and lower prices .

Net earnings per quintal by sale of 'other

vegetables' through FPOs in the nascent category were higher by 5.31 per cent in rabi, but lower by 5.70 per cent in kharif season than that earned by sale direct in the market. The comparative advantage in net earnings in this case amounted to Rs. 56.20 per quintal in rabi and a loss of Rs. 66.45 per quintal in kharif season. The calculations yielded an aggregate net gain of Rs. 20,377 on 362.58 quintals in rabi and a loss of Rs. 1751.62 on 26.36 quintals in kharif season in case of 'other vegetables' sold through FPO. Since, ten farmers sold 'other vegetables' through the FPO in rabi and four in kharif season, therefore, the average gain accrued worked out to Rs. 2037.70 per farmer in the former and a loss of Rs. 437.90 per farmer in the later season. In the PRODUCE Fund emerging category too, the comparative advantage realized amounted to Rs. 588.14 per quintal or an aggregate of about Rs. 1,58,800. In short, the farmers had a comparative advantage in selling their produce of 'other vegetables' through the FPO because primarily of price advantage and lower cost.

In mature FPOs too, the farmers earned comparative advantage on their sales through the FPO both in Punjab and Madhya Pradesh. Broadly, the experience of whatever little was sold through the PRODUCE Fund FPOs in Punjab was that the farmers had comparative advantage of higher price realized by selling the produce through the FPO and lower cost of production, except peas in which case their net earnings were comparatively lower due primarily to lower prices and higher cost of production.

4.8 Incremental Net Earnings from Sale through FPO:

Table 4.9 presents crop-wise incremental net earnings per quintal of sale through FPO over the pre FPO as well as the level from direct sale. The study reveals higher net earnings in case of all the crops sold through the FPO, both whether compared with the pre FPO or with that from direct sale. Compared to pre FPO level, it was higher across the board except potato in kharif season in mature FPOs in Punjab. And, it was only in case of peas in rabi and 'other vegetables' in kharif season that net earnings from FPO sales were

14Field inquires revealed that the price of vegetables, including peas, in the season was very low which was attributed

to bumper crop.

41

lower when compared with that from direct sale that yielded negative incremental net returns. In all the rest cases, net return was higher from FPO sale than that from the pre FPO as well as the direct sale levels. In other words, the farmer members who sold crops through the FPO benefitted.

4.9 Freedom from Arhtiya/Moneylender:

Nearly one-third in PRODUCE Fund (nascent

and emerging) and about two-fifth in mature (both in Punjab and Madhya Pradesh) responded that the FPO has the potential of saving them from exploitation at the hands of Arhtiya/moneylender. In SFAC-FPCs too, one-fifth responded affirmatively. This was an issue in Punjab where the Arhtiya mediates and controls sale of food-grains for public procurement and also interlocks a number of professions including sale of agri-inputs and money lending.

Table 4.1: Category-wise Number of Farmers Who Sold Produce through FPO and the Direct Channels

Farmer Category/Mode

of Sale

Nascent or Incubation FPOs

(N=75)

Emerging and Growing Mature or Business Expansion

Produce Fund FPOs (N=30)

Non-Produce Fund (SFAC) Companies

(N=30)

Punjab FPOs (N=30)

Madhya Pradesh Companies (N=45)

Rabi (2015-16)

Kharif (2016)

Rabi (2015-16)

Kharif (2016)

Rabi (2015-16)

Kharif (2016)

Rabi (2015-16)

Kharif (2016)

Rabi (2015-16)

Kharif (2016)

Sold Through FPO

Marginal and Small Farmer

18 4 5 1 0 0 5 5 14 12

Semi Medium and above

5 0 0 0 0 0 5 0 5 3

Total 23 4 5 1 0 0 10 5 19 15

Sold Direct in the Market

Marginal and Small Farmer

33 32 2 2 11 12 9 7 12 12

Semi Medium and above

41 43 22 22 19 18 21 22 31 32

Total 74 75 24 24 30 30 30 29 43 44

Note: N= Number of farmer members.

Table 4.1 (a): Number of Farmers according to the Sales Channel - Crop-wise FPO Stage

Nascent or Incubation (N=75)

Emerging and Growing Mature or Business Expansion Stage PRODUCE Fund

(N=30) Non- PRODUCE

Fund (N=30) Punjab (N=30)

Madhya Pradesh (N=45)

Crops

So

ld t

hro

ug

h

FP

O

So

ld D

irec

tly

in

Ma

rket

Bo

th

So

ld t

hro

ug

h

FP

O

So

ld D

irec

tly

in

Ma

rket

Bo

th

So

ld t

hro

ug

h

FP

O

So

ld D

irec

tly

in

Ma

rket

Bo

th

So

ld t

hro

ug

h

FP

O

So

ld D

irec

tly

in

Ma

rket

Bo

th

So

ld t

hro

ug

h

FP

O

So

ld D

irec

tly

in

Ma

rket

Bo

th

Rabi (2015-16) Wheat 0 73 0 0 23 0 0 23 0 0 24 6 6 36 3 Peas 10 11 1 0 0 0 0 9 0 0 0 0 0 0 0 Other Vegetables

10 18 0 1 2 1 0 25 0 3 6 1 0 7 0

Gram 0 0 0 0 0 0 0 0 0 0 0 0 5 16 1 Arhar 0 0 0 0 0 0 0 0 0 0 0 0 9 9 1

Kharif 2016 Paddy 0 62 0 0 24 0 0 22 0 1 27 0 0 10 0 Other Vegetables

4 18 0 0 2 1 0 28 0 0 6 0 0 11 0

Urad 0 0 0 0 0 0 0 0 0 0 0 0 3 6 1 Moong 0 0 0 0 0 0 0 0 0 0 0 0 2 3 0

Note: N= Number of farmer members.

42

Table 4.2: Pre and Post FPO and Crop-Wise Distribution of Number of Respondent Farmers

FPO Stage Nascent or Incubation Stage (No. of FPOs=5;

N=75)

Emerging and Growing Stage Mature or Business Expansion Stage

PRODUCE Fund (No. of FPOs=2; N=30)

Non- PRODUCE Fund (No. of FPOs=2; N=30)

Punjab (No. of FPOs=2; N=30)

Madhya Pradesh (No. of FPOs=3; N=45)

Crop: Rabi

(2015-16)

No

. of

Pre

-FP

O F

arm

er

Pro

du

cers

Number of Post FPO Farmer

producers when

No

. of

Pre

-FP

O F

arm

er

Pro

du

cers


producers when

No

. of

Pre

-FP

O F

arm

er

Pro

du

cers


producers when

No

. of

Pre

-FP

O F

arm

er

Pro

du

cers


producers when

No

. of

Pre

-FP

O F

arm

er

Pro

du

cers

(N

=4

5)


producers when

So

ld t

hro

ug

h

FP

O

So

ld D

irec

tly

in

Ma

rket

So

ld t

hro

ug

h

FP

O

So

ld D

irec

tly

in

Ma

rket

So

ld t

hro

ug

h

FP

O

So

ld D

irec

tly

in

Ma

rket

So

ld t

hro

ug

h

FP

O

So

ld D

irec

tly

in

Ma

rket

So

ld t

hro

ug

h

FP

O

So

ld D

irec

tly

in

Ma

rket

Wheat 74 0 73 23 0 23 24 0 23 30 6 30 44 9 39

Peas 21 11 12 0 0 0 10 0 9 0 0 0 0 0 0

Potato 13 0 15 1 0 0 2 0 4 2 0 1 0 0 0

Tomato 2 0 0 0 0 0 3 0 4 1 2 1 1 0 1

Other Vegetables 20 10 18 4 2 3 22 0 25 4 4 7 9 0 7

Mustard 1 0 1 0 0 0 1 0 0 3 3 1 0 2 0

Sugarcane 5 0 6 0 0 0 3 0 3 6 0 5 10 1 13

Fodder 19 0 17 16 0 18 2 0 1 17 0 18 4 0 3

Gram 0 0 0 0 0 0 0 0 0 2 0 1 22 6 17

Arhar 0 0 0 0 0 0 0 0 0 0 0 0 13 10 10

Lady Finger 0 2 1 0 0 0 1 0 2 0 0 0 0 0 0

Orange 1 1 1 0 0 0 0 0 0 0 0 0 0 0 0

Tree 0 0 0 1 0 1 0 0 0 0 0 0 0 0 0

Pulses 0 0 0 1 0 0 0 0 0 0 0 0 0 0 0

Honey 0 0 0 0 3 0 0 0 0 0 0 0 0 0 0

Crop: Kharif (2016)

Paddy 60 0 62 21 0 24 21 0 22 30 1 27 9 0 10

Maize 14 0 17 1 0 0 6 0 9 6 0 7 0 0 0

Potato 0 0 1 1 0 1 0 0 0 2 1 1 1 0 0

Other Vegetables 17 4 17 2 1 3 14 0 28 2 0 6 8 0 11

Cotton 0 0 0 2 0 10 0 0 0 0 0 0 0 0 0

Soyabean 0 0 0 0 0 1 0 0 0 0 0 0 33 0 18

Sugarcane 1 0 8 0 0 0 9 0 3 5 0 6 0 0 0

Fodder 8 0 15 7 0 12 2 0 1 17 0 15 4 0 4

Jaggery 0 0 0 0 0 0 0 0 0 2 3 1 2 1 3

Urad 0 0 0 0 0 0 0 0 0 0 0 0 9 4 7

Moong 0 0 0 0 0 0 0 0 0 0 0 0 9 2 3

Note: N= Number of selected farmer members.

43

Tab

le 4

.3:

Pre

an

d P

ost

-FP

O T

ota

l C

rop

ped

Are

a (

Acr

e) b

y S

elec

ted

Fa

rmer

Mem

ber

s of

the

FP

O

FP

O S

tag

e N

asce

nt

or

Incu

bat

ion

Sta

ge

(No

. of

FP

Os=

5;

N=

75

) E

mer

gin

g a

nd

Gro

win

g S

tag

e M

atu

re o

r B

usi

nes

s E

xpa

nsi

on

Sta

ge

PR

OD

UC

E F

un

d

(No

. of

FP

Os=

2;

N=

30

) N

on

- P

RO

DU

CE

Fu

nd

(

No

. of

FP

Os=

2;

N=

30

) P

un

jab

(N

o. o

f F

PO

s=2

; N

=3

0)

Mad

hy

a P

rad

esh

(N

o. o

f F

PO

s=3

; N

=4

5)

Cro

p:

Ra

bi

(20

15

-1

6)

Pre-FPO Cropped Area

Po

st F

PO

Cro

pp

ed

Are

a w

hen


Po

st F

PO

C

rop

ped

Are

a w

hen


Po

st F

PO

C

rop

ped

Are

a w

hen


Po

st F

PO

Cro

pp

ed

Are

a w

hen


Po

st F

PO

Cro

pp

ed

Are

a w

hen

Sold through FPO

Sold Directly in Market

Sold through FPO


Sold through FPO


Sold through FPO


Sold through FPO


Wh

eat

53

7.2

5 0

.00

52

8.3

8 3

41

.75

0.0

0 3

22

.75

10

0.0

0 0

.00

87

.00

35

0.2

5 3

3.5

0 3

03

.25

32

1.5

0 2

6.0

0 3

09

.50

Pea

s 9

6.5

0 7

3.0

4 3

0.5

0 0

.00

0.0

0 0

.00

13

.50

0.0

0 1

1.0

0 0

.00

0.0

0 0

.00

0.0

0 0

.00

0.0

0 P

otat

o

95

.50

0.0

0 8

5.2

5 1

.50

0.0

0 0

.00

9.0

0 0

.00

14

.50

7.0

0 0

.00

4.0

0 0

.00

0.0

0 0

.00

Tom

ato

3

.00

0.0

0 0

.00

0.0

0 0

.00

0.0

0 3

.00

0.0

0 4

.00

2.0

0 1

.00

1.0

0 5

.00

0.0

0 5

.00

Oth

er V

eget

able

s 4

5.3

9 4

.87

35

.89

5.6

0 4

.50

3.5

0 8

9.7

5 0

.00

93

.00

6.0

0 2

.00

16

.00

8.5

0 0

.00

8.0

0 M

ust

ard

0

.37

0.0

0 0

.37

0.0

0 0

.00

0.0

0 0

.25

0.0

0 0

.00

4.0

0 4

.00

1.5

0 0

.00

7.5

0 0

.00

Su

garc

ane

11

.50

0.0

0 1

4.0

0 0

.00

0.0

0 0

.00

8.0

0 0

.00

6.0

0 1

4.0

0 0

.00

19

.50

54

.00

7.0

0 7

3.0

0 F

od

der

14

.99

0.0

0 1

5.4

9 3

0.7

5 0

.00

32

.75

1.5

0 0

.00

1.5

0 1

5.2

5 0

.00

16

.25

4.0

0 0

.00

2.5

0 G

ram

0

.00

0.0

0 0

.00

0.0

0 0

.00

0.0

0 0

.00

0.0

0 0

.00

2.0

0 0

.00

0.5

0 8

4.5

0 2

1.0

0 3

8.0

0 A

rhar

0

.00

0.0

0 0

.00

0.0

0 0

.00

0.0

0 0

.00

0.0

0 0

.00

0.0

0 0

.00

0.0

0 3

6.0

0 4

5.5

0 3

2.5

0 L

ady

Fin

ger

0

.00

0.3

8 1

.00

0.0

0 0

.00

0.0

0 1

.00

0.0

0 3

.00

0.0

0 0

.00

0.0

0 0

.00

0.0

0 0

.00

Ora

nge

1

.00

0.5

0 0

.50

0.0

0 0

.00

0.0

0 0

.00

0.0

0 0

.00

0.0

0 0

.00

0.0

0 0

.00

0.0

0 0

.00

Tre

e

0.0

0 0

.00

0.0

0 1

0.0

0 0

.00

10

.00

0.0

0 0

.00

0.0

0 0

.00

0.0

0 0

.00

0.0

0 0

.00

0.0

0 P

uls

es

0.0

0 0

.00

0.0

0 5

.00

0.0

0 0

.00

0.0

0 0

.00

0.0

0 0

.00

0.0

0 0

.00

0.0

0 0

.00

0.0

0 H

oney

0

.00

0.0

0 0

.00

0.0

0 0

.36

0.0

0 0

.00

0.0

0 0

.00

0.0

0 0

.00

0.0

0 0

.00

0.0

0 0

.00

To

tal

A:

80

5.5

0 7

8.7

9 7

11

.38

39

4.6

0 4

.86

36

9.0

0 2

26

.00

0.0

0 2

20

.00

40

0.5

0 4

0.5

0 3

62

.00

51

3.5

0 1

07

.00

46

8.5

0 C

rop

: K

har

if

(20

16

)

Pad

dy

66

4.6

3 0

.00

65

2.7

5 2

81

.50

0.0

0 3

05

.25

97

.50

0.0

0 9

3.0

0 3

38

.25

1.2

5 3

09

.00

53

.00

0.0

0 6

3.5

0 M

aize

4

4.0

0 0

.00

54

.63

2.0

0 0

.00

0.0

0 1

2.0

0 0

.00

14

.00

21

.00

0.0

0 2

2.0

0 0

.00

0.0

0 0

.00

Pot

ato

0

.00

0.0

0 1

.00

2.0

0 0

.00

2.0

0 0

.00

0.0

0 0

.00

5.0

0 0

.25

2.5

0 1

.00

0.0

0 0

.00

Oth

er V

eget

able

s 3

7.5

7 1

.40

41

.63

4.0

0 0

.50

3.5

0 6

2.0

0 0

.00

96

.00

4.0

0 0

.00

12

.25

10

.00

0.0

0 1

7.0

0 C

otto

n

0.0

0 0

.00

0.0

0 9

.75

0.0

0 2

7.0

0 0

.00

0.0

0 0

.00

0.0

0 0

.00

0.0

0 0

.00

0.0

0 0

.00

So

yab

ean

0

.00

0.0

0 0

.00

0.0

0 0

.00

5.0

0 0

.00

0.0

0 0

.00

0.0

0 0

.00

0.0

0 3

14

.25

0.0

0 1

69

.00

Su

garc

ane

4

.00

0.0

0 2

5.0

0 0

.00

0.0

0 0

.00

25

.00

0.0

0 4

.00

13

.50

0.0

0 2

4.5

0 0

.00

0.0

0 0

.00

Fo

dde

r

7.3

7 0

.00

14

.37

8.5

0 0

.00

24

.75

2.0

0 0

.00

1.0

0 1

9.2

5 0

.00

13

.75

3.5

0 0

.00

2.0

0 Ja

gger

y

0.0

0 0

.00

0.0

0 0

.00

0.0

0 0

.00

0.0

0 0

.00

0.0

0 2

.50

5.0

0 1

.00

14

.00

1.0

0 3

2.0

0 U

rad

0

.00

0.0

0 0

.00

0.0

0 0

.00

0.0

0 0

.00

0.0

0 0

.00

0.0

0 0

.00

0.0

0 1

6.0

0 6

.00

16

.50

Mo

ong

0

.00

0.0

0 0

.00

0.0

0 0

.00

0.0

0 0

.00

0.0

0 0

.00

0.0

0 0

.00

0.0

0 2

7.0

0 5

.00

12

.00

To

tal

B:

75

7.5

7 1

.40

78

9.3

8 3

07

.75

0.5

0 3

67

.50

19

8.5

0 0

.00

20

8.0

0 4

03

.50

6.5

0 3

85

.00

43

8.7

5 1

2.0

0 3

12

.00

To

tal

A+

B:

15

63

.07

80

.19

15

00

.76

70

2.3

5 5

.36

73

6.5

0 4

24

.50

0.0

0 4

28

.00

80

4.0

0 4

7.0

0 7

47

.00

95

2.2

5 1

19

.00

78

0.5

0

Not

e: N

= N

um

ber

of

sele

cted

far

mer

mem

ber

s.

44

Table 4.4: Percent Change (+ increase/ - decrease) in Cost of Production of Crops when Sold through FPO as well as Directly Over Pre FPO Level

FPO Stage Nascent or Incubation Stage (No. of FPOs=5;

N=75)

Emerging and Growing Stage Mature or Business Expansion Stage FPOs

PRODUCE Fund (No. of FPOs=2;

N=30)

Non- PRODUCE Fund

(No. of FPOs=2; N=30)

Punjab (No. of FPOs=2;

N=30)

Madhya Pradesh (No. of FPOs=3;

N=45)

Crop: Rabi (2015-16)

Change in Cost of Production





Of

Cro

p s

old

th

rou

gh

F

PO

ov

er p

re F

PO

le

vel

Ov

er t

ha

t d

irec

tly

so

ld

Of

Cro

p s

old

th

rou

gh

F

PO

ov

er p

re F

PO

le

vel

Ov

er t

ha

t d

irec

tly

so

ld

Of

Cro

p s

old

th

rou

gh

F

PO

ov

er p

re F

PO

le

vel

Ov

er t

ha

t d

irec

tly

so

ld

Of

Cro

p s

old

th

rou

gh

F

PO

ov

er p

re F

PO

le

vel

Ov

er t

ha

t d

irec

tly

so

ld

Of

Cro

p s

old

th

rou

gh

F

PO

ov

er p

re F

PO

le

vel

Ov

er t

ha

t d

irec

tly

so

ld

Wheat - +5.16 - +4.17 - +16.53 -9.75 +35.37 -1.32 +50.61

Peas +23.50 +2.82 - - - +30.33 - - - - Other Vegetables -49.79 +0.30 +31.51 +35.16 - +53.02 -5.00 +20.80 - +10.28 Mustard - +10.00 - - - - 18.18 +63.64 - - Sugarcane - - - - - - - - - - Gram - - - - - - - +700.00 -2.22 +13.18 Arhar - - - - - - - - -3.23 +29.04 Orange 0.00 0.00 - - - - - - - - Crop: Kharif (2016)

Paddy - +9.19 - -4.86 - +25.90 -35.19 +28.66 - +32.21 Potato - - - - - - 55.34 +142.72 - - Other Vegetables -66.05 +1.43 -51.35 -2.78 - +37.36 - +114.00 - +14.62 Jaggery - - - - - - 64.18 -40.30 +321.05 +92.98 Urad - - - - - - - - +146.00 +137.00 Moong - - - - - - - - +44.17 +57.27


Table 4.5: Percent Benefit (+) or Loss (-) of Price Per Quintal of the Crop Sold through FPO Compared to When Sold Directly

FPO Stage Nascent or

Incubation Stage


PRODUCE Fund

Non- PRODUCE Fund


Crop: Rabi (2015-16) Wheat - - - +72.48 +7.35 Peas -7.84 - - - - Other Vegetables +4.00 +57.89 - +42.24 - Mustard - - - +4.76 - Gram - - - - +2.83 Arhar - - - - +4.42 Lady Finger +300.00 - - - - Orange +20.00 - - - - Crop: Kharif (2016)

Paddy - - - +25.36 - Potato - - - +40.00 - Other Vegetables +6.97 +80.00 - - - Jaggery - - - +650.00 +89.87 Urad - - - - +16.87 Moong - - - - +3.24


45

Table 4.6: Per cent of Total Produce Sold through the FPO FPO Stage Nascent or

Incubation Stage


PRODUCE Fund

Non- PRODUCE

Fund



Wheat - - - 8.85 8.00

Peas 73.62 - - - - Other Vegetables 6.76 15.58 - 16.04 - Mustard - - - 91.15 100.00 Gram - - - - 36.12 Arhar - - - - 62.26 Lady Finger 11.24 - - - - Orange 50.00 - - - - Honey - 100.00 - - - Total 7.32 1.14 - 11.71 12.45 Crop: Kharif (2016) Paddy - - - 0.38 - Potato - - - 52.94 - Other Vegetables 0.59 6.56 - - - Jaggery - - - 87.52 3.14 Urad - - - - 30.70 Moong - - - - 41.98 Total 0.09 0.28 - 1.21 1.39

Table 4.7: Net Earnings Pre and Post FPO by the Farmers FPO Category Pre FPO net

earnings (Rs. lakh)

Post FPO net earnings from sale (Rs. lakh)

Percentage increase Post

FPO (Col 5 over

Col. 2)

% or Net Earnings from FPO

sales (Col. 3 as % of Col. 5)

Through FPO

Direct in the market

Total

1 2 3 4 5 6 7

PRODUCE Fund

Nascent 434.47 12.99 509.71 522.70 20.31 2.49

Emerging 268.72 5.87 268.88 274.75 2.24 2.14

Non-PRODUCE Fund Emerging

268.90 - 706.82 706.82 162.86 -

Matured Punjab 183.78 57.59 273.27 330.86 80.03 17.41

Madhya Pradesh

142.29 32.79 158.30 191.09 34.30 17.16

46

Tab

le 4

.8:

Per

Qu

inta

l N

et E

arn

ings

(Rs.

) fr

om

th

e C

rop

s S

old

Th

rou

gh

th

e F

PO

an

d D

irec

tly

FP

O S

tag

e

Nas

cen

t o

r In

cub

atio

n S

tag

e (N

o. o

f F

PO

s=5

; N

=75

) E

mer

gin

g a

nd

Gro

win

g S

tag

e M

atu

red

or

Bu

sin

ess

Exp

an

sion

Sta

ge

PR

OD

UC

E F

un

d

(No.

of

FP

Os=

2;

N=

30)

Non

- P

RO

DU

CE

Fu

nd

(

No.

of

FP

Os=

2;

N=

30)

P

un

jab

(N

o. o

f F

PO

s=2

; N

=30

) M

adh

ya

Pra

des

h

(No.

of

FP

Os=

3;

N=

45)

Cro

p:

Ra

bi

(201

5-1

6)

Pre-FPO Net Earnings (per Qtl.)

Pos

t F

PO

Net

E

arn

ing

s (p

er q

tl.)

wh

en


Pos

t F

PO

Net

E

arn

ing

s (p

er q

tl.)

wh

en


Pos

t F

PO

Net

E

arn

ing

s (p

er q

tl.)

wh

en


Pos

t F

PO

Net

Ea

rnin

gs

(per

qtl

.)w

hen


Pos

t F

PO

Net

E

arn

ing

s (p

er q

tl.)

wh

en

Sold through

FPO

Sold Directly in

Market

Sold through

FPO

Sold Directly in

Market

Sold through

FPO

Sold Directly in

Market

Sold through

FPO

Sold Directly in

Market

Sold through

FPO

Sold Directly in

Market

Whe

at

883.

77

0.0

0

993.

44

1113

.98

0.

00

11

74.9

9

787.

46

0.0

0

1039

.12

95

7.59

26

38.8

9

1300

.11

86

9.14

13

53.9

6

1081

.35

P

eas

427.

26

467.

46

607.

44

0.0

0

0.0

0

0.0

0

248.

29

0.0

0

225.

62

0.0

0

0.0

0

0.0

0

0.0

0

0.0

0

0.0

0

Pot

ato

36

3.55

0.

00

29

2.40

13

3.33

0.

00

0.

00

46

2.50

0.

00

78

5.18

17

8.21

0.

00

-6

6.67

0.

00

0.

00

0.

00

T

omat

o

1547

.30

0.

00

0.

00

0.

00

0.

00

0.

00

99

5.61

0.

00

79

1.12

0.

00

0.

00

0.

00

0.

00

0.

00

0.

00

O

ther

Veg

etab

les

10

40.1

6

1113

.74

10

57.5

4

940.

65

1800

.00

12

11.8

6

956.

64

0.0

0

2653

.59

16

72.9

5

2364

.79

15

25.8

2

2033

.80

0.

00

32

10.9

1

Mus

tard

-2

333.

33

0.0

0

-522

.22

0.

00

0.

00

0.

00

15

00.0

0

0.0

0

0.0

0

2587

.01

34

79.6

3

2500

.00

0.

00

27

50.0

0

0.0

0

Su

garc

ane

0.0

0

0.0

0

0.0

0

0.0

0

0.0

0

0.0

0

0.0

0

0.0

0

0.0

0

0.0

0

0.0

0

0.0

0

0.0

0

0.0

0

0.0

0

Fod

der

0.0

0

0.0

0

0.0

0

213.

14

0.0

0

166.

21

0.0

0

0.0

0

0.0

0

0.0

0

0.0

0

0.0

0

0.0

0

0.0

0

0.0

0

Gra

m

0.0

0

0.0

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644.

44

0.0

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0.0

0

2231

.16

50

19.2

3

4789

.81

A

rhar

0.

00

0.

00

0.

00

0.

00

0.

00

0.

00

0.

00

0.

00

0.

00

0.

00

0.

00

0.

00

22

57.3

9

4792

.43

42

69.6

9

Lad

y F

inge

r

0.0

0

1350

.00

33

3.33

0.

00

0.

00

0.

00

74

2.86

0.

00

49

1.30

0.

00

0.

00

0.

00

0.

00

0.

00

0.

00

O

ran

ge

1825

.00

40

25.0

0

3325

.00

0.

00

0.

00

0.

00

0.

00

0.

00

0.

00

0.

00

0.

00

0.

00

0.

00

0.

00

0.

00

T

ree

0.

00

0.

00

0.

00

99

0.00

0.

00

0.

00

0.

00

0.

00

0.

00

0.

00

0.

00

0.

00

0.

00

0.

00

0.

00

P

ulse

s

0.0

0

0.0

0

0.0

0

2300

.00

0.

00

0.

00

0.

00

0.

00

0.

00

0.

00

0.

00

0.

00

0.

00

0.

00

0.

00

H

oney

0.

00

0.

00

0.

00

0.

00

15

047.

62

0.0

0

0.0

0

0.0

0

0.0

0

0.0

0

0.0

0

0.0

0

0.0

0

0.0

0

0.0

0

Cro

p:

Kh

arif

(2

016

)

Pad

dy

91

6.48

0

.00

1300

.48

11

66.0

3

0.0

0

1369

.71

69

2.60

0.

00

91

9.54

10

57.0

8

2087

.73

14

24.6

2

458.

47

0.0

0

958.

96

Mai

ze

469.

84

0.0

0

649.

65

816.

67

0.0

0

0.0

0

771.

62

0.0

0

512.

98

318.

70

0.0

0

659.

49

0.0

0

0.0

0

0.0

0

Pot

ato

0.

00

0.

00

24

1.67

31

66.6

7

0.0

0

2875

.00

0.

00

0.

00

0.

00

12

29.6

0

682.

22*

18

7.50

45

0.00

0.

00

0.

00

O

ther

Veg

etab

les

10

71.6

1

1100

.15

11

66.6

0

941.

96

1740

.00

94

2.62

10

21.4

6

0.0

0

1353

.22

11

70.8

3

0.0

0

1491

.92

14

01.5

1

0.0

0

660.

86

Cot

ton

0.

00

0.

00

0.

00

-3

250.

00

0.0

0

4027

.44

0.

00

0.

00

0.

00

0.

00

0.

00

0.

00

0.

00

0.

00

0.

00

S

oya

bean

0.

00

0.

00

0.

00

0.

00

0.

00

80

00.0

0

0.0

0

0.0

0

0.0

0

0.0

0

0.0

0

0.0

0

1642

.17

0.

00

20

76.6

7

Su

garc

ane

25

7.27

0.

00

60

6.05

0.

00

0.

00

0.

00

28

4.04

0.

00

46

1.16

21

4.29

0.

00

23

6.82

0.

00

0.

00

0.

00

F

odde

r

0.0

0

0.0

0

0.0

0

250.

00

0.0

0

147.

14

100.

00

0.0

0

0.0

0

98.0

0

0.0

0

0.0

0

0.0

0

0.0

0

0.0

0

Jagg

ery

0.

00

0.

00

0.

00

0.

00

0.

00

0.

00

0.

00

0.

00

0.

00

72

53.3

3

1369

1.66

13

33.3

3

1933

.33

39

47.3

7

2133

.33

U

rad

0.

00

0.

00

0.

00

0.

00

0.

00

0.

00

0.

00

0.

00

0.

00

0.

00

0.

00

0.

00

28

90.9

1

5717

.95

46

93.1

3

Moo

ng

0.0

0

0.0

0

0.0

0

0.0

0

0.0

0

0.0

0

0.0

0

0.0

0

0.0

0

0.0

0

0.0

0

0.0

0

2303

.06

53

45.4

5

4719

.30

Not

e: N

= N

umbe

r of

sel

ecte

d f

arm

er m

embe

rs;

2. *=

Pot

ato

See

d.

47

Table 4.9: Incremental (+ higher/ - lower) Net Earnings from the Crops Sold through the FPO over the Pre FPO Level and that Sold Directly

(Rs./Per Quintal) FPO Stage

Nascent or Incubation Stage


PRODUCE Fund

Non- PRODUCE

Fund

Punjab

Madhya Pradesh

Crop: Rabi

(2015-16)

Incr

emen

tal

Ben

efit

Ov

er

Pre

-FP

O L

evel

Incr

emen

tal

Ben

efit

Ov

er

Dir

ectl

y S

old

Incr

emen

tal

Ben

efit

Ov

er

Pre

-FP

O L

evel

Incr

emen

tal

Ben

efit

Ov

er

Dir

ectl

y S

old

Incr

emen

tal

Ben

efit

Ov

er

Pre

-FP

O L

evel

Incr

emen

tal

Ben

efit

Ov

er

Dir

ectl

y S

old

Incr

emen

tal

Ben

efit

Ov

er

Pre

-FP

O L

evel

Incr

emen

tal

Ben

efit

Ov

er

Dir

ectl

y S

old

Incr

emen

tal

Ben

efit

Ov

er

Pre

-FP

O L

evel

Incr

emen

tal

Ben

efit

Ov

er

Dir

ectl

y S

old

Wheat - - - - - - +1681.30 +1338.78 +484.82 +272.61 Peas +40.20 -139.98 - - - - - - - - Potato - - - - - - - - - - Other Vegetables

+73.58 +56.20 +859.35 +588.14 - - +691.84 +838.97 - -

Mustard +2333.33 +522.22 - - - - +892.62 +979.63 - - Gram - - - - - - - - +2788.07 +229.42 Arhar - - - - - - - - +2535.04 +522.74 Lady Finger

+1350.00 +1016.67 - - - - - - - -

Orange +2200.00 +700.00 - - - - - - - - Crop: Kharif (2016) Paddy - - - - - - +1030.65 +663.11 - - Potato - - - - - - -547.38 +494.72 - - Other Vegetables

+28.54 -66.45 +798.04 +797.38 - - - - - -

Cotton - - - - - - - - - - Jaggery - - - - - - +6438.33 +12358.33 +2014.04 +1814.04 Urad - - - - - - - - +2827.04 +1024.82 Moong - - - - - - - - +3042.39 +626.15

48

The FPOs pursue a number of social and economic activities. Their sustainability depends largely on skill and commitment of the promoting agency, and the connect of the farmer members with these organizations in availing services of backward and forward linkages and their perceptions about its working (Government of India, 2013). This chapter examines perceptions of the selected farmer members with regard to social and economic services availed from the producer organization and its working.

5.1 Farmers' Perception about Incremental Income Due to FPO Activities:

Farmers' perception about incremental income due to FPO activities and that due to individual effort is shown in Table 5.1. Details of the table are given below.

5.1.1 Market Linkage/Sale of Produce (Sr. No. 1, Table 5.1): A little less than one-third (32.00 per cent) in

15nascent category and nearly one-half (46.67 per cent)

16in PRODUCE emerging perceived market linkage/ sale of produce through FPO as income enhancing. But majority in these FPOs (53.33 per cent in nascent and 50.00 per cent in PRODUCE emerging) believed that direct market tie-ups enhance income. In mature category, on the other hand, larger proportion of the farmers (46.67 per cent in Punjab and 57.78 per cent in Madhya Pradesh) perceived market linkage/sale through FPO as income enhancing, while those who believed in direct market tie-ups comprised a smaller proportion in Punjab (36.67 per cent) and negligible

17(4.44 per cent) in Madhya Pradesh . In other words, an

overwhelming proportion of the farmers in PRODUCE nascent and emerging and significant in mature in Punjab perceived direct market tie-ups, independent of the FPO, important for income enhancement, while their proportion was negligible in Madhya Pradesh.

Indeed, the FPOs in Madhya Pradesh were allocated quota of food grains and pulses for procurement by the MBCFPCL on behalf of the government agencies. The mature Dhira Patra in Punjab also had a market license and conducted procurement operations for the government agencies, besides facilitating sale of produce of the farmer members. But, the SFAC companies in Punjab though had a market license, but did not participate in procurement operations, while the PRODUCE nascent and emerging were constrained to do so. This is the reason that the proportion that regarded market linkage/sale through FPO as income enhancing in PRODUCE Fund nascent and emerging FPOs was small. The SFAC companies in Punjab, however, were defunct and did not handle sale of any produce of the farmers.

5.1.2 Better Price Realization (Sr. No. 2, Table 5.1): In nascent PRODUCE FPOs, relatively a larger proportion (36.00 per cent) perceived better price realization due to direct marketing efforts than to sales through FPO (18.67 per cent). Hence, the nascent FPOs need to re-orient their marketing strategies for better price realization for the members. But, emerging

18(except SFAC) and mature FPOs in Punjab and Madhya Pradesh seemed doing better as a larger proportion perceived better price realization by sale

Chapter 5

Access, Support and Activities of the Agri-FPOs in Punjab and Madhya Pradesh

15Amongst nascent, the Kiratpur Sahib was performing well as the proportion affirming its contribution in income enhancement was comparatively very high (80.00 per cent). The Darapur (40.00 per cent) was progressing satisfactorily, followed by Sujanpur (26.67 per cent). But the Dholewal and Qadian FPOs did not make any mark on incomes of the farmers.16In PRODUCE emerging Global SHGs, the proportion who perceived income enhancement due to market linkage/sale through FPO was very high (two-third), while in Bathinda Farmers it was about one-fourth. 17A very high proportion of the farmers (93.33 per cent) in Dhira Patra attributed higher incomes to market linkage/sale through FPO while their proportion was nil in Lambra Kangri in Punjab. In Madhya Pradesh, on the other hand, all the farmers in Narsingh Company perceived income enhancement due to market linkage while their proportion in Dada Darbar was nearly three-fourth and nil in Kisan Ekta.18Nearly one-third to half farmers in nascent and emerging FPOs (including SFAC) attributed higher incomes post FPO to their own individual (i.e. direct) marketing efforts, including in Apni Mandis, the Kisan Melas and other exhibitions. However, their proportion in matured FPOs in Punjab was very low. (Note: There were about 72 Apni Mandis (agricultural) setup in different market committees in Punjab where about 2500 farmers sold their produce directly to the consumers. Approximately 100 farmers sold their produce daily in each Apni Mandi in Punjab and Chandigarh (official communication no. Apni Mandi: 172 dated May 10, 2017, Punjab Mandi Bhawan, S.A.S. Nagar (Mohali), Punjab).

49

through the FPO. Interestingly, none in mature FPOs in Madhya Pradesh perceived direct marketing channels for better price realization. In other words, a significant proportion of the farmers particularly in PRODUCE nascent (36.00 per cent) and emerging (30.00 per cent) still regarded direct market channel important for income enhancement, while their proportion was low in mature in Punjab and nil in Madhya Pradesh. Hence, the PRODUCE FPOs in Punjab need to integrate with effective marketing channels for better price realization for the farmers.

5.1.3 Adoption of New Technology (Sr. No. 3, Table 5.1): The table shows that relatively a large proportion of the farmer members perceived income enhancement due to adoption of FPO disseminated

19technology . Moreover, proportion of farmers not sharing technology with others in the FPO was very small, while it was relatively high in SFAC companies in Punjab. In mature category, on the other hand, the proportion not sharing technology with others in the group was negligible, both in Punjab and Madhya Pradesh. Thus, the FPOs were progressing satisfactorily as significant proportion of the farmers perceived adoption of FPO disseminated technology as income enhancing particularly in PRODUCE emerging and the mature FPOs.

5.1.4 Value Addition (Processing, Testing, Packing etc) (Sr. No. 4, Table 5.1): In none of the FPOs, farmers undertook any value addition activity individually. This

20activity was perceived to be undertaken by the FPO . The table shows that value addition was almost nil in

nascent PRODUCE and SFAC emerging FPOs in Punjab. A little over two-fifth (43.33 per cent) of the farmers each in PRODUCE emerging and mature category in Punjab perceived income enhancement due to value addition by the FPO. Their proportion in Madhya Pradesh was more than one-half (51.11 per

21cent) . In other words, though by a lesser proportion (43.33 per cent) in Punjab, value addition was perceived as an income enhancing activity by the farmers in PRODUCE emerging and mature FPOs; while this activity was non-existent in nascent category.

5.1.5 Economy of Scale (Sr. No. 5, Table 5.1): Farmers also perceived income enhancement due to economy of scale in purchase/sale of agri-inputs/ outputs through the FPO − their proportion being

22perceptible (60.00 per cent) in PRODUCE emerging , a little over two-fifth (43.33 per cent) in mature in

23Punjab and lower at about one-third (35.56 per cent) in 24Madhya Pradesh . In nascent PRODUCE FPOs, it was

25least (28.00 per cent) , and nil in SFAC companies in Punjab. Overall, larger proportion of farmers in PRODUCE emerging and the mature FPOs in Punjab perceived income enhancement due to benefits of economy of scale by sale/purchase of output/inputs through the FPO, compared even to that in Madhya Pradesh.

5.1.6 Reduction in Cost of Production (Sr. No. 6, Table 5.1): Farmer members also responded reduction in cost of production post FPO. Their proportion was negligible (10.00 per cent) in SFAC companies, a little over one-fourth in PRODUCE nascent (28.00 per

19The proportion of farmers who perceived income enhancement due to adoption of FPO disseminated technology was highest in Kiratpur Sahib farmer producer organisation (66.67 per cent), followed by Dholewal (46.67 per cent), Sujanpur (20.00 per cent), Qadian (6.67 per cent), and Darapur (nil). As regards PRODUCE emerging, all the farmers in Bathinda and 40.00 per cent in Global SHGs perceived income enhancement due to adoption of FPO disseminated technology, while their proportion was very low in SFAC companies. In mature, the proportion of such farmers was 80.00 per cent in Dhira Patra and nil in Lambra Kangri in Punjab; and in Madhya Pradesh, 86.67 per cent in Narsingh, 60.00 per cent in Dada Darbar and nil in Kisan Ekta. 20Income enhancement due to value addition was reported by 26.67 per cent in Bathinda and 60.00 per cent in Global SHGs, while their proportion was almost nil in SFAC companies. In mature, value addition was reported by 86.67 per cent in mature Dhira Patra and nil in Lambra Kangri in Punjab. 21Almost all in Narsingh company, 53.33 per cent in Dada Darbar, and none in Kisan Ekta reported value addition by the FPO. 22Quite a high proportion in Bathinda Farmers (93.33 per cent) perceived income enhancement due to economy of scale in purchase/sale of inputs/outputs through FPO while the corresponding proportion in Global SHGs was 26.67 per cent. 23Almost 86.67 per cent in mature Dhira Patra and nil in Lambra Kangri in Punjab perceived income enhancement due to economy of scale.24It was mainly in Narsingh company where a very high proportion (86.67 per cent) perceived income enhancement due to economy of scale, while their proportion in Dada Darbar was 20.00 per cent and nil in Kisan Ekta. 25It was in Kiratpur Sahib where the largest proportion (86.67 per cent) perceived income enhancement due to economy of scale while their proportion was 20.00 per cent each in Dholewal and Sujanpur, (13.33 per cent) in Qadian and nil in Darapur.

50

26cent) , quite high (60.00 per cent) in PRODUCE 27emerging , and about two-fifth (43.33 per cent) in

28mature FPOs in Punjab and Madhya Pradesh (44.44 29per cent) . In other words, significant proportion of

farmers perceived reduction in cost of production post FPO.

5.1.7 Government Subsidies and Concessions (Sr. No. 7, Table 5.1): The PRODUCE Fund nascent and emerging FPOs in Punjab did not receive any government subsidy and concession. In mature ones in

30 31Punjab and Madhya Pradesh , the farmers perceived income enhancement due to government concession and subsidy to the FPO. In Madhya Pradesh, about two-third of the farmer respondents (68.89 per cent) mentioned government subsidies and concessions to FPO as the factor that enhanced their incomes.

5.2. Aggregation, Procurement and Value Addition by FPOs:

Responses in this section have been analyzed under the headings (i) aggregation and transportation, and (ii) value addition activities of the FPO. Since the SFAC companies in Punjab were not undertaking any such activity, therefore, their discussion is omitted from the analysis.

5.2.1 Aggregation and Transportation: The nascent FPOs did not collect any produce (Table 5.2). In PRODUCE emerging, collection from farm by the FPO was reported by nearly one-fourth (23.34 per cent) of

32the farmers . In mature category in Punjab, 50 per cent (all from Dhira Patra) reported collection by the FPO from the farm. In Madhya Pradesh, almost 60 per cent reported collection of the produce from farm by the FPO (mainly the Narsingh).

Two modes of transport − self owned and the FPO − were used by the farmers to move produce from farm to aggregation centre and further to the sale point (Table 5.2). In nascent category, majority of the farmers (52.00 per cent) themselves transported produce to the FPO collection centre. However, a few (8.00 per cent) expressed dissatisfaction with this arrangement. In PRODUCE emerging, nearly one-fourth and in mature (Punjab) almost 50 per cent were satisfied with transporting the produce to the FPO collection centre. The corresponding proportion in Madhya Pradesh was 64.44 per cent.

Interestingly, majority of the farmers in nascent category (53.33 per cent) expressed satisfaction with transportation of their produce by the FPO to the sale

33point . The corresponding percentage was 26.67 per cent in PRODUCE emerging, 50.00 per cent in mature (Punjab) and 66.67 per cent in Madhya Pradesh (Table 5.2). Overall, proportion of the farmers expressing satisfaction with transportation arrangements, whether by the FPO or the farmer and further to the sale point, increased as the FPO tended to attain maturity.

Finally, all the farmers whose produce was transported to the FPO sale point, whether by the farmer himself or the FPO, expressed satisfaction with the weighing arrangements. This must have saved the farmers from the weighing malpractices in the mandis.

5.2.2 Value Addition Activities by the FPO: No value addition activity was reported in the nascent FPOs. These activities were reported by 43.33 per cent of the respondents in each PRODUCE emerging and mature FPO in Punjab. In emerging category (PRODUCE), these activities were reported taking place in Global

34SHGs and in mature in Dhira Patra in Punjab. In

26It was in Kiratpur Sahib that the largest proportion (93.33 per cent) reported reduction in cost of production post FPO while their proportion in Dholewal was 26.67 per cent, nil each in Darapur and Qadian and 20.00 per cent in Sujanpur. 27 Almost 86.67 per cent reported reduction in cost of production post FPO in Bathinda Framers and 33.33 per cent in Global SHGs. 28 Almost 86.67 per cent in Dhira Patra and nil in Lambra Kangri. 29 All in Narsingh, one-third in dada Darbar and nil in Kisan Ekta.

30For instance, the Dhira Patra FPO in Punjab has been allotted space in Market Committee, Ferozepur Cantonment, where its members sell their produce. The FPO also availed government subsidy @ 40 per cent (Rs. 6.00 lakh) from the Department of Agriculture, Punjab, for purchase of agricultural machinery worth Rs. 15.00 lakh. The FPO makes agricultural machinery available to marginal and small farmers on priority basis.31Indeed, Madhya Pradesh has a very strong procurement system and certain FPOs have been granted licenses to procure pulses and food grains on government behalf. The FPO gets commission @ 1.50 per cent on government procurement.32These farmers belonged to the Global SHGs Ludhiana that had two Bolero Camper SUVs for collection of produce.33For instance, the Darapur (nascent FPO) arranged transport to sell produce (peas) of the farmers outside the state. 34The Global SHGs processed, packaged and sold the produce under the brand name 'Global'.

51

Madhya Pradesh, value addition, if any, was reportedly taking place mainly in the Narsingh company (Table 5.3).

In PRODUCE nascent and emerging category, no improvement in value addition post FPO was reported. However, in mature, mainly Dhira Patra in Punjab, a significant proportion (46.67 per cent) reported improved value addition post FPO. In Madhya Pradesh, on the other hand, comparatively a lesser proportion (33.33 per cent) reported improvement in value addition activities post FPO. Indeed, in Madhya Pradesh, the Narsingh Company started value addition activities by roping in the women SHGs; but the FPO did not have the FSSAI certification and that it could not continue with these activities.

Likewise, in testing facility too (e.g. soil), no improvement post FPO was reported in PRODUCE nascent and emerging categories. However, improvement in this respect was reported by 43.33 per cent of the respondent farmers in mature category in Punjab and a higher of 51.11 per cent in Madhya Pradesh.

Moreover, access to storage/warehousing facilities remained more or less the same post FPO in PRODUCE nascent and emerging categories. But in mature FPOs, a significant proportion of the farmers reported improvement in these facilities − the proportion being 40 per cent in Punjab and higher of 53.33 per cent in Madhya Pradesh.

5.3 Production Related Support Activities of the FPOs: Table 5.4 presents whether access by the farmer members to new production and practices, including inputs, post FPO improved or remained the same. The details are analyzed below.

5.3.1 Access to Quality Seeds and Inputs (Sr. No. 1 & 2, Table 5.4): A significant proportion of the farmers in all the categories (including SFAC) informed improved access to quality seeds as well as inputs

35(pesticides, fertilizers etc), post FPO . The proportion of farmers responding improved access increased as the FPO tended to move upward on the lifecycle from nascent to emerging and finally to mature stage (it was over 90 per cent in Punjab and 80 per cent in Madhya Pradesh). Moreover, the proportion that informed 'improved' access post FPO was much higher than those who responded 'remained the same' in all the categories. Thus, majority of the farmer members in all the categories informed improved access to quality seeds as well as inputs such as pesticides and fertilizers etc. post FPO.

5.3.2 Introduction of New Crops/Varieties and New Cropping Practices (Sr. No. 3 & 4, Table 5.4): In this regard, majority of the farmers in nascent category responded improved access while their proportion in emerging category (PRODUCE and SFAC) was smaller at about one-third. In mature FPOs (Punjab), nearly one-half informed improved access while the proportion of such farmers was relatively higher in Madhya Pradesh (71.11 per cent). Hence, the nascent and emerging FPOs in Punjab should work more closely with the training and extension departments of agriculture and similar other technical universities and institutions, and the state Department of Agriculture/ Horticulture for sensitizing the farmers and providing them access to new crops/varieties and the cropping patterns.

5.3.3 Availability of Farm Machinery (Sr. No. 5, Table 5.4): Improved access to farm machinery was responded by almost all the farmers in mature category

35In nascent category, Kiratpur Sahib registered better performance as almost all the farmers informed improved access to quality seeds and the quality inputs (pesticides, fertilizers etc). The emerging (PRODUCE) Bathinda Farmers was successful in all these respects. In SFAC companies, vegetables seed cultivation was encouraged under National Vegetable Initiative of RKVY scheme by providing subsidy to members of the Farmer Interest Groups at the rate of Rs. 13,500 per acre on hybrid and Rs. 9,000 per acre on local (Desi) varieties of vegetable seeds in 2014. In Punjab, a total sum of Rs. 1412.24 lakh was distributed as subsidy for production of hybrid vegetable seeds (Department of Horticulture, Government of Punjab, S.A.S. Nagar (Official communication dated January 31, 2017)). In mature Dhira Patra (Punjab), the farmers grew themselves or purchased collectively or individually the seeds after group consultations. In the Lambra Kangri (Punjab), the farmers' access to quality seeds and the agri inputs improved. In Madhya Pradesh, the Narsingh Company improved access of a large proportion of farmers to quality seeds and other agri-inputs, while it was smaller in Dada Darbar and none in Kisan Ekta. It may be noted that, in Madhya Pradesh, the FPO was more involved as it procured seeds from research stations and the companies for the farmer members who multiplied and sold to other farmers and the surplus to the FPO for sale in the market.

52

36in Punjab , while their proportion was merely one-third 37

in Madhya Pradesh . In nascent and emerging FPOs in Punjab, proportion of the farmers who responded improved access to farm machinery was negligible. It is suggested that farm machinery banks in cluster of FPOs should be setup with assistance from the state government. It will greatly reduce the cost of capital input in agricultural operations of the farmers.

5.4 Purchase of Agricultural Inputs Through FPO:

In nascent category, some farmers reported purchase of agricultural inputs as fertilizers, seeds and

38pesticides through the FPO , while their proportion was

39low in PRODUCE Fund emerging , least in SFAC, and

40quite high in mature FPOs in Punjab (Table 5.5).

These farmers also reported economy of scale in purchasing agricultural inputs through the FPO − their proportion being high particularly in the mature category. However, the nascent and emerging FPOs should sensitize their members to purchase inputs through the FPO.

5.5 Sharing of Technology:

Table 5.6 depicts satisfaction level of the farmers on various aspects of sharing of technology through FPO. The Table shows that a large proportion of the farmers in all FPOs, including SFAC, were satisfied

with the FPO efforts at sharing of technology with regard to production and practices/processes (col. 1), seeds & fertilizers (col. 2), pesticides & insecticides etc (col. 3), water usage (col. 7), diversification (col. 8) and

41dissemination of technology (col. 9) .

It may also be noted that very few in nascent and almost none in SFAC companies expressed satisfaction with FPO's testing, processing and storage facilities. But, their proportion in PRODUCE emerging category varied between one-third to one-half. It was particularly in mature FPOs in Punjab as well as Madhya Pradesh that the proportion expressing satisfaction with testing, processing and storage arranged /provided by the FPO was largest.

5.6 Farmers Availing FPO Facilities:

5.6.1 Testing Facility (Soil):

Some FPOs made available soil testing facilities to their members (Table 5.7). About 38.67 per cent of the farmers in nascent category responded that the requisite testing facilities were available with the FPO, while this proportion was less in emerging categories (23.33 per cent in PRODUCE and 13.33 in

42SFAC) . In the mature category, it was only the Dhira Patra (Punjab) where 13 members (86.67 per cent) expressed that the FPO had soil testing facility − eight

36Improved access to farm machinery was reported by all the farmers in mature Lambra Kangri and a little over 90 per cent in Dhira Patra in Punjab. While the Lambra Kangri had a huge stock of agricultural implements and farm machinery, the Dhira Patra recently purchased agricultural machinery for use particularly by the marginal and small farmers.37Some farm machinery was reportedly available in Narsingh Company and not in other selected FPOs in the state.38In nascent category, the Sujanpur FPO was performing well as 6 (40 per cent) of its members purchased fertilizers, 11 (73.33 per cent) seeds and 9 (60 per cent) pesticides through it. The corresponding number in Darapur FPO was 6 (40 per cent), 5 (33.33 per cent) and 5 (33.33 per cent), and in Kiratpur Sahib 1 (6.67 per cent), 9 (60 per cent), and 9 (60 per cent) respectively. In this respect, the Darapur and Kiratpur sahib FPOs were performing reasonably well, while Dholewal and Qadian poorly.39In emerging category, all the FPOs (including PRODUCE Fund) performed poorly.40In mature category, all the farmer members in Dhira Patra (Punjab) and Narsingh Company (Madhya Pradesh) purchased these inputs through the FPO, while their number was comparatively less in Lambra Kangri (Punjab) and Dada Darbar (Madhya Pradesh). However, the proportion of farmers who purchased these inputs in Kisan Ekta (Madhya Pradesh) was poor. 41In nascent category, the Darapur FPO performed poorly as three-fourth of its members ranked unsatisfactory its efforts at sharing of technology on production practices/processes, 50 per cent each on diversification, and dissemination of technology. In Qadian FPO, at least one member rated its performance unsatisfactory on almost all the counts. However, the performance of the Dholewal and Sujanpur FPOs was reported moderate/average. Indeed, it was Kiratpur Sahib nascent FPO that performed satisfactory on almost all the counts. On the whole, the nascent FPOs were somewhat successful on all the counts except testing, processing and storage facilities. The proportion rating PRODUCE Fund emerging FPOs as satisfactory on these counts was much larger than their SFAC counterparts that performed poorly. Of the two PRODUCE Fund emerging FPOs, the Bathinda Farmer Produce Company performed satisfactorily except in testing, processing and storage which were not its activities. The Global SHGs Ludhiana performed moderately. In mature category, the Lambra Kangri (except in testing, processing and storage) and the Dhira Patra Society in Punjab and Narsingh Farmers Company in Madhya Pradesh performed satisfactorily on all the counts.42In the nascent category, it was primarily the Kiratpur Sahib FPO that provided testing facility (hired) to its members. In the emerging category, it is mainly the Bathinda Farmers that had soil testing facilities.

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responded owned and five responded hired. In Madhya Pradesh, the situation in Narsingh and Dada Darbar was highly satisfactory as these FPOs provided soil testing facilities, though hired, to all the members. In Kisan Ekta, the situation was poor.

5.6.2 Processing Facility:

The nascent FPOs did not provide any processing facilities (Table 5.7). An average of about 40 per cent in PRODUCE Fund emerging (80.00 per cent in Global SHGs) and 50 per cent in mature (all in Dhira Patra) responded that these FPOs had processing facilities. The proportion expressing availability of processing facility with the FPOs in Madhya Pradesh averaged 33.33 per cent− (all in Narsingh, but the Company was trying to obtain FSSAI certification).

5.6.3 Marketing Facilities:

Marketing facilities, following NABARD and SFAC list of deliverables, is the activity that commences in the emerging stage. The Darapur, Sujanpur and Kiratpur Sahib FPOs were marketing the produce of farmers, despite being in the nascent stage. Moreover, three-fifth of the members each in Kiratpur Sahib and Sujanpur and one-third in Darapur were satisfied with the FPOs' marketing facilities. Further, only the Global SHGs (PRODUCE emerging) and Dhira Patra (mature) in Punjab provided marketing facility to their members (the farmers' satisfaction level being 80 per cent and 93.33 per cent, respectively). In Madhya Pradesh, all the farmers in Narsingh and 93.33 per cent in Dada Darbar were satisfied with marketing facilities of the FPOs, while it was poor 20 per cent in case of Kisan Ekta. Thus, marketing facilities in nascent and emerging FPOs need to be upgraded.

5.7 Economic Gains:

5.7.1 Price Gains (Sr. No. 1, Table 5.8): Price gains post-FPO were reported by a very low proportion of the

respondents in PRODUCE Fund nascent and emerging 43FPOs (about one-tenth) . In mature category, nearly

three-fourth in Dhira Patra (Punjab) reported price gains post FPO. But in Lambra Kangri this proportion

44was nil − the overall being a mere one-third (35.67 per cent). In Madhya Pradesh, this proportion was 42.22 per cent (Table 5.7). Indeed, all the selected farmers in Narsingh Company reported price gains, while this number was four (26.67 per cent) in Dada Darbar and nil in Kisan Ekta.

5.7.2 Regularity of Payment (Sr. No. 2, Table 5.8): Improved regularity of payment was reported by one-

45third of the respondent farmers in nascent FPOs . In PRODUCE Fund emerging, the average proportion reporting regularity of payment was 23.33 per cent − nil in Bathinda Farmer Producer Company and 46.67 per cent in Global SHGs, Ludhiana. The performance of SFAC emerging FPOs in this respect was poor as the average reporting improved regularity was merely 13.33 per cent (Table 5.7). Almost all in mature Dhira Patra and Lambra Kangri reported imporved regularity of payment. In Madhya Pradesh, the average proportion that reported improved regularity of payment was 57.78 per cent − 100 per cent in Narsingh, nearly three-fourth in Dada Darbar and nil in Kisan Ekta.

5.7.3 Productivity (Sr. No. 3, Table 5.8): It was in mature category both in Punjab and Madhya Pradesh that a significant proportion of the farmers (46.67 per cent) reported improved productivity post FPO; for

46majority, however, it 'remained the same' . In nascent category, merely 16.00 per cent reported improved productivity, while their proportion in PRODUCE emerging was 30.00 per cent and negligible in SFAC

47emerging .

5.7.4 Profit/Bonus (Sr. No. 4, Table 5.8): Profit/bonus post FPO was reported by the farmers in PRODUCE Fund emerging (nil in SFAC) and mature FPOs in

43Amongst PRODUCE nascent and emerging FPOs, the Darapur registered better performance as 33.33 per cent of its members reported price gains. In other nascent and emerging, this proportion was less or negligible.44Lambra Kangri was not selling farmers’ produce. 45In this respect, the performance by Kiratpur Sahib FPO was praiseworthy as 93.33 per cent of its farmers reported improved regularity of payment post FPO. In other cases (Dholewal, Darapur and Sujanpur), it was 20 to 25 per cent, and in Qadian a mere 6.67 per cent.46In Punjab, 93.33 per cent of the farmers in Dhira Patra, and all in Narsingh and 40 per cent in Dada Darbar in Madhya Pradesh reported productivity gains post FPO.47Improved productivity post FPO was reported by about one-fourth to one-third farmer members in Dholewal and Darapur FPOs in nascent, and the PRODUCE emerging Bathinda Farmer and the Global SHGs.

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Punjab. In PRODUCE Fund emerging category, the proportion reporting profit/bonus post FPOs was about 30 per cent. In the mature category, this proportion was 66.67 per cent in Lambra Kangri and lower at 33.33 per cent in Dhira Patra; the average being 50 per cent for the group. But in Madhya Pradesh, all the members in Narsingh reported profit/bonus, while it was nil in the remaining two (Dada Darbar and Kisan Ekta), the average being 33.33 per cent.

5.7.5 Capital Investment (Sr. No. 5, Table 5.8): Farmers in only mature FPOs in Punjab (100 per cent in Lambra Kangri and three-fourth in Dhira Patra Society) and all in Narsingh reported improved capital investment in agriculture post FPO. In other FPOs, this proportion was negligible or nil.

5.7.6 Employment Opportunities (Sr. No. 6, Table 5.8): Improved employment opportunities were reported by the members mostly in mature FPOs. This proportion was three-fourth in Lambra Kangri and four-fifth in Dhira Patra in Punjab, and all in Narsingh in Madhya Pradesh. In all other FPOs, the proportion was nil or negligible, except Global SHGs, Ludhiana (PRODUCE Fund emerging) where this proportion was a little more than a quarter.

5.8 Marketing, Processing and Storage:

In PRODUCE Fund category, about one-third to two-fifth of the farmers in nascent and 50 to 70 per cent in emerging responded improved market connectivity post FPO in sale/purchase of the agri- produce/inputs. But, in these FPOs, the proportion that reported improved transportation facilities for sale of the produce was very small (13.33 per cent). Moreover, none in nascent and about one-fifth in PRODUCE and SFAC emerging reported improved processing/value addition, and access to storage/warehousing and testing facilities. Also, nearly 40 per cent in nascent and over 50 per cent in emerging felt that their situation as regards exploitation by the middleman improved post FPO (Table 5.9).

The SFAC companies, however, performed poorly on all the counts especially marketing, processing, storage etc. The mature FPOs, on the other hand, performed comparatively better on all the counts; and almost similar or slightly less in Punjab than in Madhya Pradesh, except in processing/ value addition

where Punjab FPOs performed better. The proportion of farmer members of the mature FPOs in both the states who expressed improved marketing connectivity in sale/purchase of the agri-produce/inputs post FPO was almost similar. But in respect of transportation, relief from exploitation by middlemen, and access to storage/warehousing and testing facilities, the Madhya Pradesh FPOs performed better.

In short, the PRODUCE Fund FPOs (nascent and emerging) in Punjab should concentrate on improving.

(Ii) Marketing connectivity for sale/purchase of the agri-produce/inputs (more for nascent stage).

(ii) Transportation, processing/value addition, storage/warehousing and testing facilities were almost non-existent in nascent and emerging stage and need to be improved in mature FPOs in Punjab.

(iii) Regarding exploitation by middlemen, improvement was recorded by some in nascent and mature, and by a higher proportion in PRODUCE Fund emerging category in Punjab.

5.9 FPO's Support Activity:

5.9.1 Access to Training and Extension Services (Sr. No. 1 & 2, Table 5.10): It is in PRODUCE Fund emerging and mature FPOs in Punjab that quite a high proportion of the farmers (over 70-90 per cent) reported improved access to training and extension services post FPO. Their proportion was about 40-50 per cent in PRODUCE nascent and 50 per cent in SFAC companies. In Madhya Pradesh mature FPOs, their proportion was nearly 50-60 per cent. The emerging and mature FPOs in Punjab, of course, were doing comparatively better, but the nascent FPOs needed to upgrade their training and extension services.

5.9.2 Bank/Credit Linkage (Sr. No. 3, 4 & 5, Table 5.10): Bank/credit linkage remained more or less unchanged in almost all the FPOs except in Jalandhar Vegetable Company (SFAC) where five members reported improved bank linkage and in mature Lambra Kangri Society where 14 members (93.33 per cent) were provided credit linkage. The Sujanpur nascent FPO helped credit linkage of its two members, while the Darapur helped five members to avail loans under credit

55

swap scheme of the banks. In Madhya Pradesh, none of the 45 farmer members interviewed were credit linked by the FPOs. In short, some mechanism should be evolved such that the FPOs could play a pro-active role in bank and credit linkage of the farmer members. There are, of course, special credit linkage schemes for the landless who can form Joint Liability Groups, and for others who can form Self Help Groups to avail loans from the banks. The FPOs can encourage members to form such groups to link them with institutional sources of credit and thus save them from falling into the trap of the usurer moneylender.

5.9.3 Procurement of Foodgrains (Sr. No. 6, Table 5.10): Nascent and emerging FPOs in Punjab did not participate in government procurement operations,

48though a few of these had obtained the market license . Interestingly, it was only the mature Dhira Patra society that participated in procurement operations in Punjab. The Lambra Kangri also had the market license but was not participating in the grain market. In Madhya Pradesh, 44.44 per cent of the respondent farmers reported improved access to government procurement through the FPO. Of the three FPOs selected in Madhya Pradesh, two (Narsingh Company and Kisan Ekta) had market license while that of the third (Dada Darbar) had expired. The Kisan Ekta was, however, defunct.

In Punjab, on the other hand, the FPOs were constrained to operate in whole sale grain markets, primarily because of some operational hiccups. Hence, the government should create conditions such that these FPOs also participate in government procurement and earn commission @2.50 per cent on wheat and paddy for their sustenance. This requires the FPOs to expand their produce basket to foodgrains also.

5.9.4 Dependence on Moneylender (Sr. No. 7, Table 5.10): Some improvement in terms of reduced dependence on moneylenders post FPO was also reported by the farmers. Proportion of the farmers who expressed improvement in this context was highest in mature (50 per cent in Punjab and 53.33 per cent in Madhya Pradesh), followed by PRODUCE Fund emerging (43.33 per cent) and nascent (36 per cent), and least in SFAC companies (26.67 per cent). Enabling FPOs to participate in procurement operations will

greatly reduce dependence of the farmers on moneylenders who interlock a number of professions including that of the Arhtiya/Commision agent , which is the need of hour in Punjab.

5.10 Knowledge/Awareness Generation about Ecology, Cooperative Philosophy and Financial Literacy:

Table 5.11 presents proportion of the farmers who reported FPOs' contributions in knowledge and awareness generation about cooperative philosophy, ecology and financial literacy.

5.10.1 Cooperative Philosophy and Community Organizations (Sr. No. 1 & 2, Table 5.11): Cooperation and community organizations are the life and blood of the FPO. In this respect, all the selected FPOs (including SFAC) in Punjab as well as in Madhya Pradesh have generated awareness amongst a large proportion of the farmers that varied between two-third to 100.00 per cent.

5.10.2 Ecological and Post Harvest Management (Sr. No. 3 to 6, Table 5.11): Ecological and post harvest management are important for sustainable agriculture particularly for the states like Punjab and Madhya Pradesh that depend heavily on this sector for development. The FPOs in these states were laying much more emphasis on awareness generation in these matters, as was informed by quite a significant proportion of the farmers, including in SFAC companies.

5.10.3 Bank Schemes, Savings and Financial Literacy (Sr. No. 7 to 9, Table 5.11): As regards financial matters (bank loans and savings) and financial literacy, proportion of the farmers who informed awareness generation by the FPOs was quite large in mature in Punjab (nearly 50-85 per cent), while their proportion in selected FPOs in Madhya Pradesh was relatively less (40-50 per cent). The proportion informing awareness generation about these matters was small in PRODUCE emerging and least in nascent and the SFAC companies in Punjab. Indeed, the nascent and emerging FPOs need to upgrade their awareness programmes in these respects, and particularly about the bank loan schemes that constitute a grey area in the mature FPOs.

48The Dholewal and Qadian FPOs had obtained the market license, but were not operating in the grain market.

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5.11 Community and Social Development:

FPOs made significant contributions towards promoting a spirit of community participation, social development and belongingness. This is evident from Table 5.12 that presents proportion of farmers affirming FPOs' contributions in terms of the indicators reflecting FPOs' contributions on (i) social issues (Sr. No. 1 to 4), (ii) personal and community issues (Sr. No. 5 to 9), and (iii) participation by the farmers in local and democratic institutions (Sr. No. 10 and 11). Larger proportions of the farmers informed improved FPO's contributions in these respects as it up-scaled from nascent to emerging (PRODUCE) and to mature category in Punjab (Table 5.12). Even in SFAC companies, a perceptible proportion affirmed FPOs' contributions in community and social development. It is also interesting that the mature FPOs in Punjab were performing comparatively much better than their counterparts in Madhya Pradesh on almost all these indicators. In short, the FPOs have made significant contribution in community and social development in Punjab.

5.12 Record Keeping and Payments:

Most of the farmers expressed satisfaction with record keeping by the FPOs (See Table 5.13, col. 1). Moreover, the FPOs in Punjab made payments mostly in cash (col. 2) while by cheque in Madhya Pradesh (col. 3). In Punjab too, the FPOs should be more

49transparent, and make payments online or by cheque .

5.13 Governance, Management and Feedback:

5.13.1 Training and Exposure Visits:

Proportion of the farmers who attended training and exposure visits was quite high in mature FPOs in Punjab (73.33 per cent in Lambra Kangri and 100.00 per cent in Dhira Patra). In Madhya Pradesh, it was moderate in Narsingh (60.00 per cent), low in Dada Darbar (33.33 per cent) and poor in Kisan Ekta (13.33

per cent). Attendance was better in nascent category as a group, though in some FPOs it was nil/poor (Dholewal and Qadian). However, it was quite high in Sujanpur (73.33 per cent) and Darapur (66.67 per cent), moderate in Kiratpur Sahib (53.33 per cent). Overall, participation rate of farmers in training and exposure visits was satisfactory in Punjab.

5.13.2 Attendance in General Body Meetings:

The proportion of farmers attending meetings of the general body regularly in nascent category was

50 5138.67 per cent , higher in emerging (46.67 per cent in PRODUCE Fund and 36.67 per cent in SFAC), and highest in mature FPOs (90.00 per cent) in Punjab (Table 5.14). It was an average of 55.56 per cent in

52Madhya Pradesh .

Broadly, as the FPO grows, the proportion of farmers attending the general body meetings regularly increases. It is expected also because as the FPO grows into emerging and the mature, the farmers evince more interest in its functioning and activities.

However, in nascent stage, about 28.00 per cent attended the general body meeting of the FPO rarely or never. Indeed, the challenges of involving actively the members in FPO's functioning and activities in nascent stage are numerous and varied. The nascent stage being that of incubation, the promoting agency should work intimately with the organization, management and the members so as to evoke maximum interest of the farmers in its activities.

5.13.3 Governing Body Members:

Some farmers selected for survey particularly in nascent category in Punjab and the mature in Madhya Pradesh were also the members of Governing Body/Board of Director of the FPO. They all took keen interest in the activities of the FPOs and attended the meetings regularly.

49Amongst nascent FPOs, only Darapur made payments in cheque also, while all others in this category in cash. In PRODUCE emerging, one-third in Bathinda Farmers reported payment in cheque, while all in Global SHGs in cash only. The mature Dhira Patra in Punjab made payment in cash only, while Lambra Kangri through cheque. 50In Kiratpur Sahib nascent FPO, 80.00 per cent farmers attended the meetings regularly, while this proportion was 46.67 per cent in Sujanpur, and very low or poor in the remaining three nascent FPOs in the state.51In emerging category, the proportion attending the meeting regularly was moderate in Bathinda Farmer and poor in the remaining ones.52In Narsingh in Madhya Pradesh, this proportion was fairly high (nearly 90 per cent or more), moderate in Dada Darbar (53.33

per cent) and poor in Kisan Ekta (13.33 per cent).

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5.13.4 Farmers’ Feedback on FPOs' Institutional Support:

5.13.4.1 Decision Making in FPO:

Proportion of the farmers rating decision making in the FPO as satisfactory/excellent increases as the FPO moves up from nascent to emerging

53(PRODUCE Fund), and to maturity (Table 5.15) .

5.13.4.2 Working of the FPO:

Quite a high proportion of the farmers in mature FPOs in Punjab (83.33 per cent) rated their working as successful (Table 5.15). This proportion was 100 per cent in Lambra Kangri and two-third in Dhira Patra Society in Punjab. In Madhya Pradesh, the proportion rating working of the FPO as successful was 100.00 per cent in Narsingh, 60.00 per cent in Dada Darbar and nil in Kisan Ekta. In nascent category, majority of the farmers in Sujanpur described the working as successful while the Dholewal, Qadian and Kiratpur Sahib as partially successful. However, majority of the farmers in Darapur rated FPO working as average. In the emerging category, Bathinda Farmers was described successful by nearly three-fourth of the farmers, while that of the Sangrur Vegetable Company as partially successful, and the Global SHGs and Jalandhar Vegetable Company as average.

5.13.4.3 POPI's Handholding Support:

Success of the farmer producer organization is inextricably linked to a strong handholding by the Producer Organization Promoting Institution (POPI) that promotes, supports and nurtures the FPO till it becomes commercially viable and self-supporting. From conception to conducting baseline survey, registration, setting up of the organization and its structure; governance and capacity building;

establishing procurement, credit, marketing and other linkages; and help it grow into a successful and self sus t a in ing o rgan iza t ion a re the t a sks and responsibilities of the POPI. It is generally an experienced non-government organization, and its task is to nurture a producer organization as per the timeline specified for deliverables, spread over a period of two and a half years (SFAC) or three years (NABARD).

Amongst the PRODUCE Fund FPOs, the feedback on POPI's handholding support was better in

54nascent than in emerging category (Table 5.15).

In PRODUCE Fund emerging category, four-fifth of the farmers described the POPI's handholding support as 'good' in Bathinda Farmers and 'poor/not good' in Global SHGs. In the SFAC emerging category, all the farmers in Sangrur Vegetable rated POPI's support as 'average', and 'poor/not good' in Jalandhar Vegetable Company. The mature FPOs in Punjab are working under the guidance of the project manager (Lambra Kangri) or the President (Dhira Patra). In Madhya Pradesh, the selected FPOs are currently working under the umbrella support of the Madhya Bharat Consortium of Farmer Producers’ Company Limited (MBCFPCL), Bhopal that was established under the Indian Companies Act 2013 on September 18, 2014. Its objective is “…to leverage the collective strength of the FPCs in the market place in one hand and providing larger capacity building support to the member FPCs and also to contribute to the FPC eco-system in the state and country on the other” (CEO, MBCFPCL, email dated March 17, 2017).

5.13.4.4 CEO's Role:

Chief Executive Officer (CEO) is a paid employee and should not be a member in the FPO; otherwise conflict of interest may adversely affect

53Decision making in Kiratpur Sahib and Sujanpur nascent FPOs was described satisfactory/excellent by quite a high proportion of the farmers (86.67 per cent), while this proportion was moderate in Qadian (66.67 per cent) and Dholewal (53.33 per cent) and average in Darapur FPO (80 per cent). In emerging category, the proportion expressing satisfaction with decision making in FPO was 100 per cent in Bathinda Farmer Producer Company, satisfactory in Sangrur Vegetable Company (73.33 per cent) and Global SHGs (60 per cent) and average in Jalandhar Vegetable Company (66.67 per cent). In Lambra Kangri Society, all the farmers described decision making as excellent while in Dhira Patra Society satisfactory. In Madhya Pradesh, the feedback was excellent in case of Narsingh (100.00 per cent), satisfactory in Dada Darbar (93.33 per cent) and average in Kisan Ekta Company (73.33 per cent). 54In nascent category, a high proportion (80 per cent) of the farmers in Sujanpur FPO rated the POPI's handholding support as 'very good'. In Kiratpur Sahib FPO, the feedback by three-fifth was though 'very good', but two-fifth described it 'poor/not good'. A somewhat similar situation was found in Darapur FPO where the proportion expressing 'very good' was 46.67 per cent and a higher proportion (53.33 per cent) 'poor/not good'. But in Qadian FPO, 80.00 per cent described POPI's handholding support as 'good' and a similar proportion in Dholewal as 'average'. Based on the feedback by majority of the farmers, the POPI's handholding support was considered 'very good' in Kiratpur Sahib and 'moderate' in Darapur FPO.

58

working of the organization. Amongst PRODUCE Fund FPOs, the CEO's role was described as 'very good/good' by over one-third of the members (37.33 per

55cent) in nascent and 'good' by merely 6.67 per cent in the PRODUCE emerging category. About 50.00 per cent rated role of the CEO as 'average' in both the PRODUCE Fund emerging FPOs; but a perceptible

56proportion (43.33 per cent) was not aware of its role . In SFAC emerging FPOs, majority responded 'not aware'/

57'not appointed' . In the mature FPOs in Punjab and the Narsingh in Madhya Pradesh, all the farmers rated their role as 'very good', 'good' in Dada Darbar and 'not appointed' in Kisan Ekta.

5.14 Government Policy and Support:

The government of Punjab though had not yet prepared a blueprint of its policy on Farmer Producer Organizations, still some hints were available that make evident the stand of the state government on FPOs. The committee of the MLAs constituted by the Hon'ble speaker Punjab Vidhan Sabha to examine the causes of economic distress leading to indebtedness and suicides by the farmers and farm labourers that tabled its report in the Vidhan Sabha on March 28, 2018, observed that '…the Farmer Producer Organizations (FPOs) should be integrated while formulating the agriculture policy because these organizations can play a significant role in strengthening the village economy' (transcript) (Para II, Page 14). FPOs The committee also pointed out that 'can prove a boon for marginal and small farmers if the Government provides appropriate information and guidance to them' (transcript) (Para 31, Page 44-45). The committee recommends that ( ibid)transcript,

(i) the Department of Agriculture should provide maximum information for setting up of Farmer Producer Organizations, and with appropriate leadership and the steps, should associate small farmers of upto 5 acres of land with FPOs.

(ii) the FPOs be given license to sell their crops directly in the APMCs.

(iii) assistance be given to farmers to setup small units for processing of fruits, vegetables and milk.

The draft Punjab State Farmers' Policy, June 2018, email received on August 7, 2018 from the office of Punjab State Farmers' and Farm Workers' Commission resolves to “act ively promote collectivization of small and marginal farmers into commodity specific Farmer Producer Organizations (FPOs) especially for small ruminants, livestock products and perishables” (Para xii, p.30). It further resolves to “promote access to farm machinery through Primary Agricultural Cooperative Societies, FPOs and entrepreneurs” (Para i, p.33).

Earlier, the state government amended The Punjab Agricultural Produce Markets Act, 1961 (Second Amendment Bill, 2017) and made eligible the FPOs and other collectives of the farmers to participate in a “Producer Market Yard (Kissan Mandi) [that] may be established outside the principal market yard or sub-market yard in the notified market area. …for sale to wholesellers or institutional buyer or any other buyers as may be prescribed.” (Para 7E, Establishment of Producer Market Yard (Kissan Mandi)).

Accordingly, a number of FPOs (e.g. Dholewal and Qadian PRODUCE) obtained license as Kucha Arhtiya to sell produce to wholesalers or institutional or any other buyers in the APMC market. Moreover, some FPOs (e.g. Kiratpur Sahib, Bathinda Farmer Producer Company) obtained license to sell agri-inputs as seeds, fertilizers, pesticides, insecticides etc amongst the members. Recently, the FPOs were also granted 80 per cent subsidy at par with cooperative societies for purchase of in-situ straw management agricultural

55Almost 80 per cent rated CEO's role as 'good' or above in Sujanpur FPO, 'satisfactory' in Qadian and 'average' in Dholewal. But, Kiratpur Sahib and Darapur FPOs were interesting cases as 60 per cent in the former and 40 per cent in the latter rated CEO's role as 'good' or 'very good' respectively, while a perceptible proportion (40 per cent and 53.33 per cent, respectively) responded 'not aware'. It is disquieting that a similar proportion also had described role of the POPI as 'poor/not good' (40 per cent in Kiratpur Sahib and 53.33 per cent in Darapur). This mystifies the supportive role of these institutions in the FPOs.56In emerging Bathinda Farmer Producer Company, a high proportion (80 per cent) described the role of CEO as 'satisfactory', while in Global SHGs a high proportion (80 per cent) responded 'unaware'. In the latter case (Global SHGs), an equal proportion (80 per cent) had already described POPI's role as 'poor/not good'.57Interestingly, all the farmers in Jalandhar Vegetable Company were unaware of the role of CEO where POPI's support was described as 'poor/not good', while four-fifth in Sangrur Vegetable Company responded that CEO had not been appointed, and the POPI's support had been average.

59

machinery. The Punjab Agricultural University, Ludhiana was made a coordinating agency to prepare a draft policy on FPOs in the state. Overall speaking, the

government has in principle resolved to facilitate and strengthen FPOs in the state.

Table 5.1: Farmers’ Perceptions about FPOs’ Income Enhancing Activities

Sr. No.

Particulars Perception Nascent or Incubation

Stage


Mature or Business Expansion Stage

PRODUCE Fund

Private SFAC


1 Market linkage/sale of produce through

FPO 24

(32.00) 14

(46.67) 0

(0.00) 14

(46.67) 26

(57.78)

Market tie-ups 40

(53.33) 15

(50.00) 21

(70.00) 11

(36.67) 2

(4.44) 2 Better price realization

by sale through FPO

14 (18.67)

16 (53.33)

3 (10.00)

13 (43.33)

17 (37.78)

Direct market channel

27 (36.00)

9 (30.00)

15 (50.00)

3 (10.00)

0 (0.00)

3 Adoption of new technology

Disseminated by FPO

21 (28.00)

21 (70.00)

4 (13.33)

12 (40.00)

22 (48.89)

Not shared with FPO

2 (2.67)

7 (23.33)

10 (33.33)

1 (3.33)

0 (0.00)

4 Value addition (processing, testing, packing)

FPO 1

(1.33) 13

(43.33) 2

(6.67) 13

(43.33) 23

(51.11)

Own 0

(0.00) 0

(0.00) 0

(0.00) 1

(3.33) 0

(0.00) 5 Economy of scale

FPO 21

(28.00) 18

(60.00) 0

(0.00) 13

(43.33) 16

(35.56) 6 Reduction in cost of

production FPO

21 (28.00)

18 (60.00)

3 (10.00)

13 (43.33)

20 (44.44)

7 Govt. subsidies and concessions

FPO 0

(0.00) 0

(0.00) 0

(0.00) 7

(23.33) 31

(68.89)


Table 5.2: Farmers’ Satisfaction with FPOs’ Aggregation and Transportation Activities (Per cent)

Collection from farm by the FPO

Transported by the farmer to FPO collection

centre

Transportation to sale point by the FPO

Weighing

1 2 3 4 Nascent or Incubation Stage (N=75)

Satisfactory (including Moderate/Average)

1.33 52.00 53.33 58.67

Unsatisfactory 0.00 8.00 5.33 0.00 Can’t Say/ Not an Activity of FPO 98.67 40.00 41.33 41.33

Emerging and Growing Stage (PRODUCE Fund) Satisfactory (including Moderate/Average)

23.34 23.34 26.67 40.00


Emerging and Growing Stage (Non-PRODUCE Fund SFAC) Satisfactory (including Moderate/Average)

0.00 0.00 0.00 3.33

Unsatisfactory 0.00 0.00 0.00 0.00 Can’t Say/ Not an Activity of FPO 100.00 100.00 100.00 96.67 Mature or Business Expansion Stage (Punjab) Satisfactory (including Moderate/Average)

50.00 50.00 50.00 50.00


Mature or Business Expansion Stage (Madhya Pradesh) Satisfactory (including Moderate/Average)

60.00 64.44 66.67 64.44


60

Remained the same

74 (98.67)

25 (83.33)

29 (96.97)

1 (3.33)

30 (66.67)

Note: N=Number of farmers; Figures in brackets are percentages.

Table: 5.3: Value Addition (Processing, Testing, Packaging etc) Post FPO Sr. No.


Stage



PRODUCE Fund

Private SFAC


1 Value addition (processing, packaging etc)

FPO 1

(1.33) 13

(43.33) 2

(6.67) 13

(43.33) 23

(51.11)

Own 0

(0.00) 0

(0.00) 0

(0.00) 1

(3.33) 0

(0.00) 2 Farmers’ response

on FPO’s processing/ value addition activities

Improved 0

(0.00) 6

(20.00) 0

(0.00) 14

(46.67) 15

(33.33) Remained the same

75 (100.00)

24 (80.00)

30 (100.00)

16 (53.33)

30 (66.67)

3 FPO’s Testing facility

Improved 0

(0.00) 3

(10.00) 1

(3.33) 13

(43.33) 23


75 (100.00)

27 (90.00)

29 (96.27)

17 (56.67)

22 (48.89)

4 Farmers’ access to FPO’s storage/ warehousing facilities

Improved 0

(0.00) 6

(20.00) 0

(0.00) 12

(40.00) 24


75 (100.00)

24 (80.00)

30 (100.00)

18 (60.00)

21 (46.67)


Table 5.4: Access to New Production and Practices (including agri-inputs and machinery inputs)

Sr. No.

Production and Inputs

Perception Nascent or Incubation

Stage (N=75)



PRODUCE Fund

(N=30)

Private SFAC (N=30)

Punjab (N=30)


1 Access to quality seeds

Improved 42 (56.00)

16 (53.33)

21 (70.00)

28 (93.33)

36 (80.00)

Remained the same

33 (44.00)

13 (43.33)

9 (30.00)

2 (6.67)

8 (17.78)

2 Access to quality inputs (pesticides, fertilizers etc.)

Improved 44 (58.67)

20 (66.67)

20 (66.67)

28 (93.33)

37 (82.22)

Remained the same

31 (41.33)

10 (33.33)

10 (33.33)

2 (6.67)

8 (17.78)

3 Introduction of new crops/varieties

Improved 40 (53.33)

11 (36.67)

11 (36.67)

14 (46.67)

32 (71.11)

Remained the same

35 (46.67)

18 (60.00)

19 (63.33)

16 (53.33)

13 (28.89)

4 Access to new cropping practices

Improved 38 (50.67)

10 (33.33)

10 (33.33)

15 (50.00)

24 (53.33)

Remained the same

37 (49.33)

19 (63.33)

20 (66.67)

15 (50.00)

21 (46.67)

5 Availability of farm machinery

Improved 1 (1.33)

4 (13.33)

1 (3.33)

29 (96.67)

15 (33.33)

61

Table 5.5: Purchase of Agricultural Inputs Through FPOs Sr. No.

Agricultural Inputs Purchase agricultural inputs

through FPO


Stage (N=75)


Matured or Business Expansion Stage

PRODUCE Fund

(N=30)

Private SFAC (N=30)

Punjab (N=30)


1 Fertilizers 14 (18.67)

1 (3.33)

1 (3.33)

20 (66.67)

30 (66.67)

Economy of Scale

10 (13.33)

1 (3.33)

1 (3.33)

20 (66.67)

27 (60.00)

Quality inputs 4

(5.33) 0

(0.00) 0

(0.00) 0

(0.00) 3

(6.67) 2 Seeds 28

(37.33) 6

(20.00) 3

(10.00) 22

(73.33) 27

(60.00) Economy of

Scale 25

(33.33) 5

(16.67) 3

(10.00) 8

(26.67) 2

(4.44)

Quality inputs 3

(4.00) 1

(3.33) 0

(0.00) 22

(73.33) 0

(0.00) 3 Pesticides 24

(32.00) 3

(10.00) 1

(3.33) 13

(43.33) 29

(64.44) Economy of

Scale 20

(26.67) 3

(10.00) 1

(3.33) 13

(43.33) 26

(57.78)

Quality inputs 4

(5.33) 0

(0.00) 0

(0.00) 0

(0.00) 3

(6.67)


Table 5.6: Farmers’ Satisfaction with Sharing of Technology

Production

practices/ processes

Seeds & Fertilizers

Pesticides &

insecticides etc

Testing Process-ing

Storage Water Usage

Diversi-fication

Dissemination of

Technology by FPO

1 2 3 4 5 6 7 8 9 Nascent or Incubation Stage (N=75)


80.00 96.00 96.00 17.33 1.33 1.33 94.67 86.66 82.66

Unsatisfactory 17.33 1.33 1.33 0.00 0.00 0.00 1.33 12.00 16.00 Can’t Say/ Not an Activity of FPO

2.66 2.66 2.66 82.66 98.66 98.66 4.00 1.33 1.33

Emerging and Growing Stage (PRODUCE Fund)


83.34 83.33 83.33 40.00 33.33 50.00 56.66 73.33 83.34


16.66 16.67 16.67 60.00 66.67 50.00 40.00 21.33 13.33

Emerging and Growing Stage (Non-PRODUCE Fund SFAC) Satisfactory (including Moderate/Average)

70.00 76.66 80.00 3.33 0.00 0.00 66.67 70.00 70.00


6.66 3.33 1.33 96.67 100.00 100.00 0.00 0.00 3.33

Mature or Business Expansion Stage (Punjab) Satisfactory (including Moderate/Average)

100.00 100.00 90.00 50.00 43.33 100.00 100.00 100.00 100.00


0.00 0.00 10.00 50.00 56.67 0.00 0.00 0.00 0.00

Mature or Business Expansion Stage (Madhya Pradesh) Satisfactory (including Moderate/Average)

86.66 86.66 75.56 35.56 66.66 77.77 77.78 80.00 100.00


13.33 13.33 24.44 64.44 33.33 22.22 20.00 20.00 0.00

(Per cent)

62

Table 5.7: FPOs’ Testing, Processing and Marketing Facilities Sr. No.

Particulars Nascent or Incubation

Stage (N=75)


Matured or Business Expansion Stage

PRODUCE Fund

(N=30)

Private SFAC (N=30)

Punjab (N=30)


Testing (Soil) 1 Testing facility available in the FPO 29

(38.67) 7

(23.33) 4

(13.33) 13

(43.33) 33

(73.33) 2 If yes, owned/hired

Owned 0

(0.00) 3

(10.00) 0

(0.00) 8

(26.7) 3

(6.7)

Hired 18

(24.00) 0

(0.00) 1

(3.33) 5

(16.7) 30

(66.7)

Processing 1 FPO has processing facilities 0

(0.00) 12

(40.00) 0

(0.00) 15

(50.00) 15

(33.33) 2 If yes, owned/hired

(i) Owned 0

(0.00) 9

(30.00) 0

(0.00) 13

(43.33) 15

(33.33)

(ii) Hired 0

(0.00) 3

(10.00) 0

(0.00) 2

(6.67) 0

(0.00)

Marketing 1 Satisfaction with

FPO Marketing Facilities

Yes 23

(30.67) 13

(43.33) 0

(0.00) 14

(46.67) 32

(71.11)

No 52

(69.33) 17

(56.67) 30

(100.00) 16

(53.33) 13

(28.89)


Table 5.8: Improved Economic Gains Realized by the Farmers Post FPO Sr. No.

Economic Gains Perception Nascent or Incubation

Stage (N=75)


PRODUCE Fund

(N=30)

Private SFAC (N=30)

Punjab (N=30)


1 Price of Produce (in Rs.)

Improved 8 (10.67)

4 (13.33)

0 (0.00)

11 (36.67)

19 (42.22)

Remained the same

67 (89.33)

26 (86.67)

30 (100.00)

3 (10.00)

22 (48.89)

2 Regularity of payment

Improved 25

(33.33) 7

(23.33) 4

(13.33) 15

(50.00) 26

(57.78)

Remained the same

50 (66.67)

23 (76.67)

26 (86.67)

15 (50.00)

19 (42.22)

3 Productivity Improved 12 (16.00)

9 (30.00)

1 (3.33)

14 (46.67)

21 (46.67)

Remained the same

63 (84.00)

21 (70.00)

29 (96.67)

16 (53.33)

24 (53.33)

4 Profit/Bonus Improved 0 (0.00)

9 (30.00)

0 (0.00)

15 (50.00)

15 (33.33)

Remained the same

75 (100.00)

21 (70.00)

30 (100.00)

10 (33.33)

30 (66.67)

5 Capital investment in agriculture

Improved 2 (2.67)

0 (0.00)

1 (3.33)

26 (86.67)

15 (33.33)

Remained the same

73 (97.33)

30 (100.00)

29 (96.67)

4 (13.33)

30 (66.67)

6 Employment oppor-tunities (increase in Man days)

Improved 6 (8.00)

4 (13.33)

2 (6.67)

23 (76.67)

16 (35.56)

Remained the same

69 (92.00)

26 (86.67)

28 (93.33)

7 (23.33)

29 (64.44)

Note: 1. Against ‘Price of Produce’ (Sr. No. 1), all respondents (15) in Lambra Kangri, one in Dhira Patra Society and four in Dada Darbar (Madhaya Pradesh) responded ‘can’t say’.

2. Against ‘Profit/Bonus’ (Sr. No. 4), five responded ‘can’t say’.

3. N=Number of farmers; Figures in brackets are percentages.

63

Table 5.9: Farmers’ Response on FPOs’ Marketing, Processing and Storage Facilities Sr. No.

Marketing, processing and

storage


Stage (N=75)



PRODUCE Fund (N=30)

Private SFAC (N=30)

Punjab (N=30)


1 Marketing connectivity

Improved 25 (33.33)

21 (70.00)

2 (6.67)

15 (50.00)

24 (53.33)

Remained the same

50 (66.67)

9 (30.00)

28 (93.33)

15 (50.00)

21 (46.67)

2 Purchase of inputs (seeds, fertilizers, pesticides etc)

Improved 31 (41.33)

15 (50.00)

4 (13.33)

21 (70.00)

32 (71.11)

Remained the same

44 (58.67)

15 (50.00)

26 (86.67)

9 (30.00)

13 (28.89)

3 Processing/ value addition

Improved 0 (0.00)

6 (20.00)

0 (0.00)

14 (46.67)

15 (33.33)

Remained the same

75 (100.00)

24 (80.00)

30 (100.00)

16 (53.33)

30 (66.67)

4 Testing facility Improved 0 (0.00)

3 (10.00)

1 (3.33)

13 (43.33)

23 (51.11)

Remained the same

75 (100.00)

27 (90.00)

29 (96.27)

17 (56.67)

22 (48.89)

5 Access to storage/ warehousing facility

Improved 0 (0.00)

6 (20.00)

0 (0.00)

12 (40.00)

24 (53.33)

Remained the same

75 (100.00)

24 (80.00)

30 (100.00)

18 (60.00)

21 (46.67)

6 Transportation of produce for sale

Improved 10 (13.33)

4 (13.33)

1 (3.33)

13 (43.33)

23 (51.11)

Remained the same

65 (86.67)

26 (86.67)

29 (96.67)

17 (56.67)

22 (48.89)

7 Relief from Exploitation by middle man

Improved 29 (38.67)

16 (53.33)

5 (16.67)

11 (36.67)

23 (51.11)

Remained the same

46 (61.33)

14 (46.67)

24 (80.00)

19 (63.33)

22 (48.89)


Table 5.10: Institutional Access to Training, Credit Linkage and Procurement Sr. No.

Institutional Access Perception Nascent or Incubation

Stage (N=75)


PRODUCE Fund

(N=30)

Private SFAC (N=30)

Punjab (N=30)


1 Training Improved

37 (49.33)

26 (86.67)

15 (50.00)

28 (93.33)

26 (57.78)

Remained the same

38 (50.67)

4 (13.33)

15 (50.00)

2 (6.67)

19 (42.22)

2 Extension services Improved

31 (41.33)

22 (73.33)

15 (50.00)

28 (93.33)

23 (51.11)

Remained the same

44 (58.67)

8 (26.67)

15 (50.00)

2 (6.67)

22 (48.89)

3 Bank linkage Improved

2 (2.67)

1 (3.33)

5 (16.67)

18 (60.00)

0 (0.00)

Remained the same

73 (97.33)

29 (96.67)

25 (83.33)

12 (40.00)

45 (100.00)

4 Credit linkage with other financial institutions

Improved 0

(0.00) 0

(0.00) 0

(0.00) 11

(36.67) 0


75 (100.00)

30 (100.00)

30 (100.00)

19 (63.33)

45 (100.00)

5 New credit line* Improved

0 (0.00)

0 (0.00)

0 (0.00)

6 (20.00)

0 (0.00)

Remained the same

0 (0.00)

0 (0.00)

0 (0.00)

14 (46.67)

45 (100.00)

64

6 Procurement (Government) Improved

2 (2.67)

5 (16.67)

3 (10.00)

11 (36.67)

20 (44.44)

Remained the same

73 (97.33)

25 (83.33)

27 (90.00)

19 (63.33)

25 (55.56)

7 Reduced dependence on moneylenders

Improved 27

(36.00) 13

(43.33) 8

(26.67) 15

(50.00) 24


48 (64.00)

17 (56.67)

22 (73.33)

15 (50.00)

21 (46.67)


*Against ‘New credit line’ (Sr. No. 4), the response of all the respondent farmers is ‘can’t say’ in nascent and emerging, while

the corresponding proportion is one-third in matured FPOs in Punjab

Table 5.11: FPOs’ Contributions in Knowledge and Awareness Generation about Ecology, Cooperative Philosophy and Financial Literacy

Sr. No.

Awareness about Perception Nascent or Incubation

Stage (N=75)


PRODUCE Fund

(N=30)

Private SFAC (N=30)

Punjab (N=30)


1

Working of cooperative philosophy

62

(82.67) 29

(96.67) 20

(66.67) 30

(100.00) 35

(77.78)

13

(17.33) 1

(3.33) 10

(33.33) 0

(0.00) 10

(22.22)

Improved

Remained the same

2

Community organizations (FPO, SHG, JLGs, FarmerCooperatives, FIGs etc.)

50

(66.67) 30

(100.00) 20

(66.67) 30

(100.00) 31

(68.89)

25

(33.33) 0

(0.00) 10

(33.33) 0

(0.00) 14

(31.11)

Improved

Remained the same

3

Conservation of natural resources like water, soil

50

(66.67) 23

(76.67) 22

(73.33) 30

(100.00) 35

(77.78)

25

(33.33) 7

(23.33) 8

(26.67) 0

(0.00) 10

(22.22)

Improved

Remained the same

4

Climate change impact and adaptation technique

40 (53.33)

21 (70.00)

21 (70.00)

26 (86.67)

27 (60.00)

35

(46.67) 9

(30.00) 9

(30.00) 4

(13.33) 18

(40.00)

Improved

Remained the same

5

Post harvestmanagement

41 (54.67)

21 (70.00)

21 (70.00)

30 (100.00)

31 (68.89)

e 34

(45.33) 9

(30.00) 9

(30.00) 0

(0.00) 14

(31.11)

Improved

Remained the sam

6

Dangers of stubble burning

31

(41.33) 16

(53.33) 15

(50.00) 30

(100.00) 32

(71.11)

44

(58.67) 14

(46.67) 15

(50.00) 0

(0.00) 13

(28.89)

Improved

Remained the same

7

Bank loan schemes

10

(13.33) 9

(30.00) 8

(26.67) 24

(48.89) 22

(48.89)

65

(86.67) 21

(70.00) 22

(73.33) 6

(20.00) 23

(51.11)

Improved

Remained the same

8

Savings

20

(26.67) 22

(73.33) 7

(23.33) 26

(86.67) 21

(46.67) R

Improved

emained the same

55 (73.33)

8 (26.67)

23 (76.67)

4 (13.33)

24 (53.33)

9 Financial literacy Improved

14 (18.67)

7 (23.33)

4 (13.33)

24 (80.00)

19 (42.22)

Remained the same

61 (81.33)

23 (76.67)

26 (86.67)

6 (20.00)

26 (57.78)


65

Table 5.12: FPOs’ Contributions in Community and Social Development Sr. No.


Stage (N=75)


PRODUCE Fund (N=30)

Private SFAC (N=30)

Punjab (N=30)


1 Awareness about social issues relating to health, education etc

Improved 33

(44.00) 19

(63.33) 12

(40.00) 19

(63.33) 22

(48.89)

Remained the same

42 (56.00)

11 (36.67)

18 (60.00)

11 (36.67)

23 (51.11)

2 Personal & community hygiene

Improved 34

(45.33) 19

(63.33) 15

(50.00) 23

(76.67) 20

(44.44)

Remained the same

41 (54.67)

11 (36.67)

15 (50.00)

7 (23.33)

25 (55.56)

3 Drug & alcohol abuse etc Improved

28 (37.33)

22 (73.33)

13 (43.33)

23 (76.67)

25 (55.56)

Remained the same

47 (62.67)

8 (26.67)

17 (56.67)

7 (23.33)

20 (44.44)

4 Environment issues like waste/sewage management

Improved 38

(50.67) 22

(73.33) 13

(43.33) 28

(93.33) 26

(57.78)

Remained the same

37 (49.33)

8 (26.67)

17 (56.67)

2 (6.67)

19 (42.22)

5 Community participation

Improved 61

(81.33) 29

(96.67) 20

(66.67) 30

(100.00) 35


14 (18.67)

1 (3.33)

10 (33.33)

0 (0.00)

10 (22.22)

6 Better social & community relations

Improved 44

(58.67) 29

(96.67) 19

(63.33) 30

(100.00) 32

(71.11)

Remained the same

31 (41.33)

1 (3.33)

11 (36.67)

0 (0.00)

13 (28.89)

7 Women empowerment & gender issues

Improved 28

(37.33) 23

(76.67) 13

(43.33) 21

(70.00) 29


47 (62.67)

7 (23.33)

17 (56.67)

9 (30.00)

16 (35.56)

8 Change in quality of life

Improved 32

(42.67) 26

(86.67) 13

(43.33) 20

(66.67) 21

(46.67)

Remained the same

43 (57.33)

4 (13.33)

17 (56.67)

10 (33.33)

24 (53.33)

9 Domestic violence Improved

31 (41.33)

13 (43.33)

13 (43.33)

21 (70.00)

23 (51.11)

Remained the same

44 (58.67)

17 (56.67)

17 (56.67)

9 (30.00)

22 (48.89)

10 Participation in local governance

Improved 35

(46.67) 15

(50.00) 10

(33.33) 23

(76.67) 25


40 (53.33)

15 (50.00)

20 (66.67)

7 (23.33)

20 (44.44)

11 Participation in democratic institutions

Improved 12

(16.00) 12

(40.00) 5

(16.67) 23

(76.67) 25


63 (84.00)

18 (60.00)

25 (83.33)

7 (23.33)

20 (44.44)

; Note: N=Number of farmers Figures in brackets are percentages.

66

Table 5.13: Record Keeping and Payment by the FPOs

Table 5.14: Attendance in General Body Meetings Sr. No.


Stage (N=75)


PRODUCE Fund

(N=30)

Private SFAC (N=30)

Punjab (N=30)


1 Regular 29 (38.67)

14 (46.67)

11 (36.67)

27 (90.00)

25 (55.56)

2 Sometimes 25 (33.33)

15 (50.00)

14 (46.67)

3 (10.00)

14 (31.11)

3 Rarely 12 (16.00)

0 (0.00)

5 (16.67)

0 (0.00)

3 (6.67)

4 Never 9 (12.00)

1 (3.33)

0 (0.00)

0 (0.00)

3 (6.67)


Record keeping and payments Record keeping Cash payment to

farmer member Payment by cheque

1 2 3 Nascent or Incubation Stage (N=75)


60.00 58.67 16.00

Unsatisfactory 2.67 0.00 0.00 Can’t Say/ Not an Activity of FPO

37.33 41.34 84.00

Emerging and Growing Stage (PRODUCE Fund) (N=30) Satisfactory (including Moderate/Average)

100.00 66.67 16.67


0.00 33.33 83.33

Emerging and Growing Stage (Non-PRODUCE Fund SFAC) (N=30) Satisfactory (including Moderate/Average)

40.00 16.67 0.00


53.00 83.33 100.00

Mature or Business Expansion Stage (Punjab) (N=30) Satisfactory (including Moderate/Average)

50.00 50.00 0.00


50.00 50.00 100.00

Mature or Business Expansion Stage (Madhya Pradesh) (N=45) Satisfactory (including Moderate/Average)

64.44 0.00 66.67


35.56 100.00 33.33

Note: N=Number of farmers

(Per cent)

67

Table 5.15: Farmers’ Feedback on FPOs’ Institutional Support Sr. No.


Stage (N=75)



PRODUCE Fund

(N=30)

Private SFAC (N=30)

Punjab (N=30)


1 Feedback on decision making in the FPO

Excellent 15 (20.00)

9 (30.00)

5 (16.67)

25 (83.33)

22 (48.89)

Satisfactory 36 (48.00)

15 (50.00)

11 (36.67)

5 (16.67)

7 (15.56)

Average 18 (24.00)

6 (20.00)

9 (30.00)

0 (0.00)

11 (24.44)

Unsatisfied 3 (4.00)

0 (0.00)

1 (3.33)

0 (0.00)

1 (2.22)

Can’t say 3 (4.00)

0 (0.00)

4 (13.33)

0 (0.00)

4 (8.89)

2 Impression about working of the FPO

Successful 19 (25.33)

12 (40.00)

6 (20.00)

25 (83.33)

24 (53.33)

Partially Successful

31 (41.33)

10 (33.33)

10 (33.33)

4 (13.33)

6 (13.33)

Average 21 (28.00)

8 (26.67)

8 (26.67)

1 (3.33)

10 (22.22)

Unsuccessful 2 (2.67)

0 (0.00)

2 (6.67)

0 (0.00)

1 (2.22)

Can’t say 2 (2.67)

0 (0.00)

4 (13.33)

0 (0.00)

4 (8.89)

3 Feedback on POPI’s handling support

Very good 28 (37.33)

2 (6.67)

0 (0.00)

NA NA

Good 15 (20.00)

15 (50.00)

0 (0.00)

NA NA

Average 15 (20.00)

0 (0.00)

15 (50.00)

NA NA

Poor/not good support

17 (22.67)

13 (43.33)

15 (50.00)

NA NA

Independent Group

- - - 30*

(100.0) 45**

(100.00) 4 Feedback on CEO’s

role Very good 15

(20.00) 0

(0.00) 0

(0.00) 30

(100.00) 15

(33.33) Good 13

(17.33) 2

(6.67) 0

(0.00) 0

(0.00) 15

(33.33) Satisfactory 15

(20.00) 15

(50.00) 0

(0.00) 0

(0.00) 0

(0.00) Average 12

(16.00) 0

(0.00) 3

(10.00) 0

(0.00) 0

(0.00) Not Aware

about its role 17

(22.67) 13

(43.33) 15

(50.00) 0

(0.00) 0

(0.00) CEO is not appointed

3 (4.00)

0 (0.00)

12 (40.00)

0 (0.00)

15 (33.33)

Note: *The Lambra Kangri Society is working under the guidance of the project manager and Dhira Patra Society under the President. **In Madhya Pradesh, the selected FPOs are working under the umbrella support of the Madhya Bharat Consortium of Farmer Producer’s Company Limited (MBCFPCL), Bhopal.

N=Number of farmers; NA= Not Applicable; Figures in brackets are percentages.

68

Chapter 6

Farmers' Benefits, Institutional Access, Activities, and Support

in Milk FPOs in Punjab

NABARD (Punjab) setup 28 milk FPOs under the PRODUCE Fund. These FPOs had a total of 1075 farmer members. Thus, these comprised 40.58 per cent of the total number of FPOs setup by NANARD in Punjab and their members 35.94 per cent. Since their business models were more or less similar, therefore, we selected only three milk FPOs (one nascent, one emerging and one matured) for study. This chapter d i s c u s s e s t h e f a r m e r s ' b e n e fi t s a n d t h e i r perceptions/ranking of the activities of the selected milk FPOs.

6.1 Number of Farmers Selling Milk Pre and Post FPO:

In nascent and emerging FPOs, the farmers started supplying and selling milk only after joining the producer organization (Table 6.1). But, those in matured ones, were selling before also. That means, the PRODUCE Fund initiative of setting up milk FPOs opened a new income earning avenue for the farmers.

These farmers supplied milk mainly to the producer organization. They produced agricultural crops also. Almost all of them grew wheat, while the number producing paddy was 10 (or two-third) in nascent and almost all in emerging and matured categories. Moreover, many of these produced fodder also, which was not unexpected as they required this crop for their milch animals and sold the surplus in the market. They produced vegetables also.

6.2 Number of Milch Animals and Cropped Area:

Average number of milch animals per farmer worked out to about 2.55 in nascent, 2.91 in emerging and 37.60 in mature FPO. None of the farmers in nascent and emerging categories had any milch animal pre-FPO, while the average per member in mature one was 25.47. The farmers in nascent and emerging FPOs purchased milch animals and supplied milk only after attaining the membership. In the mature category, though the respondent farmers pre-FPO had a total of 382 cows, but, interestingly, this tally increased post FPO to 564, i.e. by 47.64 per cent (Table 6.2). It implies

that the farmers in mature category found this activity remunerative and added more milch animals post FPO. This might be true in PRODUCE nascent and emerging milk FPOs also.

These farmers were agri-producers also and grew wheat and paddy as the main crops (Table 6.2). The farmers in nascent FPO grew wheat on nearly 98 per cent of the cultivated land, in emerging almost 76 per cent and in mature 50 per cent. Moreover, the proportion of land under cultivation of wheat and paddy post FPO was comparatively less. These farmers grew fodder for their milch animals as well as for sale in the market. The proportion of land cultivated for fodder (about 2 per cent) in nascent and in emerging (nearly 8 per cent) was much higher in mature FPO (47.21 per cent). The farmers in mature FPO, it may be noted, owned quite a large number of milch animals.

6.3 Price of Milk Realized:

Supply of milk through the nascent and emerging FPOs fetched farmers about Rs. 25-28 per litre of cow and Rs. 38-40 per litre of buffalo milk (Table 6.3). In the mature category, cow milk supplied through the FPO fetched Rs. 26.85 per litre and that sold

58directly Rs. 27.00 per litre . Thus, in mature category, the farmers earned 5.56 per cent less price than the market. But, in this case, the FPO (Progressive Dairy Solution) used to collect milk from the village Bulk Milk Coolers and that the farmers saved on transportation costs and other risks. MILKFED (the nascent FPO) had also made similar arrangements for collection of milk from the farmers. But in the emerging one, the farmers themselves transported milk up to the sale/processing point. Incidentally, this FPO paid higher price than that fetched by the farmers in other categories. Farmers, however, sold their agri-produce in the open market (Table 6.3).

6.4 Gross Income Realized from Sale of Milk:

Average gross income per farmer household from sale of milk worked out to about Rs. 25,000 per month in the nascent and emerging milk FPOs. The

58Price of milk is fixed according to its fat and SNF (Milk Powder Content). Table 6.3 depicts the average price as reported by the

farmers.

69

corresponding figure in mature category worked out to Rs. 10.35 lakh (Rs. 7.19 lakh from sale through FPO and Rs. 3.16 lakh from sale direct in the market). Moreover, in mature category, monthly average gross income from sale of milk after emergence of the FPO was almost three times (Rs. 10.35 lakh) the pre FPO amount (Rs. 3.43 lakh). It may be noted that the average number of milch animals per farmer in nascent and emerging category was about 2.5 to 3.0, while it was 37.60 in mature FPO. Moreover, the milch animals owned by farmers in mature category were high yielding ones. However, the point to be highlighted is that sale of milk through FPO emerged as a major income earning activity of the farmers in mature FPO, and a supplementing one in nascent and emerging.

6.5 Farmers' Perceptions about FPOs' Contributions in Income Enhancement:

Quite a high proportion of the farmers in these FPOs perceived income enhancement due to market linkage, value addition and better price realization through the FPO (Table 6.5). Income enhancement was perceived to accrue also due to such FPO activities that may result into dissemination of new technology, purchase of inputs through it and the reduction in cost. However, the proportion advocating so was relatively smaller in nascent and emerging and higher in the mature FPO. Indeed, the mature milk FPO was comparatively a large and modern one that had its own sales outlets and sold under the brand 'La Pure'. The nascent (MILKFED), on the other hand, merely supplied milk and did not undertake any processing and value addition activities directly. The emerging one, however, should upscale investment so as to modernize its processing and value addition activities.

A perceptible proportion of the farmers (46.67 per cent) in both the nascent and emerging milk FPOs attributed higher incomes to new technology disseminated by the organization. However, a very less proportion of the farmers (26.67 per cent) in both the producer organizations reported higher incomes due to the FPOs' efforts at reducing the cost of production. Further, monetary benefits due to collective purchase of inputs through the FPO were reported by merely one-fourth of the respondents (26.67 per cent) in nascent and very high of 86.67 per cent in emerging category. The matured, now the NABARD supported one

(Progressive Dairy Solution Ltd, Ludhiana), was doing extremely well on all the counts, as was responded by the farmer members. As regards the FPO contribution in higher incomes of the farmers, the nascent and emerging milk FPOs were almost at the same plane.

6.6 Institutional Access and Knowledge/ Awareness:

The FPOs benefitted the farmers in gaining institutional access and improving their knowledge/ awareness about production practices, marketing processes etc. A brief discussion of their responses with regard to each of these indicators is given below.

6.6.1 Production Practices and Quality Inputs:

(Ii) Access to Quality Inputs: Higher proportion of the farmers tended to gain improved access to quality inputs as the FPO moved towards maturity− their proportion being about one-fourth (26.67 per cent) in nascent, 53.33 per cent in emerging and 93.33 per cent in mature milk producer organizations.

(ii) Introduction of New Production Technologies: The production technologies post FPO remained the same in nascent and somewhat improved in emerging category. However, all the farmers in mature category reported improved access to new technology.

(iii) Availability of Machinery: It was only in mature milk category that a large proportion of the farmers (85.56 per cent) reported availability of machinery, while it reportedly remained the same in nascent and emerging categories (Table 6.6).

Broadly, the situation with regard to quality inputs and the new production technologies was slightly better in emerging than in nascent FPO. But, in regard to availability of machinery, it was similar in both the FPOs. However, the mature FPO was doing extremely well.

6.6.2 Marketing, Processing and Storage:

Except in marketing connectivity, the proportion expressing improved access for purchase of inputs, transportation of the produce for sale processing/value addition, storage and testing facilities post FPO was either low or nil in the nascent and emerging milk FPOs. The mature, on the other hand,

70

was performing well as majority of the farmers (in some cases three-fourth or more) reported improved access post FPO to these facilities (See Table 6.7).

6.6.3 Institutional Access:

These FPOs extend institutional support to the farmers in several ways. Proportion of the farmers who reported improved institutional access in respect of these facilities is shown in Table 6.8.

(I) Extension Services: About one-third of the farmers in both the nascent and emerging milk FPOs reported improved extension services post FPO. On this account, the nascent and emerging FPOs should improve their extension services so as to widen their coverage.

(ii) Linkage with Financial Institutions and New Credit Line: Improvement in bank/other financial institution linkage was expressed by about two-third of the farmers in the mature, and none in the PRODUCE Fund (nascent and emerging) FPOs. However, performance of all the FPOs (including mature) in helping farmers availing new credit line was dismal.

(iii) Training: Improved training activities were reported by one-third of the farmers in nascent, nearly three-fourth in emerging and by almost all in the mature milk FPO. On this account, progress of the PRODUCE Fund and the mature FPOs was satisfactory.

(iv) Government Schemes: Improved awareness about government schemes was reported by about one-fourth of the members in nascent, one-third in emerging and over nine-tenth in the mature FPOs. Effectiveness of the PRODUCE Fund FPOs in generating awareness about the government schemes, thus, was nearly moderate.

(v) Dependence on Moneylender: Contribution in reducing dependence on moneylenders was reported by about four-fifth of the members in the mature FPO. This proportion was merely one-fourth in nascent and nil in the emerging FPOs. Thus, the nascent and emerging FPOs were found wanting, while the mature had attained considerable progress on this account.

Broadly, the PRODUCE Fund milk FPOs

failed to generate significant institutional access (except testing in the emerging FPO). On the other hand, in the mature FPO, the members reported improved institutional access, except arranging new credit line for them.

6.6.4 Economic Gains:

Gains in respect of price and regularity of payment were reported by a small proportion of the farmers in the nascent, a significant in the emerging and quite a high in the mature FPO (Table 6.9). But no gains in productivity, profit/bonus, capital investment in agriculture and employment opportunities were reported by the farmers in nascent and emerging FPOs.

However, proportion of the farmers expressing such gains was quite high (three-fourth or more) in the mature FPO. Nonetheless, in their case too, none reported profit/bonus gains. Broadly, except price and regularity of payment, no economic gains accrued to members of the PRODUCE Fund milk FPOs, while a significant proportion in mature category affirmed these.

6.6.5 Awareness About Cooperative, Financial and Ecological Matters:

These FPOs were effective in generating awareness particularly about the working of cooperat ive philosophy and the community organizations (Table 6.10). But, in respect of financial matters, a large proportion of the farmers in PRODUCE Fund FPOs (nascent and emerging) reported that the situation remained more or less unchanged post FPO, while almost all in the mature FPO reported improved awareness. About ecological matters of general concern as conservation of natural resources, climate change and post-harvest management (particularly the stubble burning) and improved awareness post FPO were reported by a moderate proportion of the farmers in PRODUCE Fund organizations. It was only in the mature FPO that all the farmers reported significant improvement in respect of each of these parameters, following the awareness programmes organized by it.

In short, the PRODUCE Fund milk FPOs should organize their awareness programmes particularly in financial and ecological matters.

6.6.6 Awareness about Community and Social

71

Development:

Awareness programmes organized by the FPOs that focused on community participation and social relations have had maximum impact (Table 6.11). About two-third or more of the farmers reported improved community participation and social relations post FPO. Moderate proportion (about 40 per cent) in the nascent FPO reported improved awareness about women empowerment and gender issues, quality of life, drug and alcohol abuse and also the environmental issues. This proportion was similar or better in the emerging FPO. But, in nascent FPO, the proportion revealing improvement post FPO in respect of social issues as health, education, hygiene etc, domestic violence and participation in local and democratic institutions was lower, while it was moderate or higher in the emerging FPO. The mature, on the other hand, was performing satisfactorily as the proportion of the farmers expressing improvement post FPO in respect of each of these indicators was very high. Overall, the nascent and emerging FPOs were also progressing in these respects.

6.7 Satisfaction with FPO Arrangements:

FPOs also make arrangements for facilitating and furthering business activity. Proportion of farmers expressing 'satisfactory', 'moderate/average', and 'not an activity of the FPO' are depicted in Table 6.12. Since none expressed 'unsatisfactory' or 'can't say', therefore, these responses have not been reported in the table.

6.7.1 C o l l e c t i o n / Tr a n s p o r t o f M i l k t o Processing/Sale Point (Sr. 1 to 3, Table 6.12): The MILKFED (nascent) and the Progressive Dairy Solution (mature) setup Bulk Milk Coolers at focal points in a cluster of villages where milk from the farmers was collected, stored and then transported in tankers to the plants. The MILKFED setup cooperative societies in the villages that collected, tested and measured milk, and kept the record thereof. It setup five Milk Chilling Centres at the villages Rampura Phul, Talwandi Sabo, Badal, Sardoolgarh and Bhiki. In all these cases, milk was transported by the farmers up to the Bulk Milk Centre, which was then transported by the FPO to the Milk Chilling Plant and ultimately

the processing unit. But, merely one-fourth of the farmers (26.67 per cent) in nascent, none in emerging and a high of 80 per cent in mature category expressed satisfaction with the FPO milk collection arrangements. No such collection centres were setup by the emerging milk FPO (Young Innovative, Gurdaspur), and that the farmers themselves transported milk to the processing unit/point of sale of the FPO. Thus, the MILKFED nascent FPO should upgrade its milk collection arrangements upto the satisfaction level of the farmers, while the emerging one (Young Innovative) should setup necessary arrangements to collect and transport milk from farm to the processing/sale point.

6.7.2 G r a d i n g , M e a s u r i n g a n d Te s t i n g Arrangements (Sr. No. 4 to 6, Table 6.12): Mature FPO's grading services were satisfactory, as was revealed by 93.33 per cent of its farmers. The comparable figure was merely 33.33 per cent in nascent and 40 per cent in emerging category. The proportion affirming measuring and testing services as satisfactory was fairly large in all the FPOs. Overall, the PRODUCE Fund (nascent and emerging) milk FPOs need to improve their grading facilities.

6.7.3 Value Addition (Sr. No. 7 to 9, Table 6.12): The MILKFED collected milk from the village level cooperative society of the farmers (nascent FPO). These farmers, therefore, were not aware of the value addition arrangements (testing, processing and branding) available in MILKFED. In the emerging FPO (Young Innovative), almost two-third expressed satisfaction with regard to processing. This FPO, however, lacked branding, which it should launch immediately. As regards mature milk FPO (Progressive Dairy Solution), almost all the members expressed satisfaction with the arrangements.

6.7.4 Record Keeping and Payment (Sr. No. 10 to 12, Table 6.12): A fairly high proportion of the farmers in all the milk FPOs expressed record keeping as 'satisfactory/moderate or average'. In nascent and emerging FPOs, payments were made mostly in cash, while online in the mature

72

Progressive Dairy Solution. The nascent and emerging milk FPOs should also make payment by cheque/online.

6.8 Participation in Governance:

Interestingly, as the FPO matured, the proportion of farmers attending regularly the governing body meetings of the FPO also increased. In our survey, about one-fourth of the farmers attended general body meetings regularly in nascent, a little over half in emerging and all in the mature FPO (Table 6.13). Hence, management in nascent and emerging milk FPOs should play a proactive role and mobilize the farmers urging them to attend the general body meetings regularly.

Of the respondents, only one in nascent FPO was a member of the Governing Body also, who attended its meetings 'sometimes' (Table 6.13). Three in mature milk FPO (Progressive Dairy Solution) were also the members of the Board of Directors, who attended the meetings regularly. It seems that the members in nascent category were less proactive as regards the FPO's governance.

6.9 Decision Making and Institutional Support:

6.9.1 Decision Making: Decision making was rated mostly 'satisfactory' in the PRODUCE Fund (nascent and emerging) and excellent in the mature FPO (Table 6.14). Indeed, as the FPO tended to attain maturity, rating of decision making also improved from 'satisfactory' to 'excellent'. However, in nascent FPO, about one-fourth of the farmers rated it 'average'. It is expected to improve as the FPO would progress in future.

6.9.2 FPO Working: The mature FPO was rated 'successful' by all the farmers. In PRODUCE Fund FPOs (nascent and emerging), the proportion rating its working as 'successful' was about 50 to 60 per cent. Further, about 40 per

cent in emerging described it as 'partially successful' and 26.67 per cent in nascent category as 'average' (Table 6.14). In the later FPOs (particularly nascent), there is scope for improvement in their working.

6.9.3 POPI's Handholding Support: The mature FPO (Progressive Dairy Solution) was run by the cooperative society 'Progressive Dairy Farmers Association' whose affairs were managed by a Board of Directors comprising of four members and a Managing Director. Thus, it had no external handholding support from a promoting agency like the one in the PRODUCE Fund FPOs. MILKFED was the promoting agency of the nascent and the SARDS (Suraksha Agr icul ture Rura l Development Society) of the emerging one. The feedback on POPI's handholding support in case of both the PRODUCE Fund FPOs was rated 'good'. However, none in both the FPOs described it 'very good'. In other words, the POPI in PRODUCE Fund milk FPOs should further strengthen the handholding support.

6.9.4 CEO's Role: Only the PRODUCE Fund FPOs have the institution of CEO, while this role in mature one is played by the management itself. Role of the CEO in the PRODUCE Fund FPOs was rated merely 'satisfactory', which was about two levels below the ideal 'very good'. In other words, their role in the PRODUCE Fund FPOs was below par.

73

Table 6.1: Number of Respondent Farmers in Selected Milk FPOs Produce Nascent or Incubation

(MILKED FPO, N=15) Emerging and Growing

(Young Innovative, N=15) Mature or Business Expansion

(Progressive Dairy Solution, N=15)

Nu

mb

er

sup

ply

ing

M

ilk

P

re-F

PO

Post FPO number selling Milk

Nu

mb

er

sup

ply

ing

M

ilk

P

re-F

PO


Nu

mb

er

sup

ply

ing

M

ilk

P

re-F

PO


Th

rou

gh

F

PO

Dir

ect

in

the

Ma

rket

Th

rou

gh

F

PO

Dir

ect

in

the

Ma

rket

Th

rou

gh

F

PO

Dir

ect

in

the

Ma

rket

Milk

Cow 0 9 0 0 11 0 15 14 2

Buffalo 0 11 0 0 12 0 0 0 0

Rabi: (2015-16)

Wheat 15 0 15 15 0 14 13 0 12

Mustard 3 0 2 0 0 0 0 0 0

Sugarcane 0 0 0 4 0 5 1 0 0

Fodder 7 0 6 9 0 10 14 0 15

Crop: Kharif (2016)

Paddy 9 0 10 15 0 15 14 0 13

Sugarcane 1 0 1 2 0 2 1 0 1

Fodder 9 0 6 10 0 9 14 0 12

Cotton 14 0 14 0 0 0 0 0 0

Table 6.2: Number of Milch Animals/Total Cropped Area (Acre): Milk FPOs Produce Nascent or Incubation




Pre

-FP

O N

o. o

f M

ilch

An

ima

ls/

Cro

pp

ed A

rea

Post-FPO No. of Milch Animals/ Cropped Area when milk is

Pre

-FP

O N

o. o

f M

ilch

An

ima

ls/

Cro

pp

ed A

rea

Post-FPO No. of Milch Animals/ Cropped Area when milk is

Pre

-FP

O N

o. o

f M

ilch

An

ima

ls/

Cro

pp

ed A

rea

Post-FPO No. of Milch Animals/ Cropped Area

when milk is

So

ld

thro

ug

h

FP

O

Dir

ect

in

the

Ma

rket

So

ld

thro

ug

h

FP

O

Dir

ect

in

the

Ma

rket

So

ld

thro

ug

h

FP

O

Dir

ect

in

the

Ma

rket

Milk

Cow 0 20 0 0 32 0 382 504 60

Buffalo 0 31 0 0 18 0 0 0 0


Wheat 252.63 0.00 238.95 83.63 0.00 78.63 179.50 0.00 171.00

Mustard 2.37 0.00 2.00 0.00 0.00 0.00 0.00 0.00 0.00

Sugarcane 0.00 0.00 0.00 14.00 0.00 17.00 7.00 0.00 9.00

Fodder 5.00 0.00 5.75 7.37 0.00 7.87 100.50 0.00 161.00

Crop: Kharif (2016)

Paddy 152.00 0.00 102.00 82.63 0.00 82.63 219.50 0.00 201.00

Sugarcane 10.00 0.00 10.00 5.00 0.00 5.00 7.00 0.00 9.00

Fodder 10.25 0.00 5.50 7.87 0.00 6.87 100.50 0.00 133.00

Cotton 119.00 0.00 118.50 0.00 0.00 0.00 0.00 0.00 0.00

Cropped Area in Acre

Cropped Area in Acre

Note: N = Number of farmers

Note: N = Number of farmers

74

Table 6.4: Pre and Post-FPO Gross Income Realized from Sale of Milk Per Month (Rs. Lakh) Produce Nascent or Incubation




Pre

-FP

O G

ross

S

ale

Val

ue

Rea

lize

d Post FPO Gross

Sale Value Realized when

Pre

-FP

O G

ross

S

ale

Val

ue

Rea

lize

d Post FPO Gross

Sale Value Realized when

Pre

-FP

O G

ross

S

ale

Val

ue

Rea

lize

d

Post FPO Gross Sale Value Realized when

Sol

d

thro

ugh

F

PO

Sol

d D

irec

t in

th

e M

ark

et

Sol

d

thro

ugh

F

PO

Sol

d D

irec

t in

th

e M

ark

et

Sol

d

thro

ugh

F

PO

Sol

d D

irec

t in

th

e M

ark

et

Cow 0.00 0.95 0.00 0.00 1.38 0.00 51.40 100.67 6.32 Buffalo 0.00 1.74 0.00 0.00 1.44 0.00 0.00 0.00 0.00 Total 0.00 2.69 0.00 0.00 2.82 0.00 51.4 100.67 6.32 Income from sale of milk per Farmer

0.00 0.27 0.00 0.00 0.25 0.00 3.43 7.19 3.16

Table 6.5: Farmers’ Perceptions about Milk FPOs’ Contributions in Higher Incomes Perception Milk FPOs

Nascent or Incubation (MILKED

FPO, N=15)

Emerging and Growing (Young

Innovative, N=15)

Mature or Business Expansion


Adoption of new technology disseminated by the FPO 7 (46.67)

7 (46.67)

15 (100.00)

Market linkage/sale of produce through the FPO 11 (73.33)

11 (73.33)

13 (86.67)

Economy of scale in purchase of inputs through FPO 4 (26.67)

13 (86.67)

15 (100.00)

Value addition (processing, testing, packaging etc) by FPO 11 (73.33)

11 (73.33)

12 (80.00)

Better price realization 11 (73.33)

14 (93.33)

13 (86.67)

Reduction in cost of production 4 (26.67)

4 (26.67)

14 (93.33)


Produce Nascent or Incubation (MILKED FPO, N=15)

Emerging and Growing (Young Innovative, N=15)

Mature or Business Expansion (Progressive Dairy Solution, N=15)

Pre

-FP

O P

rice

R

eali

zed

Post FPO Price Realized when

Pre

-FP

O P

rice

R

eali

zed


Pre

-FP

O P

rice

R

eali

zed


So

ld

thro

ug

h

FP

O

So

ld

Dir

ect

in

the

Ma

rket

So

ld

thro

ug

h

FP

O

So

ld

Dir

ect

in

the

Ma

rket

So

ld

thro

ug

h

FP

O

So

ld

Dir

ect

in

the

Ma

rket

Milk Cow 0.00 25.44 0.00 0.00 27.75 0.00 21.93 26.85 27.00 Buffalo 0.00 38.36 0.00 0.00 40.27 0.00 0.00 0.00 0.00 Crop: Rabi (2015-16) Wheat 1452.00 0.00 1524.00 1410.67 0.00 1500.71 1262.31 0.00 1534.17 Mustard 1000.00 0.00 1250.00 0.00 0.00 0.00 0.00 0.00 0.00 Sugarcane 0.00 0.00 0.00 295.00 0.00 301.25 0.00 0.00 0.00 Fodder 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Crop: Kharif (2016) Paddy 1596.67 0.00 1828.50 1424.67 0.00 1549.00 1489.29 0.00 1752.31 Sugarcane 3000.00 0.00 3000.00 270.00 0.00 300.00 230.00 0.00 300.00 Fodder 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Cotton 4050.00 0.00 5169.29 0.00 0.00 0.00 0.00 0.00 0.00

Table 6.3: Price Realised Per Ltr of Milk and Qtl of Crop Sold-Pre and Post-FPO

75

Table 6.6: Access to New Production Practices and Quality Inputs Sr. No.


(MILKED FPO, N=15)


Innovative, N=15)



1 Access to quality inputs Improved 4 (26.67)

8 (53.33)

14 (93.33)

Remained the Same 11 (73.33)

7 (46.67)

1 (6.67)

2 Introduction of new production technologies

Improved 0 (0.00)

3 (20.00)

15 (100.00)


12 (80.00)

0 (0.00)

3 Availability of machinery Improved 0 (0.00)

0 (0.00)

13 (86.67)


15 (100.00)

2 (13.33)


Table 6.7: Improved Access to Marketing, Processing and Storage etc. Sr. No.


(MILKED FPO, N=15)


Innovative, N=15)



1 Marketing connectivity Improved 10 (66.67)

7 (46.67)

12 (80.00)


8 (53.33)

3 (20.00)

2 Purchase of inputs (seeds, fertilizers, pesticides etc)

Improved 4 (26.67)

3 (20.00)

14 (93.33)


12 (80.00)

1 (6.67)

3 Transportation of produce for sale Improved 0 (0.00)

0 (0.00)

11 (73.33)


15 (100.00)

4 (26.67)

4 Processing/ value addition Improved 0 (0.00)

1 (6.67)

8 (53.33)


14 (93.33)

7 (46.67)

5 Access to storage/ warehousing facility Improved 0 (0.00)

1 (6.67)

11 (73.33)


14 (93.33)

4 (26.67)

6 Testing facility Improved 5 (33.33)

4 (26.67)

8 (53.33)


11 (73.33)

7 (46.67)


76

Table 6.8: FPOs’ Contributions as Improved Institutional Access Sr. No.


(MILKED FPO, N=15)

Emerging and Growing

(Young Innovative, N=15)

Mature or Business

Expansion (Progressive Dairy

Solution, N=15)

1 Extension services Improved 5 (33.33)

5 (33.33)

12 (80.00)


10 (66.67)

3 (20.00)

2 Bank linkage Improved 0 (0.00)

0 (0.00)

14 (93.33)


15 (100.00)

1 (6.67)

3 Other financial institutions

Improved 0 (0.00)

0 (0.00)

10 (66.67)


15 (100.00)

5 (33.33)

4 New credit line* (Limit in Rs.)

Improved 0 (0.00)

0 (0.00)

1 (6.67)


15 (100.00)

6 (40.00)

5 Training Improved 5 (33.33)

11 (73.33)

15 (100.00)


4 (26.67)

0 (0.00)

6 Government schemes Improved 4 (26.67)

5 (33.33)

14 (93.33)


10 (66.67)

1 (6.67)

7 Reduced dependence on moneylenders

Improved 4 (26.67)

0 (0.00)

12 (80.00)


15 (100.00)

3 (20.00)

8 Procurement Improved 0 (0.00)

0 (0.00)

7 (46.67)


15 (100.00)

8 (53.33)


Table 6.9: Economic Gains Post FPO Sr. No.


(MILKED FPO, N=15)





1 Price of Produce (in Rs.) Improved 2 (13.33)

9 (60.00)

12 (80.00)


6 (40.00)

3 (20.00)

2 Regularity of payment Improved 4 (26.67)

11 (73.33)

15 (100.00)


4 (26.67)

0 (0.00)

3 Productivity Improved 0 (0.00)

0 (0.00)

11 (73.33)


15 (100.00)

4 (26.67)

4 Profit/Bonus Improved 0 (0.00)

0 (0.00)

0 (0.00)

77


15 (100.00)

15 (100.00)

5 Capital investment in agriculture

Improved 0 (0.00)

0 (0.00)

12 (80.00)


15 (100.00)

3 (20.00)

6 Employment opportunities (increase in Man days)

Improved 0 (0.00)

0 (0.00)

15 (100.00)


15 (100.00)

0 (0.00)


Table 6.10: Awareness Generation About Cooperative, Financial and Ecological Matters Sr. No.

Particulars Perception Nascent or Incubation (MILKED FPO,

N=15)





1 Awareness about the working of cooperative philosophy

Improved 13 (86.67)

15 (100.00)

15 (100.00)

Remained the Same

2 (13.33)

0 (0.00)

0 (0.00)

2 Awareness about community organizations (FPO, SHG, JLGs, Farmer Cooperatives, FIGs etc)

Improved 14 (93.33)

15 (100.00)

15 (100.00)

Remained the Same

1 (6.67)

0 (0.00)

0 (0.00)

3 Awareness about bank loan schemes

Improved 3 (20.00)

5 (33.33)

15 (100.00)

Remained the Same

12 (80.00)

10 (66.67)

0 (0.00)

4 Awareness regarding savings Improved 8 (53.33)

6 (40.00)

15 (100.00)

Remained the Same

7 (46.67)

9 (60.00)

0 (0.00)

5 Financial literacy Improved 3 (20.00)

5 (33.33)

15 (100.00)

Remained the Same

12 (80.00)

10 (66.67)

0 (0.00)

6 Awareness about conservation of natural sources like water, soil

Improved 8 (53.33)

9 (60.00)

15 (100.00)

Remained the Same

7 (46.67)

6 (40.00)

0 (0.00)

7 Knowledge of post-harvest management

Improved 7 (46.67)

8 (53.33)

15 (100.00)

Remained the Same

8 (53.33)

7 (46.67)

0 (0.00)

8 Climate change impact and adaptation technique

Improved 8 (53.33)

7 (46.67)

15 (100.00)

Remained the Same

7 (46.67)

8 (53.33)

0 (0.00)

9 Awareness about dangers of stubble burning

Improved 7 (46.67)

3 (20.00)

15 (100.00)

Remained the Same

8 (53.33)

12 (80.00)

0 (0.00)


78

Table 6.11: Awareness about Social Issues, Quality of Life and Participation in Democratic Institutions

Sr. No.

Community and Social Development


(MILKED FPO, N=15)


Innovative, N=15)



1 Community participation Improved 11 (73.33)

15 (100.00)

15 (100.00)


0 (0.00)

0 (0.00)

2 Better social & community relations

Improved 10 (66.67)

14 (93.33)

15 (100.00)


1 (6.67)

0 (0.00)

3 Women empowerment & gender issues

Improved 6 (40.00)

11 (73.33)

15 (100.00)


4 (26.67)

0 (0.00)

4 Awareness about social issues relating to health, education etc

Improved 3 (20.00)

9 (60.00)

14 (93.33)


6 (40.00)

1 (6.67)

5 Personal & community hygiene Improved 2 (13.33)

6 (40.00)

14 (93.33)


9 (60.00)

1 (6.67)

6 Environment issues like waste/sewage management

Improved 6 (40.00)

6 (40.00)

15 (100.00)


9 (60.00)

0 (0.00)

7 Change in quality of life Improved 6 (40.00)

9 (60.00)

14 (93.33)


6 (40.00)

1 (6.67)

8 Domestic violence Improved 2 (13.33)

6 (40.00)

14 (93.33)


9 (60.00)

1 (6.67)

9 Drug & alcohol abuse etc Improved 7 (46.67)

6 (40.00)

14 (93.33)


9 (60.00)

1 (6.67)

10 Participation in local governance

Improved 5 (33.33)

10 (66.67)

14 (93.33)


5 (33.33)

1 (6.67)

11 Participation in democratic institutions

Improved 3 (20.00)

7 (46.67)

14 (93.33)


8 (53.33)

1 (6.67)


79

Table 6.12: Satisfaction with FPO Arrangements Regarding Aggregation of Produce Sr. No.

Particulars

Milk FPO Nascent or Incubation (MILKED FPO, N=15)

Emerging and Growing (Young Innovative, N=15)

Matured or Business Expansion


Sa

tisf

act

ory

Mo

der

ate

/A

ver

age

If N

ot

an

A

ctiv

ity

of

FP

O

Sa

tisf

act

ory

Mo

der

ate

/A

ver

age

If N

ot

an

A

ctiv

ity

of

FP

O

Sa

tisf

act

ory

Mo

der

ate

/A

ver

age

If N

ot

an

A

ctiv

ity

of

FP

O

1 Collection from farm by the FPO?

4 (26.67)

0 (0.00)

11 (73.33)

0 (0.00)

0 (0.00)

15 (100.00)

12 (80.00)

0 (0.00)

3* (20.00)

2 If transported by the farmer to FPO collection centre?

11 (73.33)

0 (0.00)

4 (26.67)

10 (66.67)

2 (13.33)

3 (20.00)

14 (93.33)

0 (0.00)

1* (6.67)

3 Transportation to sale point by the FPO

6 (40.00)

0 (0.00)

9 (60.00)

3 (20.00)

0 (0.00)

12 (80.00)

14 (93.33)

0 (0.00)

1* (6.67)

4 Supply of Graded Produce 5 (33.33)

0 (0.00)

10 (66.67)

6 (40.00)

0 (0.00)

9 (60.00)

14 (93.33)

0 (0.00)

1* (6.67)

5 Measuring 11 (73.33)

0 (0.00)

4 (26.67)

13 (86.67)

0 (0.00)

2 (13.33)

14 (93.33)

0 (0.00)

1* (6.67)

6 Testing 11 (73.33)

0 (0.00)

4 (26.67)

15 (100.00)

0 (0.00)

0 (0.00)

14 (93.33)

0 (0.00)

1* (6.67)

7 Processing 0 (0.00)

1 (6.67)

14 (93.33)

10 (66.67)

0 (0.00)

5 (33.33)

14 (93.33)

0 (0.00)

1* (6.67)

8 Packaging 0 (0.00)

1 (6.67)

14 (93.33)

7 (46.67)

2 (13.33)

6 (40.00)

14 (93.33)

0 (0.00)

1* (6.67)

9 Branding (labeling ) 0 (0.00)

1 (6.67)

14 (93.33)

0 (0.00)

0 (0.00)

15 (100.00)

14 (93.33)

0 (0.00)

1* (6.67)

10 Record keeping 9 (60.00)

6 (40.00)

0 (0.00)

10 (66.67)

5 (33.33)

0 (0.00)

14 (93.33)

0 (0.00)

1* (6.67)

11 Cash payment to farmer member

11 (73.33)

0 (0.00)

4 (26.67)

15 (100.00)

0 (0.00)

0 (0.00)

0 (0.00)

0 (0.00)

0 (0.00)

12 Payment by cheque 1 (6.67)

2 (13.33)

12 (80.00)

6 (40.00)

0 (0.00)

9 (60.00)

15** (100.00)

0 (0.00)

0 (0.00)

Note: *Farmers’ response was ‘can’t say’. ** Online payment. Figures in brackets are percentages.

Table 6.13: Members’ Participation in FPO Governance Sr. No.

Particulars Milk FPO Nascent or Incubation

(MILKED FPO, N=15)





1 Frequency of attending the General Body meetings

Regular 4 (26.67)

8 (53.33)

15 (100.00)

Sometimes 4 (26.67)

5 (33.33)

0 (0.00)

Rarely 4 (26.67)

1 (6.67)

0 (0.00)

Never 3 (20.00)

1 (6.67)

0 (0.00)

2 (i) If, also a member of Governing Body?

Yes 1 (6.67)

0 (0.00)

2 (13.33)

(ii) Frequency of attending the meetings

Regular 0 (0.00)

0 (0.00)

2 (13.33)

Sometimes 1 (6.67)

0 (0.00)

0 (0.00)

Not Applicable 14 (93.33)

15 (100.00)

13 (86.67)

3 (i) If a member of the BoD?

Yes 0 (0.00)

0 (0.00)

3 (20.00)

No 11 (73.33)

15 (100.00)

12 (80.00)

Don’t know 4 (26.67)

0 (0.00)

0 (0.00)

80

Sr. No.


(MILKED FPO, N=15)





(ii) Frequency of attending the meetings

Regular 0 (0.00)

0 (0.00)

3 (20.00)

Sometimes 0 (0.00)

0 (0.00)

0 (0.00)

Not Applicable 15 (100.00)

15 (100.00)

12 (80.00)


Table 6.14: Feedback on Decision Making and Institutional Support Sr. No.


(MILKED FPO, N=15)


Innovative, N=15)



1 Feedback on decision making in the FPO

Excellent 2 (13.33)

5 (33.33)

15 (100.00)


10 (66.67)

0 (0.00)

Average 4 (26.67)

0 (0.00)

0 (0.00)

Unsatisfied 0 (0.00)

0 (0.00)

0 (0.00)

Can’t say 0 (0.00)

0 (0.00)

0 (0.00)

2 Impression about working of the FPO

Successful 9 (60.00)

8 (53.33)

15 (100.00)

Partially Successful

2 (13.33)

6 (40.00)

0 (0.00)

Average 4 (26.67)

1 (6.67)

0 (0.00)

Unsuccessful 0 (0.00)

0 (0.00)

0 (0.00)

Can’t say 0 (0.00)

0 (0.00)

0 (0.00)

3 Feedback on POPI’s handling support

Very good 0 (0.00)

0 (0.00)

0 (0.00)

Good 15 (100.00)

15 (100.00)

0 (0.00)

Average 0 (0.00)

0 (0.00)

0 (0.00)

Poor/not good support

0 (0.00)

0 (0.00)

0 (0.00)

Independent Group

0 (0.00)

0 (0.00)

15 (100.00)

4 Feedback on CEO’s role Very good 0 (0.00)

0 (0.00)

15 (100.00)

Good 0 (0.00)

0 (0.00)

0 (0.00)


15 (100.00)

0 (0.00)

Average 0 (0.00)

0 (0.00)

0 (0.00)

Not Aware about its role

0 (0.00)

0 (0.00)

0 (0.00)

CEO in not appointed

0 (0.00)

0 (0.00)

0 (0.00)


81

Facilitating institutional credit linkage of marginal and small farmers through the FPO is an area of policy concern because, despite the KCC and other schemes, these farmers continue to lack access to such facilities (Tagat, 2016). Even for input supplies, these farmers remain tied to middlemen for financing in lieu of the harvested produce. They are often cheated as regards price and quality of inputs. For loans too, their dependence is very high on middlemen who are their 24x7 ATM and provide hassle free and purpose neutral loans. The FPOs can meet loan requirements of these farmers in a similar way provided these are run on professional basis and are supported financially by banks and such other institutions.

7.1 Financing Working Capital Requirements of the FPOs:

Tagat (2016) delineates two situations for the FPOs to raise loans from the banks to help farmers. First, at the beginning of the sowing season, the FPOs will require loans for purchase of agri inputs for the members that will be repaid when the farmers are sanctioned loans under the KCC scheme. Such loans are required for two months. Second, after the crop is harvested and on the assumption that the FPOs have access to substantial part of the members' produce (say 50 per cent) then loan can be raised against the inventory of stocks with margin of say 40 per cent against Warehousing Receipts. The FPOs can bring the 40 per cent margin in the system if NABARD/SFAC provides them financing as part of the comprehensive early stage funding. The new FPOs, thus, can be enabled to create credit line and approach banks in the subsequent years.

The feasibility of the suggested scheme, as Tagat (2016) has rightly pointed out, depends on “how farmer members of newly established FPOs repose trust or willingness to risk market prices at a future date”. In the incubation stage, the FPOs have access to a small fraction of the produce of the farmers that, in our survey, ranged widely from nil in some cases to 16.93 per cent in Kiratpur Sahib FPO (Table 8.3, Sr. No. 5). But proportion of the produce sold through the Narsingh Company (Madhya Pradesh) was as high as 42.62 per

cent. Moreover, the FPOs in Madhya Pradesh dealt with multiple crops and had large membership. On the other hand, the nascent FPOs in Punjab mostly dealt with single crop and their membership was small (50 to 70). The mature Dhira Patra (Punjab) though deals with multiple crops but had merely 40 members. It is, therefore, suggested that these FPOs should deal with multiple crops and enhance their membership to an optimal level (say 500). By up-scaling the size of their operations and membership, the FPOs will succeed in generating a sufficient volume of business that will induce banks and other financial institutions to devise products to finance even the margins.

7.2 Credit Linkage of Farmer Interest Groups (FIGs):

Members of the FPO can be credit-facilitated by organizing them into FIGs on the lines the SHGs are financed. Tagat (2016) points out that the banks are wary of financing the FIGs (comprised largely of males) as risky. Hence, access to finance for men FIGs is difficult. He suggests that it would be better if “banks develop products like the Kisan Cards for the FIGs as it will reduce the transaction costs of the banks and also ensure better lending discipline among farmers through peer pressure”. Repayment would be “taken care of out of the working capital that the banks can provide to the FPOs against the security of the aggregated produce”. This seems practical and viable. Indeed, the FPO should comprise FIGs, each of 15-20 members. And, members of only those FIGs should be credit financed by the banks that are sponsored by the FPO. Repayment will be the joint responsibility of the FIG as in case of the SHG, with FPO as the guarantor. Furthermore, FPOs can become BCs for banks to lend to the FIGs.

7.3 Producer Organization Development Fund (PODF) and Small Farmers' Agribusiness Consortium (SFAC) Schemes:

FPOs too require financing for meeting working capital, and term loans. Two main sources that finance producer organizations are:

(i) NABARD under PODF (Producer Organization Development Fund),

Chapter 7

Institutional Credit Flow to Marginal and Small Farmers Through FPOs

82

(ii) SFAC (Small Farmers' Agribusiness Consortium) under

(a) Equity Grant Fund (EGF) and

(b) Credit Guarantee Fund (CGF)

7.3.1 PODF Scheme:

Under the PODF, “any registered organization viz., Producer Company (as defined under Sec 581 A in part IXA of Companies Act 1956), Producers Cooperatives, registered Farmer Federations, MACS (Mutually Aided Cooperative Society), industrial cooperative societies, other registered federations, PACS, etc setup by producers…” are eligible for financing. (http://agritech.tnau.ac.in/banking/PDF/ Financing%20and%20supporting%20Producer%20Organisations.pdf , accessed on August 24, 2017). Under the Fund, NABARD support is available to producer organizations in the form of grants, loans or a combination of both across three levers, viz. credit support, capacity building and market linkage. The details of support available in each of the three layers are given below:

A. Credit Support:

Ø term loans, or

ØComposite loans comprising of both working capital and term loans, or

Ø Working capital as composite loan

Ø Subordinated Debt

B. Capacity Building:

Ø Skill development

Ø Business planning

Ø Technological extension through classroom training

Ø Exposure visits, agricultural university tie-ups, expert meetings, etc.

Ø Any other capacity building initiative which directly benefits the producer organization.

Support can be in the form of grant, loans, or a combination of both. This support would essentially be a part of the overall project having loan component.

C. Market Linkages:

Ø Credit and/or grant support for setting up of

marketing infrastructure facilities for sale of produce.

Ø Support could even be in the lines of rural haat and rural mart.

Ø NABARD will explore tie ups with buyers for Producers Organization's produce.

Ø NABARD shall help form partnerships between Producers Organizations and local and large companies.

Ø Through existing schemes of MoRD and NHM, NABARD will promote creation of infrastructure, wherever possible.

The overall grant inclusive of all components would not exceed 20% of the loan amount.

D. Other Areas:

Ø Support for preparation of DPR up to 0.5% of the project cost or Rs.1 lakh whichever is lower, subject to other specified conditions.

Ø�Exclusive grant support for taking forward SHGs/ farmers' clubs/producer groups to the stage of having a Producers Organization.

Ø Any other support felt necessary for enabling a producer organization function in a better and profitable manner.

In our survey, only the Progressive Dairy Solution had availed the term loan of Rs. 36 lakh @ 12.10 per cent per annum and Rs. 5.06 lakh towards marketing, training, publicity etc under PODF to finance a project of setting up of six Milk Dispensing Systems at Ludhiana, Punjab. This is a large business enterprise with equity fund that amounted to Rs. 213.50 lakh and 400 shareholding memberships. Its total sales realization amounted to Rs. 798.23 lakh and net income of Rs. 17.61 lakh in 2016. The business enterprise was a mature one and had developed a sustainable business model. Being large and mature, it could meet all the terms and conditions of loan including that of the pledge of Fixed Deposit Receipt/s to the tune of 50 per cent of the loan amount and the personal guarantee of five Directors of the company. Thus, the Progressive Dairy Solution could meet all the collateral requirements of the loan.

But, the Dhira Patra (a mature one) did not raise loan to purchase machinery because of the collateral

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issues. Instead, it preferred subsidy than loans for this purpose. The FPOs in nascent and emerging stage will take long to accumulate collateral for raising such loans. From this point of view, the collateral requirements for such loans need to be revisited. Furthermore, loans for capacity building under PODF cannot be granted in isolation. Indeed it is a part of the overall project comprising the loan component. Such an encumbrance will act as hindrance in the way of generating finances for initial investments like preparing the business plan etc by the new FPOs. Moreover, promotional grant under the PRODUCE Fund is available only for a limited period. Therefore, some such provisions in the PODF scheme should be made that would meet the initial loan requirements for financing the operations of the FPO.

F u n d s f o r m e e t i n g w o r k i n g c a p i t a l requirements in the form of CCL from banks and other institutions are also available. For example, the Global SHGs (an emerging PRODUCE Fund FPO) had CCL of Rs. 1 lakh from a cooperative bank in Ludhiana. The Narsingh Company in Madhya Pradesh availed loan @ about 15 per cent for seed procurement, fertilizers etc. from FWWB during 2013-14 to 2015-16. It availed CCL from State Bank of India at more than 15 per cent rate of interest for seed procurement, fertilizers and mandi trading. Again the company did not avail any term loan for purchase of machinery etc.; could be because of the collateral issues.

Likewise, Dada Darbar in Madhya Pradesh also obtained CCL from the State Bank of India. But now the bank had refused extension of CCL to the company as it was in red. The IGS that promoted Kisan Ekta provided credit linkage to the farmers. It provided loans @ Rs. 10,000/- per acre subject to a maximum of Rs. 60,000/- per farmer for a period of three years. But the promoting institution (IGS) has deserted the company. Indeed, FPOs require permanent solution for their working capital requirements.

7.3.2 SFAC Schemes:

Eligibility conditions of availing funds under SFAC's EGF and CGF are similar, except for the number of individual share holders (minimum 50 under EGF and 500 under CGF) and cap on paid up capital of Rs. 30 lakh in EGF scheme. These, however, differ in their objectives and operational provisions. The

objectives of Equity Grant Fund (EGF) are: “(i) enhancing viability and sustainability of FPCs; (ii) increasing credit worthiness of FPCs; (iii) enhancing the share holding of members to increase their membership and participation in their FPC” (SFAC, Operational Guidelines). Under this Fund, matching equity grant of a maximum of Rs. 10 lakh can be sanctioned to an eligible farmer producer company whose paid up capital does not exceed Rs. 30 lakh as on the date of application. In our survey, none of the FPCs, including mature, had availed this scheme.

The Credit Guarantee Fund (CGF), on the other hand, has been setup with the primary objective of “providing a Credit Guarantee Cover to ELI to enable them to provide collateral free credit to FPCs by minimizing their lending risks in respect of loans not exceeding Rs. 100.00 lakhs” (ibid). Under this scheme too, none of the sampled FPOs had availed collateral free loans. To be eligible to avail funds under this scheme, a farmer producer organization must be registered under Section IX A of the Indian Companies Act. But, on the other hand, a producer organization registered under any of the following legal provisions is eligible to avail promotional grant under PRODUCE Fund.

Ii. “Cooperative Societies Act/Autonomous or Mutually Aided Cooperative Societies Act of the respective State.

ii. Multi-State Cooperative Society Act, 2002.

iii. Producer Company under section 581 (C) of Indian Companies Act, 1956, as amended in 2013.

iv. Company under section 25 of Indian Companies Act, 1956, as amended in 2013.

v. Societies registered under Society Registration Act, 1860.

vi. Public Trusts registered under Indian Trusts Act, 1882” (PRODUCE Fund, NABARD).

But the FPOs registered as cooperatives, state or multi-state, a society or a public trust are not eligible to avail financial assistance under EGF and CGF schemes, though these are eligible to avail NABARD's promotional grant.

Table 8.1 shows that of the seven sampled PRODUCE Fund FPOs (nascent and emerging) studied

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in Punjab, three are registered under the Indian Companies Act 1956, another three under the Society Registration Act 1860 and one under Cooperative Societies Act 1950. The PRODUCE Fund Dholewal, Kiratpur and Bathinda FPOs are though registered under the Indian Companies Act 1956, yet these were not eligible to avail funds under any of the SFAC schemes as these did not have any woman member in the Board of Directors. Moreover, all the PRODUCE Fund FPOs in Punjab had merely 50 to 70 and the Bathinda Farmers about 212 members; and hence were not eligible for Credit Guarantee Fund. These were the FPOs studied in Madhya Pradesh that satisfied all the conditions for availing funds under both the schemes. But none of these had applied for funds under any of the SFAC schemes. It is, therefore, suggested that

Ø The PRODUCE Fund FPOs, registered under any statutory provisions as provided by NABARD, should be made eligible to apply for financial assistance under the EGF and CGF.

Ø The FPOs should make continuous efforts to increase the number of their shareholding members to 500, which NABARD describes as optimal.

Ø FPOs should raise sufficient equity from the members.

Ø Marginal and small farmers be given adequate representation in BoD.

Ø The FPO must have at least one woman member in the Board of Directors.

Ø Provisions of the EGF and CGF schemes should be revisited.

7.4 Credit Linkage of Farmers Through FPOs:

Credit linkage of farmers through FPO has been happening in a certain way in some of the mature producer organizations. One such example is that of Lambra Kangri Multipurpose Cooperative Service Society that provided credit linkage to 14 of its 15 farmer members studied in the survey — six reported having availed new credit line from the society. It was running a farmer club (with NABARD's support), and three SHGs of 45 women that were given financial assistance of Rs. 13.45 lakh by the society. Its loan portfolio (short and long term) amounted to Rs. 501.38

lakh as on March 31, 2016. It provided loans both for agricultural and non-agricultural purposes, including domestic, and charged interest @ 10 per cent on loans of upto Rs. 1.5 lakh and 12-14 per cent above this amount, almost comparable with that charged by the commercial banks. Moreover, farmers availed KCC loans from the society at 7 per cent rate of interest and interest subvention of 3 per cent as per the rules of the Hoshiarpur Central Cooperative Bank. It earned net profit of Rs. 31.99 lakh in 2015-16 and Rs. 35.83 lakh in 2014-15, which was higher than its share value of Rs. 28.47 lakh and 26.90 lakh in the respective years. The society had been distributing dividend at the rate of 20 per cent to its shareholders since 1998. It is a self sustaining, profit earning and a bonus distributing society.

The FPO has the advantage that it is a community organization with a lot of social capital, and understands the psyche of the rural masses. That is why, its loan recovery was more than 90 per cent. It was operating in four villages, namely, Lambra, Beronkangri, Dadiana Kalan and Bagewal and had a total membership of 1421 persons.

Need for credit linking of the farmers to the producer organizations in nascent and emerging categories is also being increasingly felt. In the absence of such arrangements, these organizations have been playing their role by linking farmers for credit with banks. For instance, five (or 33.33 per cent) of the farmers studied in Darapur FPO reported that the society helped them to avail loans under the Credit Swap Scheme from the bank. In our sample, eight farmers (one each in Dholewal, Darapur, Global SHG and five in Jalandhar Vegetable Grower Producer Company) were bank linked by the FPO. Another two in Sujanpur FPO reported that the society helped them in opening KCC account in the bank. Thus, the nascent and emerging FPOs need to be groomed into building their capacity to meet credit needs of the farmers. These will be able to meet loan requirements of the farmers even for domestic purposes that will reduce their dependence on rapacious moneylenders considerably. In addition, these organizations can promote JLGs and SHGs and credit finance them.

Given their ecosystem architecture, the FPOs through organizing knowledge and awareness

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generation programmes have been sensitizing farmers about bank loan schemes and promoting financial literacy among them. Proportion of farmers who expressed improved awareness about such matters increased as the FPO moved up from nascent to maturity. From merely 15-20 per cent in nascent category, the proportion expressing improved awareness about financial matters rose to about 25-30 per cent in emerging and 40-50 per cent in the mature FPOs. Improved awareness about savings by a significant proportion of the farmer members in these FPOs was also reported.

The FPOs have also impacted the farmer members' dependence on moneylenders for loans.

About one-fourth of the farmer members in nascent, none in emerging and four-fifth in mature FPOs studied (including in Madhya Pradesh) reported reduced dependence on moneylenders, post FPOs. Moreover, proportion of the members who reported raising loans post FPO from the moneylender/ commission agent was quite low (merely 25 per cent in nascent and almost nil in mature category). In Punjab, this issue assumes special significance as the commission agent, who is a moneylender also, dominates the APMC markets in the state. However, with increasing market linkage and credit disbursing capabilities, the FPOs may achieve better results.

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This chapter has two sections. Section I evaluates the selected agri-FPOs as successful/partially successful/ unsuccessful, while Section II categorizes likewise the milk FPOs. Categorization of the FPOs is based on evaluation of the indicators reflecting on activities, benefits, access, support, contribution, participation, management etc. Average of the percentage score of best response against each broad indicator (named in title of the Table) depicted in chapters 3-5 for agri and in chapter 6 for milk FPOs have been used for this purpose. Separate benchmarks, unless otherwise specified, for nascent, emerging and mature FPOs have been applied for their categorization. The average percentage score thus obtained was compared with the benchmark and hence were categorized as successful/ partially successful/unsuccessful.The results, thus, obtained for the agri-FPOs are depicted in Tables 8.1 to 8.5 and for milk FPOs in Table 8.7. The benchmarks used are specified in the Table 8A below.

Mentioned below are the observations obtained from the field data that give an idea of the working of the FPO. These observations together with the information given in Tables 8.1 to Table 8.5 assess the success or otherwise of the FPOs.

Section I: Successful and Unsuccessful Agri-FPOs

8.1 Nascent or Incubation FPOs:

Five PRODUCE Fund nascent FPOs studied are Dholewal and Darapur promoted by SARDS, Qadian and Sujanpur by ISAP and Kiratpur Sahib by Yuva Mitr. Membership in these FPOs at the time of survey (50-70) was just above the benchmark for registration. These FPOs need to organize membership drives vigorously and regularly.

8.1.1 Dholewal FPO:

Dholewal FPO has been regarded as unsuccessful as it had not reported any marketing activity. Even the management members of the FPO did not sell wheat and paddy (produce basket crops) through the FPO. The problem probably lies with its produce basket. Interestingly, as revealed by the farmers, they sold whole of their wheat-paddy produce in the grain market, most likely through the Arhtiyas. Indeed, in Punjab, the state government ensures almost 100 per cent public procurement of both the crops at MSP. Sporadic instances of MSP higher than the market price also induce the farmers to sell their produce for public procurement. Assured marketing is another attraction. The FPO has obtained market license as an Arhtiya.

But, the volume of other vegetables produced by the farmers in this FPO was highest amongst all the selected nascent ones. It was 3359.67 quintals in Rabi (2015-16) and 5026.67 quintals in kharif season. The next highest, produced in any of the nascent FPOs, was 1800 quintals (Darapur). If the farmer members had preferred to sell wheat and paddy (the produce basket crops of the FPO) through the commission agent/Arhtiya then the FPO should have considered aggregation and sale of 'other vegetables' in the market. Moreover, vegetables were produced on a large scale by farmers in this FPO. Therefore, it should add vegetables in its produce basket.

More than 60 per cent of the farmers in the FPO were marginal and small. The FPO's share capital was

Chapter 8

Successful and Unsuccessful FPOs in Punjab and Madhya Pradesh

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Table 8A: Benchmark Norm for Best Responses

Particulars Nascent or Incubation



1. Unsuccessful Less than 25% Less than 30% Less than 40%

2. Partially Successful 25-50% 30-60% 40-70%

3. Successful More than 50% More than 60% More than 70%

about Rs. 0.97 lakh, with one member (CEO) holding almost 50 per cent. The number of trainings/workshops/ exposure visits organized by the FPO was almost comparable with others. The impact, access, and support activities of the FPO, as responded by the farmer members, were realized in respect of new production and practices, knowledge and awareness generation about ecology and cooperative philosophy and sharing of technology through FPO. As regards other activities, it was partial or unsuccessful. Whereas, feedback on the working of the FPO (including general body meeting as well as decision making) was more or less satisfactory, but that on POPI's handholding support and the CEO's role was unsatisfactory.

8.1.2 Darapur FPO:

The Darapur recorded highest sales turnover among the nascent FPOs that amounted to Rs. 17.60 lakh in 2016 (Rs. 20.17 lakh in 2015). The FPO dealt with 'peas' only which is its produce basket crop. Farmers' loyalty seems quite high in this FPO as they sold about 79.18 per cent of their crop (peas) through the organization. Moreover, it represented 80 per cent of the area on which the crop (peas) grown was sold through the FPO. In terms of number too, the proportion of farmer members who sold peas through the FPO was quite high (53.33 per cent), while the corresponding figure for marginal and small farmers was hundred per cent.

The FPO sold 'peas' either direct in the market (29 per cent) or through the commission agent (71 per cent). While the direct sale went smoothly, the transaction through commission agent soon ran into red as the payment of about Rs.14.00 lakh had not been received even by the time when the report was being written. Interestingly, decision to sell the produce through the commission agent was not taken in the BOD or the General Body. This sale, indeed, materialized through informal contacts. As a consequence, the CEO suffered who cleared dues of the farmers by raising loans from the informal sources.

The farmers, on the other hand, did not lose any money on their crop. The crop was procured from the farmers at a price higher than the market by Rs. 0.50 or Rs. 1/- per kg. It was because of the higher price paid to farmers than the market that a large proportion decided

to sell their crop of peas through the FPO. But it must have now shakened the confidence of the farmer members. Hence, the direct sale by FPO, rather than through Arthiya, was safest. Moreover, the number of layers between the farmer and the final customer should be minimum as it optimizes gains for the FPO, the farmer and the customer. The FPO, however, recorded net earnings of Rs. 2.26 lakh in 2016. The FPO had moderate equity fund of Rs. 0.35 lakh.

Except in marketing facilities where the FPO’s performance was satisfactory, it was partial or unsatisfactory on all the other indicators of access, support and activities. It organized a satisfactory number of trainings/workshops/exposure visits that were attended by about two-third of the farmers. Management of the FPO as reflected by attendance in General body meetings, decision making and its working was partial or unsuccessful. A moderate proportion of the farmer members expressed satisfaction with working of the FPO, handholding support of the POPI and role of CEO. With proper handholding support, the FPO has potential to grow. So, it is rated partially successful.

8.1.3 Qadian FPO:

The Qadian FPO may be regarded as unsuccessful. Produce sold through the FPO amounted to Rs. 3.80 lakh in 2016; of which 30 per cent was sold directly and 70 per cent through the commission agent. The FPO also generated net earnings of Rs. 0.80 lakh. But, its share capital (Rs. 0.12 lakh) was meager. The Market Committee, Qadian has issued a 'Kucha Arhtiya' license in the name of M/s 'FPO Commission Agent' authorizing S. Tarsem Singh (CEO, Qadian FPO) as the administrator/manager. That is, market license to Qadian FPO was issued in the personal name of its CEO, like in case of the individual commission agent. This may lead to conflict of interest that can be avoided if the license is issued in the registered name of the FPO. In Madhya Pradesh, such a license is issued in the registered name of the FPO only. In Punjab, it would require amendment in the Agriculture Produce Marketing Committee Act, 1961 that should incorporate a provision that the market license will be issued in the name of the FPO only. It is also suggested that the FPOs should be issued market license on preferential basis.

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But, surprisingly, none of the selected farmer members responded having sold agri-produce through the FPO. Moreover, proportion of the farmers expressing satisfaction with access, support and activities of the FPO was small. Meetings of the General Body of the FPO were not held regularly and that almost four-fifth expressed dissatisfaction with its working. Moreover, almost all the members expressed dissatisfaction as regards role of the CEO; but almost 80 per cent expressed satisfaction with POPI's handholding support.

8.1.4 Sujanpur FPO:

The next somewhat successful was the nascent Sujanpur FPO whose 81.82 per cent farmer members were marginal and small. But, merely 33.33 per cent of these sold produce through the FPO. Moreover, crop/s grown on merely one-third of the area or nearly 15 per cent of the total produce was sold through the FPO. The FPO sold produce direct in the market — a positive point. But the FPO did not generate any share capital from its members — a dark side. Also, it did not have any bank account. On the positive side, its sales realization during 2016 amounted to Rs. 5.50 lakh, and net earnings Rs. 0.50 lakh. But, least was the number of trainings/workshops that were organized by the FPO. Exposure visits organized by the FPO, and the impact as reflected in access to new production and practices, contributions in knowledge and awareness generation about the ecosystem, and sharing of technology through FPO was partial. The members responded that the FPO lacked utterly in marketing access, aggregation, processing/value addition etc. Hence, the farmers reported marginal gains from the FPO activities. Regarding its working, including feedback on POPI's handholding support as well as the CEO's role, the members expressed satisfaction. Overall, working of the FPO may be regarded as partially successful. However, with proper handholding support, it depicted potential to grow.

8.1.5 Kiratpur Sahib FPO:

This FPO operates in the foothills of Shivalik hill range, and seemed performing comparatively better. On many indicators, its agribusiness activities were satisfactory. The FPO was dealing with vegetables only, and was selling directly and majorly through the

local vendors. In doing so, the farmer members saved Arhtiya's commission (and the transportation costs). On the other hand, the FPO gained by charging a price higher than the wholesale price from the local vendors. Proportion of farmer members who sold through this FPO was highest (66.67 per cent) amongst all the PRODUCE; equal to that in mature in Punjab. Moreover, proportion of the produce sold (16.93 per cent) was also highest compared to that by other FPOs (including mature) in Punjab. Price realized from sale of crops through the FPO was higher than the market. The FPO had obtained license for sale of seeds, fertilizers, pesticides, insecticides, etc, and had tie-ups with several MNCs for supply of quality agri-inputs. The MNCs supplied these agri-inputs to the FPO on credit at concessional rates. The FPO transferred part of the concession to farmers who purchased these agri-inputs on cash. Though the farmers in the area were mostly marginal and small, but their membership was merely 46.15 per cent in the FPO. It did not report any income in 2016. Its sales realization was least amongst the selected nascent FPOs. However, the area in which it is operating is water-deficient, called Kandi area, and is manifested with wild animals that destroy the standing crops.

Regarding access, support and other activities of the FPO, the farmer members, overall speaking, expressed satisfaction. Participation and feedback of the farmer members on working of the FPO as well as the handholding support was satisfactory. Overall speaking, the FPO may be regarded as successful.

8.2 Emerging FPOs:

Emerging FPOs studied are the PRODUCE Fund Bathinda Farmer Producer Company and the Global SHGs Farmer Producer Organization, and the non-PRODUCE Fund SFAC companies, namely, Jalandhar Vegetable Grower Producer Company and the Sangrur Vegetable Grower Producer Company.

8.2.1 PRODUCE Fund Emerging FPOs:

8.2.1.1 Bathinda Farmer Producer Company:

Promoted by Ambuja, its produce basket comprised agri-inputs as seeds, fertilizers, insecticides and pesticides and was operating its agribusiness activities successfully. The FPO used to gather agri-input requirements of the farmer members, used to

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procure these in bulk quantities from the companies at subsidized/concessional rates and passed the benefit to them. In doing so, the farmers got quality agri-inputs and saved a lot of money that, some farmer members claimed, was in the range of Rs. 2000-3000 per acre. The FPO had its own shop for sale of the agri-inputs. The farmers also shared machinery on custom hiring basis that reduced the cost of cultivation. The FPO was being managed professionally with technical support from the Ambuja team of experts as well as the district level government departments.

The sales realization by the FPO was Rs. 18.55 lakh in 2016, and generated net earnings of Rs. 0.57 lakh. These earnings accrued on account of sale of agri-inputs as the FPO did not market agri-output of the farmers. The observation that each farmer could save about Rs. 2000-3000 per acre on purchase of quality agri-inputs through the FPO and the reduced cost on custom hiring of machinery speaks of the success of the FPO. The farmers attended meetings of the Governing Body of the FPO regularly and were satisfied with its working as well as the decision making. While almost all the farmer members expressed satisfaction with the POPI's handholding support, the feedback on CEO's role was one of dissatisfaction.

8.2.1.2 Global SHGs:

This organization has been federated from the 'Global Self Help Groups'. It was formed in 2011 and subsequently registered as a society on March 30, 2015 and under the PRODUCE Fund on January 19, 2016. Despite being an existing organization, its membership was small (51) at the time of survey. The business handled amounted to Rs. 3.11 lakh and the net earnings Rs. 1.11 lakh in 2016.

The processing of pickles, spices, honey, juices etc, which comprised its produce basket, was got done by the FPO from the SHGs, that generated employment opportunities in backward linkage of the supply chain. It obtained FSSAI certification (registration no. 22113441000543) for its brand 'Global'. It continued to receive technical support from Punjab Agricultural University, Ludhiana. Besides its own sale point, the FPO sold its products in Kisan melas and such exhibitions also.

The FPO purchased agri-inputs (pulses) from

other states, e.g. Rajasthan. Except the aggregation, processing and marketing activities, the farmer members rated its other activities as partial or unsuccessful. Moreover, feedback on POPI's as well as the CEO's role was not encouraging. Indeed, its organizational and management structure seemed weak and needed to be strengthened. So, the FPO was rated partially successful.

8.2.2 SFAC Non-PRODUCE Fund Companies:

Both the companies (Jalandhar Vegetable Grower Producer Company and Sangrur Vegetable Grower Producer Company) were promoted by ACTECH Agro, Noida (Uttar Pradesh) under the National Vegetable Initiative for Urban Clusters. Both are now defunct, though the ACTECH officials continued to work and receive salary (at the time of survey). The membership in both the companies was large (1500-2000), — divided into farmer interest groups, each of 15-20 members.

8.2.2.1 Jalandhar Vegetable Company:

The chairman of the Jalandhar Vegetable Company was a large farmer who owned about 150 acre of land and a cold storage in the area. Some members were distributed subsidy by the Department of Horticulture, Government of Punjab, on purchase of seeds @ Rs. 13,500 per acre on hybrid and Rs. 9000 on other seeds. The subsidy was given on a maximum of 3 acre of land. The producer organization also opened a shop in the area for sale of pesticides to the farmers. But, the shop was closed soon as the farmer members purchased pesticides from the nearby town (Malerkotla) at a lesser price or from the commission agent on credit. Various reasons for failure of the company that emerged from personal interviews were:

(Ii) No technical and marketing support to the FPC.

(ii) Commission agents- a threat to the business activities of the FPC.

(iii) Relatively inactive CEO.

(iv) Lack of attitude of the farmers to work in a cooperative spirit.

8.2.2.2 Sangrur Vegetable Company:

The farmer members in this FPC also availed subsidy @ Rs. 9000/- or Rs.13500/- under Rashtriya

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Krishi Vikas Yojna for implementation of Vegetable Initiative for Urban Clusters. This subsidy was distributed to farmers directly by the Department of Horticulture, Government of Punjab. In the beginning, some farmers were given training by the promoting agency. Some collective marketing activity on a very limited scale was also started. But the initiative failed to take off as the farmers soon became disinterested in collective sale of vegetables. They would share neither their production practices nor would they visit the field of other farmers. They purchased seeds and fertilizers individually and sold their produce through the

59commission agent . Moreover, poor feedback in working as well as the handholding support and participation was reported. Thus, the FPO was rated unsuccessful.

8.3 A Mature FPOs in Punjab:

8.3.1 Lambra Kangri Society:

The society though is primarily a PACS but since 1999 has diversified into agri inputs business, custom hiring (digitized) of agricultural machinery and implements, bio-fertilizers, diesel supply, bio-gas for domestic consumption, selling essential commodities to members at subsidized rates and so on. The society flourished under the guidance of a senior bureaucrat. It was running a farmer club (with NABARD support) and three SHGs of 45 women. It provided loans for both agricultural and non-agricultural purposes and charged interest @ 10 per cent on loans of upto Rs. 1.5 lakh and @ 12-14 per cent above this amount. Farmers availed KCC loans from the society at 7 per cent rate of interest and availed interest subvention of 3 per cent as per the rules of the Hoshiarpur Central Cooperative Bank.

A noteworthy feature noticed is that the society convinced the farmers not to take loans for consumption purposes. It was indeed a self sustaining, profit earning and a bonus distributing society. It earned net profit of Rs. 35.83 lakh in 2015 and Rs. 32.00 lakh in 2016, which was more than its share value of Rs. 26.90 lakh and 28.48 lakh in the respective years (Table 8.6). The society had been distributing dividend at the rate of 20 per cent to its shareholders since its inception. Table 8.6 gives a synoptic view of the banking activities and

financial health of the society.

The society had a commission agent license and had plans to venture into sale of agri produce in the mandi shortly. The society had plans for a holistic development of the villages in its vicinity like a commune. Such an all inclusive model needs to be adopted if the FPOs are to succeed as a business enterprise.

On almost all the indicators including access, support and activities, working of the FPO and the handholding support, it was rated successful. Overall, the FPO was successful.

8.3.2 Dhira Patra Society:

This is a society promoted by the individuals and was registered on March 6, 2012. It had 40 farmer members and nearly one-third were marginal and small. Of these, 23 (57.50 per cent) were the share holding members — 9 owned 69.21 per cent, 5 owned 19.25 per cent and the remaining 9 owned 11.52 per cent of the shares. The society was operating in 8 villages and the total area of the farmer members was 406 acre. Its BOD had 11 members, and all except one (a small farmer) were semi-medium or above farmers. Its equity fund was Rs. 11.19 lakh. Started as a farmer interest group, it is now a mature society and deals with dairy and dairy products, bee keeping, spices and organic agri-produce.

The reported total sales by the society amounted to Rs. 15.96 lakh in 2016 and registered net income of Rs. 1.57 lakh in this year. The society had market license and had been allocated space in the grain market in Ferozepur cantonment. The farmers sold almost 9.76 per cent of their produce through the FPO, and realized almost 21 per cent of their total sales value by selling through the FPO. Price gains were reported by the members. Moreover, cost of production of the crops sold through the FPO was lower. Except rated partially successful in institutional access to credit linkage and procurement, the society was rated successful on all the other counts. The society got motivations from the Department of Agriculture, Punjab. Its members availed the benefit of attending Kisan Melas, workshops, training programmes etc. Each member worked to adopt a specific activity

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59The government has also admitted that 'the farmers did not show interest in collective activity. Their interest was limited only to

availing subsidy on seeds'.

relating to production, processing and marketing as the main business activity, and hence promoted specialization in the business enterprise. Working of the FPO, including CEO's role, was rated satisfactory. However, the society should increase its membership, and higher representation should be given to marginal and small farmers in the BOD. Overall, the society was rated successful.

8.3.B. Mature FPOs in Madhya Pradesh:

8.3.3 Narsingh Farmers Company:

This FPO was promoted in 2006 under District Poverty Initiative Project (DPIP) (now State Rural Livelihood Mission- a programme sponsored by the World Bank) of the Government of Madhya Pradesh. It took 2-3 years to incubate. Till 2010, the FPO remained dormant and did not do any business. It was in 2010 when the FPO started providing seeds and fertilizers and other agri-inputs to farmer members. Till 2015, the business activities of the FPO remained low, and also passed through a tumultuous phase. It was in April 2016 that the Techno Serve — a multinational organization that was operating in 38 countries, including 17 states in India, under an agreement with Kellogs — started providing technical and business support to the FPO.

The President of Narsingh FPO was a small farmer who owned around 5 acre of land. All of its BOD members were marginal and small farmers. The FPO covered 25 villages in a radius of about 40-45 km and had a collection centre. The farmers were given training with technical support from Techno Serve in a group of males or 20-25 females. Besides, the FPO had 'group sevaks' who would disseminate technical knowledge in

60groups of 8-10 farmers in the village . The FPO would assess seed requirements of the farmer members, and about 80 per cent of them would purchase seeds from the FPO that they would grow and multiply. The FPO also sold fertilizers, pesticides and insecticides etc to the farmers. The company procured breeder seed, foundation seed and certified seed from the universities and other agencies also. Farmers used agri-machinery on custom hiring basis from the government centre or from other farmers and hence economized on cost of cultivation.

The FPO purchased Toor Dal in 2015-16 for SFAC and now for NAFED. The FPO had dealership for Syngenta seeds and IPL fertilizers. The FPO had prepared MIS of the farmers, crop-wise. This enabled the FPO to make business plan precisely and meet the crop demands without much hassles.

The FPO was assigned a target on behalf of SFAC by MBCFPCL to purchase Arhar and Chana Dal during 2015-16. Commission @ 1.50 per cent would be paid by the procurement agencies that the company and the MBCFPCL would share on 50:50 basis. In this way, both the company and the MBCFPCL were benefitted that provided a regular source of income to the FPO for sus tenance. So as to minimize the ro le of intermediaries, the FPO planned to undertake direct marketing of jaggery, Arhar and other products from its sale points. It started processing and marketing of Arhar Dal as a pilot project, and also applied for the FSSAI license. The women SHGs were federated into processing of Arhar Dal, that generated employment

61opportunities and linked them in the supply chain . All the 35-40 panchayats in the area supported the FPO. On almost all the counts, the FPO was rated successful.

8.3.4 Dada Darbar Company:

Promoted by ASA in 2011, the company performed satisfactorily till rabi season 2015 when its market license was cancelled due to non-payment of the mandi taxes. Hence, it had to withdraw from procurement operations. ASA transferred the CEO, and the one serving in Narsingh Company was transferred to it. Mishandling of funds by a CEO of the company proved another setback for the FPO. It involved the issue of two cheques (instead of one) to a firm that ultimately drained off its whole share capital. ASA withdrew from all its FPOs (including Dada Darbar) from March 2016. Being a shareholding member of the MBCFPCL, the FPO now looked towards it for help, including allocation of some procurement target and supply of seeds for sale amongst the farmers. As the FPO's market license had been withdrawn, it now (at the time of survey) proposed to undertake procurement operations on behalf of some other market license holding FPO .

60Later, the society snapped all ties with Techno Serve.61The latest enquiries revealed that the FPO could not get FSSAI certification. Moreover, high processing cost of Arhar Dal (through the women SHGs) was another reason to abandon the project.

92

It is satisfying that the FPO could mobilize 100 per cent advance money from the farmers to be paid to the MBCFPCL for supply of seeds. Thus the FPO, despite the glitches, enjoyed good reputation with the farmers. The FPO's membership grew by over 50 per cent from 830 in March 2014 to 1270 at the time of survey. It was operating in 15 villages. Almost 70 per cent of its members were marginal and small farmers. All its BOD members were marginal and small farmers. There was a woman representative on its BOD. The FPO availed cash credit limit from State Bank of India. Since the FPO was currently in red, therefore, the bank did not sanction extension in cash credit limit to the FPO. Thus, the FPO did not have any working capital to carry out the operations, and faced credit linkage and procurement issues (market license expired). Furthermore, it faced challenges from the traders and the landlords who were also operating in the grain market. The FPO, thus, was in red.

8.3.5 Kisan Ekta Company:

The company was promoted by BASIX on behalf of Indian Grameen Services and was registered in 2013. In the first two years, the company was in the farmers mobilization mode. The FPC distributed fertilizers worth Rs. 5-6 lakh in 2014 and Rs. 8 lakh in 2015 amongst the farmer members at a price less than the market. The Department of Horticulture, Government of Madhya Pradesh distributed fertilizers, seeds, pesticides etc worth Rs. 12000-15000 amongst member farmers of the FPO. Credit linkage of the farmers was one objective of the IGS. It provided loans @ Rs. 10,000/- per acre subject to a maximum of Rs. 60,000/- (and minimum Rs. 30,000/-) per farmer for a period of three years. Each loanee was insured for Rs. 50,000/-, with insurance premium of Rs. 2000/- per month.

The FPC suffered because its two CEOs left in quick succession, the first after two years and the second in less than a year in 2016. No CEO could be appointed since then till the time the survey was being carried out.

The FPC had marke t ing l i cense fo r procurement of grains that expired in 2016. It saved Rs. 1.7 lakh that had been exhausted in routine expenses as wages, salary etc. At the time of survey, one local resource person was making attempts to raise loan from

the IDBI to start procurement operations. It was in 2015-16 that the FPC procured 5547 quintals of Arhar on behalf of SFAC, worth Rs. 1.77 crore.

The FPO's area of operations extended over 31 villages, out of which majority (17) was drought prone. The size of holding in these villages was mostly small. The area is popular for the prime Sharvati Colour wheat. The IGS helped the society for three years only, and had now deserted it. The company though existed on papers, but it was virtually defunct; hence an unsuccessful one.

Section II:

8.4 Successful and Unsuccessful Milk FPOs:

The milk FPOs have been evaluated on the same criterion as for the agri-FPOs (for criterion, see Table 8.7 on p.103), but on a lesser number of indicators (17). Percentage score and the degree of success (S/PS/US) thus obtained for each milk FPO are depicted in Table 8.7.

8.4.1 Bathinda Milk Producer Union (MILKFED FPO):

This is a single village FPO that was promoted by the MILKFED- manufacturer of a well known brand 'Verka' in milk and milk products in Punjab. The FPO's activities were limited only to the produce basket 'milk' and supplied it to the Verka Milk Plant, Bathinda (a unit of MILKFED) for processing, value addition etc. Hence, there was no incentive for the FPO to scale up its activities. The FPO faced competition from local vendors in milk collection and incentivized its farmer members to supply milk to it by providing

(i) Good quality cattle feed;

(ii) Mineral mixture;

(iii) Artificial insemination services;

(iv) Service in animal health camps

MILKFED as a POPI did not provide any service relating to production and processing in agri-products. On most of the indicators, the farmer members rated the FPO as partially or unsuccessful. The decision making and working of the FPO was though satisfactory, but the role of CEO was unsatisfactory. The Project Monitoring Review Committee in its meeting held in December 2016

93

decided that the FPO should setup automatic milk collection unit in the village for testing of fat and SNF for improving aggregation and marketability. Overall, the FPO was unsuccessful.

8.4.2 Young Innovative:

The society was successful in more than doubling its membership from 50 at the time of registration to 112 (all shareholders) at the time of survey. Moreover, the number of villages being accessed by the society doubled from 2 to 4 over the same period. It had one woman member in its BOD. Its equity fund was Rs. 0.59 lakh- contribution by BOD members was @ Rs. 1000/- each and Rs. 500/- by others. Its sales amounted to Rs. 22.77 lakh, and net income Rs. 3.77 lakh in 2016. On all the indicators, the FPO was successful. The average price paid per litre of milk supplied was higher than that paid by other sampled FPOs (including mature). But, the FPO was unsuccessful on important indicators as production technologies, access to marketing, processing and storage, intuitional access and post FPO gains. Though the farmer members rated the FPO as successful as regards decision making and the POPI's handholding support, but on several other counts, including the CEO's role, it was rated partially/ unsuccessful.

The processing equipment costing about Rs. 1.50 lakh and other physical infrastructure were owned by the CEO. The FPO had not distributed any profit amongst the members. The payment used to be made in cash in 10-12 days of the supply of milk.

The Project Monitoring Review Committee in its meeting held on November 28, 2016 noted that the milk collection by the FPO was 400-450 kg per day, that should be increased @ 25 per cent every year in next 3-5 years. The FPO was suggested to increase its sale points, besides opening an input store for sale of quality animal feed and calcium to increase milk yield of the milch animals. The FPO had applied for license for sale of inputs. The FPO was yet to tie-up with large establishments for sale of milk and milk products. Based on its performance on all the indicators, the FPO was rated partially successful.

8.4.3 Progressive Dairy Solution:

Conceived in 2002 with 50-60 dairy farmers, the Progressive Dairy Solution grew into a large mature

business entity with turnover of about Rs. 7.98 crore and net income of Rs. 17.61 lakh in 2016. It took almost eight years of concerted efforts for the Progressive Dairy Farmers Association (PDFA) to register itself as a private limited company under the Companies Act in 2010. In 2013, it was converted into a public limited company. In the initial stages, the entity concentrated on improving the breed of cows for increasing the milk yield. It imported semen from Denmark and succeeded in increasing milk yield from 25 to 40 and even 50 litre per milch animal per day. The Chairman of the PDFA visited Israel with support from Punjab Government and was inspired by the dairy practices of farmers in Israel. Subsequently, he visited America, Canada, New Zealand and Brazil during 2006-09. In 2010, he managed to send a group of about 10 dairy farmers from Punjab to these countries.

With the knowledge acquired, the farmers improved management, cow shed design, equipments and ecosystem for the cows. The improved silage making practices has since increased among dairy farmers in Punjab. In this way, the PDFA successfully introduced innovations as artificial insemination, silage making, creating hygiene conditions in dairy farming. In 2007-08, one Canadian farmer on his visit to Punjab demonstrated as how to make corn silage which was more nutrient for the animals. The corn silage increased milk yield of the animals.

Punjab had not made much progress in dairy farming till 2002. The PDFA's initiatives accelerated the pace of growth in many areas of dairy farming. The PDFA could achieve it without any support from the state government. In the initial stages, the business entity faced several bottlenecks, and competition from the giants like Nestle. It also faced some glitches created by some officials in district administration. It was during 2007-09 that the best practices in dairy farming started taking place with the help of companies engaged in dairy inputs like veterinary medicines, feed, milking, fodder cutter, silage making etc. The PDFA arranged funds for the farmers to participate in the dairy shows. At almost the same time, the State Farmers Commission, PAU and the state Department of Animal Husbandry extended support. The PDFA initially used the PAU platform to carry out its business activities, and later shifted its office premises in a rented accommodation in a village near

94

Ludhiana. The PDFA had organized 11 dairy shows so far with participation of companies from Canada, New Zealand, USA etc, along with local ones dealing with dairy inputs and outputs. Training of dairy farmers by experts from abroad was also arranged by the unit. The unit introduced farmers to banks to avail loans for dairy farming and the recovery rate was also satisfactory. It is common knowledge that a 20 milch animals size dairy is viable, while the average for the farmers of PDS worked out in our study at 37.60. Thus, dairy for the farmer members of PDS was a viable occupation. It sold its products under the brand 'La Pure'. Its total sales amounted to Rs. 7.98 crore in 2016, up by 53.20 per cent

compared to that in 2015. It recorded a net income of Rs. 17.60 lakh in 2016, which was more than three times of that in 2015. Its equity fund was Rs. 2.13 crore. On almost all the indicators, the FPO was rated successful.

From the growth story of the Progressive Dairy Solution, it follows that the FPO should lay emphasis on

(i) Training and exposure visits of the farmers;

(ii) Marketing and processing;

(iii) Management techniques;

(iv) New technology and its dissemination

95

Tab

le 8

.1 G

ener

al

Info

rmati

on

ab

ou

t th

e F

PO

s

Par

ticu

lars

Na

scen

t C

ate

gor

y E

mer

gin

g C

ate

gor

y M

atu

re C

ateg

ory

Dholewal

Darapur

Qadian

Sujanpur

Kiratpur Sahib

Bathinda Farmers

Global SHGs

Jalandhar Vegetable Co.

Sangrur Vegetable Co.

Lambra Kangri

Dhira Patra

Narsingh Co.

Dada Darbar Co.

Kisan Ekta Co

Dat

e of

sig

nin

g of

M

oU(*

)/R

egis

trat

ion

w

ith

NA

BA

RD

($/$

$)/

Oth

ers

agen

cies

(@)

10.02.16*

24.03.15*

09.07.15*

09.07.15*

28.03.16*

25.04.16$

19.01.16$$

13.07.13@

02.08.13@

27.07.1920@

06.03.12@

06.02.06@

08.09.11@

11.3.13@

Nam

e of

the

PO

PI1

S

AR

DS

S

AR

DS

IS

AP

IS

AP

Y

uva

M

itr

Am

bu

ja

Glo

bal

A

CT

EC

H

AC

TE

CH

-

- D

PIP

A

SA

IG

S

FP

O r

egis

tere

d as

2 C

S

S

C

oop

.S

C

C

S

C

C

S#

S

C

C

C

Nu

mb

er

of

farm

ers

Mem

ber

s

67

67

52

55

52

21

2 5

1 1

96

2 1

56

5 1

42

1##

40

28

72

12

70

70

0

%

of

mar

gin

al

and

smal

l fa

rmer

s 6

2.6

8 7

0.1

5 1

00

.00

81

.82

46

.15

NA

N

A

97

.09

88

.88

NA

3

2.5

0 N

A

70

.00

NA

No.

of

T

rain

ings

/ w

ork

shop

/exp

osu

re

visi

ts o

rgan

ized

4

5 5

2 5

4

4 1

4

2 5

4 7

NA

Not

e: 1

SA

RD

S=

Su

rak

sha

Agr

icu

ltur

al a

nd

R

ura

l D

evel

op

men

t S

ocie

ty;

ISA

P=

In

dia

n

Soc

iety

o

f A

gri

cult

ure

Pro

fess

ion

als

; A

mbu

ja=

Am

buja

C

emen

tF

oun

dat

ion

; A

CT

EC

H=

AC

TE

CH

In

form

atio

n S

yste

ms

Ltd

.; D

PIP

= D

istr

ict

Po

vert

y In

itia

tive

Pro

ject

; A

SA

= A

ctio

n f

or S

oci

al D

evel

opm

ent;

IG

S=

In

dian

Gra

min

Ser

vice

s. 2

C=

Com

pan

y; S

= S

oci

ety;

Co

op.S

= C

oop

erat

ive

So

ciet

y. $

Dat

e o

f re

gis

trat

ion

(In

itia

l)=

21.

03.

14

; $$

Dat

e o

f re

gis

trat

ion

(In

itia

l)

= 3

0.0

3.1

5. #

Re-

reg

istr

atio

n a

s a

mul

ti-p

urp

ose

soci

ety

in 1

999

. ## A

gric

ult

ural

=3

20 a

nd

Non

-agr

icu

ltur

al=

110

1.

Sr.

n

o.

.

1

2

3

4

5

6

96

Ta

ble

8.2

: E

con

om

ic A

ctiv

ity

of

the

FP

Os-

A S

yno

pti

c V

iew

S

r.

no.

Part

icu

lars

cod

e

Nasc

ent

Cate

gor

y

Em

ergin

g C

ate

gor

y M

atu

re

Cat

egor

y

Dholewal

Darapur

Qadian

Sujanpur

Kiratpur Sahib

Bathinda Farmers

Global SHGs



Lambra Kangri

Dhira Patra

Narsingh Co.

Dada Darbar Co.

Kisan Ekta Co.

1

Mar

ket

ing

chan

nel

s

(wit

hin

the

stat

e)

1

-

S

S

S

S

S S

US

US

S S

S U

S U

S

Dir

ect

sale

2

-

29

% 3

0%

10

0% 1

00%

10

0% 1

00%

- -

10

0%

30

%

17

.8%

5

6%

1 2

6.2

%2

- -

Com

mis

s-

ion

Agen

t

-

7

1%

3

7

0%

-

-

-

- -

- -

70

% -

- -

2S

ales

re

aliz

atio

n

in

2016 (

Rs.

lak

h)

1

-

S

S

S

S S

S U

S U

S S

S S

US

US

2

-

17

.60

(2

0.0

7)$

3.8

0

5.5

0

2.8

2

18

.55

(23.

33)

$

3.1

1 N

A N

A

22

4.5

4 (2

15.8

3) $

15

.96

$$ (1

0.1

3) $

97

9.5

7 (7

8.11

) $

10

.56

$ 1

2.6

7$

3N

et

inco

me

in

2016

(Rs.

lak

h)

1

-

S

S

S

PS

S S

US

US

S S

S U

S U

S

2

-

2.2

6

(3.2

1)$

0.8

0

0.5

0

0.0

0

0.5

7 (1

.43

)

$

1.1

1 N

A N

A

32

.00

(35.

83)

$

1.5

7$$

(0.8

5)

$

2.3

7 (1

.13

)

$

0.3

4$

0.6

0$

4N

et

inco

me

as

%

of

sale

s re

aliz

atio

n (

2016)

1

-

S

S

S

PS

S S

US

US

S S

S U

S U

S

2

-

12

.84

(1

5.9

9)

$

21

.05

9

.09

0

.00

3.0

6 (6

.13

)$

35

.69

NA

NA

14

.25

(16.

60)

$

9.8

3 (8

.39

)$

0.2

4 (1

.45

)$

3.1

8$

4.7

1$

5E

quit

y F

un

d

(R

s. L

akh

)

1

S

S

S

US

S

S S

S S

S S

S S

S

2

0.9

7

0.3

5

0.1

2

-

0.9

2

1.6

2 0

.51

7.1

0 6

.00

28.

48 11

.19

2.8

9 3

.32

9.2

2 N

otes

1:

A

pos

itiv

e va

lue

is r

ated

succ

essf

ul

(S),

zer

o

(0.0

0)

par

tial

ly s

ucc

essf

ul

(PS

) an

d n

ot u

nder

taken

(-)

unsu

cces

sful

(US

). 2

: C

ode;

FP

O 1

=C

ateg

oriz

ed a

s S

ucc

essf

ul (

S)/

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tial

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cces

sfu

l (P

S)/

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-su

cces

sfu

l (U

S).

2=

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rage

Per

cen

tage

Sco

re.

3:

1S

FA

C P

rocu

rem

ent,

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PO

to

FP

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ale,

3O

uts

ide

the

stat

e. $

For

th

e ye

ar=

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5.$$

As

per

th

e in

com

e ta

x re

turn

of

the

FP

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n 2

016

.

97

Ta

ble

8.3

: A

gri

-

Bu

sin

ess

Th

rou

gh

th

e F

PO

an

d F

arm

ers’

Ben

efits

Sr.

N

o.

Par

ticu

lars

Co

de

N

asce

nt

Cat

ego

ry

Em

erg

ing

Cat

ego

ry

Mat

ure

Ca

teg

ory

Dholewal

Darapur

Qadian

Sujanpur

Kiratpur Sahib

Bathinda Farmers

Global SHGs



Lambra Kangri

Dhira Patra

Narsingh Co.

Dada Darbar Co.

Kisan Ekta Co.

1

2

3

4

5

6

7

8

9

10

1

1

12

1

3

14

15

16

1%

of

resp

on

dent

sm

all

and

m

arg

inal

far

mer

s w

ho s

old

cr

op/s

thr

ough

th

e F

PO

al

so

1

US

S

U

S

PS

S

N

A

S

US

U

S

NA

S

S

S U

S 2

0

.00

1

00

.00

0

.00

4

1.6

7

71

.43

0

.00

1

00

.00

0

.00

0

.00

0

.00

8

3.3

3

75

.00

10

0.0

0 0

.00

2%

of

the

resp

on

den

t f

arm

er

mem

ber

s w

ho

sold

th

rou

gh

the

FP

O

1

US

S

U

S

PS

S

N

A

PS

U

S

US

N

A

PS

S

PS

US

2

0.0

0

53

.33

0

.00

3

3.3

3

66

.67

N

A

33

.33

0

.00

0

.00

N

A

66

.67

8

0.0

0 4

6.6

7 0

.00

3%

are

a u

nd

er t

he

crop

/s

sold

thr

oug

h th

e F

PO

1

U

S

S

U

S

P

S

P

S

N

A

P

S

U

S

U

S

N

A

U

S

U

S P

S U

S 2

0

.00

79

.77

0.0

0

33

.33

39

.38

NA

42

.24

0.0

0

0.0

0

NA

8.1

3

39

.38

46

.67

0.0

0 4

Pro

por

tio

n o

f th

e pr

odu

ce

of

indi

vidu

al c

rop

s so

ld

thro

ug

h th

e F

PO

(C

ateg

oriz

ed o

n hi

ghes

t

pro

por

tio

n o

f an

y c

rop

sold

),

1

U

S

S

US

S

S

NA

PS

US

US

NA

S

S

S

US

2

0.0

0

Pea

s=

79

.18

%

0.0

0

Pea

s =

1

0.6

6%

;

O

ther

ve

g.=

8

6.8

7%

;

Ora

nge=

5

0.0

0%

Pea

s=

10

0%

;

Oth

er V

eg.=

8

3.2

9%

; L

ady

fing

er=

2

5.0

0%

NA

Oth

er

Veg

.=

74

.57

%;

Hon

ey=

1

00

%

0.0

0

0.0

0

NA

Wh

eat=

9

.92

%;

P

addy

=

0.4

0%

; O

ther

Veg

.=

28

.53

%;

Mu

star

d,

Pot

ato

an

d Ja

gger

y=

10

0%

Wh

eat=

4

8.5

4%

; M

ust

ard=

1

00

%;

Arh

ar=

6

3.1

5%

; S

uga

rcan

e=

52

.94

%;

Jagg

ery=

3

.13

%;

Ura

d=3

2.0

5;

M

oo

ng=

7

3.3

3%

Wh

eat=

2

.89

%;

Gra

m=

5

8.7

3%

; A

rhar

=

67

.73

%

0.0

0

5%

of

pro

duce

so

ld

thro

ug

h F

PO

$

1

US

S

US

S

S

NA

US

US

US

NA

PS

S

US

US

2

0.0

0

5.8

3

0.0

0

14

.87

16

.93

NA

1.1

3

0.0

0

0.0

0

NA

9.7

6

42

.62

1.1

8

0.0

0 6

Co

st o

f pr

odu

ctio

n co

mpa

red

w

ith

tha

t w

hen

sold

in

the

mar

ket

$$

1

US

PS

US

PS

PS

-

S

US

US

-

S

PS

PS

US

2

-

Hig

her

-

Sam

e

Hig

her

NA

Lo

wer

-

-

NA

Lo

wer

Hig

her

Hig

her

- 7

Pri

ce

real

ized

of

the

cro

p/s

com

pare

d t

o th

at i

n t

he

mar

ket

$$

1

US

PS

US

PS

S

-

S

US

US

-

S

S

PS

US

2

-

Lo

wer

-

Lo

wer

Hig

her

NA

Hig

her

-

-

NA

Hig

her

Hig

her

Sam

e

- 8

Yie

ld p

er a

cre

$$

1

US

US

US

PS

PS

-

PS

US

US

-

S

S

S

US

2-

Lo

wer

fo

r -

Lo

wer

fo

r p

eas,

S

ame

for

othe

r v

ege-

NA

Lo

wer

fo

r ot

her

-

-N

AL

ow

er f

or

wh

eat

and

Hig

her

for

all

crop

s so

ld

Hig

her

for

wh

eat

-

98

Sr.

N

o.

Par

ticu

lars

Co

de

N

asce

nt

Cat

ego

ry

Em

erg

ing

Cat

ego

ry

Mat

ure

Ca

teg

ory

Dholewal

Darapur

Qadian

Sujanpur

Kiratpur Sahib

Bathinda Farmers

Global SHGs



Lambra Kangri

Dhira Patra

Narsingh Co.

Dada Darbar Co.

Kisan Ekta Co.

peas

high

er

for

oth

er

veg

e-ta

bles

an

d sa

me

for

oran

ge

tabl

es a

nd

low

er f

or

lady

fing

er

veg

e-ta

bles

pad

dy a

nd

high

er f

or

othe

r v

ege-

tabl

es

thro

ug

h th

e F

PO

and

Arh

ar,

and

low

er

for

gram

9G

ross

sal

es v

alu

e re

aliz

ed

by t

he s

elec

ted

farm

er

mem

ber

s as

% o

f to

tal

sale

s po

st F

PO

$

1

US

P

S

US

S

S

U

S

PS

U

S

US

U

S

S

S P

S U

S 2

-

4

.59

0

.00

8

.30

1

4.9

2

0

.00

4

.32

0

.00

0

.00

0

.00

2

0.8

9

2

8.2

7 1

0.1

7 0

.00

Not

es1:C

ode;

FP

O 1

=C

ateg

oriz

ed a

s S

ucc

essf

ul

(S)/

Par

tial

Su

cces

sfu

l (P

S)/

Un-

succ

essf

ul

(US

). 2

= A

vera

ge P

erce

ntag

e S

core

.

2

:$ F

or n

asce

nt a

nd

emer

gin

g ca

tego

ry-

Un

succ

essf

ul

(US

)=

0%; P

arti

ally

Su

cces

sfu

l (P

S)=

upt

o 5%

; S

ucc

essf

ul (

S)=

>5%

and

for

mat

ured

cat

egor

y-

Un

succ

essf

ul

(US

)=

10%

; P

arti

ally

Su

cces

sfu

l (P

S)=

10-

20%

; Su

cces

sfu

l (S

)= >

20%

.

3

:$$

Rat

ed a

s pe

r p

erso

nal

Ju

dge

men

t

4

:NA

= N

ot A

pp

lica

ble.

99

Tab

le 8

.4:

Acc

ess,

Su

pp

ort

an

d O

ther

Act

ivit

ies

of

the

FP

O

Sr.

no

.

Par

ticu

lars

Co

de

Nas

cent

Cat

egor

y

Em

ergi

ng C

ateg

ory

M

atu

re

Dholewal

Darapur

Qadian

Sujanpur

Kiratpur Sahib

Bathinda Farmers

Global SHGs



Lambra Kangri

Dhira Patra

Narsingh Co.

Dada Darbar Co.

Kisan Ekta Co.

1

2

3

4

5

6

7

8

9

1

0 1

1 1

2 1

3 1

4 1

5 1

6

1

Impr

ov

ed A

cces

s to

New

P

rodu

ctio

n a

nd

Pra

ctic

es

(in

clu

din

g In

puts

)

1

S

PS

U

S

PS

S

P

S

US

P

S

PS

P

S

S

S

PS

U

S

2

53

.33

32

.00

22

.67

34

.67

77

.33

53

.33

28

.00

52

.00

32

.00

57

.33

94

.67

97

.33

62

.67

32

.00

2

Impr

ov

ed A

cces

s to

M

ark

etin

g,

Pro

cess

ing

/Val

ue

Add

itio

n, T

esti

ng

and

Sto

rag

e F

acil

itie

s

1

US

U

S

US

U

S

PS

P

S

PS

U

S

US

N

A

S

S

PS

U

S

2

13

.33

19

.05

2.8

6 1

8.1

0 3

7.1

4 3

3.3

3 3

4.2

9 7

.62

4.7

6 6

.67

87

.62

10

0.0

0 5

1.4

3 4

.76

3

Impr

ov

ed I

nst

itu

tio

nal

Acc

ess

to T

rain

ing,

C

redi

t L

ink

age

and

P

rocu

rem

ent

1

US

U

S

US

U

S

PS

P

S

PS

U

S

US

P

S

PS

P

S

US

U

S

2

20

.83

20

.00

7.5

0 1

3.3

3 3

5.8

3 4

3.3

3 3

0.0

0 2

7.5

0 1

2.5

0 6

1.6

7 5

5.0

0 6

2.5

0 3

0.8

3 0

.00

4

Impr

ov

ed E

con

om

ic

Gai

ns

fro

m F

PO

A

ctiv

itie

s

2

US

U

S

US

U

S

US

U

S

US

U

S

US

U

S

S

S

US

U

S

2

12

.38

16

.19

1.9

0 6

.67

16

.19

10

.48

21

.90

4.7

6 3

.81

34

.29

74

.29

85

.71

20

.95

0.0

0

5

FP

O’s

co

ntri

buti

ons

in

Kno

wle

dg

e an

d A

war

enes

s g

ener

atio

n

abou

t ec

olog

y,

coo

per

ativ

e p

hilo

soph

y an

d fi

nan

cial

lit

erac

y

1

S

PS

P

S

PS

S

S

P

S

PS

P

S

S

S

S

PS

U

S

2

51

.11

40

.74

28

.89

40

.74

74

.07

80

.00

51

.85

58

.52

43

.70

91

.11

94

.07

10

0.0

0 6

2.9

6 2

4.4

4

6

FP

O’s

co

ntri

buti

ons

in

Co

mm

uni

ty a

nd

So

cial

D

evel

op

men

t

1

PS

P

S

PS

P

S

S

S

S

PS

U

S

S

S

S

PS

U

S

2

29

.70

41

.21

35

.15

47

.88

73

.94

77

.58

61

.21

50

.30

38

.18

78

.18

80

.00

98

.79

48

.48

24

.24

7

Sat

isfa

cto

ry F

PO

A

rran

ge-

men

ts R

egar

din

g A

ggre

-gat

ion,

val

ue

addi

tion

an

d pa

ym

ent

of

Pro

duce

1

US

P

S

US

U

S

PS

U

S

S

US

U

S

US

S

S

P

S

US

2

2.7

8 3

5.5

6 0

.00

22

.78

29

.44

13

.89

66

.67

3.8

9 5

.00

0.0

0 8

8.8

9 8

1.6

7 5

5.5

6 0

.00

8

Sat

isfa

cto

ry S

hari

ng o

f T

echn

olo

gy

1

S

U

S

PS

S

S

S

P

S

US

U

S

PS

S

S

P

S

US

2

55

.24

2.8

6 4

4.7

6 5

6.1

9 8

5.7

1 6

0.0

0 3

9.2

6 2

2.2

2 1

7.0

4 6

5.9

3 9

4.0

7 1

00

.00

58

.52

17

.04

9

Tes

tin

g F

acil

ity

wit

h th

e F

PO

1

U

S

PS

U

S

PS

S

P

S

US

U

S

US

N

A

S

S

S

US

2

13

.33

40

.00

0.0

0 4

6.6

7 9

3.3

3 4

6.6

7 0

.00

26

.67

0.0

0 0

.00

86

.67

10

0.0

0 1

00

.00

20

.00

10

P

roce

ssin

g f

acil

ity

wit

h 1

N

A

NA

N

A

NA

N

A

NA

S

U

S

US

N

A

S

S

US

U

S

100

Not

es:

Cod

e; F

PO

1=

Cat

egor

ized

as

Su

cces

sful

(S

)/P

arti

al S

ucc

essf

ul

(PS

)/U

n-s

ucc

essf

ul

(US

). 2

= A

vera

ge P

erce

ntag

e S

core

.

Par

ticu

lars

Co

de

Nas

cent

Cat

egor

y

Em

ergi

ng C

ateg

ory

M

atu

re

Dholewal

Darapur

Qadian

Sujanpur

Kiratpur Sahib

Bathinda Farmers

Global SHGs



Lambra Kangri

Dhira Patra

Narsingh Co.

Dada Darbar Co.

Kisan Ekta Co

the

FP

O

2

0.0

0 0

.00

0.0

0 0

.00

0.0

0 0

.00

80

.00

0.0

0 0

.00

0.0

0 1

00

.00

10

0.0

0 0

.00

0.0

0

Mar

ket

ing

Fac

ilit

ies

1

U

S

S

US

P

S

S

US

S

U

S

US

N

A

S

S

S

US

2

0.0

0 6

0.0

0 0

.00

33

.33

60

.00

6.6

7 8

0.0

0 0

.00

0.0

0 0

.00

93

.33

10

0.0

0 9

3.3

3 2

0.0

0

2

0.0

0 6

6.6

7 2

6.6

7 7

3.3

3 5

3.3

3 2

6.6

7 6

.67

6.6

7 0

.00

73

.33

10

0.0

0 6

0.0

0 3

3.3

3 1

3.3

3

Sr.

no

.

.

11

101

Tab

le 8

.5:

Part

icip

ati

on

an

d F

eed

back

of

the

Farm

ers

Sr.

no

. P

arti

cula

rs

Co

de

Nas

cen

t C

ateg

ory

E

mer

gin

g C

ateg

ory

M

atu

red

Dholewal

Darapur

Qadian

Sujanpur

Kiratpur Sahib

Bathinda Farmers

Global SHGs



Lambra Kangri

Dhira Patra

Narsingh Co.

Dada Darbar Co.

Kisan Ekta Co.

1

2

3

4

5

6

7

8

9

1

0 1

1 1

2 1

3 1

4 1

5 1

6 1

A

tten

ding

tra

inin

g

and

expo

sure

vis

its

regu

larl

y

1

US

S

P

S

S

S

US

U

S

US

U

S

S

S

PS

U

S

US

2

0

.00

66

.67

26

.67

73

.33

53

.33

26

.67

6.6

7 6

.67

0.0

0 7

3.3

3 1

00

.00

60

.00

33

.33

13

.33

2

Att

endi

ng G

ener

al

Bo

dy M

eeti

ng

Reg

ula

rly

1

PS

U

S

US

P

S

S

S

PS

U

S

PS

S

S

S

P

S

US

2

3

3.3

3 2

0.0

0 1

3.3

3 4

6.6

7 8

0.0

0 6

0.0

0 3

3.3

3 2

6.6

7 4

6.6

7 8

6.6

7 9

3.3

3 1

00

.00

53

.33

13

.33

3

Fee

dbac

k o

n

deci

sio

n m

akin

g i

n th

e F

PO

(E

xcel

lent

an

d S

atis

fact

ory)

1

S

PS

S

S

S

S

S

P

S

S

S

S

S

S

US

2

5

3.3

3 4

6.6

7 6

6.6

7 8

6.6

6 8

6.6

7 1

00

.00

60

.00

33

.33

73

.33

10

0.0

0 1

00

.00

10

0.0

0 9

3.3

4 0

.00

4

Impr

essi

on

abou

t w

ork

ing

of

the

FP

O

(Su

cces

sfu

l)

1

PS

P

S

PS

S

P

S

S

PS

P

S

PS

S

S

S

P

S

US

2

2

6.6

7 0

.00

@

20

.00

53

.33

26

.67

73

.33

6.6

7 0

.00

40

.00

10

0.0

0 6

6.6

7 1

00

.00

60

.00

0.0

0

5

Fee

dbac

k o

n P

OP

I’s

han

dlin

g su

pp

ort

(v

ery

go

od a

nd

goo

d)

1

US

P

S

S

S

S

S

US

U

S

US

N

A

NA

N

A

NA

N

A

2

0.0

0 4

6.6

7 8

0.0

0 1

00

.00

60

.00

93

.33

20

.00

0.0

0 0

.00

*

*

*

*

*

6

Fee

dbac

k o

n C

EO

’s

role

(v

ery

go

od a

nd

goo

d)

1

US

P

S

US

S

S

U

S

US

U

S

US

S

S

S

P

S

US

2

0

.00

46

.67

0.0

0 8

0.0

0 6

0.0

0 1

3.3

3 0

.00

0.0

0 0

.00

10

0.0

0 1

00

.00

10

0.0

0 1

00

.00

0.0

0

Not

es: C

ode

1; F

PO

1=

Cat

egor

ized

as

Su

cces

sfu

l (S

)/P

arti

al S

ucc

essf

ul

(PS

)/U

n-s

ucc

essf

ul

(US

). 2

= A

vera

ge

Per

cent

age

Sco

re.

2

:*T

hes

e F

PO

s ar

e ru

n, m

anag

ed a

nd a

dm

inis

tere

d b

y th

e re

spec

tiv

e m

anag

emen

ts i

nst

ead

by t

he P

OP

I.

3:@

Wor

kin

g o

f th

e F

PO

rat

ed ‘

part

iall

y s

ucc

essf

ul’

by

46

.67

per

cen

t an

d ‘

aver

age’

by

40

.00

per

cen

t o

f th

e re

spon

den

t fa

rmer

s.

102

Table 8.6: Banking Activities and Financial Performance of Lambra Kangri Society (Amount in Rs. Lakh)

Year 2011 2012 2013 2014 2015 2016 Membership 1611 1656 1700 1729 1750 1421

Shares 20.32 22.10 23.86 25.35 26.90 28.48 Saving & FDR of Members 1217.50 1393.05 1622.04 1857.70 1905.75 2040

Loan (short time and long time)

539.39 581.61 533.33 502.49 488.45 501.38

Fix Deposits In Banks 648.03 764.29 962.71 1253.30 1350 1438

Saving Accounts In Banks 57.42 47.99 63.18 73.09 46.46 77.58

Net Profit 22.69 37.49 33.03 32.95 35.83 32.00 Total Working capital 1392.01 1600.21 1853.19 2131.14 2189.80 2347.53

Table 8.7 Successful, Partially Successful, and Unsuccessful Milk FPOs Sr. No.

Broad Activity Nascent or Incubation

(MILKED FPO)


(Young Innovative)


(Progressive Dairy Solution)

1 Percent of farmer members selling through FPO

S S S

100.00 100.00 93.33

2 Percent increase in milch animals post FPO#

NA NA S

NA NA 47.64

3 FPO purchase price compared with market price (+/- percent)

NA NA NA

NA**@

(-5.77)

NA*@

(+2.78) (-) 5.56**

4 Proportion of produce sold through FPO S S S

100.00 100.00 94.09

5 Farmers’ Perceptions About Milk FPOs’ Contributions in Higher Incomes

PS PS PS

26.67 33.33 45.56

6 Access to New Production Practices and Quality Inputs

US US S

8.89 24.44 93.33

7 Improved Access to Marketing, Processing and Storage etc

US US S

21.11 17.78 71.11

8 FPOs’ Contributions as Improved Institutional Access

US US S

15.00 17.50 70.83

9 Post FPO Economic Gains US US S

6.67 22.22 72.22

10 Awareness Generation About Cooperative, Financial and Ecological Matters

S PS S

52.59 54.07 100.00

11 Awareness About Social Issues, Quality of Life and Participation in Democratic Institutions

PS S S

36.97 60.00 95.76

12 Satisfaction Status with FPO Arrangements Regarding Aggregation of Produce

PS PS S

38.33 52.78 85.00

13 Attending General Body Meeting Regularly PS PS S

103

26.67 53.33 100.00

14 Feedback on decision making in the FPO S S S

73.33 100.00 100.00

15 Impression about working of the FPO S PS S

60.00 53.33 100.00

16 Feedback on POPI’s handling support S S S

100.00 100.00 100.00

17 Feedback on CEO’s role US US S

0.00 0.00 100.00

18 Overall Score/Rating$ PS PS S

44.42 52.59 88.08

Note: S= Successful; PS= Partially Successful; US= Unsuccessful. #Any increase in milch animals post FPO to supply milk to the producer organization is indicative of its success. @Compared with market price realized by the farmers in mature milk FPO. *The farmers themselves transport milk upto the FPO sale/processing point. **The FPO collects milk from the village Bulk Milk Coolers that sales farmers on transportation costs and other risks.

$Average of the average percentages for top level rating under

each broadly classified activity in the preceding tables.

104

In this chapter, two case studies have been analyzed in two separate sections.

1. Unati Cooperative Marketing cum Processing Society Ltd., Talwara.

2. The Citrus Estate at Chaunni Kalan, Hoshiarpur.

Section 9.1: Unati Cooperative Marketing cum Processing Society Ltd, Talwara

9.1.1 Historical Background:

The Unati Cooperative Marketing-cum-Processing Society Ltd. (hereafter referred as Unati or the unit) is a Cooperative Society registered under Punjab State Cooperative Act. 1963 vide registration No. 7 dated May 16, 2003. It is managed by 14 core members with expertise in 'Biotechnology, Agronomy, Plant Pathology, Soil Sciences, Ayurveda, and Pharmaceuticals', and 311nominal (non-share holding) farmers/collectors.

Conceived in 2001 and following a baseline survey of the bioresources rich Kandi area, the unit had a humble start from a village named 'Palli', block Talwara, where a group of women and local unemployed youth was created for collection of 'Amla' fruit from the forest and its processing. This initial step that generated an income of around Rs. 79,000 for the group proved a big leap forward that culminated into registration of the Unati Cooperative Marketing cum Processing Society in 2003. Subsequently, following relentless efforts of the core members, the project was funded by the Department of Bio-Technology, Government of India through Punjab State Council for Science and Technology, Chandigarh under which a facility for processing of 'Amla' with backward integration so as to benefit the local people, was established. Simultaneously, a group in Unati was working on medicinal and aromatic plants for its diversification to other health drinks. The society also introduced 'lemon grass' in Kandi belt in 2004, and a number of other such crops subsequently. During 2004-07, the Department of Bio-Technology through Punjab State Council for Science and Technology,

Chandigarh invested Rs. 37.50 lakh for establishment of the processing unit which was handed over to the society in 2007. Since then the unit had been progressing by leaps and bounds and was 100 per cent self-financing one, without any direct government financial aid, subsidy and bank loan. The unit held ISO 22000:2005, HACCP, Halal and Organic (as per India USDA & Euro Organic) certifications and was market linked with big brands as Apollo Pharmacy, Medplus Pharmacy, Healthkart.com, Goderj Natures Basket, and many more. Unati also exported to Europe, USA, Canada and Dubai. The unit sold its products directly also, through the cooperatives in Hoshiarpur, Gurdaspur and a few other places in Punjab. It is first in India to have organic certified apple cider and jamun vinegar. It launched its organic vinegars on international platform BIOFACH 2017 in Germany. Other initiatives of the unit include:

(i) Gur Initiative;

(ii) Unati Bamboo Mission;

(iii) Unati Swatch School Abhiyan; and

(iv) Unati Skill Development Initiative

In short, Unati has transformed from a small rural development project into a successful business enterprise with turnover of Rs. 15.00 crore in 2016-17, generating income of more than Rs. 3.00 crore to local community and around Rs. 1.00 core to government in taxes, from the bioresources which were going waste. During the journey over the period, the unit remained in incubation stage for four years (2003-07), emerging and growing for three years (2007-10), and had been in mature stage since 2010. During the incubation and emerging stage, the unit faced following problems.

(i) Lack of working capital;

(ii) Insufficiency of the unit to meet promoter members' needs and hence some left the unit;

(iii) Lack of support from private finance companies;

(iv) Poor infrastructure;

(v) Non-cooperative and obstructing attitude of the

Chapter 9

Case Studies

105

government departments; and

(vi) Marketing issues

The success story of the unit has following lessons to replicate.

(i) Indentify resources in the catchment area.

(ii) Win confidence and trust of the farmers.

(iii) Diversify crops.

(iv) Explore and hold market tie-ups.

(v) Government infrastructure support.

9.1.2 Background Characteristics of the Farmers/ Collectors:

Over 85 per cent of the respondent farmers (all males) were 30 to 60 years old. More than 90 per cent were upto matriculate. All reported agriculture as their main occupation, while the proportion who responded supplementary activity as dairying, shopkeeping etc comprised a mere 26.67 per cent. More than 80 per cent were marginal and small farmers. Counseling by the management committee and other members was the main motivating factor (66.67 per cent), followed by better returns (20 per cent) for their association with the unit.

9.1.3 Agri-Produce Activities of the Farmers/ Collectors:

This is a health products manufacturing unit whose farmer members though are producing traditional crops as wheat and paddy also, but their response to grow medicinal and herbal plants post the unit was encouraging. All the selected farmers though were producing wheat and a lesser number paddy, but the acreage under these crops declined drastically, while that under medicinal and herbal plants

62substantially increased in the post period (Table 9.1). Given that the unit purchased all the produce of the medicinal and herbal crops of the farmers, it provided them assured marketing that induced them to reduce acreage under the traditional and increase under the medicinal and herbal crops for the unit.

Cost of production of all the crops post the unit

was substantially higher (more than double in certain cases), but increase in yield in the corresponding period more than compensated the farmers. Increase in price of medicinal and herbal crops realized by sale of the produce by the farmers to the unit was relatively much higher. As a consequence, yield as well as gross value of sales of medicinal and herbal crops by the farmers to the unit was much higher than in case of traditional crops (wheat and paddy) (Table 9.1). The gross value realized by the selected farmer members from sale of traditional crops in the open market post the unit was Rs. 9.10 lakh (wheat Rs. 4.04 lakh in Rabi season and paddy, maize and lemon Rs. 5.06 lakh in Kharif season), while the corresponding figure for medicinal and herbal crops sold to the unit had more than doubled. Moreover, area under cultivation of medicinal and herbal crops post the unit increased tremendously while that under the traditional crops declined. In other words, a paradigm shift in area under cultivation of medicinal and herbal crops post the unit was observed that resulted in higher returns for the farmers due to assured purchase by the unit.

9.1.4 Activities and Support of the Unit:

Association with the unit benefitted the farmers by way of their market linkage, value addition, better price realization and, for some, reduction in cost of production. As regards dissemination of new technology and diversification of crops, the unit made little contribution. Indeed, the unit's intervention was more in naturally existing bioresources than the cultivated ones. Further, the loan facility in the form of advance to be adjusted against the value of produce to be supplied to the unit saved the farmers from

63exploitation by the moneylenders .

However, the farmers revealed tie ups with the unit as the major factor for realizing higher incomes. As regards improved access to new production and practices (including inputs from the farmers), the unit made little contribution. On the other hand, all the farmers reported improved access to marketing and transportation of produce post the unit. Improved access to processing/value addition, storage and warehousing and testing facilities were also reported by

62It may be noted that while Bhera, Giloye and Harar are mostly a bio-source in the area, the farmers post the unit started commercial

cultivation of the medicinal plants as bitter gourd, lemon grass (that was introduced in the area by Unati), tulsi and amla. 63At the time of survey, the amount advanced by the unit as loan to the farmers aggregated approximately Rs. 5.00 lakh.

106

the farmers. Direct sale of produce to the organization saved the farmers from exploitation at the hands of the middlemen.

Farmers aggregated and transported produce to the unit. All the respondent farmers rated grading, weighing, testing, processing, packaging, branding and record keeping by the unit as satisfactory. They were paid in cheque. Its record in testing, processing and storage was satisfactory. It made some progress in improving production practices/processes. Gur initiative by the unit was an important intervention as it brought jaggery making technology in the area. It also introduced lemon grass in the area which was now being cultivated by the farmers for commercial purposes. Moreover, being organic, it did not encourage use of fertilizers, pesticides, insecticide etc.

Except in bank linkage and new credit line, the farmers associated with the unit affirmed improved access to extension, training and procurement facilities. Improved access to loan in the form of advance from the unit reduced their dependence on the moneylender. Besides, improved access to government schemes also was reported by four-fifth of the farmers.

In addition to institutional support, the farmers associated with the unit reported improved economic gains as higher price, higher productivity, regularity of payment and employment opportunities. But, the farmers/collectors were not share-holding members of the unit, and hence were not distributed any profit/ bonus.

Though none of the respondent farmers had crop insurance, but three-fourth asserted that they were interested. None, except one, had Kisan Credit card. Thus the credit linkage of the farmers was very poor. Low loan requirements could be one reason, that the farmers generally met by raising advance from the unit against the produce to be supplied to it.

9.1.5 Knowledge/Awareness Programmes:

Track record of Unati in improving awareness of the farmers about the community and ecological issues as philosophy and working of the community organizations, participation and community relations, conservation of natural resources as water and soil, knowledge about post harvest management (including stubble burning) was moderate/satisfactory. In financial matters, however, the situation remained as before.

Regarding other social and health issues and participation in local governance and democratic institutions too, the situation remained more or less unchanged.

9.1.6 Participation and Feedback:

Majority attended the collectors/farmers meet 'sometimes', while one-fourth 'rarely/never'. Lack of interest of the farmers in these meetings could be because they were the non-share holding members. All the respondents rated decision making in the unit as excellent, working successful, and handholding support very good.

Broadly, processing and marketing of herbal and medicinal products followed by excellent extension, training and procurement facilities, well supported by packaging, branding, record keeping etc were the strengths of the unit. It disseminated new production/practices technologies like jaggery making and lemon grass in the area. It also promoted community and social development programmes like Unati Slum and Landless Income Generation Programme, Unati Skill India Programme, Unati Swachh School Abhiyan in the area. But the associated collectors/farmers, who numbered about 311, were not the share-holding members of the unit and hence were not fully participating in its prosperity. The evidence from field survey amply demonstrated that huge backward integration and economic benefits accrued to farmers/collectors in the Kandi area who were associated with the unit.

The unit that had a humble start in 2001 grew by 2007 into a successful business enterprise. It received one time financial assistance from the government for setting up of the processing activities, well supported by wide market linkages. Besides, a paradigm shift towards cultivation of the input crops resulted in higher returns due to assured purchase by the unit. Moreover, backward integration and economic benefits accrued to the farmers.

Section 9.2: The Citrus Estate, Chaunni Kalan (Hoshiarpur)

9.2.1 Historical Background:

One Citrus Estate in each of the five identified natural citrus growing areas in the state was established by the Department of Horticulture with the objective to provide all infrastructural facilities under one roof to

107

improve the quality and productivity of the fruit, and also to promote its export. These estates were established at Abohar (Ferozepur), Tahliwala Jattan (Ferozepur), Badal (Muktsar), and two at Hoshiarpur- one in Bhunga and the other at Chaunni Kalan. The underlying objective of establishing these Estates was to “shift agriculture focus away from traditional water and soil depleting cropping pattern and to encourage non-conventional farm activity for large scale citrus cultivation in the state” (Department of Horticulture, Government of Punjab).

The Ci t rus Es ta te a t Chaunni Kalan (Hoshiarpur) was setup on August 7, 2007 at the initiative of the progressive farmers of the area. It was conferred charitable status on May 25, 2009, and was governed by an Executive Committee of 21 members with Deputy Director, Department of Horticulture, Hoshiarpur as its Chairman-cum-CEO. The Executive Committee, whose meetings were held regularly, was assisted by the following committees in discharging the functions.

( I i) Purchase Committee-for the purchase of new inputs/implements.

(ii) Inspection Committee- for the supervision of technical staff.

(iii) Finance Committee- for the better utilization of funds and budget control.

These committees, as claimed, were so constituted as to broad base the decision taking as well as its implementation by involving all the members of the Executive Committee.

The Citrus Estate is provided financial assistance by the Govt. of Punjab through Department of Horticulture to meet technical and administrative expenses. The details are given in Table 9.2.

The Estate thus had a corpus fund of Rs. 5.28 crore, created by one time grant from the state government. It also earned from the services it provided, and was a self financing unit.

9.2.2 Progress of the Citrus Estate:

1. Table 9.3 depicts the progress of the Estate in terms of number of plantations, registered farmers and the area under it, which grew by 2.63 per cent, 1.38 per cent and 0.85 per cent respectively during the ten

months ending January 2017.

The Estate though had 360 members, but merely 70-80 were active and 30-35 very active. The Estate, however, is progressing satisfactorily.

2. It caters to citrus farmers in about 300 villages located in a periphery of 20 km. The farmers in the area though mostly were marginal and small, but the medium and large farmers were its largest beneficiaries.

3. The Estate was providing technical knowhow for pest control, plant diseases etc to the farmers. It was operating a Scientific and Disease Prevention Centre also. It was organizing a number of awareness camps and seminars to educate the farmers about the “services provided… such as subsidies…, recent developments in Citrus industry, increase in utilization of irrigation potential, water conservation and its efficient management etc.” In these awareness programmes, information about proper and timely use of insecticides and pesticides was also disseminated. Currently, it organizes one village level camp every month in the allotted village/circle.

4. Equipped with costly and latest machinery and implements like Heavy Tractors, Rotavators, Aeroblast Spray Pumps, Hydraulic Pruners, Manure Spreader, Knap Sack Spray Pumps, Front Loader etc, the Estate made available these machinery and equipments at very low maintenance charges, that the farmers otherwise could ill-afford. Thus, the Citrus Estate played an important role in mechanization of the orchards in the area. Table 9.4 depicts the list of machinery and implements that were available with the Citrus Estate for use by the farmer members.

It also provided Pheromone Traps that acted as an indicative measure enabling farmers to prevent white fly attack on the kinnow orchards. As on ending January 2017, the Citrus Estate had a total of 16703 pheromone traps for an area of 835 hectares.

The farmers also had access to a pack cum grading-waxing unit installed by the Punjab Agri Export Corporation in the neighbouring building.

5. The Estate obtained pesticide and fertilizer license from the Department of Agriculture, Punjab, that enabled it to provide quality agri-inputs to the farmer members. A Leaf and Soil Analysis Lab was also

108

setup in the Estate to test the nutrient status and diagnose deficiencies in the soil that could help save use of fertilizers by upto 40 per cent. For collection of samples, the Estate had a van. Over the ten months ending January 2017, the Estate rendered activities and services to its members as per information given in Table 9.5.

6. Net receipts of the Estate from sale of activities and services grew by 35.67 per cent over the triennium ending March 2016 (Table 9.6).

Largest increase in net returns was realized by the Estate from the sale of services of tools and implements, followed by sale of pesticides and the sample test fee. Thus, whereas the Estate, on the one hand, provided quality services to its members at cheaper rates, it, on the other hand, earned from these activities also.

9.2.3 Observations from Field Survey:

Fifteen farmer members of the Estate were surveyed, and the information obtained is analyzed below.

9.2.3.1 Background of the Farmer Members:

Nearly three-fourth of the respondent farmers (all males) were 50 or more years old and hence were experienced. Their educational level was satisfactory. More than 90 per cent were matriculate or above and 46.67 per cent were graduate or above. Agriculture was their main activity, and one-fourth reported shopkeeping etc as the supplementary economic activity. They became members of the unit for diverse reasons. However, all were medium and large farmers. They adopted new technology disseminated by the unit and reaped economy of scale in purchase of inputs through the unit.

9.2.3.2 Agri-Produce Activities of the Farmers:

Largest numbers (13) of the selected farmer members in the Estate produced the Estate core crop (Kinnow). Amongst them, an equal number grew wheat and a little less (11) paddy also. Some of them also produced maize and vegetables. Interestingly, acreage under production of Kinnow was second largest (after wheat), and post the Estate was more or less stable. But, the area under other crops notably maize, sugarcane, wheat and to a smaller extent paddy (except vegetables)

was larger post the Estate (Table 9.7).

As already noted, the Estate provided agricultural machinery, pesticides and leaf and soil testing facilities to its members at concessional rates. This should contribute in keeping a check on cost of production of kinnow crop in the Estate. As revealed by the farmers, cost of production rose by nearly 30 per cent post-FPO (say over 5-10 years). But in case of all other crops, the increase in cost of production post the Estate was substantial. The selected farmer members fetched higher market price for all the crops including Kinnow post the Estate, except other vegetables in Rabi season in which case it fell. But, the farmer members sold produce of their crops directly in the market, and none through the Estate (Table 9.7).

Productivity of the crop Kinnow, as reflected in yield per acre, marginally increased post the Estate. In case of all other crops, except vegetables in Kharif season, the farmer members realized higher productivity levels. Further, with slightly lower acreage and marginal increase in yield per acre, total yield of the crop Kinnow, post the Estate, remained almost stable. But, the yield of other crops grown by these farmers was comparatively much higher. Nevertheless, gross value realized from sale of Kinnow post the Estate was higher by 54.65 percent. In case of other crops too, substantial increases in gross sales values were realized by these farmers.

Overall, the government support has been instrumental in keeping the cost of production of Kinnow under check in this Estate. However, the acreage under cultivation of the citrus fruit (Kinnow) has remained more or less stable, though the farmers in the Estate brought more land under cultivation of traditional crops as wheat and paddy, notably the cash as maize and sugarcane, post the Estate. That means, besides the government support, there are other factors that tend to influence the farming practices.

9.2.3.3 Activities and Support of the Estate:

The farmer members processed, packaged, transported and marketed their own produce. They seldom shared their technology with other fellow members. They were benefitted by government subsidies and concessions through the FPO. Improved access to quality inputs, new crops and the cropping

109

practices post Estate were reported by all the members. Availability of farm machinery post Estate also improved. The farmers reported improved access to extension and training services as well as to government schemes. Some (40 per cent) felt that their membership of the Estate reduced dependence on the moneylender. The Estate did not provide any marketing, processing and storage facilities that the farmers arranged

64themselves . None availed crop insurance, though all of them responded that they were interested. Almost all of them (93.33 per cent) had Kisan Credit Card.

Economic gains of the farmers remained as before, except improved capital investment in agriculture due primarily to government assistance. Awareness and training programmes conducted by the estate proved fruitful for the farmers. Many of them reported improved community and social development access post the Estate. But as the aggregation of produce and the related activities up to sale were handled by the farmers themselves, therefore, no improved access due to the Estate was reported.

The farmers rated all the facilities in the Estate relating to dissemination of technology as satisfactory. It is heartening that the farmers rated improved access to technology, production practices and processes, purchase of agri inputs, testing, and diversification post

the estate as satisfactory. The Estate had soil, seed and water testing facilities. The farmers purchased fertilizers and pesticides through the Estate.

9.2.3.4 Participation and Feedback:

Almost all the respondent farmers attended meetings of the governing body regularly. One farmer was a member of the governing body and the Board of Directors as well, who attended the meetings regularly. Feedback about decision making in the Estate was reported as 'excellent'; its working successful; and the CEO's role 'very good'.

Broadly, the Estate has thrived primarily on financial (under state budget and RKVY), technical and administrative support by the government. Sufficient capital formation in the form of machinery and testing facilities are available in the Estate that have improved access of the farmers to latest technology.

Broadly, the citrus estate, Chaunni Kalan receives regular financial assistance from the government. It has setup an agricultural machinery and implements bank, a leaf and soil analysis lab and a scientific and diseases operating centre. This initiative of providing inputs/machinery and technical knowledge and support to farmers under one roof at concessional rates is praiseworthy.

64The farmers sold about 70 per cent of the citrus produce through the contractors financed by about 5-7 arhtiyas operating

at national level from Chennai, Bangalore, Calcutta, Hyderabad, Mumbai etc. Another 25 per cent sold through

contractors financed by the local arhtiyas, and merely 5 per cent directly. The market as well as the price of citrus fruit were

controlled by the arhtiyas. The marketing season of the citrus fruit is January 15 to February 28.

110

Tab

le 9

.1:

Are

a,

Cost

, P

rice

, Y

ield

an

d S

ale

s V

alu

e of

the

Cro

ps

by t

he

Farm

ers/

Co

llec

tors

C

rop

: R

ab

i

(20

15

-16

)

Nu

mb

er o

f F

arm

er

Pro

du

cers

To

tal

Are

a C

ult

iva

ted

(Acr

es)

Co

st o

f P

rod

uct

ion

Per

Acr

e

(Rs.

)

Pri

ce p

er Q

tls

(Rs.

)

Yie

ld p

er A

cre

(Qtl

s)

To

tal

Yie

ld (

Qtl

s) G

ross

Va

lue

Rea

lize

d f

rom

Sa

les

(Rs.

La

kh

)

1

2

3

4

5

6

7

Pre

-F

PO

Po

st F

PO

w

hen

Pre

-F

PO

Po

st F

PO

w

hen

Pre

-F

PO

Po

st F

PO

wh

en

Pre

-F

PO

Po

st F

PO

wh

en

Pre

-F

PO

Po

st F

PO

w

hen

Pre

-F

PO

Po

st F

PO

wh

en

Pre

-U

nit

Po

st U

nit

w

hen

Sold through the Unit














Wh

eat

15

0

1

5

5

2.7

5

0

.00

2

8.7

5

2

74

6.6

7

0

.00

4

43

3.3

3

1

07

0.0

0

0

.00

1

51

4.6

7

8

.80

0

.00

9

.27

4

64

.20

0

.00

2

66

.42

4.9

7 0

.00

4.0

4 A

mla

*5

9

0

4.8

3

5.5

0

0.0

0

25

00

.00

61

11

.11

0.0

0

78

0.0

0

12

66

.67

0.0

0

22

.00

65

.22

0.0

0

10

6.2

6

35

8.7

2

0.0

0

0.8

3

4.5

4

0.0

0 B

her

a*2

7

0

1.1

6

2.8

3

0.0

0

20

00

.00

32

85

.71

0.0

0

40

0.0

0

78

5.7

1

0.0

0

32

.50

38

.57

0.0

0

37

.70

10

9.1

6

0.0

0

0.1

5

0.8

5

0.0

0 G

ilo

ye*

1

5

0

0.3

3

1.3

3

0.0

0

10

00

.00

27

00

.00

0.0

0

30

0.0

0

12

20

.00

0.0

0

10

.00

30

.60

0.0

0

3.3

0

40

.70

0.0

0

0.0

1

0.5

0

0.0

0 H

arar

* 4

4

0

3.3

3

2.9

8

0.0

0

29

25

.00

35

00

.00

0.0

0

92

5.0

0

10

00

.00

0.0

0

12

.00

31

.25

0.0

0

39

.96

93

.13

0.0

0

0.3

7

0.9

3

0.0

0 T

ota

l -

-

-

62

.40

12

.64

28

.75

-

-

-

-

-

-

-

-

65

1.4

2

60

1.7

1

26

6.4

2

6.3

3

6.8

2

4.0

4 C

rop

: K

har

if

(20

16

)

Pad

dy7

0

9

44

.50

0.0

0

22

.50

45

14

.29

0.0

0

62

77

.78

87

8.5

7

0.0

0

13

44

.44

16

.00

0.0

0

14

.56

71

2.0

0

0.0

0

32

7.5

0

6.2

6

0.0

0

4.4

0 M

aize

8

0

5

10

.25

0.0

0

5.2

5

15

50

.00

0.0

0

32

00

.00

90

0.0

0

0.0

0

13

40

.00

6.5

0

0.0

0

6.6

0

66

.63

0.0

0

34

.65

0.6

0

0.0

0

0.4

6 L

emon

1

4

1

1.0

0

13

.40

0.2

0

0.0

0

22

00

.00

30

00

.00

0.0

0

40

00

.00

40

00

.00

0.0

0

25

.33

25

.00

0.0

0

33

9.4

7

5.0

0

0.0

0

13

.58

0.2

0 A

mla

*5

5

0

4.8

3

4.5

0

0.0

0

0.0

0

0.0

0

0.0

0

0.0

0

0.0

0

0.0

0

0.0

0

0.0

0

0.0

0

0.0

0

0.0

0

0.0

0

0.0

0

0.0

0

0.0

0 B

her

a*2

3

0

1.1

6

1.8

3

0.0

0

0.0

0

0.0

0

0.0

0

0.0

0

0.0

0

0.0

0

0.0

0

0.0

0

0.0

0

0.0

0

0.0

0

0.0

0

0.0

0

0.0

0

0.0

0 G

ilo

ye

*1

1

0

0.3

3

0.3

3

0.0

0

0.0

0

0.0

0

0.0

0

0.0

0

0.0

0

0.0

0

0.0

0

0.0

0

0.0

0

0.0

0

0.0

0

0.0

0

0.0

0

0.0

0

0.0

0 H

arar

*4

4

0

3.3

3

3.3

3

0.0

0

0.0

0

0.0

0

0.0

0

0.0

0

0.0

0

0.0

0

0.0

0

0.0

0

0.0

0

0.0

0

0.0

0

0.0

0

0.0

0

0.0

0

0.0

0 T

ota

l -

--

65

.40

23

.39

27

.95

--

--

--

--

-7

78

.63

33

9.4

73

67

.15

6.8

61

3.5

85

.06

Not

e: *

Nom

inal

val

ues

of

the

rele

vant

vari

able

s in

cas

e of

thes

e an

nual

fru

itio

n l

ag c

rops

are

reco

rded

agai

nst

th

e se

ason

wh

en s

old.

How

ever

, ac

reag

e un

der

th

e cr

op m

ay b

e la

rger

in th

e ot

her

sea

son w

hen

mor

e la

nd

is b

rough

t un

der

it.

111

Table 9.2: Financial Assistance to Citrus Estate, Chaunni Kalan Hoshiarpur Sr. No. Description Amount (Rs.) Remarks Allotment of Budget under State Plan 1 Grant-in-Aid and other charges 2,20,31,000 1. For purchase of latest technology, machinery and

tools. 2. For salary of the staff. 3. For contingencies and other miscellaneous

expenses. 4. For setting up of weather forecast station etc.

2. Corpus fund 3,10,00,000 For the salary of staff and other non-planned expenditure.

Allotment of Budget under RKVY 1. Purchase of machinery/

implements etc. 45,72,200 To purchase the latest technology, machinery, tools,

implements etc. 2. Purchase of equipments of

soil/leaf analysis lab 91,65,000 For purchase of equipments of soil/leaf analysis lab

3. Corpus Fund 2,18,00,000 For the salary of the staff and other non-planned expenditures.

4 Building 95,20,000 For the construction of Building Total 9,80,88,200

Source: Citrus Estate, Hoshiarpur, Department of Horticulture, Government of Punjab.

Table 9.3: Progress of the Citrus Estate Hoshiarpur Sr. No.

Particulars Progress upto 31-03-2016

Progress during 01-04-16 to 31-01-17

Total Col. 2 as % of col.3

1 2 3 4 1. Plantations 1286.2 34.7 1320.9 2.62 2. Registered farmers 311 5 360 1.38 3. Registered area (hec.) 790.4 6.8 797.2 0.85

Source: Citrus Estate (Hoshiarpur) Department of Horticulture, Government of Punjab.

Table 9.4: Machinery/Implements Available with the Citrus Estate for Use by the Farmers Name of the

Estate Particulars Upto 31-03-

2016 01-04-16 to 31-12-2016

01-01-17 to 31-01-2017

Total

Citrus Estate

Hoshiarpur

Tractor 6 Nil Nil 6 Rotavators 6 Nil Nil 6 Tillers 1 Nil Nil 1 Diggers 2 Nil Nil 2 Chizlers 1 Nil Nil 1 Shrub master 1 Nil Nil 1 *sprayers (5 tractor mounted, 5 areo blast, 2 knap-sack)

12 1 Nil 13

Discs 3 Nil Nil 3 Fertilizers spreader 2 Nil Nil 2 Zinda 2 Nil Nil 2 Teran wala karah 1 Nil Nil 1 Peas drill machine 1 Nil Nil 1 Wheat drill machine 1 Nil Nil 1 Front loader 1 Nil Nil 1 Disc plough 1 Nil Nil 1 Hydraulic trolli 1 Nil Nil 1 Washing pump 1 Nil Nil 1 Pruners 2 Nil Nil 2 Air filling pump 1 Nil Nil 1 Total 46 1 Nil 47

Note: *One hydraulic pruner, one spray pump, one fertilizers spreader from farmer commission and one hydraulic pruner and

one electrostatic spray pump have been made available by Government of Punjab.

112

Table 9.5: Number of Tests Performed in Leaf and Soil Lab Sr. No.

Particulars From year 2012 to 31-03-2016

01-04-16 to 31-12-2016

01-01-2017 to 31-01-2017

Total Samples

1 Sample of Soil 4800 1388 32 6220 2 Sample of Leaf 1907 505 0 2412 3 Sample of

OrcHarars 45 39 6 90

4 Sample of Fertilizer 101 44 0 145 5 Sample of Water 187 72 3 262

Total 7040 2048 41 9129

Table 9.6: Net Receipts of the Citrus Estate During 2014 and 2016

Particulars Sale (Rs.) Expenditure (Rs.) Net Receipts (Rs.)

2014 2016 2014 2016 2014 2016 Pesticides/Fertilizer 3280914.00 3023820.00 3526424.00 2857556.5 3746.16 217552.01 Pheromone Traps 196160.00 202480.00 110714.00 140451.00 81350.10 45232.27 Sample test fee (Leaf & Soil)

266480.00 405350.00 - - Based on no Profit no loss

Based on no Profit no loss

Income from Tool Implements

952960.00 1101760.00 594056.00 463947.00 358904.00 637813.00

Total 4696514.00 4733410.00 4231194.00 3461954.50 444000.26 900597.28

Source: Annual Audit Reports of the Estate, 2014 and 2016.

113

Tab

le 9

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les

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the

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tal

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a C

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e)

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Per

Acr

e (R

s.)

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Rs.

)

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e R

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Sold through it


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0

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114

The Punjab State Cooperative Supply and Marketing Federation Limited (MARKFED), Chandigarh signed a Memorandum of Understanding (MOU) with M/s Adhiraj Bio-Tech Ltd. Chandigarh, a private limited company, on November 30, 2000 for a period of one year, extendable subsequently, for procurement, processing and marketing of fruits and vegetables under the brand name SOHNA at the identified sale-points in the tri-city of Panchkula, Mohali and Chandigarh. This arrangement was operated as a joint venture by MARKFED and the Bio-Tech, wherein the MARKFED agreed to provide 'initial working capital of Rs. 2.00 lakh, arrange outlets and their expenses such as rent, electricity charges etc, and provide staff for procurement, grading, distribution and marketing of vegetables and fruits'. The responsibility of the Bio-Tech, on the other hand, was to 'procure vegetables and fruits in association with MARKFED officials, bear total expenses on grading, packing including packing material etc, arrange sale of vegetables and fruits in the sale outlets, Apni Mandis and stores, supply vegetables and fruits to hotels, clubs and other institutions using bulk supplies and also arrange home delivery on regular basis in Chandigarh, Mohali and Panchkula'.

Though the MOU was signed on November 30, 2000 but sale of vegetables and fruits, as per the records, under the MARKFED brand name SOHNA started from October 20, 2000, the figures of which are available till 28.02.2001 as per details given in Table 10.1.

This joint venture provided for profit sharing on 50:50 basis, besides a provision for goodwill charges to be paid by Bio-Tech to MARKFED for utilizing the trade (brand) name SOHNA. Soon after, there developed fissures in the joint venture when the MARKFED officials reported shortcomings/lapses at the following sale points in Chandigarh.

1. Bus Stand, Sector 43

2. Cooperative Bank, Sector 34

3. Bus Stand, Sector 17

4. SPINFED, Sector 17

5. IFFCO Office, Sector 17

In a detailed meeting with the representatives of the Bio-Tech held on January 27, 2001, the Managing Director MARKFED, Chandigarh noted the following operational constraints in this venture.

Ø Poor coordination between procurement and marketing,

Ø Limited operational area (as the sale points were opened in Chandigarh only),

Ø Lack of competitive price and quality as some vegetables and fruits were also procured from local market for sale at these counters,

Ø Lack of customer care,

Ø Expensive sales counters and low volume of sales,

Ø Lack of promos for these sale counters,

Ø Lack of training of the employees at the sale counters,

Ø Lack of infrastructure like cold storage, godown etc,

Ø Lack of working capital,

Ø Thefts and pilferages,

Ø Overcharging by the employees on the counter.

The MARKFED Bio-Tech joint venture continued till end of November 2001, after which the later started operating on its own and there was no involvement of MARKFED with regard to the finances etc.

The relationship of MARKFED with Bio-Tech during the period of joint venture for sale of vegetables and fruits can be explained in three phases:

(Ii) October 2000 to June 2001, when the joint venture functioned. Though the goodwill charges for the months of October 2000 to March 2001 were paid, but not for the months of May and June 2001.

(ii) June−November 2001, when working capital expenses were met by MARKFED. During this period, MARKFED officials procured vegetables

Chapter 10

MARKFED Bio-Tech Joint Venture Initiative

115

from markets and it was transported, graded, packed and dispatched to the sale counters by the Bio-Tech. This arrangement earned a profit of Rs. 45,000 that was to be shared on 50:50 basis with Bio-Tech.

(iii) December 2001 onwards, when there was no involvement of MARKFED with regard to finance etc. The Bio-Tech continued selling vegetables and fruits at these counters till November 2002, by which time the goodwill charges payable to MARKFED amounted to Rs. 2.39 lakh, and adding the other recoverable amount of Rs. 0.12 lakh, the total amount outstanding against Bio-Tech worked out to Rs. 2.51 lakh by end November 2002 and Rs. 3.31 lakh by end March 2003.

Subsequently, the Bio-Tech handed over five cheques, each of Rs. 0.50 lakh for a total amount of Rs. 2.50 lakh, to MARKFED during July and August 2003. But the same were dishonored due to insufficient funds in the account of the drawer (Bio-Tech). The recovery of this amount landed both the parties in the court of law that ultimately sealed the fate of this venture. Filed in October 2003, the case was decided by the court after almost eight years in August 2011.

An introspection by MARKFED in March 2003 revealed that the joint venture was a modest beginning for the marketing of fresh fruits and vegetables and helped farmers in diversification of crop rotation and also to provide marketing infrastructure. However, the project failed because of the following reasons:

1. The main procurement for sale at the counters was mainly from mandi itself and not from the farmers. Hence, the arrangement utterly lacked quality and price competitiveness.

2. Small volume of sale at the counters failed to invoke an encouraging response from the

farmers who were keen for clearance of their entire harvested crop rather than piece meal.

3. Poor financial position of the Bio-Tech.

4. Lack of vision, mismanagement and excessive overheads.

A perusal of MARKFED Bio-Tech joint venture case study has brought out some interesting facts. According to its Bye-Laws, the MARKFED is mandated to carry on activities:

( I i) “…of making arrangements for procurement, marketing, trading, processing/manufacturing agricultural products and also grading and packing activities of agricultural products and also supply of goods on corporative basis and to act as agent to its constituents and other persons and institutions”.

(ii) “…as inter-state trade, import and export of agricultural produce, farm, equipments and consumer goods and also it has a wide net-work upto the village level farmers through the cooperative sector and has the ability for carrying out contract farming”.

(iii) The MARKFED has also documented that it is its moral duty to “assist the farmers within the State of Punjab for trading/marketing of their produce to get them the competitive prices by avoiding intermediaries to the minimum possible extent”.

Any arrangement involving farmer producer organizations for sale of agricultural produce (including technical support) in the state of Punjab cannot be visualized without the direct and active participation of the MARKFED. It may act as a nodal agency for carrying out the activities of marketing and processing of agriculture produce of the producer organizations.

Table 10.1: Monthly Sales of Fruits and Vegetables by MARKFED Bio-Tech Period Amount (Rs.)

20.10.2001 to 31.10.2000 16,380.40 01.11.2000 to 30.11.2000 3,02,323.20 01.12.2000 to 31.12.2000 2,45,661.03 01.01.2001 to 31.01.2001 2,92,771.45 01.02.2001 to 26.02.2001 3,62,142.63

Total 12,19,278.71 Source: MARKFED, Chandigarh

116

The NABARD under PRODUCE Fund setup 69 FPOs in Punjab during 2015-16 and 2016-17. Most of these FPOs deal with agri-produce and milk and milk products. The SFAC on behalf of the Government of Punjab setup seven Farmer Producer Companies during July and August 2013 and July and December 2014, which are now defunct. A couple of producer organizations have also been working in Punjab prior to these FPOs. Madhya Pradesh is the first state in the country that setup farmer producer organizations under DPIP. Subsequently, a number of other states setup these organizations for improving the livelihood of particularly the marginal and small farmers. NABARD has advocated collectivization of marginal and small farmers as the means that would expand their scale of production, improve market access, increase bargaining power, promote specialization and so on.

This study was undertaken to examine the activities and performance of farmer producer organizations in Punjab, and to draw lessons from experiences of a few such organizations in Madhya Pradesh for replication so as to improve their performance in the state of Punjab. In all, a total of 19 FPOs (16 (including 2 case studies) in Punjab and three in Madhya Pradesh) and 285 farmer members (240 in Punjab and 45 in Madhya Pradesh) were studied. The field survey was conducted using pre-tested separate questionnaires− one unified for the POPI/CEO/FPO and another for the farmer members. The conclusions drawn and the recommendations made thereof are briefly outlined below.

11.1 Benefits and Costs:

1. Marginal and small farmers are the major beneficiaries. They sold mostly a single crop through the FPO. The semi medium, medium and large farmers preferred direct channel for sale. The farmers though produced more than one crop, but none sold all their crops through the FPO. Proportion of produce sold through the FPO was meager. It comprised merely 2.15 per cent of total produce of the farmers in PRODUCE nascent and emerging FPOs (taken together). Even in mature Dhira Patra in

Punjab, this proportion worked out to just 10.00 per cent, which in percentage terms, was less than one-fourth of that handled by Narsingh (42.67 per cent) in Madhya Pradesh.

2. Farmer members benefitted by way of reduced cost of production, price gains and higher net earnings from sales through FPO, compared both to pre as well as the direct sale channels. Moreover, a subtle trend seemed taking place towards diversification post FPO, both in terms of the number of farmers growing produce basket crops as well as the acreage.

3. Farmers in a couple of nascent FPOs incurred loss of earnings on sale of a vegetable crop (peas) through the FPO rather than directly in the market. Indeed, vegetables which comprise the produce basket of most agri-FPOs are perishable and that their price is volatile. Moreover, these prices vary widely across the seasons. Therefore, the FPOs will have to be vigilant about the market mood and sell farmers' produce at optimum prices. For this purpose, the FPOs should have storage facilities such that they could sell produce at higher prices at a later date. The FPOs in Madhya Pradesh, on the other hand, deal with foodgrains only, which are non-perishable. Moreover, some of these (e.g. Narsingh) have storage facility, built with financial assistance from the state government. In Punjab too, the state government should come forward and assist FPOs in creating storage facilities at a focal point in a cluster of the FPOs. The FPOs should explore possibility of contract farming and tie-ups with military canteens, hotel industry, paying guest establishments, corporate consumer chains etc for bulk supplies.

4. A few FPOs in Punjab sold produce through the commission agents also. It obviously means additional layer of marketing that reduces margin of the farmers. On the other hand, it is a risky marketing channel. In one case, the commission agent received supplies, but did not make payment. The CEO of the FPO suffered because it was his personal decision to sell produce of the farmer members to the commission agent. The decision on marketing

Chapter 11

Conclusions and Recommendations

117

channel to sell farmers' produce should be a collective one and should be approved by the Board of Directors. Moreover, the number of layers in marketing of the produce, as far as possible, should be minimum.

5. Improved access post FPO to quality seeds as well as other inputs such as pesticides and fertilizers was reported by the farmers. Economy of scale in purchasing agricultural inputs through the FPO was also reported. A couple of FPOs in Punjab got dealership in agri-inputs of some companies (e.g. Kiratpur Sahib) and sold these to the framer members at concessional rates. The FPOs in Madhya Pradesh, on the other hand, were more involved as these procured seeds from research stations and the companies for the farmer members who multiplied and sold these to other farmers and the surplus to the FPOs for sale in the market.

6. FPOs can play a significant role in generating awareness about cooperative philosophy and community organizations, ecological and post harvest management (including stubble burning), community and social development etc. in the rural areas.

11.2 Role and Support System of Various Agencies:

1. Success of the farmer producer organization is inextricably linked to a strong handholding by the Producer Organization Promoting Institution (POPI) that promotes, supports and nurtures the FPO till it becomes commercially viable and self-supporting. From conception to conducting baseline survey, registration, setting up of the organization and its structure; governance and capacity building; establishing procurement, credit, marketing and other linkages; and help it grow into a successful and self- sustaining organization are the tasks and responsibilities of the POPI. It is generally an experienced non-government organization, and its task is to nurture a producer organization as per the timeline specified for deliverables, spread over a period of two and a half years (SFAC) or three years (NABARD).

2. POPIs in Punjab were mostly qualified and experienced. Most of them were degree holders in agriculture or related disciplines. Some had

experience in organizing and guiding JLGs, farmer clubs, SHGs, farmer cooperatives, farmer interest groups etc. Some POPI officials were doing farming or some other activity also, but none in Madhya Pradesh.

3. POPI/BOD and the group leader counseled farmers to become members of the FPO. Almost similar was the case in Madhya Pradesh. Thus, membership was not supply driven by the farmers, but demand driven by the FPOs. Further, membership of the PRODUCE Fund FPOs in Punjab was very small (50-70), just above the benchmark. FPOs should make efforts to increase it to NABARD suggested optimum level (500).

4. A couple of POPIs in Punjab promoted about one dozen FPOs each. The distance of these FPOs from their office in Punjab ranged between 2-200 km in one case and 10-100 km in another. It is suggested that FPOs should be promoted in a cluster mode such that the centralized services could be established at a focal point in a cluster of the FPOs to cater to the needs of farmers.

5. The CEOs, on the other hand, though were educationally qualified, but many lacked professional experience. One farmer member in most FPOs in Punjab acted as the CEO, but not in the selected ones in Madhya Pradesh. Being the first initiative in Punjab by NABARD to set up FPOs, a peer farmer member discharging duties as CEO may be unavoidable (or may be even desirable); but, he/she may be allowed till registration of the FPO and not beyond. Since, he is a paid employee of the FPO, therefore, utmost care should be taken in appointing the CEO. Moreover, some CEOs or their families sold produce through the FPO. This practice should be discouraged because of the potential threat of conflict of interest.

6. It is the responsibility of POPI to deploy experienced and qualified manpower to supervise and guide the FPO.

Ø Most of the FPOs had some paid staff. But these spent mostly on the salary of the POPI official. Many of the PRODUCE FPOs did not have an accountant or a field assistant. That is why, most of the PRODUCE FPOs

118

could not maintain accounts properly and get these audited.

Ø The PRODUCE FPOs are supposed to prepare business plan before the completion of first year of the MOU. Only a few PRODUCE FPOs had planned some future business activity. Some FPOs had prepared the MIS and had applied for the licenses. The profit loss accounts were also under preparation.

7. CEO and BOD play a crucial role in success of the FPO. An incubation centre should be set up in the state for training and capacity building of young farmers and graduates in agriculture to run farmer collectives.

8. All the selected FPOs had five or more members on the Board of Directors (BOD), who motivated farmers to become members of the FPO. The BOD members produced crops that comprised the produce basket of the FPO, which is encouraging.

9. Representation of marginal and small farmers in the BOD of some of the FPOs in Punjab was less than their proportion in total membership.

10. There was no woman member in the BOD of the FPOs in Punjab (except in Global SHGs), while BOD in all the selected ones in Madhya Pradesh had at least one each.

11. NABARD may prescribe a minimum of 60 per cent membership for marginal and small farmers in the FPO's BOD. Moreover, each FPO should have at least one woman member in its BOD.

12. All decisions about functioning of the FPO should have consent of the Board of Directors.

13. Farmers' attendance in General Body meetings was less in nascent and emerging FPOs. These FPOs should take steps to improve it. Decision making was excellent in successful FPOs (mature in Punjab and Narsingh in Madhya Pradesh), while it was poor or low in unsuccessful ones, e.g. Dholewal, Darapur (partially successful), Qadian and SFAC emerging).

14. The POPI is supposed to constitute and hold quarterly the meetings of Project Monitoring

Review Committee. The survey revealed that meeting of the Project Monitoring Review Committee in case of some of the nascent FPOs had either been not held or held irregularly.

15. Amongst the PRODUCE Fund FPOs, the feedback on POPI's handholding support was better in nascent category. In PRODUCE emerging category, four-fifth of the farmers described the POPI's handholding support as 'good' in Bathinda Farmers and 'poor/not good' in Global SHGs. In the SFAC emerging category, all the farmers in Sangrur Vegetable rated POPI's support as 'average', and in Jalandhar Vegetable Company as 'poor/not good'. The mature FPOs in Punjab were rated working successfully under the guidance of the project manager (Lambra Kangri) or the President (Dhira Patra). In Madhya Pradesh, the selected FPOs were working under the umbrella support of the Madhya Bharat Consortium of Farmer Producers’ Company Limited (MBCFPCL), Bhopal.

16. The Government of Punjab though has not prepared a blueprint of its policy on Farmer Producer Organizations, yet some scattered references are available that make evident the stand of the state government on FPOs. Indeed, the state government has in principle resolved to facilitate and strengthen the FPOs.

Ø The state government amended The Punjab Agricultural Produce Markets Act, 1961 (Second Amendment Bill, 2017) and made eligible the FPOs and other collectives of the farmers to participate in a “Producer Market Yard (Kissan Mandi) [that] may be established outside the principal market yard or sub-market yard in the notified market area. …for sale to wholesellers or institutional buyer or any other buyers as may be prescribed.” A number of FPOs (e.g. Dholewal and Qadian PRODUCE) had obtained license as Kucha Arhtiya to sell produce to wholesalers or institutional or any other buyers in the APMC market. However, the FPOs were not still eligible to undertake procurement operations on behalf of the government agency.

119

Ø Some FPOs (e.g. Kiratpur Sahib, Bathinda Farmer Producer Company) had obtained license to sell agri-inputs as seeds, fertilizers, pesticides, insecticides etc amongst the members.

Ø Recently, the FPOs were also granted 80 per cent subsidy at par with the cooperative societies for purchase of in-situ straw management agricultural machinery.

11.3 Opportunities and Challenges in the Agricultural Value Chain:

1. Though marketing is an emerging stage deliverable activity, yet some nascent FPOs (Darapur, Sujanpur and Kiratpur Sahib in Punjab), despite being in this stage, were selling produce of the farmers. A significant proportion of the farmers in these as well as in the emerging and mature FPOs expressed satisfaction with the FPO marketing facilities. At the same time, many farmers were not selling their crops through the FPO. Moreover, proportion of the produce sold through the FPO was very small. Thus, the challenge for the FPO was how to integrate these farmers and their produce with its marketing channel. Improving marketing connectivity was another challenge for the FPOs. The PRODUCE fund FPOs in Punjab dealt with single crop. These dealt with vegetables only (a perishable crop), and not in foodgrains (wheat and paddy). The FPOs should deal with multiple crops, including foodgrains , which is important for their sustainability.

2. Many farmer members in PRODUCE nascent and emerging categories in Punjab still believed that direct market tie-ups than the FPO are income enhancing. They perceived individual marketing channels for better price realization. But the proportion of farmers who perceived so in mature category was relatively small (one-third) in Punjab and negligible in Madhya Pradesh. It means that particularly the nascent and emerging FPOs should work towards building up the trust of farmers in their marketing capabilities.

3. Aggregation by the FPOs, including weighing etc, seemed satisfactory. Most of the farmers themselves transported their produce to the FPO collection

centres from where the produce was transported by the FPO to the marketing/ sale point. Sale through FPO can save farmers from exploitation by the commission agents which is need of the hour particularly in Punjab.

4. FPOs should be involved in procurement operations in Punjab as in Madhya Pradesh. A committee of five MLAs constituted by the Hon'ble Speaker of Punjab Vidhan Sabha to examine the causes of economic distress leading to indebtedness and suicides by the farmers and farm labourers, that tabled its report in Punjab Vidhan Sabha on March 28, 2018, recommended that “the FPOs be given license to sell their crops directly in the APMCs.” Some FPOs in Punjab, of course, had obtained license to operate in the APMC, but these were not allotted space in the market. Moreover, these were prevented from operating in the market by the vested interests (commission agents (Arhtiya)). The State Government should accept and implement the recommendation so that the FPOs could effectively participate in the APMC market alongside the Commission Agents/Arhtiyas as was happening in Madhya Pradesh where the FPOs were participating in government procurement operations alongside the traders, and earn commission for their sustainability.

5. Farmers perceived income enhancement due to FPO disseminated technology, value addition and economy of scale in purchase/sale of agri inputs/outputs through the organization. They shared their technology with fellow members, which was not the case in SFAC companies that are now defunct in Punjab. Value addition was reported in a couple of FPOs (mature) in Punjab, but it was insignificant. No value addition was reported in PRODUCE nascent FPOs. In Madhya Pradesh, this activity could not pick up as the lone FPO (Narsingh) that attempted, had to abandon because it could not get FSSAI certification. The government should help the FPOs in obtaining the FSSAI certification that will encourage them to plan value addition activities. Moreover, state support should be provided for setting up of small processing units.

6. Transfer of new production technology, including seeds, fertilizers, pesticides and insecticides, and

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diversification and dissemination of technology though benefitted the farmers, but the FPOs (particularly the nascent and emerging) need to work more closely with the training and extension Departments of Agriculture of the state government and other technical universities and institutions for sensitizing farmers and providing them access to new crops/varieties and cropping patterns.

7. Testing facilities and access to storage and warehousing facilities were almost non-existent in nascent and emerging FPOs, while some improvements in mature FPOs were reported. The government must help establish these facilities in a cluster of the FPOs. The recent policy of NABARD to establish cluster of FPOs in group of five is a right step in this direction.

8. A few FPOs (Dhira Patra and Lambra Kangri in Punjab) have farm machinery banks that the farmer members use on custom hiring basis. In Madhya Pradesh, the government setup farm machinery banks. Such banks should be setup at a focal point in a cluster of FPOs with assistance from the State Government.

9. Support of the MARKFED, banks and SFAC in training activities were minimal. Banks should organize training programmes in bank linkage for the FPO and its stakeholders. They should also give them training in availing new credit line from other sources as well. SFAC should also play a proactive role in market and credit linkage of the FPOs. MARKFED should be assigned a proactive role in the functioning of FPOs and their activities. FPO institutions as well as NABARD should play a proactive role in assessing the needs and organizing training and similar programmes.

11.4 Enhancing Institutional Credit Flow through FPOs:

1. Institutional credit linkage of marginal and small farmers through FPO assumes special significance in Punjab as they depend largely on the usurious money lender and other informal sources for their credit needs. Therefore, the FPOs should be groomed into building their capacity to meet credit needs of the farmers. These should be able to meet loan requirements of the farmers for domestic purposes

also, that will considerably reduce their dependence on rapacious money lender.

2. Though some isolated instances of bank/credit linkage by the FPOs were reported, yet, overall speaking, it was lacking. Farmers reported some improvement in terms of reduced dependence on money lenders post FPO. It is, therefore, suggested that some institutional mechanism should be evolved to ensure credit/bank linkage of the farmers through the FPO that will save them from falling into the trap of the usurer money lender.

3. The possibility of raising loan by the FPO against warehousing receipts in Punjab is almost nil as the FPO's access to farmers' produce was meager. Moreover, farmers need money immediately after harvesting for sowing in the next season. They would also deem it risky and may not give their consent to the FPO to raise loans against warehousing receipts of their produce.

4. By up-scaling the size of operations and membership, the FPOs should generate sufficient volume of business that will induce banks and other financial institutions to devise products to finance even the margins.

5. The FPOs have working capital and term loan requirements. But these lack assets to mortgage as collateral with banks. NABARD's PODF scheme should contain such provisions as to meet the initial loan requirements for financing the operations of the FPOs.

6. Only the farmer producer organizations registered under section IXA of the Indian Companies Act are eligible to avail assistance under SFAC's EGF and CGF schemes. Hence, the FPOs registered as cooperatives, state or multi-state, a society or a public trust though are eligible to avail promotional grant from NABARD, but these are not eligible to avail financial assistance under SFAC’s EGF and CGF schemes.

7. None of the selected FPOs (including mature) in Punjab and Madhya Pradesh have availed SFAC's financial assistance under these schemes.

8. It is suggested that

Ø The PRODUCE Fund FPOs, registered

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under any statutory provisions as provided by NABARD, should be made eligible to apply for financial assistance under the EGF and CGF schemes.

Ø�The FPOs should make continuous efforts to increase the number of their shareholding members at least to 500, which NABARD describes as optimal.

Ø�FPOs should raise sufficient equity from the members.

Ø�Marginal and small farmers be given adequate representation in BoD.

Ø�The FPO must have at least one woman member in the Board of Directors.

Ø�Provisions of the EGF and CGF schemes should be revisited.

9. The FPOs should contain FIGs, each of 15-20 members. Avenues should be found to credit link members of these FIGs that are sponsored by the FPO. Repayment should be the joint responsibility of the FIG as in case of the SHG, with FIG/FPO as the guarantor. Collateral requirements for such loans may be carefully worked out. These organizations can also promote JLGs and SHGs and credit finance them.

10. The PRODUCE Fund FPOs should make attempts to link all the members with the Kisan Credit Card. The FPOs should also help farmers to avail loans under Credit Swap Scheme of the banks.

11. Contribution to equity fund should be made compulsory while enrolling farmers as members of the FPO.

12. All the FPOs should have at least one woman member in the BOD.

Milk FPOs:

1. NABARD's initiative of establishing milk FPOs has proved remunerative for the farmers. In nascent and emerging categories, the farmers purchased milch animals and started selling milk only after joining the producer organization. They earned an average gross income (per farmer) of about Rs. 25000/- per month from sale of milk through the FPO. In the mature, the corresponding amount worked out to Rs. 10.35 lakh

(Rs. 7.19 lakh from sale through FPO and Rs. 3.16 lakh from the sale direct in the market). Thus, by establishing milk FPOs, NABARD has generated a supplementary income earning activity for the farmers.

2. Milk FPOs seemed performing better than their agri-business counterparts. It was primarily due to assured marketing of milk through the FPO. The farmers in these FPOs were benefitted particularly in market linkage, value addition and better price realization. Farmers also benefitted in gaining institutional access and improving their knowledge/awareness about production practices, marketing processes etc. Access to quality inputs also improved as the FPO matured. It was primarily in the mature milk FPO that the farmers reported improved access to new technology. But the nascent and emerging milk FPOs could hardly provide improved access to farmers for purchase of inputs, transportation of produce for sale, processing/value addition, storage and testing facilities post FPO. The mature one, on the other hand, was performing well in all these facilities.

3. Benefits as price gains and regularity of payment accrued to the farmers in all these FPOs. Payments were made mostly in cash in nascent and emerging FPOs, and online in the mature one.

4. Number of trainings organized was least in the nascent MILKFED FPO. Merely one-fourth of the farmers attended General Body meetings regularly. It is disturbing that, in nascent FPO, the proportion attending never or rarely was very high (46.67 per cent). Moreover, it was a single village based society, while others expanded to other villages also.

5. Feedback on POPI's handholding support in case of both the PRODUCE nascent and emerging FPOs was 'good'. However, none in the both described it 'very good'. In other words, the POPI in PRODUCE Fund milk FPOs should further strengthen the handholding support. In mature FPO, it was excellent. Role of the CEO in PRODUCE Fund milk FPOs was merely satisfactory, which was about two levels below the ideal 'very good'.

6. The nascent and emerging FPOs faced competition from the private milk vendors. Therefore, these should improve their aggregation, processing and

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marketing strategies.

7. Like the agri-FPOs, these need to improve bank/other financial institution linkage. Performance of all the milk FPOs (including mature) in credit linkage of the farmers, however, was dismal.

Case Studies:

1. A Case study of The UNATI Cooperative Marketing cum Processing Society Ltd. offers following lessons for the FPOs.

Ø�Identify resources in the catchment area

Ø Win confidence of the farmers

Ø�Diversify crops

Ø�Develop and hold market tie-ups

Ø�Government infrastructure support

2. The Citrus Estate, Chaunni Kalan (Hoshiarpur), thrived primarily on financial, technical and administrative support provided by the government. Sufficient capital formation in the form of machinery and testing facilities were available in the Estate that improved access of the farmers to latest technology. The state help, indeed, is sine qua non for promoting capital formation and creating infrastructure facilities in the producer organizations.

11.5 Factors Contributing to Success of FPOs in Punjab and Madhya Pradesh:

1. Role particularly of POPI as well as the CEO are critical for success of the FPO. For instance, the farmers' feedback on POPI handholding support and the CEO role was average in Dholewal FPO. The Dada Darbar in Madhya Pradesh suffered because its CEO landed the FPO in trouble because of non-payment of mandi tax and also messed up its finances. The Kisan Ekta suffered because it did not have POPI as well as the CEO for quite some time. The SFAC companies in Punjab suffered as the POPI had stopped taking interest in the operations of these companies. Both the mature FPOs in Punjab (Dhira Patra and Lambra Kangri) had very strong handholding support from the individuals who promoted and nurtured these, and were successful. The same is true of the mature milk FPO (Progressive Dairy Solution).

2. Sustained government support is an important determinant of the success of the FPO. The farmer members should own the FPO rather than regard it as a private initiative.

3. Cash subsidy by the government to farmers may not sustain the FPO (as is the experience of SFAC promoted FPCs in Punjab). Government help in establishing machinery banks and storage (e.g. in Madhya Pradesh), testing, processing, and packing facilities (e.g. in citrus estate), at a focal point in a cluster of FPOs etc will prove more beneficial for sustainability of the FPO. Moreover, involvement of the state Department of Agriculture and of the technical universities and the institutions in providing technical support is critical.

4. Participation of farmers in decision making as well as its working is an important determinant of success of the FPO.

5. Farmers will join the FPO if they find it advantageous.

6. Care should be taken that the CEO to be appointed is trained, qualified, honest, dedicated and should have rural background.

7. Marketing is an important determinant of success of the FPO. State support in marketing plays a crucial role in their sustainability.

8. Farmers would sell their produce through the FPO if they get some inducement. Plus the market price given in Darapur FPO (Punjab) induced a large proportion of producers of the crop 'peas' (79.18 per cent) to sell their produce through the FPO. Same was true of the Dhira Patra (a mature agri-FPO in Punjab). In Madhya Pradesh, benefits accrued to farmers who sold their produce for government procurement through the FPO. That is why, the Narsingh could handle sale of a large proportion of the produce of its members (42.62 per cent). But, the Dada Darbar (Madhya Pradesh), because of misdoings by its CEO, had to withdraw from procurement operations that led to its downfall. Likewise, because of expiration of the market license, the Kisan Ekta (Madhya Pradesh) could not participate in procurement operations in 2016 and failed (upto 2015 it was working satisfactorily). Thus, participation of the FPO in procurement operations (e.g. in Madhya Pradesh) has

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been an important contributory factor in success of the FPO.

11.6 Recommendations for Sustainability of FPOs in Punjab:

A committee of the MLAs was constituted in June 2017 to examine the causes of economic distress leading to indebtedness and suicides by farmers/farm labourers in Punjab that tabled its report in Punjab Vidhan Sabha on

65March 28, 2018 . The committee in its report (2018) observed that

“The National Bank for Agriculture and Rural Development (NABARD) has adopted the policy of organizing the Farmer Producer Organizations… Under this policy, especially the marginal and small farmers are organized into Farmer Producer Organizations and [that they] can cultivate, obtain knowledge about technology and market their produce collectively. Besides, NABARD provides financial and technical ass is tance to these FPOs. The D e p a r t m e n t o f A g r i c u l t u r e , Government of India also provides financial assistance to the FPOs. L ikewi se , many f a rmer s have collectively setup [Self] Help Societies. The committee feels that the FPOs can prove a boon for marginal and small farmers if the Government provides appropriate information and guidance t o t h e m . T h e e x p e n d i t u r e o n agricultural implements by small farmers can reduce if the FPOs p u r c h a s e t h e s e i m p l e m e n t s collectively. Purchase of seeds, fertilizers and pesticides collectively can also reduce these expenditures. These FPOs can earn profits by marketing [farmers ' ] produce”. (Transcript, p. 44)

Also, The draft Punjab State Farmers' Policy (June 2018, “email received on August 7, 2018, from the office of Punjab State Farmers' and Farm Workers'

Commission”, SAS Nagar (Mohali), Punjab resolves to “actively promote collectivization of small and marginal farmers into commodity specific Farmer Producer Organizations (FPOs) especially for small ruminants, livestock products and perishables” (Para xii, p.30) romote access to farm . It further resolves to “pmachinery through Primary Agricultural Cooperative Societies, FPOs and entrepreneurs” (Para i, p.33). However, following are the major recommendations that will facilitate sustainability of PRODUCE FPOs in Punjab:

1. The Farmer Producer Organizations (FPOs) should be integrated in the state agricultural policy. The state support is essential for sustainability of the FPOs.

2. The FPOs should be developed in a cluster mode. The government should help create centralized facilities such as agricultural machinery bank, testing, processing, storage and packing facilities etc at a focal point in a cluster of the FPOs.

3. APMC license on preferential basis be given in the name of the FPO on the pattern as in Madhya Pradesh. An enabling environment in the APMC should be created for the FPOs such that these could participate in government procurement operations and earn commission that will help facilitate their sustainability.

4. FPOs should use more frequently the training and extension services of the state department of agriculture and similar other technical universities and the institutions. A proactive role should be assigned to MARKFED, the financial institutions (in particular the banks) and SFAC in market and credit linkage of the FPOs.

5. An incubation centre should be set up in the state for training and capacity building of young farmers and graduates in agriculture to run farmer collectives.

6. Marketing is the major challenge for agri-FPOs. The FPOs should concentrate on marketing from the nascent stage. In this context, some target be prescribed for sale of farmers' produce through the organization, say 10 per cent in nascent, 15 per cent in emerging, and by the time these complete three years, it should be a minimum of 25 per cent.

65Interactions with the Committee on Farmer Producer Organizations were held on January 18, 2018.

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7. Almost all the respondent farmers produce wheat and paddy in Punjab. But most of the FPOs in the state do not deal with these crops. Hence, FPO activities in Punjab are restricted merely to vegetables which comprise a small fraction of the total agricultural produce in the state. If these FPOs are to be successful and make impact on the rural economy of

the state then these must deal with wheat and paddy, besides other food grains.

An umbrella organization of FPOs in Punjab on the lines of MBCFPCL in Madhya Pradesh should be setup that will nurture the FPO after the POPI exits. This should be called the Punjab Consortium of Farmer Producers' Company Limited (PCFPCL).

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