24-December-2024-Special-Article

FARMERS PRODUCER ORGANISATIONS (FPOS): CHALLENGES AND SOLUTIONS

Farmers Producer Organisations (FPOs) are vital for empowering small and marginal farmers by helping them achieve economies of scale, improve market access, and increase bargaining power.

A recent analysis by the Indian Council for Research on International Economic Relations (ICRIER) highlights the challenges faced by FPOs and suggests reforms to enhance their effectiveness.

What is a Farmers Producer Organisation (FPO)?

• An FPO is an organisation formed by farmers to collectively manage production, marketing, and other related activities.
• Purpose: To enable farmers to negotiate better prices, reduce costs, and access global markets.
• Ownership: Owned and managed by member farmers, following the principle of “for the producers, by the producers.”
• Support: Promoted by the Small Farmers’ Agribusiness Consortium (SFAC).
• Legal Framework: FPOs can be registered under:

• Companies Act (1956 and 2013)
• Society Registration Act (1860)
• Indian Trusts Act (1882)

Need for FPOs in India

• High Smallholder Population: Over 86% of Indian farmers are small or marginal.
• Economies of Scale: Collective action enables better price negotiations and cost reductions.
• Income Growth: Supports the government’s aim of doubling farmers’ income.
• Global Integration: Facilitates access to international markets.

Differences Between FPOs and Cooperative Societies

Challenges Faced by FPOs

Limited Market Access

• Nearly 80% of FPOs struggle to connect with buyers, manufacturers, and exporters.
• Preference for traditional trade channels like mandis over FPOs due to insufficient product visibility.

Lack of Product Information

• Despite registration of over 8,000 FPOs, detailed product information is missing.
• Absence of a centralised product-specific database restricts market opportunities.

Complex Regulations

• Multiple Standards: Diverse guidelines from FSSAI, BIS, APEDA, and others create confusion.
• Information Gap: Limited awareness of export requirements and compliance standards.
• Non-Acceptance of Standards: Importing countries often reject Indian standards despite their quality.

Traceability Issues

• Global buyers demand traceability in the supply chain, which most FPOs cannot provide.
• Traceability requires detailed tracking and documentation of production and logistics.

Low E-commerce Adoption

• Limited knowledge and use of platforms like eNAM and ONDC.
• For instance, no turmeric FPOs are currently listed on ONDC.

Success Stories of FPOs in India

Kandhamal Apex Spices Association for Marketing (KASAM), Odisha:

• Promotes Kandhamal turmeric through collaboration with Spice Development Societies.
• Partnered with Kisan Saathi to export turmeric to international markets like the Netherlands.
• Demonstrates the potential of strategic partnerships and coordinated efforts.

Global Success Stories

Mexico (Ejido System):

• Collective farming helped farmers enter international markets for crops like avocados and berries.

Thailand:

• Strong agricultural cooperatives in rice production.
• “One Tambon One Product” initiative promotes unique local produce.

China:

• Farmer Professional Cooperatives use platforms like Alibaba to connect directly with consumers.

Way Forward

Comprehensive Database

• Create a detailed product-specific database of FPOs.
• Enable global companies to connect with relevant FPOs.

E-commerce Integration

• Increase FPOs’ participation on platforms like eNAM and ONDC.
• Provide training for farmers to utilise digital platforms effectively.

Global Compliance Standards

• Educate FPOs on export standards, including sanitary and phytosanitary measures.
• Develop guidelines for adhering to technical barriers to trade.

Product-Specific Training

• Conduct tailored training sessions for compliance and market entry.
• Focus on key agricultural products with export potential.

Replicating Successful Models

• Document and replicate case studies like Kandhamal turmeric’s success.
• Establish knowledge-sharing platforms for FPOs.

Improved Market Linkages

• Facilitate partnerships between FPOs and global buyers.
• Address challenges like product traceability to enhance trust.

Policy Reforms

• Simplify compliance processes and reduce regulatory overlaps.
• Foster mutual recognition agreements for standards with importing countries.

Conclusion

FPOs are crucial for empowering small farmers and enhancing India’s agricultural economy. By addressing the challenges of market access, compliance, and traceability, and leveraging successful case studies, India can position its FPOs as global leaders in agricultural trade. Reforming policies and fostering digital integration are key steps toward this goal.

Mains Question:

1. “Discuss the role of Farmers Producer Organisations (FPOs) in enhancing the economic empowerment of small farmers in India. What are the key challenges they face, and how can they be addressed? (150 WORDS)