NABARD Presentation on FPO

Promotion of Farmer Producer Organizations

NABARD INITIATIVES

Taking Rural India >> Forward

SMALL HOLDER AGRICULTURE

The share of SF & MF accounted for around 85% of operational holdings in 2010-11as compared to about 62% in 1960-61. Average size has declined to 1.16 ha.

Area operated by SF & MF has increased from about 19% to 44%.

In terms of production, SF & MF make larger contribution to the production of highvalue crops. Contribute 70% of vegetables prod., 55% of fruits, 52% of cereal prod.,69% in milk production. Thus, small farmers contribute to both diversification andfood security.

The small holding character of Indian agriculture is much more prominent todaythan even before.

The future of sustainable agriculture growth and food security in India depends onthe performance of SF & MF.


CHALLENGES FACED BY SMALL HOLDER AGRICULTURE

Access to inputs, technology, markets & poorly developed supply chain

Lack of hassle free access to credit results in high dependency of farmers on number ofintermediaries. Need a level playing field with large farms.

Output price fluctuations: Different models emerged for marketing collectively by SF&MF.

SHG model, Co-operative model, Small Producer Co-operatives and Contract farming.

Apni Mandi in Punjab, Rytu Bazars in AP, dairy co-operatives in marketing.

Lack of assured income and frequent crop failures.

Real challenge: Organising the SF & MF for marketing and linking them to high value agric.

The National Commission for Enterprises in the Unorganized Sector (NCEUS) hasconsidered 4 important group approach models to benefit from the economies of scale.

Co-operatives, Producers Companies, Farmers groups such as SHG in Andhra PradeshSEWA (Self EmployedWomens Association) in Gujarat and Kudumbashree in Kerala.

Strategy : Shrinking the Marketing Chain and Promotion of FPOs. Taking Rural India >> Forward

NABARD EXPERIENCE IN POs

NABARD set up a Producer Organisation Development Fund with acorpus of Rs.50 crore from its surpluses in the year 2011.

So far, NABARD has supported 91 POs of different forms by extendingcredit facility of Rs.205 crore and Rs.6.30 crore towardsaccompanying measures for capacity building/ market interventions.

NABARDs experience shows that significant capacity building andhandholding is required before the POs attain organizational,financial and commercial sustainability.

It requires a gestation period of three years for generatingmeaningful benefit to the members.


GoI Initiative

Union Budget (2014-15): Producers Organization Development andUpliftment Corpus (PRODUCE) Fund of Rs.200 Cr. in NABARD forpromotion of 2000 Farmer Producer Organizations (FPOs)

Objective: to promote and nurture Farmer ProducerOrganizations(FPOs)

Ultimate objectives are better price discovery and better incomeenhancement opportunities for farmers

Rational: Aggregation is an imperative necessity for small andmarginal farmers for attaining economies of scale, accessing themarket and for reducing transaction cost.


Strategies for Promotion of FPOs

Identification of natural clusters of farming groups involving POPIsInput centricCommodity / crop centricTechnology centric

Potential FPOs among successful WDF / Wadi Projects and theirFederations

Farmers Clubs / Federation

SHGs and Federation

PACs, MACs


Strategies for Promotion of FPOs continued

Involvement of Resource Support Agencies (RSAs)Close involvement of stakeholders (NGOs, Banks,Line Depts. of Govt.)Stakeholders meetingsDevelopment of best practices, success stories forreplicationMission mode: Quantitative and qualitativemilestones with timelines


Strategies for Promotion of FPOs continued

Wide publicity - print, electronic media, mass communication strategies

Launching of pilot projects, action research projects, experimentalprojects, field trials to learn and understand various successful modelslike MPDPIP, SERP, Mission Mangalam, etc.

At National Level: Advisory Committee consisting of 15-20 members /experts from reputed academic institutions / NGOs / representatives ofGOI, State Govt, SFAC, Corporates, Value Chain Players and Banks.

State Level: Consultative Committee with 7-10 members consisting ofNABRD, SLBC Convener, Director Agriculture, Director Horticulture,Resource Support Agency / POPI, Banks, etc.


Resource Support Agency

Capacity building of POPIs

Necessary training and handholding support to POPI

Nodal POPI in places of no RSA


Role of POPIs

NGOs, Trusts, Corporates, State Govt. Depts., NABARD subsidiaries,KVKs, Big FPCs, Farmers Federations, Commodity Board / Federations,Cooperative Milk Unions and Other experienced institutions areeligible institutions for POPIs

Awareness Creation among farmers about FPOs

Organizing, enrolling and registering of FPOs

To develop organization chart, business plans and nurture the FPOs

Monitoring project implementation progress of FPOs


Eligibility of POPIs

Registered under relevant Acts

Minimum 3 yrs audited Balance Sheets/P&L accounts

Good track record/relevant experience

Dedicated and professionally competent staff

Adequate infrastructure, not blacklisted by any agency

No negative net worth, no default to any FI

Experience in facilitating business / livelihood activities with marketlinkage


Activities eligible for support to POPIs and FPOs

POPI

Mobilization of FarmersRegistration of POTraining-cum-Exposure Visits of Farmers (for two programmes)Training to Board of Directors of POs (for three programmes in three years)Training to CEOs of POs ( Two programmes in two years)Compensation to resource person of POPI ( for three years)Preparation of Business Plan/DPR , MIS, etc.FPO

Compensation to CEO and office expensesRevolving Fund assistance


Bank Finance for FPOs

Need based financial assistance to FPOs

Grant support from NABARD

Credit for business activities

Satisfying the norms- number of members, legal entity

Credit guarantee cover from SFAC for Producer Companies

It is critical to support POs in terms of awareness creation,capacity building, technical support, professional management,provision of initial seed capital and working capital, etc. and handholding support for a period of 3-5 years


THANK YOU


Contact:Dr.Y.HaragopalAGM, [email protected]

Documents

NABARD Presentation on FPO