Farmer Producer Companies are turning farmers into entrepreneurs and boosting agrarian businesses

Dr Heera Lal and Tashi Sharma

Prime Minister Narendra Modi's envisioned 'Amrit Kaal' journey seems to give wings to Mahatma Gandhi's popular saying, "Let the villages of the future live in our imagination so that we might one day come to live in them!"

Actions speak louder than words, and certainly, now is the time to leverage existing resources and create new ones. Apparently, the Britishers came to India because they sensed immense potential in the rich Indian heritage and its enormous resources. And today, Indians feel pride as well as a little discomfort when they see Indian crafts installed in global art galleries.

Well, the world cannot deny the fact that Indians are progressive and solution-oriented people. Indians are futuristic and they are doers.

During this new phase of Amrit Kaal, Jai Jawan, Jai Kisan, Jai Vigyan and Jai Anusandhaan, i.e., Hail the Soldier, Hail the Farmer, Hail Science and Hail Innovation must drive our actions.

In one of the recent guest columns published in Mint, jointly written by Member of Parliament (Dr.) Kirit P. Solanki (Member of Parliament - Lok Sabha, Chairman of the Parliamentary Committee on the Welfare of Scheduled Castes and Scheduled Tribes, and Lok Sabha Panel Speaker) and Sumit Kaushik, a researcher at O.P. Jindal Global University, the authors rightly point out the fact that agricultural social entrepreneurship holds enormous potential for fostering an enabling ecosystem for farmers; value chain management, organic farming, agri-decision support systems, and input and product management are some of the prospects for development driven by agricultural social entrepreneurship in India.

Farmer Producer Companies, a game changer

Farmers do not like to keep engaged in loss-making agriculture because losses push them into poverty for generations, and to let youth come into farming, there is a dire need to foster profitable farming. The whole agricultural entrepreneurship ecosystem needs transformation, and for this, the farmers will have to operate with the mindset of a businessman.

The Indian government has come up with a policy of uniting farmers into a farmers' business enterprise, i.e., a Farmer Producer Company (FPC). An FPC is a group of farmers who are engaged in agricultural production and allied work and have similar thinking in running agricultural business activities. Farmers from one village or several villages can form this group together.

The main objective of the FPC is to form agrarian businesses by registering as a company. FPCs are created with the objective of grouping small-scale producers (especially small and marginal farmers) to protect their interests. As members of the FPC, farmers have the power to negotiate better. By this, they will get more benefits from buying inputs or selling their grains, fruits, vegetables, spices, etc., at a good price.

As FPC can receive a range of technical and financial support, it becomes the simplest and most cost-effective means of converting a village into a model village. FPC helps farmers sell their products easily across the country as well as globally. The FPC will receive contributions from the government to increase the business on par with its capital.

The idea is that whatever farmers buy, they buy together in bulk. And whatever they sell, they sell it together in bulk. This will help in the aggregation of agricultural products for better marketing opportunities—savings to the farmers from the combined expenses incurred in processing, storage, transportation, etc., by doing business in diversity.

FPCs are generally encouraged under various Central Sector Schemes implemented in the states by the Department of Agriculture, Cooperatives and Farmers Welfare. Farmers wishing to set up an FPC should contact the concerned department or its advisor for detailed information and hand holding.

FPCs can be implemented by National Bank for Agriculture and Rural Development (NABARD), Small Farmers Agribusiness Consortium (SFAC), National Cooperative Development Corporation (NCDC), and nodal departments of state government because they allow farmers to increase their income significantly by transforming themselves into a farmer-business enterprise.

These organisations will bear management expenses for a period of three years to run the FPC. Rs 5 to Rs 15 lakh will be given for capital. It will provide loans of up to Rs 2 crores without any collateral. The FPC must have a minimum of 300 members.

An FPC can have members from more than one village. A farmer can give up to 10 per cent of the membership capital. Also, there is no limit to the number of FPCs that a farmer can be a member of. However, any such farmer can avail of government benefits only once. At least 50 per cent of the farmers should be small and marginal.

The Government of India is leaving no stone unturned to uplift rural development, and in fact, there is a huge array of special schemes and policies for rural as well as tribal communities to foster socio-economic development through agriculture-based enterprises.

As the young fabric of India has immense potential, coming together and working in a single direction can put the machinery of ideas into action and thus lead to tangible results. There is a need to revitalise the entrepreneurial climate from a novel perspective in India. This silent support needs to be awakened to strengthen community development and support government, business, and society.

Dr. Heera Lal is Additional Mission Director-UP, National Health Mission. Tashi Sharma is an economics student at Dr. B. R. Ambedkar University, Delhi. Views are personal.