90
S
tate
of
I
ndia
’
s
L
ivelihoods
R
eport
2015
credit is also being considered. Similarly, the
Government of Andhra Pradesh aiming at
double digit inclusive growth, has identified
promotion of FPCs as one of the high growth
opportunities and plans to provide budgetary
support for formation of FPCs.
Formation of FPCs is seen as a key strat-
egy to address the issues being faced by small
andmarginal farmers. Due to increased frag-
mentation and sub-division of land, farmers
with marginal landholdings have limited
choices in technology adoption, invest-
ments and markets. FPC members have
the potential to leverage collective strength
to access financial and non-financial inputs
and services and appropriate technologies,
reduce transaction costs, tap high value
markets and enter into partnerships with
private entities on more equitable terms.
With fragmentation of holdings making
large-scale economies impractical, FPOs
offer a form of aggregation which leaves
land titles with individual producers and
uses the strength of collective planning for
production, procurement, value addition
and marketing to enhance income realisa-
tion from members’ produce.
3
The major support for FPCs has been
from SFAC and NABARD. SFAC was man-
dated to lead a project to promote FPOs in
close collaboration with state governments,
civil society and technical organisations as
well as private sector companies. Working
across 25 states, the project has helped to
mobilise approximately 10 lakh farmers in
over 800 FPOs (both registered and under
formation) by April 2015. While present-
ing the Union Budget for 2014–15, the
Union Finance Minister announced that a
Producers Organisation Development and
Upliftment Corpus Fund of
`
200 crore to
be utilised for building of 2000 FPOs in the
next two years to supplement NABARD’s
Producer Organisation Development Fund
(PODF). The fund has become operational
and 835 FPOs have been approved during
the financial year 2014–15. A grant assis-
tance of
`
6.55 million has been sanctioned
for the promotion and capacity-building/
nurturing of these FPOs.
Structure of farmer producer
companies
Producer companies are usually mobilised
and nurtured by civil society organisations.
Most of them are farmer producer organisa-
tions that promote Farmer Interest Groups
(FIGs) at village level for productivity
enhancement measures and also for aggre-
gation of outputs. FIGs are aligned crop/
product/craft wise. The producer company
functions usually at a cluster level of 5 to 15
villages depending on density of population
and interest shown by farmers.Where neces-
sary a cluster of FIGs are also formed which
is an informal structure for exchange of ideas
and communicating with farmers. A few
producer companies (PCs) have a block as a
catchment area but ownership and member
connect are seen as issues. Last year’s report
carries a detailed discussion on this and has
recommendations on area coverage. FewPCs
are formed as the apex of federations as in the
case of BAIF
4
and CCD
5
which has a multi-
district operational area with a large mem-
bership base. Suchmulti-district, multi-state
structures require strong seniormanagement
and good field monitoring systems.
A more recent initiative especially by
SFAC is to form a state-level apex PC of
producer companies functioning in the state
(Figure 5.1). State-level apexes are nurtured
by a POPI.
Formation of state apex of PCs has been
taking shape since the past two years in states
likeMP, Karnataka, Maharashtra, Rajasthan,
Uttar Pradesh and West Bengal, which have
3
Pravesh Sharma, 2014, Transforming Agricultural
Markets and Value Chains in the 21st Century: Farmer
Producer Organisations and Policy Challenges,
.
php?id=15&catid=2
4
Bhartiya Agro Industries Foundation, Pune–a
leading NGO.
5
Covenant Center for Development is a Madurai
basedNGOworking in several agricultural value chains.
