Producer Companies
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after making them understand the concept,
principles and business of a producer com-
pany is time consuming. At present the local
leaders who form the initial interest group/
governing body convince others to pay the
share money and thus become a member.
Producer companies are reluctant to
increase membership beyond the manda-
tory minimum since they raise the expecta-
tions of members, but may be unable to
fulfill them in the short term due to lack of
funds. While initial mobilisation brings in
membership, converting the shareholders
into active members has been a problem.
During the field interactions with a number
of PCs, the active membership was much
less. This is on account of the limited services
and products offered by the PCs. Where
PC arranged input supply, especially urea,
active membership increased and there was
also interest from households in the area to
become shareholders. On output marketing
very few PCs met had taken steps on aggre-
gation. Where aggregation and marketing
was done, active membership was high in
the crops chosen for marketing.
POPIs and also some PC board mem-
bers mention that the understanding of the
functions of the company and ownership
among members is low. Active members
range between 20 per cent to 50 per cent.
Active is defined as availing the services of
the company. Attrition rates are not tracked
by many POPIs as of now. Indicators for
member ownership and norms of mem-
ber patronage are yet to evolve. These are
likely to vary based on sector/commodity
and also for each type of service. AKRSP
mentions that in FPC, package of practices
should be adopted by 100 per cent, input
supply by 60 per cent and marketing by 20
per cent to 30 per cent at the end of three
years. Providing market linkages for more
members requires tremendous efforts in
supply chainmanagement, which FPCs and
POPIs find it hard to manage.
Interactions with PCs also revealed that
they deal with non-member producers as
well, especially inmarketing of produce; this
trend is seen more in dairy PCs. In some of
the PCs there are more non-members than
members that are marketing their produce.
The input supply services are restricted to
members in some PCs, but extended to
non-members in others. However, there
is no clear strategy as to how these non-
members can be made members to increase
the strength of the PC. Member ownership
in PCs is ranked as the topmost issue by both
the boards of PC as well as the POPIs. The
pace of initial mobilisation, communication
to shareholders, activities to build company
visibility and availability of funds to take
up business activities have a bearing on the
bond between members and the PC. Even
five-year-old companies interviewed men-
tion that member loyalty is a major area of
concern.
The issue of member acquisition and
member loyalty has to be dealt with by the
promoters right from the design stage. The
PC should be able to articulate the benefits to
those who choose to become shareholders.
Typically the PC would like to raise its
business volumes by dealing with not just
members but also non-members. But the
PC should provide preferential treatment to
members in terms of making available scarce
inputs, offering a lower price tomembers on
items sold to them, higher price for produce
bought from members compared to non-
members and build in patronage bonuses
linked to the volume of business done by
the member with the PC. Field interactions
From promoting institutions, the commu-
nication with shareholders has been limited;
business has been confined to a few farmers.
Shareholder buy-in has not been given
importance. In today’s ground reality, PCs
with 200 active members are called good
working ones. Even with this small number
of members, business break even can be
achieved. However, sustainability of PC and
impact of PC in a farmer’s livelihood is likely
to be very limited.
Source:
POPI, MP.
