Producer Companies
101
at warehouse. Market fluctuations in price
of guar gum, another popular produce of
Rajasthan has made farmers wary of storing
and selling.
Value addition
has been tried by very
few PCs in farm produce
.
Milling of grams
and converting spices to powders have been
attempted by a few. POPIs find that a very
high level of preparedness and understand-
ing of markets is needed for entering such
value addition. To move up the value chain
may take five to seven years after formation
of PC. However, lack of working capital
restricts the scale of procurement from
farmers and such value addition. Moreover,
taxes eat into profits and affect viability.
While other private players may be indulg-
ing in tax evasion practices, FPCs pay the
taxes and find the margins squeezed.
Sorting, grading and packaging for selling
in local markets are the minimalist value
addition that many FPCs do. This activity
requires investment of
`
1 to 3 lakhs that
FPCs usually get as grants through govern-
ment or donor schemes. FPCs are realising
the need for godowns but are concerned
about year-round utilisation and over-
capitalisation. For seed producers more
sophisticated facilities are needed. MP
state apex PC plans to create such common
infrastructure with government and private
sector funding at a regional level where a
cluster of PCs can utilise such facilities. PCs
also mention that the land for construction
of common facilities should be provided by
the local panchayat since lot of wasteland
is available. This will save PCs from setting
aside large sums for purchase of land. PCs
working among tribals have an additional
issue of inability to purchase land since
land owned by tribals is not available for
purchase. Government has to allocate the
land.
Lenders like Ananya Finance mention
that for marketing and processing facilities
PCs should seek private sector partnerships
and investments through a special purpose
vehicle based on co-investment principles,
which will be managed professionally.
Choice of technology plays a key role in
determining efficiency, profitability and
market acceptance. Especially value addi-
tion investments near the high end of the
value chain are often beyond the capacity
of POPI and thus PCs require private sector
partnerships.
Staffing in PCs
Producer companies initially require at least
three staff; Chief Executive Officer (CEO),
accounts and a community facilitator/
business promoter. Additionally, four to
five local resource persons are engaged to
work with producers and farmers. However,
except a few, most of the FPCs interacted
with, had no CEO and the post is largely
lying vacant. Hiring and retaining qualified
staff has been difficult. PCs do not have staff
who can grow their business. Local resource
persons are usually employed in all PCs
especially FPCs. These are mostly progres-
sive farmers who are also on the board of the
PC. However, there is limited oversight on
their work; there have been reports that with
inadequate knowledge they have misguided
producers in some instances.
Managing inputs and produce marketing
business, requires a competent person and
this involves payment of fair salary. Many
Staff salaries being provided are very low,
`
15,000 to 20,000 per month for a CEO. Staff
with education from a good institute ask for
`
30,000 to
`
40,000. If the staff selection and
capacity is good then time taken for achieving
sustainability of PC will be less.
Source:
POPI, MP.
By law the staff is a CEO, but by qualifi-
cation and salary he is a clerk. It is difficult
to find qualitative persons who will bolster
business and improve the trust levels of
farmers—chicken or egg, which comes first
kind of situation.
Source:
POPI, Gujarat.
