102
S
tate
of
I
ndia
’
s
L
ivelihoods
R
eport
2015
PCs are not able to afford one. There are
instances where CEOs are appointed after
lengthy selection processes but never trained.
During the project funding support phase
of SFAC/NABARD/donors, the professional
staff of the POPI have been working with the
PCs. Usually such technical staff work with
four to five PCs. However, some of the pro-
moting organisations of FPCs do not have
the technical expertise on commodities, or
crop husbandry. Thus, the staff capacity of
POPIs to work with FPCs, especially in the
chosen crops, requires a review.
Few of the POPIs are able to provide
similar support after the project funding is
exhausted for which they mobilise separate
funding. FPCs promoted by ASA, ALC and
Vrutti follow a three to four staff model.
They mention that CEO salary should be
supported for the initial three to four busi-
ness cycles till business stabilises. They are
planning to support PCs for a longer time
frame (7 to 10 years), which also involves
bridging operational costs including salaries
where found necessary. However, most
POPIs are neither able to provide profes-
sional expertise after the funding is over
nor able to raise resources for operational
costs of the PCs, which can pay for salaries.
When qualified staff are not on roll,
members are also not keen to expand busi-
ness especially by taking loans. PCs are
caught in a vicious cycle of lack of business,
lack of staff, lack of funds and lack of own-
ership of members. The Board of directors
carry out the functions of staff inmany PCs.
Banks naturally feel uncomfortable with this
situation and often query “who is the face
of the company?” Poor staff resources and
capacity is often cited as one of the reasons
for lack of loan funding by banks.
Governance in PCs
Boards of PCs are playing a crucial role in
keeping the operations going since many
PCs face staff constraints and fund con-
straints. As per the data gathered by Access
from PCs, the average number of directors
is nine (based on data for 45 FPOs). In ten
companies, the number is less than nine.
The number of male directors reported
for 42 FPOs, ranges from 1 to 15, and for
women, these numbers from 19 FPOs are
1 to 12. Twenty-four PCs had exclusive male
boards with no womanmember and 11 PCs
had exclusive women boards.
In some of the boards, the representatives
of the POPIs take most positions. POPIs
identify professionals as independent direc-
tors or advisors to PCs. POPIs however are
finding it difficult to completely hand over
the management and reduce dependency
since there is a concern that freedom can
be misused. There needs to be a balance
between the POPI, board and management
roles in the PC.
Most of the board members also act
as LRPs either on paid basis or draw an
honorarium. In the absence of staff, board
members carry out the staff functions often
without adequate remuneration. Thus,
boards play a dual role of governance and
execution, which is not a healthy practice
in the long run.
AFARM finds that instead of only small
farmers if the board of directors consists of
a few better off farmers, the FPC is managed
well. The large farmers are well integrated
with government and banks and thus man-
age to mobilise more resources. The ever-
present threat perception of elite capture
prevents most POPIs frombringing affluent
farmers on boards.
POPIs lay emphasis on board capacity
development. Some of themhave developed
different modules for training. But much of
the training to the board is given on the job
by POPI staff who attend the board meet-
ings. State apex PCs are also planning to
undertake extensive board training. Boards
of PCs mention that they require training
on business aspects; business planning, legal
compliances, financial management and
resource mobilisation.
At present most boards are not compen-
sated for their work. Like corporates, PCs
also need to pay a share of profits to directors.
