Producer Companies
103
Instead of activity based incentives the board
has to decide yardsticks of good perfor-
mance, work to achieve multiple targets and
offer a share in profits to directors. This will
motivate other competent members to come
forward to take board positions and improve
overall governance.
Benefits seen by farmers in FPCs
During the interactions with boards and
members of 22 PCs, the PCs are reported
to offer the following benefits:
1. Savings of 15 per cent to 20 per cent of
input costs.
2. Fair practices in price fixation, weigh-
ment, timely procurement and prompt
payment.
3. Bargaining ability increased as a collective.
4. Input advisory.
5. Convergence with government schemes.
While the reduction in input costs is
quantified and experienced by themembers,
the others are yet to be quantified at the
member level. But if the listed benefits are
perceived, it is a good augury for the PCs.
Funding promotion of PCs
SFAC and NABARD are the two major
agencies funding the promotional costs
of PCs. All major centrally sponsored
schemes of Department of Agriculture
and Cooperation, Ministry of Agriculture,
GoI have incorporated special provisions
for promotion and development of FPOs
during the 12th Five-year Plan. Some of
the externally aided projects by the World
Bank and IFAD also provide for forma-
tion of and funding for PCs. Some of the
state governments like Andhra Pradesh,
Rajasthan etc., are also pushing this for-
ward with specific allocations and targets.
Irrespective of the source of funding, the
quantum of funding and attached condi-
tions largely determine the quality and
sustainability of PCs.
POPIs mention that for carrying out agri-
business, a professional team of four staff
who can handle marketing, procurement,
advisory services, finance and compliances,
need to be funded for a minimum of five-
year period; and this teamwill support 20 to
25 PCs depending on the geographical area.
After this term the PCs should be able to
pay for the costs of the team. In the initial
period of promotion of a PC, three PC staff
and four LRPs are required. Their costs and
partial staff salary of POPI require about
`
1 million per year. SFAC’s funding norms
are widely perceived to be more realistic,
with financial assistance ranging between
`
3 to
`
4.5 million over a three-year period.
NABARD at present provides
`
1 million as
promotional cost per PC for three years and
POPIs mention that the fund allocated by
GoI,
`
2,000 million, is divided among the
target 2,000 PCs to be formed. POPIs men-
tion that the present funding support from
all these agencies is geared towards basic
mobilisation but not towards agribusiness
stabilisation at PC level.
NABARD has forged partnerships with
NGOs to form producer groups, especially
in watershed development project areas.
As a strategy this is appreciable since the
target group would have been mobilised
for carrying land- and water-related activi-
ties, and building on such mobilisation for
strengthening the agriculture and allied
activities of farmers through an appropri-
ate institutional structure is the logical
next step in improving the livelihoods of
farmers. NABARD expects that from the
first year the PCs will undertake business
and start earning incomes. However, most
of the partners mention that the quantum
of funding is not adequate to place qualified
staff who can handle complex inputs and
outputs marketing functions andmeet their
salary requirements.
Many state government programmes,
especially externally aided programmes,
have provisions for seed capital and revolv-
ing fund for the PCs ranging between
`
0.5 million to
`
2.5 million, apart from
promotional costs. However, POPIs men-
tion that in spite of PCs fulfilling the laid
