Producer Companies
109
to be reluctant to engage with PCs, then it is
a clear indication that they do not trust this
form and structure. This lack of awareness
and trust on the part of banks and financial
institutions has to be dealt with. Financial
linkages for PCs as an institutional class
should be established and strengthened
before committing additional funds for
new PCs.
Advisory and mentoring support
to PCs
Under the present funding arrangement that
usually lasts three years, POPIs are unable to
nurture the PCs. Institutional and financial
sustainability of the PCs is fragile unless the
POPIs have themeans of providing technical
and handholding support for another three
to four years. Many POPIs mention that in
three years’ time, at best two business cycles
are carried out. Business volumes adequate
tomeet the salary costs of the CEO and other
staff cannot be built within three years. Vijay
Mahajan in last year’s SOIL report
8
had
diagrammatically shown stagewise capac-
ity and capital growth for the sustainability
of PCs and had concluded that seven- to
eight-year time frame is needed for a PC
to be sustainable and provide meaningful
services to producers.
Some POPIs are developing their strate-
gies for supporting PCs beyond the initial
three years. ALC signs contract with each
PC by the third year of operation when the
business has commenced. Annual plan dis-
cussions are jointly held, yearly targets set,
services to be provided by ALC are specified
and achievement of plan jointly monitored
through specific indicators. In all large
PCs (4,000 to 5,000 members), ALC places
technical staff to help the CEO and other
staff in their business. The contract specifies
payment to ALC for its services, which is
partially fixed and partially variable, based
on achievement of outcomes.
Vrutti encourages farmers to pay for
services from first year onwards. Cost of
incubation and retainer costs are charged to
FPO to be paid later. Transaction cost based
on turnover in business and financial access
costs are also collected. Thus, both FPOs
and Vrutti are bound by deliverables and
payment for services. Vrutti has established
Farm Enterprise Facilitation Centers at dis-
trict level which are staffed by professionals.
BASIX group of institutions plan to grade
the FPOs and give holistic support beyond
the project/government support to those
with A grade, for which they are sourcing
separate funding.
The pool of resources to offer technical
advice to PCs to expand their business and
finances should be made available. While
SFAC provides consultant support, they are
largely fromNGO background. State apexes
have to create a resource base of identifying
key experts with business experience who
can offer advice.
While POPIs are contemplating and
designing longer term support, SFAC and
NABARD should extend support for five
years in stages based on achievement of key
results. When it is a well-established fact
that PCs require about six years to attain
maturity and financial strength to procure
services, funding for a lesser term is not
result oriented; and it might be sub-optimal
use of resources to leave community based
organisations incomplete.
Policy support
State governments need to play a major role
in propagating the concept. Almost in every
state visited, except in the case of MP the
POPIs, members and office bearers in PCs
and other stakeholders narrated countless
experiences of how they had to deal with
ignorance of PC form in government and
bank officials. In some states the higher
officials in the state and district are unaware
of PCs. In Uttar Pradesh, the Agriculture
Commissioner had issued instructions to
district officials to support PCs through
convergence of some of the state schemes.
8
Access Development Services, 2014, State of the Sector
report on livelihoods, 2014.
