Farmer producer organisations need their very own Amul -Jitendra
-Down to Earth
Instead of encouraging them on paper, the government has to create a few model FPOs in the country and provide institutional support to them
The Narendra Modi-led government has been tirelessly claiming that it would double farmers’ income by 2022. There is a lot of evidence to show that in the pursuance of this target, the income of farmers has not increased, but has rather stalled or decreased. Consequently, for the past three years, farmers have been protesting across India, demanding favourable policies or concrete initiatives that would get them a fair price for their produce.
Economists and agriculture experts say that market reforms can ensure farmers a fair price. The Modi government has tried to bring in some policy reforms like e-market, farmer producer organisations (FPOs) and the Model Contract Farming Act, 2018. Let me add a rider though: This government has given a “half-hearted” push to all these reforms that were started in the previous United Progressive Alliance (UPA) regime. Unsurprisingly, farmers are boiling with rage.
Indian farmers have the smallest landholding on the planet. Consequently, they lose individual bargaining capacity in the open market for their small produce. In such a scenario, the aggregation of their produce on a large scale can be a solution.
The UPA government had started promoting FPOs from 2011-12 and put them on priority in the 12th Five Year Plan (2012-17). The current government gave tax holidays for five years. But FPOs have not taken off.
Last week in New Delhi, experts on FPOs met and raised a number of pertinent issues like credit facilitation from government banks, competing in marketing and training of manpower to study market behavior of commodities and the Contract Farming Act.
I have travelled in a number of states where FPOs have created some assets in very remote areas—for instance, godown facilities and installation of cleaning and grading machines in the tribal areas of Madhya Pradesh’s Mandla district. All these asset creations in remote areas have been due to facility of loans on high interest rates (18-24 per cent) from non-banking financial companies or micro-finance companies. However, such high rates of interest for asset creation can neither help small or marginal farmers nor can they be sustainable in the long run.
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Down to Earth, 14 August, 2018, https://www.downtoearth.org.in/blog/farmer-producer-organisations-need-their-very-own-amul-61382