Promotion of Farmer Producer Organizations

NABARD INITIATIVES

Taking Rural India >> Forward

SMALL HOLDER AGRICULTURE

The share of SF & MF accounted for around 85% of operational holdings in 2010-11
as compared to about 62% in 1960-61. Average size has declined to 1.16 ha.
Area operated by SF & MF has increased from about 19% to 44%.
In terms of production, SF & MF make larger contribution to the production of high
value crops. Contribute 70% of vegetables prod., 55% of fruits, 52% of cereal prod.,
69% in milk production. Thus, small farmers contribute to both diversification and
food security.
The small holding character of Indian agriculture is much more prominent today
than even before.
The future of sustainable agriculture growth and food security in India depends on
the performance of SF & MF.

Taking Rural India >> Forward

CHALLENGES FACED BY SMALL HOLDER AGRICULTURE

Access to inputs, technology, markets & poorly developed supply chain

Lack of hassle free access to credit results in high dependency of farmers on number of
intermediaries. Need a level playing field with large farms.
Output price fluctuations: Different models emerged for marketing collectively by SF&MF.
SHG model, Co-operative model, Small Producer Co-operatives and Contract farming.
Apni Mandi in Punjab, Rytu Bazars in AP, dairy co-operatives in marketing.
Lack of assured income and frequent crop failures.
Real challenge: Organising the SF & MF for marketing and linking them to high value agric.
The National Commission for Enterprises in the Unorganized Sector (NCEUS) has
considered 4 important group approach models to benefit from the economies of scale.
Co-operatives, Producers Companies, Farmers groups such as SHG in Andhra Pradesh
SEWA (Self Employed Womens Association) in Gujarat and Kudumbashree in Kerala.
Strategy : Shrinking the Marketing Chain and Promotion of FPOs.

Taking Rural India >> Forward

NABARD EXPERIENCE IN POs

NABARD set up a Producer Organisation Development Fund with a
corpus of Rs.50 crore from its surpluses in the year 2011.
So far, NABARD has supported 91 POs of different forms by extending
credit facility of Rs.205 crore and Rs.6.30 crore towards
accompanying measures for capacity building/ market interventions.
NABARDs experience shows that significant capacity building and
handholding is required before the POs attain organizational,
financial and commercial sustainability.
It requires a gestation period of three years for generating
meaningful benefit to the members.

Taking Rural India >> Forward

GoI Initiative
Union Budget (2014-15): Producers Organization Development and
Upliftment Corpus (PRODUCE) Fund of Rs.200 Cr. in NABARD for
promotion of 2000 Farmer Producer Organizations (FPOs)
Objective: to promote and nurture Farmer Producer
Organizations(FPOs)
Ultimate objectives are better price discovery and better income
enhancement opportunities for farmers
Rational: Aggregation is an imperative necessity for small and
marginal farmers for attaining economies of scale, accessing the
market and for reducing transaction cost.

Taking Rural India >> Forward

Strategies for Promotion of FPOs

Identification of natural clusters of farming groups involving POPIs
Input centric
Commodity / crop centric
Technology centric
Potential FPOs among successful WDF / Wadi Projects and their
Federations
Farmers Clubs / Federation
SHGs and Federation
PACs, MACs

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Strategies for Promotion of FPOs continued

Involvement of Resource Support Agencies (RSAs)

Close involvement of stakeholders (NGOs, Banks,

Line Depts. of Govt.)
Stakeholders meetings
Development of best practices, success stories for
replication
Mission mode: Quantitative and qualitative
milestones with timelines

Taking Rural India >> Forward

Strategies for Promotion of FPOs continued

Wide publicity - print, electronic media, mass communication strategies
Launching of pilot projects, action research projects, experimental
projects, field trials to learn and understand various successful models
like MPDPIP, SERP, Mission Mangalam, etc.
At National Level: Advisory Committee consisting of 15-20 members /
experts from reputed academic institutions / NGOs / representatives of
GOI, State Govt, SFAC, Corporates, Value Chain Players and Banks.
State Level: Consultative Committee with 7-10 members consisting of
NABRD, SLBC Convener, Director Agriculture, Director Horticulture,
Resource Support Agency / POPI, Banks, etc.

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Resource Support Agency

Capacity building of POPIs
Necessary training and handholding support to POPI
Nodal POPI in places of no RSA

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Role of POPIs
NGOs, Trusts, Corporates, State Govt. Depts., NABARD subsidiaries,
KVKs, Big FPCs, Farmers Federations, Commodity Board / Federations,
Cooperative Milk Unions and Other experienced institutions are
eligible institutions for POPIs
Awareness Creation among farmers about FPOs
Organizing, enrolling and registering of FPOs
To develop organization chart, business plans and nurture the FPOs
Monitoring project implementation progress of FPOs

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Eligibility of POPIs
Registered under relevant Acts
Minimum 3 yrs audited Balance Sheets/P&L accounts
Good track record/relevant experience
Dedicated and professionally competent staff
Adequate infrastructure, not blacklisted by any agency
No negative net worth, no default to any FI
Experience in facilitating business / livelihood activities with market
linkage

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Activities eligible for support to POPIs and FPOs

POPI
Mobilization of Farmers
Registration of PO
Training-cum-Exposure Visits of Farmers (for two programmes)
Training to Board of Directors of POs (for three programmes in three years)
Training to CEOs of POs ( Two programmes in two years)
Compensation to resource person of POPI ( for three years)
Preparation of Business Plan/DPR , MIS, etc.
FPO
Compensation to CEO and office expenses
Revolving Fund assistance

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Bank Finance for FPOs

Need based financial assistance to FPOs
Grant support from NABARD
Credit for business activities
Satisfying the norms- number of members, legal entity
Credit guarantee cover from SFAC for Producer Companies
It is critical to support POs in terms of awareness creation,
capacity building, technical support, professional management,
provision of initial seed capital and working capital, etc. and hand
holding support for a period of 3-5 years

Taking Rural India >> Forward

THANK YOU
Contact:
Dr.Y.Haragopal
AGM, NABARD
040-27685126
hyderabad@nabard.org
www.nabard.org

Taking Rural India >> Forward