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Sreelatha Menon: Small farmers Inc

Government to have public-private partnerships with farmers for agri business companies

Sreelatha Menon  |  New Delhi 

The Farmer Producer Companies (FPCs), registered under the Companies Act, might make the small and marginal farmers visible on a larger platform soon, that is, if they survive the heat and the dust of carrying Rs 50 crore on their frail shoulders. The agriculture ministry wants FPCs to aim really big, that is, to have an investment of at least Rs 50 crore backing each of them. It plans to lure farmers to form FPCs in the vegetable, meat, poultry or flower business, in association with private companies or NGOs or whoever is ready to invest Rs 25 crore per company of 5,000 farmers each. The state government is expected to put in the remaining Rs 25 crore for each FPC that is formed.

FPCs are already in existence on a small scale, thanks to efforts by NGOs like Access, who helped organise clusters of farmers into companies. These companies then began to buy inputs like seeds and fertilisers collectively on a large scale and then sell them and share profits. Others set up processing units to increase profits. They also became one-stop sourcing points for retail chains like Mother Dairy and Reliance.

Small Farmers’ Agri-Busin-ess Consortium (SFAC), an agency of the ministry, with state units, has announced a new scheme for the public-private partnerships between farmers and private companies. The company and the state government are to jointly invest Rs 1 lakh per farmer member of an FPC. The company is supposed to form a group of 5,000 farmer members into an FPC, registered under the Companies Act. The scheme is currently called Public Private Partnership for Integrated Agriculture Devel-opment (PPPIAD) and targets small and marginal farmers.

According to Pravesh Sharma, managing director of SFAC, an agriculture finance company, the PPPIAD is only an enabling framework for states to get private players involved in agriculture as partners and investors. He added that Maharashtra, for instance, is ready with about 12 projects involving private partners and farmers companies. The Central scheme would help the state to set the ball rolling. Two other states have been engaged in a dialogue with private companies and are waiting for an enabling scheme, he said.

As for an investment of Rs 50 crore for every FPC, Sharma does not find it unachievable. This will allow big projects and there are companies which can invest in them, he added. Besides, the money can be invested over three to five years and so even an NGO might be able to do it, he added.

Though the scheme mentions NGOs also as possible partners, the large investment amount rules them out. The funding for FPCs would be routed through the Rashtriya Krishi Vikas Yojana which has an allocation of Rs 8,000 crore.

Access Development Services is one of the NGOs which has offered to form farmer companies in nine areas in three states. Work is in progress in a few villages in Midnapore in Bengal, where vegetable growers are being brought together to form a company. Access hopes to get its project approved under the PPP scheme. But, even they are not prepared to spend Rs 50,000 per farmer.

Access has been forming FPCs on its own in the past and linking them to bank loans, and is puzzled why such big investments are required.

Meanwhile, SFAC is planning an awareness campaign for the industry and NGOs to clear all misgivings and make the FPCs an inviting proposition. Sharma says the scheme is open for all farmers including poultry and breeders of small ruminants, adding that he is already flooded with enquiries from top companies like ITC.

As for concerns whether FPC might not change into a group of captive farmers who are bound to sell their produce only to their industry partners who may turn into their exploiters, Sharma rules out captive producer bonds.

M S Acharya, who has organised garlic farmers into groups in Rajasthan and helps them sell processed garlic, wonders why ITC would want to put Rs 25 crore on a group of 5,000 farmers. Whether farmers would agree to be a part of such a partnership is another question.

Sharma’s concern today, however, is to find a new name for a scheme that he feels would change the countryside forever.

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First Published: Sun, August 19 2012. 00:41 IST