Linking smallholders to the agri value chain

Imperatives for inclusive economic growth

Small Farmers’ Agribusiness Consortium(Dept. of Agriculture and Cooperation)

Govt. of India

 लघु कृषक कृषिष व्यापार संघ भारत सरकार, कृषिष मंत्रालय

1

What ails smallholder agriculture

1. Investment deficit: less than 10% access institutional credit; poor capital formation; no avenues to leverage assets

2. Technology deficit: Irregular and unreliable technical advice (19% depend on private input dealers for advice; only 9% on govt. extension staff: NSSO study 2005)

3. Input deficit: uncertain input supplies; huge dependence on unregulated private markets for water, labour etc.

4. Market deficit: Monopoly and monopsony market conditions; opaque price discovery; poor marketing infrastructure; lack of bargaining power

FPOs Department of Agriculture and

Cooperation (DAC), Ministry of Agriculture, Govt. of India will act as the nodal agency for the development and growth of FPOs.

3

Small Farmers’ Agribusiness Consortium (SFAC), a Society under DAC, is the designated agency of DAC to act as a single-window for technical support, training needs, research and knowledge management and to create linkages to investments, technology and markets. SFAC will provide all- round support to State Governments, FPOs and other entities engaged in promotion and development of FPOs. In particular, SFAC will create sustainable linkages between FPOs and inputs suppliers, technology providers, extension and research agencies and marketing and processing players, both in the public and private sectors.

4

• The mandate of National Cooperative Development Corporation (NCDC) will be expanded to include FPOs in the list of eligible institutions which receive support under the various programmes of the Corporation.

• NAFED will take steps to include FPOs in the list of eligible institutions which act on its behalf to undertake price support purchase operations.

5

• DAC will work with Food Corporation of India (FCI) and State Governments to encourage them to include FPOs as procurement agencies under the Minimum Support Price (MSP) procurement operations for various crops.

• DAC and its designated agencies will work with NABARD and other financial institutions to direct short and medium term credit for working capital and infrastructure investment needs of FPOs. DAC will also work with all relevant stakeholders to achieve 100% financial inclusion for members of FPOs and link them to Kisan Credit Cards.

6

• DAC will work with Ministry of Corporate Affairs and other stakeholders to further clarify and strengthen provisions of the law relating to the registration, management and regulation of FPOs with a view to fostering fast paced growth of FPOs.

7

How FPOs benefit small producers1. Aggregating smallholders into FPOs proven pathway to

increase investment, improve bargaining power, move up value chains and improve access to technology, markets.

2. Aggregation only way to enable SMF to exploit emerging opportunities domestic and global by integrating with SMEs; retail chains

3. Climate change coping mechanisms and risk mitigation requires aggregated platforms for efficient delivery

4. Aggregation will facilitate more effective targeting of subsidies to farmers

8

SFAC FPO network structure

Village level(Crop planning, seed production, demonstration, knowledge sharing, aggregation)

Cluster level (10-12 villages)

(Credit, inputs, technology, capacity building, marketing linkages)

State level(Policy advocacy, explore wider markets, strategic partnerships)

Federation of KPCs(10000+ farmers)

KPC(1000 farmers/50 FIGs in each)

FIG(15-20 farmers in

each group)FIG

Kisan Producer Co/Coop

FIG

Marketing linkage/inputs/credit S F A C

Input supply

(Seed, fertilizer, machinery) Financial & technical

(Credit, savings, insurance, extension)

Marketing linkages (contract farming,

procurement under MSP)

Training and Networking (HRD, policy advocacy,

documentation)

FPO

Farmer Producer Organisations (FPOs)Typical range of services provided

TargetNo. of Farmers to

be mobilizedNo. of FIGs

(15-20 farmers) to be formed

No. of FPOs (@1000/FPO) to be

formed

2.85 lakh 14000-19000 227

No. of Farmers mobilized

No. of FIGs (15-20 farmers)

formedNo. of FPOs registered

No. of FPOs under processRegistration

2.80 lakh 15000 147 80

Status of FPO Promotion

Achievement

STATE WISE STATUS OF FPO PROMOTION

S.no Name of StateAchievement

No. of Farmers No. of FIGs FPO Registered FPO registration under process

1 Arunachal Pradesh 1678 94 2 02 Andhra Pradesh 29395 987 2 83 Assam 6000 300 NA NA4 Bihar 6606 408 7 05 Chhattisgarh 6063 412 4 26 Delhi 3520 196 4 07 Goa 1810 116 0 28 Gujarat 10461 536 5 69 Haryana 5073 259 5 3

10 Jammu 1500 85 1 011 Srinagar 600 35 0 112 Jharkhand 10107 628 5 113 Karnataka 20001 1094 4 1114 Kerala 3160 158 NA NA15 Himachal Pradesh 6000 72 NA NA16 Madhya Pradesh 34410 1861 33 617 Maharashtra 36917 2065 29 518 Manipur 1750 84 2 019 Meghalaya 1750 140 2 020 Mizoram 700 35 0 121 Nagaland 1750 139 1 122 Odisha 6001 301 2 423 Punjab 6005 343 7 124 Rajasthan 32215 1827 12 1325 Sikkim 1876 159 0 226 Tamil Nadu 5940 298 NA NA27 Tripura 1750 127 3 028 Uttarakhand 6004 359 6 029 Uttar Pradesh 23245 1209 4 1330 West Bengal 8322 641 7 0 TOTAL 280609 14968 147 80

Direct marketing efforts by FPOs

Andhra Pradesh

Retail selling through mobile vans

MaharashtraRs. 7-8 lakh worth of vegetables are being directly marketed daily to 30 housing societies in Thane, Mulund and Kalyan, resulting in saving of 1 to 1.25 lakh per day (middle man charges)

JharkhandCollective marketing of produce including cabbage, cauliflower,

tomato, beet root, gourd and

coriander etc.

Biharorganic cultivation and

convergence with Government schemes

ChhattisgarhNot only promoted women empowerment but also helped attain sustainable livelihood

DelhiEstablished linkages with Mother Dairy, Reliance Fresh and Bharti Walmart

GoaState Horticulture

Corporation Ltd. procures the vegetables from the

farmers’ groups on fixed rate basis.

GujaratCollective Marketing

of vegetables

HaryanaOnion field

Karnatakacapsicum cultivation in

the protected environment

KeralaRoof Top Gardening

PunjabCultivation of Lettuce and Iceberg at Farmers’ Field in Samrala, Ludhiana

Madhya Pradesh

Market Linkage by grading & packing

OdishaAggregation, distribution,

market linkage and retailing for farmers- ICT led model by

private company

SikkimEstablished a unit for water

harvesting

18

KRISHIDOOT Project by SFAC & RML

FPOs in the XII Plan

• XII Plan document endorses FPO mobilization• Policy framework to promote FPOs under RKVY• 2014: Year of Farmer Producer Organisations• 2014: UN Year of Family Farming

19

FPO focus of XII Plan

• Component for FPO promotion in all major CSS• RKVY window opened for FPO promotion (MP: 100

FPOs; WB: 50 FPOs; Sikkim: 10 FPOs; UP: 50 FPOs; Kerala: 30 FPOs)

• Equity Grant and Credit Guarantee Fund Scheme• RBI included financing of FPOs upto Rs. 5.00 crores

under priority sector lending norms• GBY: 33% subsidy to FPOs• Venture Capital Scheme: minimum project size

reduced to Rs. 15.00 lakhs; poultry, dairy included20

Building an ecosystem for supporting FPOs

Challenges ahead

21

Ecosystem for

sustainable FPO

Marketing

EGCGFSInfrastructur

e

Retailing

Services (Technical)

Credit

HRD

Link to ConsultantBanks

PHI/VIUCGBYVCANMFPRKVY/PPIAD

Retailers/ProcessorsMSP

NSPOT/NCDEXSFI/GVT HR Plan

FPOs as sourcing point for rural products

FPOs as rural retail points for consumer products/services

CSC

Banks

NBFCs

InputsBDS/ERPWHRMechanizationKrishidoot

Thank You

23