WELCOME

TITLE OF THE STUDY:Producer Organizations(PO)- An

effective tool for Agricultural and rural development.

Presented byPRABIR DATTA 2013-AMJ-57

OBJECTIVES:To review the concept of Producer Organization.To explore the Role of Producer Organizations in Agril. & rural development. To highlight the importance of Producer Organization.To understand the sources of Finance and support system for Producer Organizations.To review few case studies.

OUTLINEINTRODUCTION

ROLE & IMPORTANTS OF POs

FINANCING & SUPPORTING OF PO PRESENT STATUS OF PO IN ASSAM

IMPORTANCE OF PO IN ASSAAM

CASE STUDY

IntroductionProducer’s organizations (FOs) refer to independent, non-governmental, membership-based rural organizations of part or fulltime self-employed smallholders and family farmers, pastoralists, artisanal fishers, landless people, women, small entrepreneurs and indigenous peoples. They range from formal groups covered by national legislation, such as cooperatives and national farmers unions, to looser self-help groupings and associations (FAO, 2007).As per the concept, farmers, who are the producers of agricultural products, can form groups and register themselves under the Indian Companies Act.

Producers Organization viz, Producers Company( as defined under Sec 581 A in part IXA of Company’s Act 1956), Producers Cooperatives, registered Farmer Federations, MACS (Mutually aided cooperative society), industrial cooperative societies, other registered federations, PACS, etc. set up by producers. (NABARD).

The year 2014 is being observed as the “Year of Farmer Producer Organizations (FPO)” by the Government of India.

It (FPO) is one of the important initiatives taken by the Department of Agriculture and Cooperation of the Ministry of Agriculture to mainstream the idea of promoting and strengthening member based institutions of farmers. As per the concept, farmers, who are the producers of agricultural products, can form groups and register themselves under the Indian Companies Act. These can be created both at State, cluster, and village levels. It is aimed at engaging the farmer companies to procure agricultural products sell of them .

Supply of inputs such as seed, fertilizer and machinery, market linkages, training & networking and financial and technical advice are also among the major activities of FPO. The Small Farmers’ Agribusiness Consortium (SFAC) has been nominated as a central procurement agency to undertake price support operations under Minimum Support Price (MSP) for pulses and oilseeds through the FPO’s.

Producer organization – An update in India: Producer Company form of cooperative entity has been introduced in the Indian economy by virtue of the Companies (Amendment) Act, 2002 which is effective from February 6, 2003. The roots of producer company form of an entity can be traced to the recommendations of an expert committee led by a reputed economist, Mr. Yoginder K. Alagh. The committee  was asked to frame a legislation that would enable incorporation of cooperatives as companies and conversion of existing cooperatives into companies taking care to ensure  that the proposed legislation accommodated the unique elements of cooperative business with a regulatory framework similar to that of companies.

“Indian Organic Farmers Producer Company Limited” is the first Farmers’ Producer Company incorporated in the year 2004.

Salient Provisions of Companies Act relating to Producer Companies 1)In a `Producer Company', only persons engaged in an activity connected with, or related to, primary produce can participate in the ownership.

2)The members have necessarily to be primary producers.

Objective The objects of producer companies shall include one or more of the eleven items specified in the Act, the more important of these being:Production, harvesting, procurement, grading, pooling, handling, marketing, selling, export of primary produce of members or import of goods or services for their benefit.Processing including preserving, drying, distilling, brewing, venting, canning and packaging of produce of its members.Manufacture, sale or supply of machinery, equipment or consumables mainly to its members.

producer organizations active in India are hereunder The Grower Associations The User Associations The Farmer Cooperatives The Farmer Interest Groups (FIGs) Commodity Interest Groups (CIGs)The Farmers Clubs etc .

Role and Important of Producer Organizations:Producer organizations (POs) are widely heralded as leading contributors to poverty reduction and achievement of food security (FAO, 2010).

POs can successfully strengthen the economic position of their members by providing agricultural inputs, credit, processing and marketing services (Narayanan and Gulati, 2002).

In India, the Central Government has identified farmer producer organization as the most appropriate institutional form around which to mobilize farmers and build their capacity to collectively leverage their production and marketing strength (GoI, 2013)

1. Collective inputs purchase2. Collective marketing3. Processing4.Increasing productivity through better inputs5. Increasing knowledge of farmers6. Ensuring quality7.Marketing assistance, 8.Technical services, 9.Saving and credit, 10.Local development

Financing and supporting Producer Organizations:

NABARD has created “Producers Organization Development Fund”An initial corpus of Rs 50 crore with a sanctioning limit of 100 crore out of NABARD’s profits as at the end of the financial year 2010-11 and it will be operational with effect from 1st April 2011.

NABARD’s interventions:NABARD will undertake the following interventions:Financial InterventionCapacity BuildingMarket LinkagesOther Areasa) Support for preparation of DPR up to 0.5%

of the project cost or 1 lakh whichever is lower.

b) Exclusive grant support for taking forward SHGs/farmers’ clubs/producer groups to the stage of having a Producers Organization.

Process:1) Submission of Concept Note by Producer

Organization/ Implementing Agency for business plan of Producer Organization.

2) Submission of Detailed Project Report by Producer Organization/ Implementing Agency.

Guiding Principle : registered under any Statute of Law

are eligible. The activities may fall within the

domain of agriculture, allied sectors & Non Farm Sector only.

The fund will be used for providing loan to carry out the economic activity and mix of grant and loan for capacity building market linkages. Community participation.Integrated approach (need-based and flexible, convergence with other schemes / programmes)Pro-poor (improves employment, reduces poverty, improves access to credit, information, entitlements)

Sources: Nabard Guidelines Producers Support

Producer Organization in Assam Given the large small and marginal land holdings in the country in general and particularly in Assam where in small and marginal landholdings constitute more than 80%; the organization of producers gains much crucial both in input management and in marketing and finally to make the farming a economically viable enterprise on sustainable basis. The organization of small and marginal producers has been considered a basic necessity in the current era of globalization and WTO in the country.

At Assam SFAC work with producer organizations to strengthen their institutions and build their capacity to: 1)Access market opportunities, services and investments they need to increase their farm and off farm revenues, and 2)Make their voices heard in local, national and international forum where decisions that affect their lives are taken.  

Field Management Committee (FMC)Pathar Parichalana Samitee In Assamese Field Management Committee (FMC) is a producer organization meant for effective management of agriculture in a specific crop field.

It came into operation by a resolution on settlement of agricultural land and reorganization by the Government of Assam in 1951.

Commodity interest groups (CIG)Crop : BananaClub Green Land Dudhnoi, GoalparaTen Star Banana Growers Society Vill – Singra, KamrupBanana Growers Society, Singra , Kamrup

Crop : OrangeKamrup District Organic Farmers Association SonapurMa Kamakhya Society Vill. Hajobari Via. Chandrapur

ADO Circle SatgaonTinsukia District Purani Motapung Patmadoi SHGKalpataru SHGN.C.HillsSri Borai People (NGO) HaflongHariyali Growers Committee Langting, N.C. Hills

Assam Small Farmers Agri-Business Consortium(India) Report:In Assam now 25 no's cooperative society( producer organization) effectively working. (SFAC Govt of India)Legal form of PO – Cooperative society Machinery and related infrastructure for renting – applied under RKVY mechanization scheme . Credit through bank and some amount from Assam Agricultural Competitiveness Project (AACP )PO involved in sorting , grading 7 marketing of produce grown by producer Major component – paddy , potato , cabbage , mustard , bottle gourd, cauliflower , pulses, orange , banana , chili , fish , milk , animal husbandry etc. Source-http://sfacindia.com/

IMPORTANCE OF PO IN ASSAAM Statistics of AssamThe economy of Assam continues to be predominantly agrarian.

Agriculture sector providing employment to more than 50 percent of the rural people.(census, 2011)

The net cultivated area of the State is 28.11 lakh hectare (2009-10)

The contribution of Agriculture sector to the State Domestic Product was nearly 25 percent (census,2011).

Land available for agricultural cultivation

88%

12%

AgricultureOther

Per Thousand distribution of Employment type in Rural Sector

0 50 100 150 200 250 300 350 400 450 500

359

479

Ru-ral In-dia

Ru-ral As-sam

Self

-em

ploy

men

t in

A

gric

ultu

re

Source:Employment Policy for Assam 2010

About 82.00 percent farmers of Assam are belongs to category of small and marginal farmers (Source: Agril. Census-2013).

Average operational land holding is only 1.11 ha (Agril. Census 2013).

Low adoption of technology is one of the several problems confronting the small and marginal farmers due to small land holding besides others.

It is widely acclaimed that the technological knowledge generated by the agricultural research system failed to reach-out to the actual users.

An effective rural institution has the potentiality to close the gaps in transferring knowledge by helping the public extension system.

Multiple production risks (biophysical as well as socio economic), lack of market for farm produce, and fluctuating price coexist with the problems of delivery institutions.

A grass root level farmers’ organization is necessary to drive the benefits of the schemes. In order to sensitize the farmers to raise their voice and improve the delivery mechanisms at the grass root level

when rural producers come together they can find their voice and take an active role is shaping their own pathways out of poverty.

It is no coincidence that there is a saying that goes ‘Where the production sector is strong, the Association is strong”

Case study : 1Field Management Committee

Field Management Committee (FMC) is a producer organization meant for effective management of agriculture in a specific crop field. It is formed in a contiguous field where large numbers of farmers of a village or of a locality have their land or cultivation. A farmer can be member of more than one FMC, but he/she will be eligible to be a member of only one executive body. It came into operation by a resolution on settlement of agricultural land and reorganization by the Government of Assam in 1951. FMC is a non-government organization (NGO) registered by the District Agricultural Officer, Department of Agriculture, Assam. The Agricultural Development Officer (ADO) and Village Level Extension Worker (VLEW) of the concerned area are the technical advisers of the FMC. By 2011, the Department of Agriculture, Government of Assam has organized about 1.8 million farmers in 25,938 FMCs (Govt. of Assam, 2012).

Performance By 2012, almost 95 per cent FMCs were defunct. Therefore, it is important to analyze the reasons for their lack of sustainability. Reason of poor sustainability of FMC From field based to village basedDemarcating the field Member contributionDistribution of inputs without support and services Governance of FMCForming groups without mobilization Lack of capacities within extension Lack of clarity on registration and access to funds

Case study : 2Indian Organic Farmers Producer Company Ltd. - The first farmers' producer company.The Indian Organic Farmer Producer Company Ltd. is an Aluva (Kerala) company of farmers producing organic products.

Only producers with organic certification are eligible for membership of the company, where patronage for one share is fixed at Rs.40,000.

Thus, the holder of one share can market his/her own organic products worth a maximum of Rs.40,000 through the company.

The company provides advice to farmers on mapping and assessing resources (mainly soil and water), sustainable resource utilization and scientific production methods.

The company markets organic products after branding. 'Healthy People, Wealthy Farmer, Healthy and Wealthy Nation' is the motto of the company.

One of the company’s future plans is attracting environmental funds from farmer-friendly groups abroad who are interested in supporting fair trade.

(The HINDU, Sep 23, 2004)

Case study : 3In Assam, the Spices Board under the Ministry of Commerce, Government of India has promoted two producer companies, the Coinonya Farm Producer Company Limited for turmeric and Karbi Farms Producer Company Limited for ginger and chilly in Karbi Anglong District of Assam under organic cultivation for processing and export. The spices board has put in Rs. 1 crore as equity in each of the companies, while the rest of the equity is held by tribal farmers, 600 in Coinonya and 400 in Karbi.

Case study : 4The Tribal Co-operative Dairy Farm and Allied Industry Ltd. (TCDF)

The tribal Milk Producers of Bongaigaon and Kokrajhar districts formed a co-operative society, the tribal Co-operative Dairy Farm and Allied Industry Ltd. (TCDF) with head quarters at Dhaligaon on 1st. April 1980.

The society started functioning with the procurement of 101 litres of milk from the bonafide shareholders. The shareholders are mostly agricultural labourers, small and marginal farmers and other weaker sections of the society including educated unemployed youth in rural areas.

Presently, the society is procuring 300-690 litres of milk daily.

The society is also producing and selling milk by-products such as panir, ghee, dahi, cream, butter, flavoured milk etc.

The TCDF provides training through distinguished Govt. faculties especially to women and educated unemployed youth in various courses including scientific Livestock and poultry rearing.

Apart from the dairy co-operative society the TCDF management has also established a pork-processing project with a processing plant at Kishanbazar, first of its kind in the NE region. The plant has a capacity to process 200 nos. pigs per day with the total estimated cost of Rs. 202.58 lakhs. The total no of shareholders in this project is 345 (Male-160 and Female-185).

(Source : Directorate of Animal Husbandry & Veterinary, Chenikuthi, Guwahati-3)

CONCLUSIONExperience shows that POs represent the interest of their members and have the potential to articulate their need for agricultural services. Partnering with POs would improve knowledge promotion, adaptation and its eventual use. It also helps extension to assess better the priorities of farmers. Many POs need support to develop their capacities to serve farmers better especially in promoting adoption of new technologies, stimulate learning and develop entrepreneurial skills.

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