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Current situation of smallholders

Building Farmer Producer Orgn. : Madhya Pradesh/Bihar Experience   Value chain workshop Patna Bihar 4 th Jan’2013 Dr. Yashwant Singh 09304080204(patna@asabhopal.org) www.asaindia.org. Current situation of smallholders.

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Current situation of smallholders

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  1. Building Farmer Producer Orgn. : Madhya Pradesh/Bihar Experience  Value chain workshop Patna Bihar4th Jan’2013Dr. Yashwant Singh 09304080204(patna@asabhopal.org)www.asaindia.org

  2. Current situation of smallholders • 83 % of Indian farmers are SMF (2005-06), cover nearly 50% of operational holdings, 65% of all farmers are marginal • 90% of the Small & marginal farms are rain-fed • About 50-60 crore smallholders family members directly depend on agriculture for income & employment; adding 15-20 lakhs small farms every year. • SMF together contribute 42% to marketable surplus as against 34% of LMF • 82% SMF engaged in food crop cultivation against 67% large farmers

  3. Current situation of smallholders…….. • Uncertain input supplies; dependence on unregulated Pvt. market for agri. inputs • 19% of farmers depend on Pvt. input dealers for advice; only 9% on govt. extension staff (NSS 2005) • 47% SMF seek farm credit from moneylenders; 15% from banks (NSSO 2003) • Monopoly and monophony market conditions • No targeted approach by Govt. for SMF • Emerging market scenarios favor smallholders’ aggregation • Unorganized & fragmented - no say in the policy and value chain

  4. The model building smallholders’ collectives to integrate them with the value chain…..it has worked with milk, but no efforts made for agriculture in general

  5. The Beginning ………… • M.P – DPIP in Ph-1 (2001-2008) promoted large no. of CIGs in 14 Dists. • > 70% of the CIGs were in agri. & allied Sectors proving the project hypothesis wrong that non-farm sector will be the driver in the project • Since 2003, ASA as TA was providing agri. sector support to DPIP, mainly promotion of varieties thru. participatory selection • Many Farmer preferred varieties (FPV) were selected, but seeds in bulk quantity was not available

  6. The Beginning ………… • So, seed production of FPV on commercial basis was the first trigger for FPC • There were other ideas also like – market integration, agri. extn. etc. • In 2005, DPIP & ASA incubated the idea of FPC as Federation of CIGs as service outfit with commercial outlook

  7. The Area where it started ……… • Predominantly socio-economically backward community (> 80% SC & OBC) • Rain-fed agriculture, < 10% land under irrigation, • Crop intensity is < 100 • Soybean is main crop, food crops – pulses, corn, wheat • Infrastructures & services – Poor • Forest resources is poor

  8. The Pilot….………… • Pilot phase from 2006-2009 with 14 FPC only • Average member per FPC was 2500-3000 • Thinking was that one FPC per dist. to cover all CIGs • Each FPC was supported by a Management Team; & • ASA & DPIP for technical support including making enabling policy in the State, thanks to political will in M.P

  9. The Expansion….2010 onwards • Many Promoters – DPIP, RLP, SFAC & NGOs • More than 40 functioning FPCs as on date, will be 55-60 by end of 2012 • Av. member in new FPC is about 1000-1200

  10. Business Mix of an FPC – typical • Crop seed production - Certified and foundation level • Agri-inputs supply – quality, on-time, on MRP (three key principles) • Agri. extension services mainly thru. grant support • Trading - aggregation of farm produce and sell • Contract farming

  11. Volume of business & services • Av. Rs.3 cr. is the turnover for a company by its 4th. birth day & profitable • Total turnover was nearly 100 cr. in 2011-12, expected to cross 150 cr. in 12-13. • 1 Lakh Qtl of Certified, Foundation, Hybrid seeds produced every year • Provide extn. services every year to > 50 K producers of Better cotton & Responsible soya (3rd. Party certified crops & market linked)

  12. Volume of business & services • Bulk supplier of Agri inputs. Soon be accepted as member of MARKFED • Business linkage with at least 75 big & small agribusiness companies • New initiatives – marketing thru. Spot exchange, Reuter’s Mobile Krishi • BCI procurement details by FPC_till Dec. 2012.xls

  13. Members’ benefits • Av. Rs.10000 per year – direct & indirect, also depends upon services used • Over 95% members want their FPC to continue and grow

  14. Learning……………. • Size should be within 1000-1200 farmers (15-20 vill.) • business should be a mix of everything, just like smallholders’ agriculture. Single activity or commodity focus may not work • the general agribusiness to start with; Specialization will be little later • Input supply and extension – without these two services FPCs do not make any relevance to its members

  15. Learning……………. • Management Team in each FPC is a must • As no. of FPC increases there is need for higher order support system • FPC of FPCs may be considered to leverage market • GoMP policy support was timely and critical

  16. Cost ……………. • Promotional cost comes to about Rs. 10 lakh / FPC per year including CB cost, per member cost Rs.1000 -1200 • Min. 3 years of support is required • average benefits per member is in the range of Rs.7500-10000 per year from various services by the FPC

  17. Some strategic interventions that worked • Seeding the concept with various stakeholders to create a support eco- system • Pursuing with GoMP to provide policy support • Working with sub-sectors for capacity building (CA firm, Company Secretary, market players, Mandi Board, Bankers…….)

  18. So, what needs to be done to scale up …….

  19. Grant support to promote FPOs as the platform for aggregation for market, financing & extension • Exclusive CSS for FPO promotion, • Or • Dovetailing with the existing CSS (viz. 5% of the RKVY budget would be sufficient) to target one crore SMF families in 12th. Plan

  20. Establish Apex central organization to support FPOs & address the need for promotional role • the role could be given to an existing institution with professional management & autonomy Develop a detailed Operational guidelines thru. multi-stakeholder consultation to roll out the programme

  21. Creating conducive policy regime for FPOs to access Start up and investment capital • Equity grant & Infrastructure support to FPOs • Relaxing PSL norms for collateral free loans upto Rs.25 lakh • Credit Guarantee Fund for Banks / FIs lending to FPOs. Such provision exists for SMEs & MSMEs • Venture Capital Support upto Rs.1 crore to FPOs without collateral thru SFAC, NABARD, etc.

  22. Creating conducive policy regime for FPOs to access Start up and investment capital • Allow ECB by FPOs • Allow foreign grants to FPOs for institutional support, infra., equity, risk fund, Agri. Extn. etc. • Interest subvention as given in case of crop loans • FPOs to qualify for tax exemption

  23. Address marketing issues to incentivize direct market interventions by FPOs • FPOs included as a recognized category of institutions under APMC Act. & allowed to market members’ produce directly to buyers of their choice, through all platforms • Exempt FPOs from APMC Cess when trade is executed outside the Mkt yard • Single unified license for agri. inputs trade by FPOs

  24. Key Recommendation ……. • Address marketing issues to incentivize direct market interventions by FPOs…… • Single license for Spot Exchange or electronic market to operate anywhere in the state • Deepen the MSP procurement in the remote areas. & constitute a Task force to reform implementation processes • Improve infrastructure of rural Haats

  25. Key Recommendation ……. • HRD initiatives to meet the requirement of professional management of FPOs • Increase PG seats in all agriculture universities for agribusiness • Explore possibilities of diploma course in agribusiness in Polytechnic • Bachelor’s degree in agribusiness can be considered in degree collages • IIMs, MANAGE, IRMA, IIFM, etc. to handhold NIRD, SIRD & similar institutions for running courses on FPO promotion and business dev.

  26. Targeting FPOs for creation of rural agriculture support infrastructure • National insurance agency for Group insurance schemes pertaining to members of FPO - crop insurance, crop loan linked with life of the member, etc. • FPOs under Producer Companies Act. be treated at par with Coops for benefits & privileges extended to Coops by Central & State Govts. • Consider FPOs as implementing agencies for various agricultural development programmes like RKVY, NFSM, ATMA etc.

  27. Thank you ACTION FOR SOCIAL ADVANCEMENT (ASA)

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