Farmer Producer Company: India’s Magic Bullet to Realise Select SDGs?

Abstract

Sustainable development goals (SDGs) are designed for the betterment of the underprivileged and the marginalised. Some of the sub-goals target doubling agricultural productivity and incomes of the small-scale food producers to realise the SDGs. Access to land, technology, inputs and financial services, opportunities for value addition and markets, non-farm employment and effective and transparent institutions that ensure responsive, inclusive, participatory and representative decision-making at all levels are assumed to be the means to that end. Based on the Alagh Committee report’s recommendations, to address the voids in the existing form of collectives, producer company as a new legal option was introduced in 2003 by amending the Companies Act. This new form of collective is expected to combine efficiency and professional management of the company form and the cooperative principles necessitating ownership and participation of and governance by producers. This study takes a mixed-method approach. It qualitatively inquires about member’s perception of roles farmer producer companies (FPCs) play in their lives and livelihood. With the help of performance data from five FPCs, this study elaborates on the promises this form holds in realising some of the SDGs and challenges FPCs facing that could make achieving these promises a distant dream.

Keywords

Farmer producer company India producer organisation sustainable development goals

Introduction

India’s rank on the sustainable development goal (SDG) report was 110 in 2017 and has gone down to 117 in 2020. Of all the G20 countries, India is the only one with an absolute SDG performance gap of more than 20% for more than half of the SDGs. According to the Sachs et al. (2020), India faces major challenges in 10 SDGs in the areas of hunger, health and well-being, gender equality, clean water and sanitation, energy, infrastructure, inequality, sustainable communities, strong institutions and partnerships for goals. From a global perspective, owing to its large population, India alone represents 23.8% of the total achievement gap on SDG2 (zero hunger). If India can eradicate undernourishment for 14.5% of the Indian population, the world would be 27.4% closer to achieving the SDG target on undernourishment (Sachs et al. 2020). India’s own SDG Index and Dashboard 2019–2020 indicates that several states and union territories need to put in concerted efforts to reach a respectable status on some of the SDGs. These include SDGs pertaining to poverty, hunger, gender equality, industry, innovation and infrastructure and sustainable cities and communities.

Thus, the global as well as national reports indicate the need for India to focus on several sustainable development indicators related to agriculture and allied sectors of its economy. Recognising the need for strengthening the agriculture sector, the government has also announced schemes and programmes with farmers at the centre. Some of these include crop insurance scheme, irrigation scheme, farmer pension scheme, e-marketing platform for agriculture produce, etc. Recognising the promise the farmer producer organisations (FPOs) hold for improving the lives and livelihood of farmers, the government has also announced the creation of a large number of FPOs through some of its agencies such as the Small Farmers’ Agribusiness Consortium (SFAC) and National Bank for Agriculture and Rural Development (NABARD).

While the rest of the sectors of the Indian economy have accelerated, agriculture, with over 70% of rural households being dependent on it, has not been able to keep pace. Despite the notable increase in crop yields, the declining relative income per worker in agriculture calls for special attention to the sector, particularly as agriculture is the largest generator of livelihoods in India. Agriculture as a sector, thus, assumes greater significance in facilitating the country’s journey towards achieving the SDGs particularly related to poverty and hunger.

This article focuses on the role of FPOs in general and farmer producer companies (FPCs), in particular, towards the realisation of select SDGs by India. This article highlights the promises the collective form holds and raises concerns that could halt India’s march towards SDGs.

This article is divided into four sections. It starts with the section on literature presenting a succinct review of relevant literature on farmer organisations in general and cooperatives as well as FPCs in particular. It is an attempt to explore the promises the FPOs and FPCs hold towards realising SDGs. This is followed by a brief section on the methodology deployed for the research being reported. The section on findings and discussion relates the research findings with the relevant SDGs interspersed with findings from primary data and extant literature. The section also raises questions that emanate from the same when viewed from the lenses of existing knowledge. The conclusion section ends with ideas for further work.

Farmers’ Organisations and SDGs: Review of Literature

The dependence of a high proportion of the Indian population on agriculture is evident. Howsoever clichéd it may sound, the fact that the agriculture sector has contributed only 15.6% to the country’s GDP for the year 2019–2020 while providing 54.41% of the total employment cannot be denied. A study reported in 2014 revealed that 76% of the farmers would prefer to source their livelihoods from any sector but farming. The study also revealed that 60% of the farmers did not want their children to pursue farming; rather, they desired that the children should migrate to cities.

Various reasons for farming being perceived as a non-remunerative occupation are labour-intensive work ridden with problems such as fragmented and small landholdings, predominantly rainfed farming and vagaries of weather such as droughts and floods. Despite these factors pushing farmers away from agriculture, small and marginal farmers constitute approximately 80% of the total farmers in India. The challenges get aggravated when we consider further data such as 90% of the small and marginal farmers being dependent on rainfed farming, about 55% of the total cultivated land being rainfed and 85% of the country’s land being prone to natural disasters. Apart from all these, the prices farmers receive by selling their crops are a minuscule proportion of the final consumer rupee spent on buying the same produce (Murray 2008). According to the Centre for the Study of Developing Societies report (2013–2014), about 62% of the farmers were not even aware of the provision of minimum support price (MSP), and an average of 70% was not aware of the support schemes run by the government for farmers. Only about 7% of the farmers get benefitted from these schemes, making lack of awareness or inaccessibility of the schemes evident. Together, all these factors bring very little agricultural income to the farmer and push the primary producer on the verge of poverty. Once the farmer enters this vicious cycle, the shortage of money affects the farmer’s expenses on food and nutrition, education of children, health and farming as an enterprise. Thus, agriculture, as an enterprise, while providing an opportunity for employment to the large population which otherwise lack wherewithal for livelihoods, also poses enormous challenges, making it one of the least preferred occupations for the younger generation.

Management of agriculture for better performance can bring multiple benefits not only to the farmers but also to the country in its march towards realisation of SDGs. However, inadequate or inaccessible transport and lack of communication networks restrict the farmers’ reach to remunerative markets and generate rent-seeking opportunities for local traders and intermediaries (Negi et al. 2018). Transportation for small quantities proves costlier, in turn compelling farmers to sell and buy from the local market. The local procurement of inputs and selling of produce is not only inadequate in terms of quality of inputs and other services, but also does not realise good returns from the produce, thereby lowering the income for the farmer (Hegde 2010). From the lens of organisational economics as Valentinov (2007) puts it aptly, ‘the transaction cost-economising effect of family farms has a price in the form of their limited ability to realise economies of scale and to develop market power.…’

In several countries across the globe, cooperatives are a means to strengthen farmers’ bargaining position and ensure equitable distribution of income throughout the supply chain. This is achieved by institutional advantages of reduced transaction costs, accessibility to information (related to market including consumer preferences), technologies, certification and food safety standards (Chagwiza, Muradian, and Ruben 2016; Latynskiy and Berger 2016; Markelova et al. 2009) and developing ‘countervailing power’. Thereby, cooperatives can reduce rural poverty by increasing members’ income. Additionally, they are perceived to be inclusive and fair as they benefit the members equally irrespective of their gender and education (Verhofstadt and Maertens 2015). They can positively affect farmers’ food security due to farmers’ participation in the market (Montalbano, Pietrelli, and Salvatici 2018). In the milk producers’ organisations, positive economic benefits were found for member farmers in addition to other benefits such as services like negotiating a fair price, securing sales and access to relevant information (Boskova and Ahado 2020). A more significant impact of cooperative membership was found on the income of farmers in remote areas (Verhofstadt and Maertens 2015). Stability in the buyer’s market channel and certainty are the most crucial benefits accruing to cooperative members (Alho 2015). The literature cited above evinces that collectivisation not only improves the economic status but can also support the achievement of SDGs such as poverty reduction, zero hunger and food security, reduces inequalities and gender equality for the collectivised farmers and vicariously impacts those around the members.

India, with a century-long history of cooperatives, has also demonstrated the benefits of collectivisation to the small and marginal farmers. The realisation that if small and marginal farmers must continue pursuing agriculture as a more remunerative enterprise, collectivisation is a necessity, has strengthened over the last century. In India, the oldest form of collective that has been in existence for over a century now is the cooperative. The celebrated history of cooperatives in dairying has demonstrated how farmers supplying milk to cooperative were found more efficient and earned better profits than farmers supplying milk to informal channels (Vandeplas, Minten, and Swinnen 2013). Academic literature on benefits of cooperatives in horticulture, agriculture and allied sectors is replete with evidence of how collectivisation can support realisation of some of the SDGs. Cooperatives involved in horticulture production could export the products and significantly increase member income by partnering with a marketing firm (Roy and Thorat 2008). All women’s cooperatives empowered women by providing them economic security, developing their entrepreneurial behaviour and increasing their contributions to the family (Datta, Bhatt, and Gailey 2012).

However, according to Singh (2008), the cooperatives have suffered from problems globally resulting in failure. In India also, the cooperative’s inability to support the smallholder farmers, with exceptions of cooperatives dealing in high-value crops and dairying, is recognised (Roy and Thorat 2008).

A high-powered committee of the Government of India, chaired by Y. K. Alagh, reiterated the need for institutions to provide backward and forward linkages to the rural economy for leveraging the opportunities generated by liberalisation of economy, advances in communication and modern technology (GoI 2000). The committee recognised the need for new institutional forms. Owing to either the inadequate performance of the existing institutional form or stronger recognition of the need for collectivisation to leverage opportunities, the search for appropriate forms was on. In past, recognising the limitations of State Acts for promoting vibrant cooperatives, some states also amended existing laws or enacted new laws, like the Mutually Aided Cooperative Societies (MACS) Act, to provide enabling conditions to the cooperatives, but could not demonstrate acceptable degree of success.

Different authors attribute the failure of cooperatives as an institutional form to factors such as government interference, lack of awareness, issues with management (Ghosh 2007), poor infrastructure, lack of quality management and dominant membership (Das, Palai, and Das 2006). Some problems originate due to the very nature and principles of the cooperative form of organisation, including the commitment to buy the entire produce from all members, lack of financial and managerial resources, lack of market orientation and small size of operations (Singh 2008). To overcome the problems owing to the institutional structure, new generation cooperatives evolved in various parts of the world (Singh 2008). Exploration of institutional forms such as joint ventures (Kurien, Reddy, and Raju 2003; Singh 2008) continued, while the Government of India amended the Company Act in 2003 to provide for producer company—another institutional form to promote collectivisation with professionalisation.

FPCs as a legal form accord legitimacy and credibility to the collective in the market by shattering the often-prevalent negative images of the cooperatives ridden with inefficiency and corruption. As an institution, much like the traditional cooperatives, it provides a platform for small and marginal farmers to organise and benefit from collective action and enter the high-value markets as farmer collective rather than individual farmer (Singh 2008). As a legal form, FPCs hold a robust promise of strengthening farmer’s position in India’s agriculture value chains (Trebbin 2014; Tripathi and Singh 2017). The FPC, as a new form of collective, is designed to protect small farmers from the damage caused by globalisation and help farmers compete collectively in an aggressive market. FPC can play a vital role in protecting small farmers’ interests and can help enhance the competitiveness of farmers to get advantages in emerging market opportunities (Trebbin and Hassler 2012). FPCs also have the potential to develop as a business hub in rural areas (Trebbin 2014). While promising to protect farmers’ interest, FPCs are an institutional form with the potential to deal with development concerns of the country—many of which have been translated into the SDGs.

A study by Murray (2008) evinces the role a producer company can play in reducing poverty when it reports a 66% increase in income of the member farmers and an increase in household savings by a whopping 183%. Overall benefits to the members of an FPC are higher than non-members (Pandian and Ganesan 2019). Thus, FPCs see promising results for SDG1 and positively impacting migration if farming becomes remunerative.

FPCs handling diversified crops open new opportunities for members to reap better benefits. For example, vegetable cultivation improves the nutritional basis of families and allows them to earn additional income. It also helps in knowledge dissemination about soil conservation and rainwater harvesting. Furthermore, as an FPC enters the processing of produce, it generates employment opportunities locally, improves the financial condition and reduces labour migration. Additionally, women’s self-help groups are used to share knowledge about health and hygiene issues (Trebbin and Franz 2010). Boskova and Ahado (2020), in their study, found members becoming open to new and innovative ideas around products and services. The production of glyphosate-free milk is an example of such openness. It targets to eliminate the possible health risk by chemical-free dairy products. Such practices by FPCs hold the promise of improving nutrition status and health, sustainability and climate action when the FPCs focus on organic or non-pesticide management (NPM) crops. According to Nayak (2016), through empirical evidence from smallholder farmers and FPOs from across India, ‘economies of scope’ in agriculture is found necessary because it is not only more efficient for nutritious food production, wellbeing in farmers and their communities and local climate healing but also for the sustainability of agricultural ecosystems and the overall socio-economic environment. Fair trade (Murray 2008) is perceived to be another advantage of FPCs.

The advantages of the collectivisation of farmers in the form of FPCs have been acknowledged by literature and policy alike. Since the amendment in the Companies Act that made FPC as a legal form, possible government organisations and agencies such as SFAC and NABARD have been supporting and promoting FPCs in a big number. An analysis by Neti, Govil and Rao (2019) indicates that of the 7,374 producer companies registered in India between 2003 and 2019, a large majority of 6,432 were registered during 2015–2019. This spurt in number coinciding with various state and central government schemes to promote the FPCs indicates the state’s keen interest in promoting the FPCs.

Agricultural value added and employment in agriculture transmit a successful positive impact on poverty reduction (Matthew et al. 2019). One study finds eight out of the 17 SDGs directly or indirectly related to agriculture, and they are the following: SDG1—end poverty; SDG2—zero hunger; SDG6—water; SDG7—energy; SDG12—sustainable consumption and production; SDG13—combat climate change; SDG14—oceans, seas and marine resources, and SDG15—life on land (Nhemachena et al. 2018).

Similarly, another study by Nicholls et al. (2020) demonstrated that agriculture can positively help in achieving seven SDGs. Five of these are the same as found in study by Nhemachena et al. (2018), namely SDGs 1, 2, 12, 13 and 15. The others are as follows: SDG3—ensure healthy lives and promote wellbeing … and SDG8—promote sustained, inclusive and sustainable economic growth.…

Based on the SDGs and the role of FPCs for furthering the same, we have developed the following framework (see Table 1), briefly describing SDGs related to agriculture that can be impacted by FPCs.

Table 1.

Framework: SDGs Relevant with Farmer Producer Company.

Sr. No.	SDGs	Targets
1	Goal 1: No Poverty	Build resilience of poor and vulnerable and reduce their exposure and vulnerability to climate-related extreme events and other economic, social and environmental shocks and disasters.
		Ensure significant mobilisation of resources from a variety of sources, including through enhanced development cooperation, to provide adequate and predictable means for developing countries … to implement programmes and policies to end poverty in all its dimensions.
2	Goal 2: End hunger, achieve food security and improved nutrition and promote sustainable agriculture	Double the agricultural productivity and incomes of small-scale food producers, in particular women, indigenous peoples, family farmers, pastoralists and fishers, including through secure and equal access to land, other productive resources and inputs, knowledge, financial services, markets and opportunities for value addition and non-farm employment.
		Ensure sustainable food production systems and implement resilient agricultural practices that increase productivity and production, that help maintain ecosystems, that strengthen capacity for adaptation to climate change, extreme weather, drought, flooding and other disasters and that progressively improve land and soil quality.
		Maintain the genetic diversity of seeds, cultivated plants and farmed and domesticated animals and their related wild species, including through soundly managed and diversified seed and plant banks at the national, regional and international levels and promote access to and fair and equitable sharing of benefits arising from the utilisation of genetic resources and associated traditional knowledge, as internationally agreed.
3	Goal 8: Promote sustained, inclusive and sustainable economic growth, full and productive employment and decent work for all	Achieve higher levels of economic productivity through diversification, technological upgrading and innovation, including through a focus on high-value added and labour-intensive sectors.
		Promote development-oriented policies that support productive activities, decent job creation, entrepreneurship, creativity and innovation and encourage the formalisation and growth of micro-, small- and medium-sized enterprises, including through access to financial services.
4	Goal 9: Build resilient infrastructure, promote inclusive and sustainable industrialisation and foster innovation	Increase the access of small-scale industrial and other enterprises, in particular in developing countries, to financial services, including affordable credit and their integration into value chains and markets.
5	Goal 10: Reduce Inequalities	Progressively achieve and sustain income growth of the bottom 40% of the population at a rate higher than the national average.
6	Goal 12: Ensure sustainable consumption and production patterns	Halve per capita global food waste at the retail and consumer levels and reduce food losses along production and supply chains, including post-harvest losses.
		Achieve the environmentally sound management of chemicals and all wastes throughout their life cycle, in accordance with agreed international frameworks and significantly reduce their release to air, water and soil in order to minimise their adverse effects on human health and the environment.
7	Goal 16: Promote peaceful and inclusive societies for sustainable development, provide access to justice for all and build effective, accountable and inclusive institutions at all levels	Develop effective, accountable and transparent institutions at all levels.
		Ensure responsive, inclusive, participatory and representative decision-making at all levels.

Source: https://www.un.org/development/desa/disabilities/envision2030.html

Objective of the Study

Having reviewed the relevant literature on the need for and importance of collectives in the lives and livelihoods of the farmers impacting the sustainable development as such and in a country like India, we decided to explore further with some of the existing FPCs and their members, their views on the advantages of FPCs and concerns as perceived by them. In addition, we also looked at the performance data of the sampled FPCs. The performance data considered include financial performance, membership pattern, business profile and attendance at board meetings. Figure 1 outlines the data included in the study.

Figure 1.

Source: The authors.

The rationale for considering some of the data and operational definitions are briefly described as follows. 1.

Business profile: Such a profile of the sampled FPCs can help us contextualise the study. We include information such as the year of establishment and produce dealt with by the producer company.

Membership pattern: Change in membership numbers over the years and gender-wise membership distribution is considered. In an FPC, membership data serve as a good indicator of a significance of the company for members. Share capital is an additional indicator of membership growth as well as the financial resources of the FPC.

Financial performance: Here, we consider the data pertaining to turnover, actual earning and profit. As an FPC promises professionalisation of management of collective, this serves as a good indicator of FPC performance.

Attendance at board meetings: Attendance at the board meeting is a basic indicator of farmer involvement in the governance of the producer company.

Staffing pattern: This helps in understanding the HR availability and competence with the FPCs.

Annual general meeting (AGM): Data related to AGMs is used as proxy indicators for member involvement, interest and sense of ownership in FPC.

Perceived benefits: For any farmer to continue her/his membership with the producer company, a positive perception of membership benefits is essential.

Perceived concerns/problems: This can either demotivate the members’ participation and continuation of membership or motivate the member to act.

Perception of FPC structure: We capture the director’s perception of management and governance roles in the FPC. Often these roles overlap in collectives; hence, it is important to capture the same.

Methodology

We have deployed mixed methods, including qualitative inquiry to capture farmers’ perception of the role FPC plays in their lives and livelihoods and quantitative data to capture objective data. Quantitative data are largely obtained from records of the sampled FPCs.

The qualitative part of the study is conceptualised to explore roles the FPCs play in lives and livelihoods of the members, the benefits of FPCs and challenges with the FPCs. The following broad questions were deployed to capture the perceptual data. 1.

What roles are these FPCs as institutions playing in the lives of the member farmers?

How are these FPCs benefitting the farmers?

What challenges do the farmers perceive to be associated with the FPCs?

What is the organisation structure of the FPC? Where do you place the board of director (BOD) and the chief executive officer (CEO) in the hierarchy?

Sampling and Sample Characteristics

The exploratory study is carried out in five FPCs operating in Gujarat—a western state of the country. While FPCs are promoted by different categories of resource institutions (RIs) such as non-governmental organizations (NGOs), government missions, corporate social responsibility (CSR) foundations and for-profit business entities, we focus on FPCs promoted by NGO-RIs and that is the pre-dominant format. All the sampled FPCs are promoted by the same NGO-RI Aga Khan Rural Support Programme (India), which has been working in the area for more than three decades. All the FPCs were incorporated under the government support scheme for FPCs. The promoting NGO-RI has supported the FPCs in their formation and continues to handhold them for various activities pertaining to current operation of the FPCs including Legal and Management matters. All the FPCs are in the same geographic area spread across in an area of 60 km approximately; they are similar in type of business conducted—in the business of pulses—and have been operational for a minimum of three financial years. These features of the sampled FPCs—the unit of analysis for the study—ensure homogeneity rendering comparability to the findings.

Data Collection

Documented sources as well as key informant interviews were the two major data sources for the study. Performance data were collected from the documents, including the balance sheet of the organisation, whereas key informant interviews provided the perceptual data. The key informant included the board members interviewed as groups, whereas the CEOs were interviewed as individuals.

Data collection was done during February and March 2020 through two different rounds of visits to the sampled FPCs, before the lockdown was imposed in the country. Face-to-face in-depth interviews using open-ended questions were conducted, and the data were captured by recording the interviews after obtaining the consent of the respondents.

The interview data were transcribed and translated. The transcripts were cleaned, and the data were analysed to identify patterns and codes on Atlas.Ti8, using the content analysis approach. While coding, the researchers focused on the key questions of the enquiry; codes generated through this process were further grouped in 21 categories under five themes. The next section contains reporting of findings and discussion of the same by interspersing the study findings with those from other studies and relevant reports.

Findings and Discussion

In this section, we present the findings of the study and intersperse them with the existing literature to construct discussion. The same sequence, as given in Figure 1, is followed for reporting the findings. We begin with a discussion on performance data and then elaborate on the perceptual data.

Performance Data

A brief profile of the FPCs is given below for providing contextual clarity to the readers:

Lilotri Pulse Producers Company Ltd (FPC 1): Located in Narmada district, registered at the beginning of the FY 2016–2017, the FPC is supported by the SFAC and deals in pulses such as arhar (pigeon pea) and moong (green gram), besides paddy and cotton. All the shareholders are tribal, and the FPC covers 22 villages in the area.

Netrang Pulse Crop Producers Company Ltd (FPC 2): One of the oldest FPCs among the sampled one, located in Bharuch district, FPC 2 was registered in the last quarter of the FY 2012–2013. It is supported by the SFAC and deals in pulses such as arhar, moong and udad (black gram) besides paddy. All the shareholders are tribal, and the FPC covers 30 villages in the area.

Bhumiputra Pulse Crop Producers Company Ltd (FPC 3): Located in Narmada district, registered towards the end of FY 2015–2016, the FPC is supported by the SFAC and deals in pulses such as arhar and moong, besides paddy and cotton. All the shareholders are tribal, from an area of 18 villages.

Surydeep Adivasi Pulse Crop Producers Company Ltd (FPC 4): Located in Bharuch district, registered towards the end of FY 2015–2016, the FPC is supported by SFAC and deals in pulses such as arhar, udad and moong, besides paddy and cotton. All the shareholders are tribal, from an area of 26 villages.

Umarpada Pulse Crop Producers Company Ltd (FPC 5): Located in Surat district, FPC is supported by SFAC and deals in pulses such as arhar and moong, besides paddy and maze. All the shareholders are tribal, from an area of 23 villages.

Membership Pattern

As can be seen in Figure 2 the membership number has grown almost consistently for the study period in all the five sampled FPCs. FPCs 1 and 2 appear to be bigger than the remaining three; however, it must also be noted that the highest number of members is a little over a thousand.

Figure 2.

Source: Compiled by authors from archived records of the companies.

While the overall membership data seemingly paint a positive picture of the growth of the sampled FPCs, the gender-wise distribution (see Figure 3) paints a bleak picture of the FPCs, where the highest representation of women in FPC 1 is about half of the number of men members. While the literature cited earlier did indicate women’s participation as one of the strengths of FPCs, the data collected do not seem to corroborate the same.

Figure 3.

Source: Compiled by authors from archived records of the companies.

In a country where there have been several strong all-women SHGs, even cooperatives in dairying are promoting all-women dairy cooperative societies, such low women membership certainly calls for remedial action if the FPC is to be a means of achieving women equality.

Financial Performance

The financial performance of FPCs is being keenly observed as indicated in several studies carried out within the country. The growth in the number of FPCs is often attributed to government financial support. Analysis by Neti, Govil and Rao (2019) also seems to indicate the same. Hence, while analysing the data pertaining to financial performance, we looked at the same after removing the data pertaining to grants received by the FPCs. The analysis is presented in Figure 4.

Figure 4.

Source: Profit and loss accounts of the companies.

All the FPCs are receiving maintenance grants for meeting the operating expenses of the Company. The operating expenses include fixed costs such as salaries and other administrative costs, including variable ones. As the grants are accounted in the books as income, considering grant fund as part of annual income could be misleading as at times the grants are not utilised in the same year. In such a scenario, it inflates the profit for that year, which makes comparison across financial years difficult and unreliable for any financial performance prediction. We consider only revenue from operation as an income source for further analysis. Figure 4 shows that these FPCs are not able to cover their expenses out of their own earnings. Expenses include administrative costs (such as APMC charges, audit fee, salaries of CEO & staff, office rent, electricity bills, etc.), operational expenses (such as transportation, labour and wages, loading unloading expense) and finance cost (like processing fee, interest on loans, etc.). As these FPCs are not able to cover their expenses in absence of external financial support, it puts serious question on FPCs viability, once the government grants and support from NGO-RI are withdrawn. Table 2 depicts the same financial picture with more financial data analysed.

Table 2.

Actual Profits.

Year	Parameters	FPC 1	FPC 2	FPC 3	FPC 4	FPC 5
2016–2017	Revenue from operations	8,834,672	21,302,217	10,302,000	1,141,685	17,547,520
	Total Expenses	9,022,397	21,803,287	10,605,155	1,237,340	17,825,240
	Actual Profit	–187,725	–501,070	–303,155	–95,655	–277,720
2017–2018	Revenue from operations	4,355,213	3,045,245	2,307,694	8,259,055	2,557,429
	Total Expenses	4,914,881	3,266,206	2,891,840	8,734,396	3,464,295
	Actual Profit	–559,668	–220,961	–584,146	–475,341	–906,866
2018–2019	Revenue from operations	14,832,813	7,859,697	2,236,815	4,756,467	5,115,599
	Total Expenses	14,960,658	7,732,238	2,781,474	5,242,415	5,702,555
	Actual Profit	–127,845	127,459	–544,659	–485,948	–586,956
2019–2020	Revenue from operations	4376104	7109557	2161250	5939149	4122266
	Total Expenses	5025318	7134700	2705763	6280802	4749295
	Actual Profit	–649214	–25143	–544513	–341653	–627029

Source: Profit and loss accounts of the companies.

As can be seen in Table 2, none of the sampled FPCs have generated profits during any of the years of study period. FPC 2 for the years 2018–2019 comes across as an exception.

We further analysed the financial data for actual earnings from operations of the sampled FPCs, as depicted in Figure 5. Revenue from operation is considered as source of income, and cost of goods sold is considered as part of total expenses incurred every year. Through Figure 5, we can see that FPCs are progressing in their actual earnings, though sustainability of the FPCs cannot be guaranteed.

Figure 5.

Source: Profit and loss accounts of the companies.

For the year 2016–2017, none of the sampled FPCs earn much; on the contrary, FPC 2, as can be seen in Figure 5, incurred losses due to rate difference. Based on further inquiry, we understand that for the same year, FPC 2 acted as a centre for procurement of produce for GUJPRO (it is a federation of FPOs in Gujarat); FPC benefited the members and non-members both equally by giving them MSP for produce. This is also the reason why some FPCs earned high revenue when compared with subsequent years. The amounts for FPC 2 are exceptionally high as they also conducted business on behalf of another FPC that was in the process of getting registered.

Table 3.

Actual Earnings.

Year	Parameters	FPC 1	FPC 2	FPC 3	FPC 4	FPC 5
2016–2017	Revenue from operations	8,834,672	21,302,217	10,302,000	1,141,685	17,547,520
	Cost of goods sold	8,834,672	21,310,863	10,302,000	1,137,285	17,544,955
	Actual earning	0	–8,646	0	4,400	2,565
2017–2018	Revenue from operations	4,355,213	3,045,245	2,307,694	8,259,055	2,557,429
	Cost of goods sold	4,181,679	2,718,073	2,247,264	7,911,115	2,663,956
	Actual earning	173,534	327,172	60,430	347,940	–106,527
2018–2019	Revenue from operations	14,832,813	7,859,697	2,236,815	4,756,467	5,115,599
	Cost of goods sold	13,753,907	7,140,891	1,990,662	4,551,051	4,659,061
	Actual earning	1,078,906	718,806	246,153	205,416	456,538
2019–2020	Revenue from operations	4376104	7109557	2161250	5939149	4122266
	Cost of goods sold	3927860	6545165	2039412	5143079	3914622
	Actual earning	448244	564392	121838	796070	207644

Source: Profit and loss accounts of the companies.

As can be seen in Table 3, for the financial year 2018–2019, except FPC 4, all FPCs performed better when compared with earlier years. It must be noted that the FPC 4 though has reduced earnings for the year 2018–2019, that is, the actual earning is less than the actual earning of previous year. But in year 2019–2020, the condition is reversed, and all FPCs other than FPC 4 have reduced actual earning compared to previous years. Reason for this was explained as follows: Since FPCs bring inputs on credit and credit has to be settled within a fixed period of two months’ time, if monsoon gets delayed, farmers delay sowing of crops, which leaves FPCs with a shorter window to sell inputs leading to reduced input business. Similarly, delayed monsoon could also affect the quality of produce, adversely leading to reduction in output business. In case of FPC 4, condition is different because it expanded its area of operation from 13 villages to 26, and this is evident in the increased membership for financial year 2018–2019. Non-availability of market within a radius of 15 km makes FPC the best alternative for input purchase and selling of output. Above data indicate that the FPCs are growing in the business and earnings; however, when all the expenses are accounted for and the grant is withdrawn, the FPCs would find it difficult to meet their expenses.

Since all the FPCs are providing backward and forward linkages to the member farmers as well as non-member farmers, we analysed the data on the number of member and non-member farmers with whom the collective has conducted business. These data along with the number of seasons during which business was conducted and the commodities in which the FPCs are dealing are depicted in Table 4.

Table 4.

Business Details.

	2016–2017*	2017–2018		2018–2019		2019–2020
FPC	FPC 1	FPC 1	FPC 2	FPC 1	FPC 2	FPC 1	FPC 2
Number of member farmers who purchased inputs from the FPC	412	383	23	496	255	173	187
Number of non-member farmers who purchased inputs from the FPC	288	101	30	63	241	25	37
Number of member farmers who supplied produce to the FPC	245	167	51	110	388	53	201
Number of non-member farmers who supplied produce to the FPC	96	15	62	43	258	135	27
Inputs provided (Seeds)	Cotton, paddy, corn,soyabean, green gram,pigeon pea	Cotton, paddy, corn,soyabean, green gram,pigeon pea	Green gram.	Cotton, paddy, corn,soyabean, green gram,pigeon pea	Cotton, pigeon pea, soyabean, black gram, green gram, paddy	Cotton, paddy, maize,soyabean, green gram,pigeon pea	Paddy, cotton, pigeon pea, moong, Amul Dan seed, soyabean, wheat
Commodities procured from farmers	Green gram, gram, pigeon pea	Green gram, pigeon pea	Black gram, cotton, gram, soyabean, green gram, pigeon pea	Green gram, pigeon pea	Cotton, pigeon pea, soyabean, green gram, black gram, mango	Green gram, pigeon pea	pigeon pea, cotton, green gram,
Number of seasons for which backward linkage support was provided	2	2	1	2	2	1	2
Number of seasons for which forward linkage support was provided	2	2	1	2	2	2	2

Source: Compiled by authors from archived records of the companies.

Notes: *For FPC 2, data for the year 2016–2017 is not available. For FPCs 3–5, none of these data are available with the FPCs, hence not reported.

For FY 2017–2018, FPC 1 conducted business in both the seasons for input and output, whereas FPC 2 conducted business only in one season for input and output. Non-availability of working capital on time and lack of market for the produce were the reasons cited.

As indicated in Table 4, FPCs conduct business with members and non-members as the scale is small and quality of members’ produce often may not meet the market requirements. FPCs often have entered forward linkage arrangements with buyers for certain quality of produce. Procuring produce from non-members may make it possible for the FPCs to honour the arrangements with buyer and earn profits. Owing to small scale and no processing facility, FPCs often stop procuring from members once the quantity and quality promised to buyer are procured. For FY 2019–2020, both the FPCs reduced their input and output business due to delayed monsoon. The delayed monsoon also adversely affected the quality of produce, in turn affecting the overall business that the FPC could do during the year.

Data indicate that at the input end, the FPCs are conducting business in wider range of commodities when compared with the business at the output end. Non-availability of accessible market is a reason. Thus, mere collectivisation does not promise better business for the farmer member. This could demotivate the member farmer and weaken her/his loyalty for the FPC.

Data pertaining to business with members and non-members indicate a gradual increase in the input business with member farmers. This is a positive sign and so is the decrease in number of non-member farmers with whom the FPCs conduct business. When we consider the data about procurement of commodities from the members as well as non-members, the decreasing trend in case of FPC 1 is worrisome. Further exploration of the situation revealed that the quality of produce did not meet the market requirement, and hence, the produce was not procured by the FPC.

This change showing an increasing business with member farmers is indicative of a positive trend of more members getting benefitted by the FPC. One must also note that these are the early years for the FPCs, and they are in the process of building membership base. Based on our discussion with the CEO, we also found that the non-members became members of company in the following year.

Attendance at Board Meetings

We also explored involvement of the board members in the governance of FPC. One of the basic indicators of this is their attendance at the board meetings. Table 5 shows total board meetings held in each financial year for both FPCs. Figure 6 provides data pertaining to attendance trends in the board meetings of FPC 1.

Table 5.

Attendance at Board Meetings.

	Total Number of Board Meetings
Financial Year	FPC 1	FPC 2
2016–2017	12	Data not available
2017–2018	14	9
2018–2019	12	11
2019–2020	9	12

Source: Compiled by authors from archived records of the companies.

Figure 6.

Source: Compiled by authors from archived records of the companies.

As can be seen in Tables 5 for FPC 1, a total of 12 meetings took place in the year 2016–2017, 14 in the year 2017–2018, 12 in the year 2018–2019 and 9 in the year 2019–2020. In all the FPCs, there are provisional 11 board members, including a chairman. Figure 6 indicates that over the three-year period, attendance of board members in the monthly board meetings has gradually reduced. Qualitative exploration of the concern revealed another challenge. The members expressed loss of interest and motivation in the meetings as they perceive them as a waste of time.

Data on the same from FPC 2 also paint a similar picture as can be seen in Figure 7. Although for the year 2017–2018, one may find the linear trend to be encouraging, one must note that it was the initial year of board meetings and the total number of meetings held during the year is lesser with a substantial gap between the first and the second meeting of the year.

Figure 7.

Source: Compiled by authors from archived records of the companies.

FPC Staffing Pattern

Each FPC is provisioned to have one CEO, 11 BODs, including a chairman, four local resource persons (LRPs) and an accountant. Among all of them, the CEO, the LRPs and accountant are salaried. The CEO shoulders the responsibility of managing the FPC, planning its business in consultation with the board, executing the same, arranging buyers for the produce and input suppliers, completion of required documentation and monitoring of the LRPs and accountant. Accountant is responsible for maintaining books of accounts and LRPs gather data related to demand of input and availability of produce, supply of input, collection and disseminate information to and from the FPC and members for the villages allocated to them. Figure 8 shows the structure of FPCs.

Figure 8.

Source: Archived records of the companies.

Tables 6 and 7 show the staffing pattern in each FPC, and it can be seen that the number of LRPs appointed currently in FPCs is lower than the provision, owing to inadequate financial resources. Laying off some LRPs over time while the workload of the other LRPs increased is an indicator of the same. Similarly, there is one accountant who looks after the accounts of all five FPCs.

Two of the five CEOs are from outside the district where the FPCs are working, whereas three are from the same district. All the LRPs are from villages within the area of operation of the respective FPCs. The minimum education qualification mandatory for the position of CEO is either degree or diploma in agriculture or rural studies. The staffing pattern does hint at HR problems in the FPCs.

Table 6.

FPC Staffing Pattern.

	FPC 1	FPC 2	FPC 3	FPC 4	FPC 5	Financial Benefits
Chairman	1	1	1	1	1	No
Director	10	10	10	10	10	No
CEO	1	1	1	1	1	Salary
Number of LRPs (provisioned)	4	4	4	4	4	Salary
Number of LRPs (currently appointed)	2	3	3	2	2	Salary
Accountant	One accountant looks after all five FPCs					Salary

Source: Compiled by authors from archival records and interviews.

Table 7.

FPC Staffing Pattern.

	FPC 1	FPC 2	FPC 3	FPC 4	FPC 5
CEO hails from	Same district	Same state but different region of Gujarat	Same district	Same district	Different district
CEO qualification	Diploma agri	M. B. A. agri	Bachelor in rural studies	Bachelor in rural studies	Diploma agri
LRP hails from	Same villages FPC working in	Same villages FPC working in	Same villages FPC working in	Same villages FPC working in	Same villages FPC working in
LRP qualification criterion (min)	Intermediate
Accountant qualification	Bachelor of commerce

Source: Compiled by authors from archival records and interviews.

Annual General Meetings

All the members are invited to the AGMs. These meetings are important as they serve as a platform to disseminate FPC’s audited reports and plans. In addition, decisions regarding change in board membership or chairman are also taken in these meetings. In FPCs 1 and 2, regular AGMs have been held. However, the data pertaining to attendance at these AGMs are not available as records are misplaced while shifting office or with change of CEO of the FPCs.

Analysis of Perceptual Data

Analysis of the perceptual data captured from the farmer members who are directors on the board of the FPCs reveals interesting pattern combining the strengths of and benefits accruing from the FPCs along with recognition of the problems the FPCs face. We present the same in Figure 9, which is elaborated immediately after the presentation of the figure.

Figure 9.

Source: Complied by authors from interviews.

Financial Benefits

The respondents (farmer directors on the FPC Board) expressed positive effect of FPC on the incomes of member farmers as well as non-member farmers. They also perceive that the member farmers receive greater benefits like inputs delivered at their doorstep and at less than market price. Similarly, for forward linkage, member farmers receive better prices for the produce and do not need to worry about transporting the produce as it is collected at the village-level procurement centre. These result in accrual of savings for farmers at the time of input purchase and an increase in income from sale of produce. FPCs do not just benefit members but also non-members by selling them input and procuring quality produce, though other services are not provided to the non-member farmers. Non-members also receive the same price for products as a member and save on transportation costs. In addition, the farmer members can also get benefitted from the dividend and patronage bonus if company makes profits. As the sampled FPCs are too young with precarious condition, dividend and patronage bonus have not yet been paid, but the members do anticipate the possibility and consider it as an advantage of the FPC.

Services

The FPCs also provide services like door-step delivery of input and village-level procurement of produce. Owing to the form and its attempts at professionalising the activities, the farmer’s awareness levels have been raised such that they have started grading the produce, which helps them get a better price for their produce. This is attributed to the FPC’s efforts towards information sharing, member capacity building and knowledge dissemination. The sampled FPCs also encourage saving habits among the members as well as cash purchase rather than credit purchase. This has helped some of the farmers escape the vicious cycle of buying inputs on credit and paying high interest in addition to being forced to sell their produce to the same trader on his terms.

The respondents reported of unfair practices by the traders, owing to farmers’ lack of awareness about prevalent prices. Additionally, the farmer often loses out due to unfair weighing of the produce. Whereas the FPCs practice sample check of produce in accordance with the norms/guidelines and if the produce meets the quality standards, the farmer can sell to the FPC; otherwise, the farmer gets to know about the exact quality of his produce so that can negotiate accordingly with the trader in the market.

Thus, in more than one way, the FPCs are helping farmers increase their income and reduce the costs and vulnerability of farmers by reducing their dependence on the traditional market mechanisms that often prove to be exploitative for small and marginal farmers.

Agricultural Practices for Better Health and Nutrition and Sustainable Agriculture

As FPCs are created for betterment of farmers, they often design innovative solutions and ideas for the problems and issues that the member farmers face. To keep farmers engaged with the FPC, management of one FPC conducts activities such as distribution of vegetable seeds, demonstration of kitchen garden preparation or bio pesticides preparation, etc., in each farmer interest groups¹ (FIGs) meeting, held every month. Often these activities focus on bettering the nutritive value of the household consumption.

All these FPCs are from a tribal belt in the select state of western India and the tribal are in the habit of practicing NPM-based agriculture. With the increased demand for organic produce, FPCs also focus on NPM agriculture that is easier to manage and will fetch better prices for the members. FPCs are promoting and encouraging farmers for NPM and supporting farmers with the training of organic farming. The master trainer at the FPCs acquires knowledge and skills on agricultural practices and shares the same with farmers in meetings of the FIGs. The NPM-based agriculture practices besides improving farmers’ income also promote sustainable agriculture.

Lead farmer in each group is responsible for adopting new agricultural practice and demonstrating the same. Positive results of demonstration motivate other farmers to adopt the new practices. Thus, the tiered structure of the FPCs acts as a platform for knowledge sharing among farmers, which, in turn, will enhance the farmers’ knowledge and motivate them to adopt improved practices, resulting in increased incomes.

Benefits of Institutional Form

While the qualitative data clearly indicate positive perception at the level of individual members such as fair price and bargaining power to the individual farmer, the FPC as an institutional form promises combined benefits of collective action with professional management orientation. As a collective, it is a structure that is meant to reach out to each member, and each member can reach the governing unit of the company—the Board. The board of the company consists of representatives from member farmers. The composition of the board of the sampled FPCs is such that each cluster of 100 farmers (about five FIGs) get represented on the BODs by one among them. This farmer member on the board is the lynchpin between the farmers and the board. Tier 2 of the FPC—the FIG—consists of 15–20 farmer members, and each such group has three critical roles pramukh (president), mantri (secretary) and the lead farmer who take responsibility for their respective groups. This structure is designed to ensure timely two-way communication on operation and management of the company resulting in multilevel accountability and transparency.

The monthly board meetings are platforms for taking critical governance and management decisions, and the monthly meetings of the FIGs are means through which the LRPs share the critical decisions taken in the board meeting with farmer members. The three key role holders in the FIGs take responsibility of informing six to seven member farmers. These meetings serve as a platform for the member farmers to raise their concerns that are collated and conveyed to the management during the board meetings. In a study of smallholder farmers, it was found that organisations that are more coordinated vertically (different contract types) and horizontally (different farmer organisation types) are preferred by potential buyers because it reduces the transaction costs (Vroegindewey, Theriault, and Staatz 2018), FPCs in our sample are showing horizontal coordination (member reach and connect) and professional management by allocated staff provides structure for vertical coordination, though requires to grow in scale.

These processes of representation and two-way communication serve as effective means of learning about democratic processes and strengthen the institutions. Besides being nurseries for democratic governance, the FPCs also reflect the emphasis on transparency in operations through its practices such as maintenance of proper records of meetings, transactions, regular and prompt communication of decisions and disclosing books of accounts to the members from time to time in AGMs and monthly meetings. Decisions are taken by board in consultation with each other, and resource organisations also help them by providing technical inputs and information about business environment pertaining to the FPCs business. This does touch upon the SDG related to stronger institutions. Though the FPCs are strengthening institutions at the grass-roots levels, they certainly hold a promise of stronger institutions at higher levels gradually as the citizens get trained to operate strong institutions and begin seeing the positive impact of strong participatory institutions. However, the performance data pertaining to decreasing attendance at board meetings certainly raise concerns.

Problems

While the respondents have expressed their perceptions of benefits and advantages of the FPCs for the farmers, they are adequately aware and vocal about the problems they perceive.

Working Capital is one of the pressing problems facing not only the sampled FPCs but large majority of the few thousand registered FPCs in the country since the amendment in the Companies Act in the year 2003. With INR 500 as membership fees and a total of 1,000 member farmers, it collects a share capital of five million, which is far from adequate for carrying out reasonable scale of business. For their working capital requirements, the FPCs are dependent on credits from different financing agencies. The smaller scale of business does not make them customers of interest for mainstream banks. Some institutions with goals of financial inclusion such as Friends of women’s world Banking do provide loans towards working capital; however, such institutions are too few or the amounts provided is far from adequate.

As members of these FPCs are small and marginal farmers, they often do not have finances to buy agriculture inputs. Some FPCs do enter into arrangement between financing institutions and the FPC such that the financing institutions provide loan for FPCs to buy inputs and supply them on credit to the farmers. After harvesting, the loan is paid back to the financing institution. While this solution may seem to be a working one, default by farmers in case of crop failure is a major hindrance and a stark reality, given the extent of rainfed farming prevalent in the country.

The sampled FPCs (and FPCs in general) are largely in the business of input supply and procurement of agriculture produce of the farmer members who are necessarily small and marginal farmers. This has led to the profits of the FPCs generated so far to be awfully low or no profit at all, when compared with the fixed costs of running a company. Young FPCs find it difficult to sustain themselves financially. Maintenance grants under government schemes are available to the FPCs for a period of three years as initial support for such expenses is far from adequate and the FPCs are still not able to meet their operating expenses. Thus, given the small scale, financial stability is a major challenge facing the FPCs as captured through the perceptual as well as performance data of the sampled FPCs. Another empirical study found retention of control rights in a cooperative important for members, and a farmer’s willingness to invest in a cooperative was linked with farm size. Also, financial difficulties reduce commitment of members (Alho 2016). In case of FPCs under study, control rights are with farmers but land holding with farmers is low, so it is important for FPC to explore opportunities to attain financial stability while not drifting away from the reasons for collectivisation and professionalisation.

Dearth of skilled staff is another challenge facing the sampled FPC owing not only to the problems of financial instability but also location disadvantage that the FPCs have.

Clarity About Governance and Management Roles

In all the sampled FPCs, the board members are required to shoulder the responsibility for governing the FPC. These roles include: 1.

policy and strategic decisions such as appointment of CEO, acquisition of financial resources, procurement policies such as pricing and number of collection centres);

monitoring of activities related to the board subcommittees and monitoring of accounts;

monitoring the performance of the CEO.

So we can see that BOD is involved in governance of company at the same time they are carrying out management activities as well. We also carried out an exercise with farmer members on the board. The respondents were to depict the organogram of the FPC and place each stakeholder according to the hierarchy they perceive. Three out of four groups placed CEO above board. It shows blurring role boundaries between management and governance.

SDGs Relevant with Farmer Producers Companies: Possibilities and Problems.

S. No.	SDGs	Potential Benefits	Problems in Realisation of Goals
1	Goal 1: No poverty	Reduced cost, better prices for produce, dividend, patronage bonus, door-step input delivery, village-level procurement centres, fair trade practices all together can positively affect farmers income.	FPCs are not financially self-sustainable. Dependent on grants and support from RI and government.
2	Goal 2: End hunger, achieve food security and improved nutrition and promote sustainable agriculture	Encouraging farmers to use NPM practices for farming by connecting them with relevant buyer	NPM or organic produce marker does not provide good prices due to lack of certification.
		Through training dissemination of knowledge for better pre- and post-harvesting techniques, on pesticide management.	FPCs are working in limited commodities with shelf life. Other commodities and vegetables grown are sold in local markets only.
		Backward integration to produce seeds.
3	Goal 8: Promote sustained, inclusive and sustainable economic growth	Company form of organisation, if enters in forward integration, that is, production can generate employment opportunities.	with current mode of operation lack of working capital is a constant problem. For any processing at FPC level further capital investment is a concern. In absence of collateral and small size of operation mainstream banks do not see FPCs as ‘customers of interest’.
3		Industry innovation and infrastructure development according to the local need, that is, local production as per local need.
4	Goal 9: Build resilient infrastructure, promote inclusive and sustainable industrialisation	Producer as owners of the company makes FPCs inclusive and FPCs can act as a better means to connect farmers with bigger markets, for produce as well as for credit.
5	Goal 10: Reduce inequalities	Positive income effect due to reduced cost and better prices can help achieve target.	In case of crop failure or produce with fewer quality FPCs cannot provide any solution to the farmer.
6	Goal 12: Ensure sustainable consumption and production patterns	FPC promotes and disseminates knowledge about pre- and post-harvest techniques. Also, aggregation of produce at FPC level ensures better handling of produce.	Lack of proper storage at FPC level.
7.	Goal 16: Promote peaceful and inclusive societies for sustainable development.	With policy of multilevel accountability, transparency, participatory and representative decision-making and process to ensure good communication and coordination among members and company this form is promising for strong institution building.	Due to lack of finances FPCs are not in position to maintain all the Staff required-adversely affects coordination and communication between member and FPC. BODs shoulders governance as well as management responsibilities with no direct financial benefits—lack of interest in FPCs working.

Source: The authors.

Discussion

The study based on perceptual and performance data of five FPCs (as depicted in Table 8), indicates that the FPCs are perceived to be beneficial to the individual farmers owing to the short-term and long-term financial benefits (direct) and in terms of services and reduced costs (indirect benefits). These do hold the promise of realising ‘no poverty’ (Goal 1) and reduce inequality by increasing income of pro-poor (Goal 10). However, the performance and financial data from the sampled FPCs present a very different picture with losses and dependence on the government or other supporting agency. Also, vagaries of nature and rainfed farming may hamper performance of small FPCs. This does lead to questioning the potential promises that the FPCs hold in realising the select SDGs.

The benefits accruing to the members in form of services are well recognised by the members and extant literature. In addition, the contribution that the FPCs can make towards better health and nutrition and sustainable agriculture (Goal 2) due to NPM or organic farming practices is well accepted. But to sustain this, it is important to have remunerative market for the NPM produce.

Being a company form FPCs can enter production activities according to the local requirement fulfilling possibilities to promote inclusive and sustainable industrialisation (Goal 8) and foster innovation productive employment and decent work (Goal 9). But for production activities, capital investment is required. As FPCs are still facing problem of working capital, and due to small-scale operation and in absence of collaterals, FPCs are not considered as ‘customers of interest’ by mainstream banks.

Being a collective of farmers FPCs serve as a platform for knowledge dissemination through training to the farmers, this includes new pre- and post-harvest techniques to be adopted for better produce in terms of quantity and quality. Aggregation of produce at FPC and better holding capacity of the FPCs can ensure better handling of produce reducing wastes in supply chain (Goal 12). However, this would also require easy and affordable access to financial resources.

Benefits of the institutional (Goal 16) form are widely discussed in extant literature and recognised by the respondents in the study; however, the data pertaining to attendance at board meetings raise serious concerns about the FPCs promises of institution building.

Emanating from the study, the following are some questions having implications for policymaking future research and management practice.

Since the sampled FPCs are working in close geographic proximity, can they explore the possibility of consolidating into one larger FPC to achieve economies of scale and reduce transaction as well as administrative costs? Such consolidation can reduce major expenses such as APMC charges, audit fees, Staff salaries or have better employee competencies with similar salary budget. Forward linkage without value addition will not make the FPCs a viable business in the long run. Consolidation of FPCs into one will increase the possibilities of financial viability.

Do the FPCs need to explore markets for other commodities for which they are selling inputs to the farmers but not procuring their produce? Is there a need for the FPCs to educate members for maintaining quality of produce by adopting better agricultural practices and post-harvest techniques of grading and sorting?

Considering the reducing attendance at the board meeting, should the FPC consider seating fees for the directors? What implications would it have on the financial performance of the FPC? Do the directors need to be educated in their governance role and responsibilities?

For a strong institution with effective governance and management practices, it is imperative that the FPC has not only well-trained professional staff but also a competent board. Lack of financial stability coupled with uneducated and unaware farmer members accentuate the problem further. Intent, ability and role of the RI or promoting become very critical if the FPC is to have competent staff and well-aware governing body.

Should FPCs focus on scale as a probable solution to the challenges? However, with its sole focus on small and marginal farmers, the FPCs may find it impossible to achieve scale. Possibility of federating FPCs by creating a higher tier can make the scale a reality. Another option could be of accepting medium and large farmers also as members of the FPC. The latter does have a potential threat of elite capture; however, in highly homogenous FPCs like the sampled ones that are all tribal FPCs, they may not have to worry about the issue of elite capture.

Last but one of the most critical question to be asked: Do members see themselves as the owners of the company? Trust-building is a time-consuming process, and in the case of FPCs, ownership and commitment for FPC in member-only comes when FPC can generate benefits for farmers and acts as a one-stop solution for members.

Is it too early to study these young FPCs? Do they need a little more time to grow and stabilise as a form before they are amenable to academic inquiry?

Conclusion

The problems perceived by the respondents and the questions raised earlier in this work based on the analysis of performance data require urgent policy attention and that of managerial practice, particularly by the RIs.

In summary, we suggest that while FPCs as the newest form of collectives in India do hold promises of facilitating and accelerating the country’s march towards attaining sustainable development, the challenges mentioned in the previous section call for urgent response and, if not addressed adequately and timely, may adversely affect the highly promising image of FPCs. With strict adherence to one-member-one-vote policy, higher representation of small and marginal farmers on the governing board and strong positive intent, ability and role of the RI/promoting organisation can possibly help us achieve the daunting task of balancing focus on small and marginal farmer and yet achieve large scale of business to tackle the challenges of working capital, financial sustainability and competent staff.

It would be interesting to study large FPCs for the same variables to determine the impact of scale and the extent to which it can help FPCs play a major role in supporting the country’s march towards realising select SDGs.

Footnotes

Declaration of Conflicting Interests

Funding

The authors received no financial support for the research, authorship and/or publication of this article.

Note

ORCID iDs

Mamta Mourya

Madhavi Mehta

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Farmer Producer Company: India’s Magic Bullet to Realise Select SDGs?

Abstract

Keywords

Introduction

Farmers’ Organisations and SDGs: Review of Literature

Framework: SDGs Relevant with Farmer Producer Company.

Objective of the Study

Methodology

Sampling and Sample Characteristics

Data Collection

Findings and Discussion

Performance Data

Membership Pattern

Financial Performance

Actual Profits.

Actual Earnings.

Business Details.

Attendance at Board Meetings

Attendance at Board Meetings.

FPC Staffing Pattern

FPC Staffing Pattern.

FPC Staffing Pattern.

Annual General Meetings

Analysis of Perceptual Data

Financial Benefits

Services

Agricultural Practices for Better Health and Nutrition and Sustainable Agriculture

Benefits of Institutional Form

Problems

Clarity About Governance and Management Roles

Other Concerns and Potential Solutions

SDGs Relevant with Farmer Producers Companies: Possibilities and Problems.

Discussion

Conclusion

Footnotes

Declaration of Conflicting Interests

Funding

Note

ORCID iDs

References