Despite over 20,000 FPOs registered across India under various frameworks—ranging from cooperative laws to provisions in the amended Companies Act, 1956—the number of economically sustainable, impactful FPOs remains dishearteningly low. Much of the optimism around FPOs is marred by underwhelming performance metrics, fragmented market linkages, and inadequate capacity-building support.
FPOs: The High Expectations and Harsh Reality
FPOs were designed to help farmers gain better prices through collective bargaining, enhanced access to inputs, and market linkages. They were also expected to adopt progressive practices like climate-smart agriculture, fair trade, and gender inclusivity. However, expecting under-resourced collectives to champion such transformative agendas without first achieving economic stability is arguably premature.
The average paid-up capital of FPOs stands at just ₹1.8 lakh, and annual net profits hover below ₹1.3 lakh—hardly the indicators of thriving entities. Even the better-supported FPOs seldom cross the 3–6% return threshold from output marketing, raising critical concerns about the very business model.
Structural Challenges and Skewed Incentives
FPOs are often promoted with little regard for long-term sustainability. Many operate in silos, lacking the technical know-how, managerial expertise, or working capital to function as viable enterprises. Though government schemes, such as the central ₹6,865 crore initiative to create 10,000 new FPOs, offer vital seed funding, their top-down model—where implementing agencies select regions and partners—can result in fragmentation and weak accountability.
Furthermore, the tendency to spread resources thin across hundreds of FPOs instead of focusing intensively on a few viable models undermines the potential for building strong exemplars. This is where the analogy to "spraying money across many FPOs" versus "nurturing a few" becomes strikingly relevant.
The Missing Middle and Market Paradoxes
FPOs often find themselves squeezed between informal, exploitative middlemen and formal institutional buyers with high compliance demands. While the intent is to eliminate predatory intermediaries, many rural FPOs lack the scale or logistics to directly access institutional markets. As a result, they fall back into traditional channels—weakening the very purpose of their formation.
The broader question remains: is the FPO business model robust enough in its current form? Is aggregation alone sufficient, or should the focus also shift toward value addition, processing, and diversified revenue streams?
Rather than relentlessly pushing for quantity—10,000 FPOs and counting—India needs a new FPO policy anchored in quality, capability, and sustainability. That means:
Creating exemplars: Identify and incubate a select few FPOs that have the potential to succeed, and offer them intensive mentoring, funding, and market support.
Building enabling ecosystems: Encourage partnerships with NGOs, CSR initiatives, and philanthropies to support FPO incubation, farmer training, and leadership development.
Redefining metrics: Move beyond mere registration numbers to performance-based outcomes such as turnover, farmer dividends, market penetration, and resilience indicators.
Simplifying access to finance: Revamp the credit ecosystem so that FPOs can tap affordable capital for inputs, storage, and logistics.
The Road Ahead
Successful FPOs are already operating across India, proving that the model can work when built on strong foundations: charismatic leadership, trust among members, adequate working capital, and meaningful market access. These should become the benchmarks for replication.
Ultimately, if FPOs are to transform rural livelihoods, India must move from a supply-push to a demand-driven model—building from the ground up, ensuring contextual fit, and aligning policy, philanthropy, and private sector efforts.
Only then can FPOs evolve from policy buzzwords to robust engines of rural prosperity.
No comments:
Post a Comment