FPO: Public Policy & Value Chain Development

A basic concept can be read here:2014 - Year of Farmer Producer Organizations (FPOs) before going further ahead in this topic.

Public Policy: There is always so much talk on FDI in retail, so it seems a good state to channel the same money for farmers’ producers’ cooperatives and ensure they get good margins and market access. The government of India (GoI) already invest Rs 275,000 crore in an agricultural subsidy budget that is constantly touted and needs to be unpacked. Who is the real beneficiary of these subsidies, farmers, or seeds, fertilizer manufacturers, and agricultural banks? That is where good public policy comes into play.

The government of India (GoI) is promoting the concept of Farmer Producer Organizations going in the right step to engage and adapt agriculture to the market system. The primary objective of the collective mobilization of farmers into FPOs is to enhance the production, productivity, and profitability of especially small farmers in the country. FPO will be positioned as a gateway agency between the farmers and markets. The complete Policy and Process Guidelines for Farmer Producer Organizations; is a good framework. FPO policy will give auxiliary advantages like women’s empowerment.

Policy guidelines are the first step but we need awareness of this novel concept among a diverse range of stakeholders: the farming community, State Governments, Banks and other financial institutions, Civil society organizations, the media, and elected representatives of the people. Policies that impede the growth of FPOs, such as APMC laws, tenancy provisions, cold storage, etc. must be amended with changing times.

Value Chain Development: With the below diagram, we see how Value Chain is different from Supply Chain.

 Value chain development interventions focus on improving business operations and relationships (even contractual) at the level of primary producers, processors, and other actors in the chain. Production, harvesting, procurement, grading, pooling, handling, marketing, selling, and exporting of primary produce comes under the scope of the value chain. It can also include preserving, drying, distilling, brewing, venting, canning, and packaging the produce of its members.

Value chain analysis starts with mapping the volume of products, the number of people engaged, the geographical flow of products, and value at different levels of value chains. The supply and demand side of the business can be understood with the result of analysis only. Only then, we can start with the business planning of the enterprise. All the members of FPO are primarily farmers only but we need to build their capacities on trading, accounting, and hoarding practices over time. Farmer Producer Organizations can only result in more sustainable and better-performing business plans when farmers have a good understanding of value chain systems.

FPOs are nee steps towards organizations having higher financial autonomy and lesser government subsidy. Possibly the biggest failure of GoI is the promotion and formation of good organizations in the agriculture sector. Let us look for the big question in the livelihood sector: Is a full-fledged value chain development project through FPO the best way to bring about development? If not, then what is an alternative!

Development Sector

Salary is one of the most critical components of a human resources strategy even in development sector. It is unreal, and perhaps even unfair, to expect that a development professional is going to do good to society at a loss to himself. This path has produced few rare exceptional people, but its not a sustainable way of growth. I think job anywhere is very simple; to work with the best of our ability, and inspire younger generation to excel given standards. Compensation, Experience , Commitment and Skill set creates the Job Profile. But there is always huge gap between supply and demand in development sector. The reason is below:

World Toilet Day

“Civilisation is the distance we put between ourselves and our own excreta.” - Brian Aldiss, The Dark Light Years

Indians are strange creatures as when we think of skills we are obsessed with IITs; when we think of health care we can scarcely think beyond doctors. At present, generally, the Indian has cleaning to the household level but is apathetic to the community where he lives. Even governments typically overspend on very high on expensive machines used in healthcare, at the expense of public goods such as community toilets, sewer pipes, low cost sanitary napkins etc. Despite of bad image of World bank among left in India, they will also agree with their suggestion of increased spendings of government on sanitation issue. India has already popular PPP model of community toilets and washroom in Sulabh Shauchalya.

November 19th is celebrated as the World Toilet Day to raise awareness on the use of toilet, sanitation and clean water. I was invited to a primary school with Block Development Officer (BDO) on this day a year before. I learn a lot on five ways for washing hands; waterborne disease & clean water for safe drinking. Ganjam district is ill-famous for open defecation in the whole Odisha. This was directed towards giving children information on area of water, sanitation and hygiene (WASH).

Knowledge alone though is not enough; it has to be complemented by actions to implement the most basic rules for prevention. Using evidence to guide massive social investment is crucial to ensuring the efficient use of limited resources. As per research of  JPAL in Kenya , there is little evidence on whether existing water quality, sanitation, and hygiene (WASH) interventions lead to lasting improvements in children’s health, growth and development and whether nutrition programs are more effective when combined with WASH interventions.

Government machinery has funds under Individual Household Latrine(ihhl) for construction of toilets at household level. It requires 10% fund by the household while 90% are given by government in three phases. And, sanitation is seen only as seen as construction of new toilets without thinking about water facilities and waste management. Power builds consensus like nothing else. There is no democratic discussion in government meetings. Even infeasible orders are taken without looking either on the quality of construction work or utility to end user to achieve targets. Unless government at municipal doesn't think on the line of Reduce-Reuse-Recycle, there will be huge waste dumped without proper process.

There is quite little thinking on policy level on solid and liquid waste management, awareness regarding toilet usage, water storage, hand washing practices and acceptability of the total idea of sanitation. India really need a large social campaign to make people aware, working with them and explaining things of private hygiene to them. The reason is that sanitation is primarily a behavioural issue, to be undertaken by community and household for their own good. The role of government is only to facilitate this positive change by providing incentives and solution oriented approach in assisting people.  Government is trying to work with children in schools and mothers through health clinics to educate them about hygiene behaviour. Such education initiative can help change behaviour and hygiene practices, it is a super slow process. The sanitation problem is so drastic and urgent that policies need to be set in place to drive behavioural change. There is need to have social norms regarding sanitation. Government need to listen the wise words of Samuel Johnson: "People need to be reminded more often than they need to be instructed.”

2014 - Year of Farmer Producer Organizations (FPOs)

I always remember the words of Chinese Premier Deng Xiaoping - "It doesn't matter whether the cat is black or white, as long as it catches mice." So, now NGOs and the government are finally coming to the phase of acceptance of market forces in the development sector. The cooperative movement is already a failure except for a few notable examples. The government has never managed to manage any scheme efficiently. The government is partnering with various professional organizations for setting up a new institution in the country - Farmers Producer Company (FPC) / Farmer Producer Organizations (FPO). The legal framework is ready under the Companies Act. According to this new law, only farmer–producers can be members of the FPC and the farmer members themselves will manage this company. It takes care of the flaws in the cooperative societies but has also borrowed the strengths of the corporate companies.

FPO/FPC will be dominating future debates on livelihood and its success depends on the implementation and design of the program. Pieces of evidence will come for pros and cons of such initiative, no matter how reliable, have to be interpreted. Interpretations can differ and do differ, and such differences account for an explanation. That is a future full of possibilities. I will be updating this space related to FPO. The chart will give an overview of the FPO structure and purpose. It is a bit late to post here but the Calendar year 2014 is declared as the “Year of Farmer Producer Organizations (FPOs)”.

Annual General Meeting of UAPCL

Udaipur Agro Producer Company Limited, UAPCL, is a social-enterprise company focused on strengthening the livelihoods of the community. The organization was registered on June 29, 2010. The company’s main concentration is building the surrounding community through direct collaboration. The company is comprised of 1635 members. Each member is a local farmer mostly small and marginal who owns a share of the company.

UAPCL Annual General Meeting

Share Certificate Distribution

ACCESS Team with UAPCL Board of Directors

ACCESS Development Services is working in the area of livelihood with FPOs (Farmer Producer Orgainzation). Here is a glimpse of Annual General Meeting organized by one such - UAPCL attended by 700 members. Here we see smallholder farmers not as marginal recipients of charity instead as customer entrepreneurs. I will be updating more on FPOs in this space.