Stakeholder Consultation on FPOS in Bihar

PROCEEDINGS OF STAKEHOLDER CONSULTATION ON
FARMER PRODUCER ORGANIZATION (FPOs) - OPPORTUNITIES & CHALLENGES
Jointly Organized by:
CUTS International
&
Indian Grameen Services (IGS-BASIX)
Venue:
Hotel Chanakya, Patna
On 12/22/2015
Background:
Globalisation and liberalization together have brought changes in market scenario and
corporate sector confined to the town and city are trying their best to have access to the
rural market as 80% of the total market of food products is there in the villages. At the same
time changes and diversification in food products, processing and competitive market with
increasing trend of capturing market share among the companies
have also helped
evolving this kind of situation. On the other hand increasing demand of such food products
is also motivating these corporate sectors to enter into agreement with the farmers and get
quality produce in required quantity.
Most of the major corporate houses of the country are venturing into the agri-business
sector, especially with regulations allowing the corporate sector to enter into direct
contractual arrangements with farmers. One of the triggers for this newfound interest in
agribusiness by the corporate sector is the change occurring in the retail markets, where
consumers are making dramatic shifts from purchasing at neighbourhood kirana stores to
shopping at supermarkets, malls and food plazas, enabling development of food supply
chains from the farms to consumers.
With increase in population, there is continuous increase in demand of food products. Yet
the farmers are in distress, as witnessed by the large number of farmer-suicides. One
explanation for this is that the farmer disposes off his produce in unprocessed form and
value addition in agricultural commodities happens only after sale by the farmers. One
possible solution may lie in aggregated functioning through Farmers Producers Organization
[FPOs] to foster public private partnership.
During the last decade there has been a growing interest from Govt. and nongovernmental
organizations in promoting small farmers’ organizations. These organizations have been
playing the important role of creating strong supply chains and linking farmers to the
market. FPOs have opened new vistas in the agribusiness sector with input and out market
on large scale.
FPOs face a number of challenges and hurdles as they grow in number and scale. There are
also opportunities that arise from collective functioning. These opportunities and challenges
have to be addressed systematically by bringing together all stakeholders viz. Government,
NGOs, FPOs, private sector, aggregators and service providers in order to ensure quality,
quantity and market for remunerative prices for the produce. Against this backdrop,
Consumer Unity and Trust Society (CUTS) and IGS organized day-long Stakeholder
Consultation was organized in Patna, Bihar to understand the issues and challenges ahead
specific to the State and do the advocacy for the appropriate policies for the smooth
functioning of FPOs in the State.
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Proceedings:
The Stakeholder Consultation workshop commenced with a welcome address by Mr. Arijit
Dutta, Managing Director, Indian Grameen Services (BASIX). This was followed by Mr.
Sourabh Kumar, Policy Analyst, CUTS International welcoming the participants and
explaining the mandate of CUTS. He explained that the objective of the workshop was to
discuss the operational and policy level issues with respect to FPOs and to bring all
stakeholders together on a common platform in order to create an enabling environment
for the organizations of small farmers. He expressed the need to discuss the challenges and
opportunities that FPOs encounter or may face in future and the role of the government
sectors, banks, NABARD, private sectors and NGOs.
Mr. Arijit Dutta, Managing Director, IGS giving welcome speech to the participants.
Mr. Sudhir Kumar Mishra, Deputy Director, Department of Agriculture, Government of Bihar
also addressed the participants. Mr. Mishra narrated the importance of Trust, Technology
Transfer and Transparency in FPOs. He said that future of FPOs is based on trust and
transparency. He also elaborated the government schemes for FPOs.
The workshop discussion was divided in three sets
 Sensitize FPOs on government schemes
 Key challenges for FPOs
 Conclusion
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Mr. Sudhir Kumar Mishra, Deputy Director, Department of Agriculture, GoB.
Sensitize FPOs on Government Schemes
The main objective of the workshop was to disseminate the information regarding
government support to FPOs. Invited resource person Mr. Sudhir Kumar Mishra, Deputy
Director, Department of Agriculture, Government of Bihar and Mr. Nilesh Kumar Mishra,
Assistant Manager, Nabard have shared their experienced about schemes and support for
existing FPOs in Bihar. The FPOs will get support at three levels from NABARD i.e. credit
support, capacity building and market linkage. Mr. Nilesh Kumar narrated that every FPO
will get support of credit through soft loan from NABARD. He also stated that capacity
building is core portfolio of NABARD, so the existing interested FPOs need to send their
name for capacity building with the help of parental organization. On the other hand reach
of extension services and schemes also need to reach majority of the farmers as it is limited
to the few farmers of few villages. In this era of globalization and liberalization, only that
organization will prosper which have access to the changing environment of technology,
improved practices with market information. So there is great need to make such
environment available to the farmers and farmer organizations from sustainability point of
view.
Key Challenges of FPOs
Key challenges of FPOs basically divided in two parts as per discussion with stakeholders in
workshop:
Finance
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Marketing and
Capacity Building
A. Finance

Small farmers’ membership in cooperatives is 3% in Bihar against 30% at the national
level; membership of this group in Self Help Groups [SHG] is 0.8% in Bihar against 4.8
% at the national level; membership in registered organization is 0.3% in Bihar and
2.2 % across the nation. These statistics are indicative of the position of small and
marginal farmers in Bihar. There should be three or four schemes exclusively for
small and marginal farmers because the issues and concerns of this group are
different from that of other farmers.

The State Level Bankers’ Committees should track the flow of credit to this group.
Commercial banks are not keen to finance small and marginal farmers.
Requirements of a professionally produced Business Plan tend to discourage the
small farmers who have no access to the resources required to produce such a Plan.
Currently only selected groups with the appropriate political connections have
access to credit. The government should provide some guarantee to cover this risk.

FPOs in Bihar have lack of fund to regulate their activities in smooth manner. Share
capital in many FPOs has within 1-2 lakhs, so it restrict for large business. The
government should provide working capital support to FPOs to regulate their
activities.

The administrative cost of FPOs is Rs. 40000- 50000 per month, which is not bearable
by FPOs due to lack of fund or insufficient income flow in the beginning. It hampers
the growth of FPOs, so government and agencies should give handholding support in
administrative cost of FPOs for minimum 5 years.
B. Marketing

Marketing is another concern of FPOs. It is difficult for the FPOs to compete with
traders who control large part of the value chain with their network of retail shops,
access to funds and infrastructure. FPOs are also unaware about proper market to
sell their output and take remunerative price. The FPOs need handholding support in
market linkages, established ones enjoy enormous power from the linkages and
relationships built up over several years and sometimes several generations.

Farmers of North Bihar are facing problem of no entry of fruits and vegetable loaded
truck to the Patna mandi as one lane of the Mahatma Gandhi Setu is not operational
and at the same time heavy refrigerated van is also not allowed to cross the bridge
and hence fruit marketing (Litchi) is badly affected. it takes hours to cross the bridge
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too. It is a major concern for Farmers from North Bihar. The farmers of North Bihar
are not able to sell their produce (Fruit) in outside market and take remunerative
price, so the Government of Bihar should take initiative and give permission to fruits
and vegetable trucks to enter into the Mandi through giving relaxation in no entry
timing.

There is a wide price variation between the rural areas and the town/city. However
many small and marginal farmers find it easier to sell in the village haat. There are
1500 haats in Bihar. These should be developed and at least basic facilities made
available.

Lack of basic infrastructure is another bottleneck of FPOs. The existing FPOs of Bihar
has involved in business activities, they collects goods produce from farmers in one
place and sell in remunerative market. But the FPOs is facing a problem of collection
of goods for long time due to non- availability of warehousing. Warehouse in Bihar is
controlled and managed by government officials, so the government should take
initiative and give subsidies grant to FPOs for construction of warehouse. It will
increase the business volume of FPOs and also helpful in remunerative price from
market.

The FPOs do not get fertilizers direct from company. So the government should
take initiative in licensing policy and make the process easy for FPOs to take license
and purchase fertilizers directly from input company (IFFCO is not supposed to
market fertilizers other than co-operative).

Delay in issuance of input license also affects the business of the FPOs (KatiharMasahi katihar agro producer company limited)

After getting APMC act repealed, the condition and functioning of Market yard has
gone down drastically. Even the maintenance of the market yard (road, Building,
cleanliness) is not done properly and number of buyers and sellers has also come
down significantly affecting the overall marketing of produce. Govt. should come out
with such facilitation/regulation that is helpful for farmers and functioning of market
yards.
C. Capacity Building
Most of the FPOs in Bihar are run by 8th or 10th pass farmer who are incapable to take
decision and make better plan for wellbeing of FPOs in short span of time. They have lack of
leadership initiative to run the FPOs in professional manner. FPO requires an external agent
to mobilize the director and chairman in professional manner. Continuous hand-holding is
required to build capacities. The sustainability of the organization will be at stake without
this investment of time and resource. The process of planning, resource allocation and
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market linkages is too complex for farmers to handle by themselves. The promoters,
however, will have to vigilant about providing support and guarding against taking over the
decision- making role. Farmers who were 7th and 8th class pass could take up leadership role
and marketing responsibilities when they are trained properly and regularly at work rather
than class room training, so that they are capable to stand and star on their own. The
promoting organization has to assist the FPO to make access to input suppliers and facilitate
aggregated market.
Currently farmers have least access to the extension services. KVKs, created to provide
farmers access to appropriate technology, is usually too far for the small and marginal
farmer to contact. There is need to raise productivities and generate marketable surplus and
this can happen only when the farmers have the access to the technology and improved
Agri practices and can be ensured through the extension services. The facilitating NGO has
to fill this gap. Lack of basic infrastructure is another bottleneck in formation of FPOs. Roads,
access to power, storage, market yards, ripening chamber are required for marketing. One
of the bottlenecks in formation of FPOs is the large amount of complicated documentation
that is required. The farmers can neither understand them nor manage to deal with them.
The Chairman and CEOs of FPOs expressing their views
Conclusion
To strengthen the agriculture sector, there is need to have strong farmer producer
organization working closely with market to safeguard the interest of the small and marginal
farmers.
Indian Grameen Services
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At the same time all stakeholders are playing their role effectively to enabling such
environment in which FPOs are functioning well and meeting the marketing requirement
with quality and quantity. For this support agency need to provide:






Govt. to play role of facilitator instead of regulator
Market (Local Haats and Market yards) should be developed in such a way with basic
amenities that it attracts more numbers of buyers and sellers.
Reach of extension services need to be maximized so that the S&M farmers have
access to the technology and improved practices.
Initial Financial and hand holding support to be extended for five years so that
capacity of FPOs is built properly.
District Agriculture Office, ATMA and KVK should provide timely technical and nontechnical support to strengthen the FPO through timely issuance of input license,
training on technology and improved practices.
Govt. and private investment need to be encouraged for infrastructure and
processing plants.
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List of Participants:
Sl.
No.
Name
Designation
Organisation
Contact No.
E-mail ID
1
Sudhir Kumar
Mishra
Department of
Deputy Director Agriculture
(Govt. of Bihar)
9431818928
63skmishra@
gmail.com
2
Sourabh Kumar
Policy Analyst
CUTS
7891469886
[email protected]
3
Arijit Dutta
Managing
Director
Indian Grameen
Services
9831004016
arijit.d@basixi
ndia.com
4
Suraj Kumar Ray
Sr. Manager
Indian Grameen
Services
9431301446
surajkray@g
mail.com
5
Hareshwar Prasad
Singh
Assistant Vice
President
Indian Grameen
Services
7763803313
hpsingh@basi
xindia.com
6
Siromani Devi
President
7
Ratna Devi
Vice President
8
Soni Devi
Treasurer
9
Rahul Kishor
Gautam
Assistant
Manager
10
Rajesh Kumar
Sharma
Area
Accountant
11
Jitendra Yadav
President
12
13
Anil Prasad
Lal Babu Ram
Indian Grameen Services
Purnea Mahila
Kisan Producer
Company Ltd.,
Purnea
Purnea Mahila
Kisan Producer
Company Ltd.,
Purnea
Purnea Mahila
Kisan Producer
Company Ltd.,
Purnea
Indian Grameen
Services
9801468328
9973428345
7070067589
Action for Social
Advancement
7781012628
(ASA), Purnea
Gurua Agro
Producer Company 9955821202
Limited, Gaya
President
Bankey Dham Agro
Producer Company 9430971609
Limited, Gaya
Chairman
Adarsh Farmer
Producer Company
9006416315
Ltd., Kudhani,
Muzaffarpur
rkg.rahulkisho
[email protected]
purnea_aoa@
asabhopal.org
Page 8
14
Panchanan Ingle
Sr. Manager
15
Rajendra Mandal
Chairman
16
Jay Prakash Ray
CEO
17
Arun Kumar Tiwari
CEO
18
Vivek Kumar
CEO
19
Rajesh Kumar
CEO
20
Bhanu Pratap Singh
Branch
Manager
21
Rama Shankar Shah
22
Swatantra Singh
EDA Rural System
Pvt. Ltd.
Mansahi Katihar
Agro Producer
Company Ltd.,
Katihar
Prakash Agro
Producer Company
Ltd., Hajipur
(Vaishali)
Baba Someshwar
Nath Agro
Producer Company
Ltd., Areraj, E.
Champaran
Bapudham Agro
Producer Company
Ltd., Chhota
Bariyarpur, E.
Champaran
Baudhi Devi Agro
Producer Company
Ltd., Chakiya,
E. Champaran
9801858395
panchanan@
edarural.com
9931638443
9471028179
jayparkashray
@gmail.com
9006528062
arun.tiwari72
[email protected]
m
9471080293
kumarvivek69
[email protected]
9572831979
rkrai143@yah
oo.com
IG International
Pvt. Ltd., Patna
7858020884
bhanu.pratap
@iginternatio
nal.net
Trader
Maa Mundeshwari
Fruiti
9334144217
Trader
IG International
Pvt. Ltd., Patna
7858020884
Prakash Agro
Producer Company
9934424530
Ltd., Hajipur
(Vaishali)
Bagwan Budh
Krishak Club
9801209588
(ATMA)
23
Dileep Pal
Dealer
24
Mahesh Prasad
Singh
Dealer (Kisan
Club)
25
Baiju Lal Singh
Chairman
Farmers Club,
Diggha Fatehpur
9801079128
baijulal.singh
@gmail.com
26
Dharmendra
Sriwastwa
Sr. Manager
Indian Grameen
Services
9835325211
dharmendra.s
@basixindia.c
om
Indian Grameen Services
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27
Shanti Bhushan
Assistant
Manager
Indian Grameen
Services
9771070651
28
Abhishek Kumar
Assistant
Manager
Indian Grameen
Services
7488435811
29
Kanhai Kumar
Assistant
Manager
Indian Grameen
Services
9473006200
30
Nilesh Kumar
Assistant
Manager
NABARD, Patna
9155616414
31
Tapan Kumbhkar
Office Assistant
Indian Grameen
Services
9234475994
32
Sunil Kumar Sinha
Executive Accounts
Indian Grameen
Services
8797050588
sunilkumar.s
@basixindia.c
om
33
Anil Kumar Singh
Director
Assign technosoft
Ltd.
708009003
anil@assignte
chnosoft.com
Ashish Kumar Singh
Marketing
Executive
Assigntechnosoft
Ltd.
9080009001
ashish@assig
ntechnosoft.c
om
34
sbhushan06@
yahoo.co.in
abhishek_um
[email protected]
n
kanhai.kumar
@basixindia.c
om
nilesh.kumar
@nabard.org
Acknowledgement:
This document has been produced by Indian Grameen Services, Bihar with the financial
assistance from CUTS International, Jaipur under the project entitled Sustainable
Development Investment Portfolio (SDIP) funded by Department of Foreign Affairs and
Trade (DFAT), Government of Australia. The views expressed here are those of IGS, Bihar
and can therefore in no way be taken to reflect the positions of CUTS International or
DFAT.
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