What are the major functions of Farmer Producer Organisations? Discuss the various challenges faced by them along with the remedial measures (200 Words)
Refer - Business Standard
Enrich the answer from other sources, if the question demands.
IAS Parliament 5 years
KEY POINTS
Farmer Producer Organisation (FPO) is an entity formed by primary producers, viz. farmers, milk producers, fishermen, weavers, rural artisans, craftsmen. An FPO can be a Producer Company, a Cooperative Society or any other legal form which provides for sharing of profits/benefits among the members.
Major Functions
· To establish a collection centre to aggregate various lots of farmers, FPOs act as a custodian and facilitators for the member farmers produce
· Farmers remain the owners of their produce, price risk & return
· FPOs should aggregate similar quality of produce to make one lot, Separate lots should be made for different qualities
· Basic cleaning should be done by farmers for better price realization , Farmers to deliver produce at FPO’s collection centre.
· FPOs to organize transport from collection centre to nearest e- NAM mandi & sensitize farmers to bring bigger lot sizes for ease of operations
Challenges faced by FPOs
· The shares of FPOs are not traded on the stock markets to forestall any risk of hostile takeover by way of equity acquisition.
· Difficulties in securing institutional finance, inability to operate in the regular agricultural markets and the lack of legal recognition under the contract farming regulations.
· The banks are usually wary of granting loans to the FPOs as they do not have assets of their own to serve as collaterals.
· Consequently, the FPOs have to rely on loans from non-banking financial companies or micro-finance companies to raise working capital at very high interest rates.
· The facility of cheap bank loans with liberal subvention of interest by the government that is available to individual farmers is denied to the FPOs, though they are purely farmers’ organisations.
· Many other kinds of concessions, tax exemptions, subsidies and benefits provided to cooperatives, startups or other grassroots farm bodies have not been extended to the FPOs.
· They also usually face resistance in operating at the regulated mandis because of the resistance offered by the licensed traders and their cartels who wield significant hold over these markets.
Remedial Measures
· Providing FPOs easy access, affordability with respect to institutional finance.
· Benefits enjoyed by cooperatives needs to be extended to FPOs gradually.
· FPOs to be brought under the scope of interest subvention scheme.
Raj 5 years
Kindly Review. Thanks!!
IAS Parliament 5 years
Good answer. Keep Writing.
Raj 5 years
AP 5 years
Answer.
IAS Parliament 5 years
Try to include about lack of accessibility to institutional finance, lack of legal recognition under contract farming regulations etc. Keep Writing.
