The programme to promote Farmer Producer Organisations (FPOs) can prove a game changer for agriculture, if they are allowed to function as professional business enterprise. Examine (200 Words)
Refer - Business Standard
Enrich the answer from other sources, if the question demands
IAS Parliament 4 years
KEY POINTS
· FPO(farmer producer organisations) virtually the hybrids of cooperative and joint stock companies are being envisaged as the implicit third sector of the economy other than the private and public sectors.
· They are supposed to possess the virtues of both the cooperatives and the private companies but without inheriting their vices.
· However, the experience of their functioning over the past decade indicates that they face formidable constraints in accessing institutional finance, marketing farm produce, and entering into contract farming deals.
· Banks are usually wary of lending to FPOs because they do not have any assets of their own to offer as collateral.
· Most of the assets belong to their member farmers. However, the way the government seeks to tackle this issue under the new scheme does not inspire much confidence in its outcome.
· The two main measures mooted for this purpose are equity infusion and creating a Credit Guarantee Fund of up to Rs 1,000 crore under the National Bank for Agriculture and Rural Development.
· The government equity participation can potentially pave the way for unwarranted official, as also political, meddling in their affairs, which can be ruinous for them. The proposed credit fund, on the other hand, is too meagre to meet the needs of around 5,500 existing and 10,000 proposed FPOs.
· The FPOs face handicaps also in striking contract farming deals on behalf of their member farmers. The contract farming laws of most states, including the Model Bill drafted by the Centre, provide only for agreements with individual farmers and not with their groups or FPOs.
· This lacuna needs to be rectified to enable the FPOs negotiate better deals with agro-industries and ensure fulfilling commitments.
· The government also needs to create infrastructure and facilities for capacity building and professional training of human resource for manning the FPOs.
· Unless these issues are suitably addressed, the FPOs might find it hard to survive, let alone help raise the income of their member farmers.
Shivangi 4 years
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IAS Parliament 4 years
Good attempt. Keep Writing.
