Skip to main content

Farm laws' 'unbridled' monopoly to MNCs: Can Amul-type coops rescue farmers?

By Moin Qazi* 
Three new farm Acts were recently introduced in the country. The most important of these, the Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Act, 2020 is aimed at putting an end to the monopoly of the Agriculture Produce Marketing Committee (APMC) mandis. Earlier, under the 1964 APMC Act, all the farmers were required to sell their produce at the government-regulated mandis.
The arhatiya (middlemen) in such cases helped the farmers in selling their crops to private companies or Government agencies. While APMCs will continue to function, farmers will now have a wider choice. But the hazards in the new dispensation is that multinationals may enter the arena, and absence of proper regulation may give them unbridled monopoly. The experiences of such makeovers in several other fields have already shown the ugly side of globalisation.
But one of the powerful ways that growers can serve as their own middlemen is through a livelihood and development strategy that collectivizes the smaller primary producers through locally-managed Farmer Producer Organizations (FPOs) and integrates them into an inclusive value-chain. It is a sustainable, market-based approach in which resources of member farmers (for example, expertise and capital) are pooled to achieve more together than they can alone.
It enables members to see their work through an entrepreneurial lens and confers economies of scale, better marketing and distribution, more investible funds and skills, greater bargaining power, access to credit and insurance, sharing of assets and costs, opportunities to upgrade skills and technology, and a safety net in times of distress. The best-known example of an FPO is that of Amul (Gujarat Cooperative Milk Marketing Federation Ltd.) which is a dairy cooperative with over three million producer members.
In this model thousands of scattered small farms are systematically aggregated and provided centralized services around production, post-harvest, and marketing. This helps help reduce transaction costs of the farms for accessing the value chains and makes it easier for small farmers to access inputs, technology, and the market. It also opens opportunities to bring primary processing facilities closer to the farm gates and help producers gather market intelligence and manage the value chain better with digital agriculture tools.
An FPO is a hybrid between a private limited company and a cooperative society. Hence one can see it enjoy the benefits of professional management of a private limited company as well as reap the benefits of a cooperative society. Smallholder farmerproducer groups are a key medium to build scale on account of the confidence, support and buyer/ seller power they provide.
They are able to achieve economies of scale through postharvest infrastructure (collection, sorting, grading facilities), establishment of integrated processing units, refrigerated transportation, pre-cooling or cold stores chamber, branding, labeling and packaging, aggregation and transportation, assaying, preconditioning, grading, standardizing and other interventions. 
The key benefit is the marketing support that links producers to mainstream markets through aggregation of subsistence-level produce into economic lots that can significantly raise the share that peasants get of the money people pay for their food.
The FPOs are owned and governed by shareholder farmers and administered by professional managers. They adopt all the good principles of cooperatives and the efficient business practices of companies and seek to address the inadequacies of the cooperative structure. The best way for these organizations is to leverage their collective strength through a full value chain from the farm to the fork.
The underlying principle is similar to that of the full stack approach. This approach makes the sponsor, catalyst or promoter responsible for every part of the experience. In short, it is a whole-farm systems approach. It creates a complementary support ecosystem that boosts farm yields, reduces negative environmental impacts, and increases market access and smallholder farmer incomes. It also provides sustainability interventions including sustainable irrigation products and practices. Moreover, the value chain uses a business approach in order to make it viable.
Apart from the collective strength that group synergy generates, the support structures help in building the capacities of producers to deal with input suppliers, buyers, bankers, technical service providers, development promoting agencies and the Government (for their entitlements), among others.
One of its important roles is linking them to reliable and affordable sources of financing in the funding ecosystem to meet their working capital, infrastructure, development and other needs. The collective works to reorient the enabling environment by influencing policies in this direction. The extension services available through the collectives include augmenting farmer capacity through agricultural best practices, agronomic advice, training on use of bio-fertiliser and pest management and modern harvesting techniques, and access to optimal environmental practices. 
The success of a collective hinges on many factors -- the technical support it receives, its institutional base, social and professional composition, land access and cropping patterns of members and adaptation of the model to the local context. Elite farmers are significantly more likely to participate than the less privileged. They often become administrative members and use services substantially more than rank-and-file members. It is, thus, necessary to strengthen democratic processes in these institutions.
Most promoters of the value chain are now successfully using the subsector approach which allows for a focus on specific subsectors and helps in strengthening the ecosystem within which they are able to transition from a comparative to a competitive advantage. 
One of the powerful ways that growers can serve as their own middlemen is through a livelihood and development strategy that collectivizes the smaller primary producers
The value chain also facilitates capacity-building support and use of modern tools including technology that can help to improve weather forecasting, agricultural processing, soil health monitoring crop identification as well as damage control, and mapping of available water resources.
Some of these collectives are using digital tools to make farming climate-resilient, nutrition sensitive, and inclusive. The farmers are also able to achieve increase in quantity, quality, and consistency of production of crops. For achieving better scale, the value chain needs to steward limited resources and build production systems that natural systems can support over time.

This logic embraces the use of soil management regimes that incorporate modest, targeted use of synthetic fertilizer to boost farmer incomes and production without affecting the quality of soil. The technical support is complemented by better water management through rainwater harvesting and recharging of ground water table; introduction of multi-cropping and diverse agro-based activities and use of low-cost and small plot irrigation technologies.
Consolidation of smallholders’ land holdings through cooperatives can also create synergies, especially for the leasing of large equipment or bulk input orders. It also helps in creating cold storage for controlling post-harvest losses. Financing for setting up micro-irrigation facilities and rainwater harvesting modules would help create an infrastructure for sustainable water supply and hence aid farm productivity.
FPOs should also be encouraged to participate in MSP-based procurement operations. eNAM can connect farmers with distant buyers. However, the biggest limitation of eNAM and other similar programmes seems to be that most farmers are not tech-savvy. This is further compounded by low internet penetration and erratic electric supply. We need robust farmer-producer institutions which will have capital and the risk-taking ability to set up processing zones which are critical for preventing losses on account of rotting of foodgrains.
There are several other structural barriers that have to be overcome. First and foremost is the capital constraint. FPOs are initially not able to raise share capital from their member-farmers. They also cannot go to the share market to raise capital unlike the privately-owned food processing companies.
The next is working capital. FPOs have to deal in cash as their member-farmers need the money desperately at harvest time to pay input suppliers and labour, repay crop loans and meet their household expenses. FPOs need higher working capital than the private sector. This is where dairy cooperatives score better since milk is produced and consumed daily and farmers can wait for a few days to get paid.
The third barrier is managerial capability. Many FPOs are struggling on account of lack of handholding support. Many FPOs lack professionalism. FPOs can hire well-paid professionals if they reach a certain scale as Amul and several other, large, successful cooperative dairies have done. But FPOs will have to reach adequate scale to pay appropriate salaries to these professionals. 
The inclusion of small famers in supply chains requires substantial public investment in agronomic training, irrigation, soil-water conservation, and an overall improvement in the support ecosystem which small famers cannot afford.
While FPOs remain the most trusted allies for farmers, they need to be revitalised by infusing modern design features without diluting their traditional ethos and philosophy. It would require innovative collaborations between state, civil society, and the private sector. In the light of new insights, we need to revisit the model and harness the basics; tweak the traditional design features instead of reinventing the wheel.
Experience tells us that continuous training, capacity-building and member awareness programmes can reinforce the key elements and help solidify the relationship between members, field staff, professional managers, financial institutions and directors and build a strong bond that can equip the collectives with the will to fight adversities and exploit opportunities
FPOs can grow as viable, member-controlled, self-sustaining farmer businesses if they constantly work on reshaping the interaction of their members with themselves. The failure of cooperatives is often rooted in the inability of their promoters to understand this interaction. A self-regulatory body designed to protect the interest of FPOs and farmer members can serve a useful purpose.
We need robust farmer-producer institutions which will have capital and the risk-taking ability to set up processing zones which are critical for preventing losses on account of rotting foodgrains. Together with FPOs, farmers can be their own middlemen and India can finally see the dream of farmers’ incomes being doubled being realised.
---
*Development expert

Comments

TRENDING

'Blatant violation' of law by Central government in making NREGA payments

By Our Representative  In September third week, NREGA workers across the country were mobilised for two day so raise their issues and submit a memorandum to the Prime Minister. Organised the NREGA Sangharsh Morcha (NSM), a collective of groups that work with NREGA labourers across the country, workers from 13 states -- Andhra Pradesh, Bihar, Chhattisgarh, Gujarat, Haryana, Jharkhand, Karnataka, Madhya Pradesh, Odisha, Rajasthan, Telangana, Uttar Pradesh and West Bengal -- carried out Kaam Do Abhiyaan, staging demonstrations and rallies against what they called blatant violation of law by the Central government in making NREGA payments. While NREGA has had very positive impacts, it has lately become fruitless, exploiting labour, even though workers who have put in honest hard work have to wait for their wages endlessly, it was suggested.  In such a situation, there is a need to firm up NREGA implementation and end systematic corruption to ensure that workers get their basic NREGA entit

Fascism on prowl? Religious meet 'deeply pained' at silence of Church, bishops, priests

Counterview Desk  The ‘Forum of Religious for Justice and Peace’which held its 17th National Convention at the Montfort Social Institute, Hyderabad, Telangana from 22 to 24 September 2022 on the theme “Deepening our Identity as Religious: Responding to the Signs of the Times”, has expressed concern “at the deteriorating situation of our nation on every front”, especially stating, “Fascism seems to have come to stay” in India. At the same time, the convention, which took place with the participation of 60 persons from 16 states representing 20 religious congregations, in its unanimously-adopted statement added, “We have reached abysmal depths on every parameter: be it social, economic and political”, underlining, “The poor in India become poorer every day; the rich and powerful continue to profiteer at their expense and amass scandalous amounts of wealth.” Text: We, members (63 women and men Religious, from 16 states representing 20 Congregations) of the Forum of Religious for Justice

Muslim intellectuals met Bhagwat, extra-constitutional authority 'like Sanjay Gandhi'

By Shamsul Islam*  In a significant development a delegation of five Muslim intellectuals namely former chief election commissioner SY Quraishi; former senior bureaucrat Najeeb Jung; former AMU vice-chancellor and Lt Gen (retd) Zameer U Shah; politician-cum-journalist Shahid Siddiqui (presently with RLD); and businessman Saeed Shervani [Samajvadi Party] met RSS Supremo Mohan Bhagwat at RSS Delhi headquarters. The meeting was kept secret for reasons known to the participants and was held in August. According to the Muslim intellectuals the meeting held in “a very cordial” atmosphere continued for 75 minutes whereas time allotted was 30 minutes! In a post-meeting justification of the parleys Quraishi stated that their main concern was “the insecurity being increasingly felt by the Muslim community in the wake of recurring incidents of lynching of innocents, calls by Hindutva hotheads for genocide and the marginalisation of the community in almost every sphere”. This delegation consistin

Whither Govt of India strategy to reduce import dependence on crude oil, natural gas?

By NS Venkataraman*  India presently imports around 80% of it’s crude oil requirement and around 50% of its natural gas requirements . As the domestic production of crude oil and natural gas are virtually stagnant and the domestic demand is increasing at around 7% per annum, India’s steadily increasing dependence on import of the vital energy source is a matter of high energy security concern. This is particularly so, since the price of crude oil and natural gas are considerably fluctuating / increasing in the global market due to geo political factors, which are beyond the control of India. India has promised to achieve zero emission by the year 2070, which mean that the level of emission has to start declining at slow and steady rate from now onwards. It is now well recognized that global emission is caused largely due to use of coal as fuel and natural gas as fuel and feedstock. While burning of coal as fuel cause emission of global warming carbon dioxide gas and sulphur

Rajasthan cops 'halt' Gujarat Dalit women's rally: homage to untouchability victim boy

By Our Representative  In a surprise move, the Rajasthan police stopped a Dalit women's rally from Gujarat on the borders after it crossed Gujarat alleging that it would "disturb peace" in village Surana, Jalore district, where the gruesome incident of death of a Dalit boy took place on August 13 after he was brutally beaten up by his teacher on touching the drinking water pot. Sources said, while the Gujarat government had "no objection" in allowing the rally, which originated from the Dalit Shakti Kendra (DSK), an empowerment-cut-technical institute for teens founded by human rights leader Martin Macwan, on September 24 morning, the Rajasthan police stopped it for two and a half hours before allowing it to proceed to Surana. The decision to take out a women's rally was taken at a DSK meeting on September 5 following a condolence meeting of the NGO Navsarjan Trust, also founded by Macwan, activists committed to work against caste-based discrimination, orga

Why Bose's India Gate statue suggests RSS, BJP need violence-loving ‘Hindu’ Netaji

By Prem Singh*  In a TV channel debate, a BJP spokesperson and anchor shared and served a lie that Netaji Subhas Chandra Bose's daughter in her letter to the Prime Minister has alleged that the Congress kept devaluing Netaji to further Gandhi's non-violence; because Netaji had taken the path of liberating the country through violence mode by forming the Azad Hind Fauj (INA). They also praised the Bombay Royal Naval Mutiny of 1946 to confirm that the country got its independence through a violent route. I stated that I have read the letter of Netaji's daughter, and there is no such allegation in it. But a lie told in the intoxication of power is bound to be blatant. Netaji's daughter Anita Bose Pfaff, even in the past, has already requested some earlier prime ministers of the country to bring back the mortal remains of her father from Japan to India. In none of the letters she has spoken about devaluation of her father’s role in the freedom movement on the basis of Gandh

Buddhist shrines were 'massively destroyed' by Brahmanical rulers: Historian DN Jha

Nalanda mahavihara By Our Representative Prominent historian DN Jha, an expert in India's ancient and medieval past, in his new book , "Against the Grain: Notes on Identity, Intolerance and History", in a sharp critique of "Hindutva ideologues", who look at the ancient period of Indian history as "a golden age marked by social harmony, devoid of any religious violence", has said, "Demolition and desecration of rival religious establishments, and the appropriation of their idols, was not uncommon in India before the advent of Islam".

Is coal import dependence of more than 50% by 2047 of any relevance to India?

By Shankar Sharma*  I have read the article " Building Resilience in India’s Power Sector " by N Vedachalam, released by the Observer Research Foundation, with a lot of interest. I expected it to provide few useful recommendations to our authorities in charting out a sustainable pathway to green energy transition much before the climate catastrophe push our communities to the precipice. But I am sorry to say that the overall discussions or the message implied in the article disappointed me. I was expecting the article, coming from an engineer with past experience in the power sector, to discuss the much needed recommendations to put the power sector on a sustainable developmental pathway. But I could notice mostly technical jargon and a lot of statistical information, which may already be available in the public domain.   The article also seems to have simply accepted what some of the official agencies seem to have indicated as inevitable for the power sector in our country;

'True decolonisation move': Demand to name new Parliament building after Ambedkar

By Kancha Ilaiah Shepherd*  In recent weeks, there has been a demand for the new Parliament building being constructed on the revamped Central Vista in New Delhi to be named after the architect of the Constitution and anti-caste leader BR Ambedkar. On September 14, the Telangana Assembly passed a resolution urging the Centre to name the new Parliament building after Ambedkar. The Bharatiya Janata Party was absent during the debate about the resolution. The next day, the Telangana Rashtra Samithi-led government declared that the new secretariat in the centre of Hyderabad would be named after Ambedkar. Chief Minister K Chandrasekhar Rao added that he would write to Prime Minister Narendra Modi requesting him to name the new Parliament building in Delhi “Ambedkar Parliament”. The demand is finding resonance among civil society groups too and has led to social media discussions as well as public mobilisation.  But two questions arise: Should a Parliament that makes laws for a nation over a

Government 'fails to take up' Indian migrants' unpaid wages issue with other countries

By Rafeek Ravuther, Chandan Kumar, Dharmendra Kumar*  The migrant workers were one of the most vulnerable sections during the pandemic. India experiences large-scale movement of migrants internally and internationally. After the outbreak of the pandemic, migrant workers continued to face injustice especially in getting wages in expedited manner. In the international context, India, the home of 9 million cross-border temporary labour migrants, carried out the largest repatriation exercise ‘Vande Bharat Mission’. Even though the Indian government addressed the immediate requirement of repatriation, it failed to understand and recognise their post-arrival grievances, like back wages, social protection etc. Recently many workers were deported from the middle- east region. Amidst the establishment of grievance mechanisms such as Consular Services Management System (MADAD) and helplines in Pravasi Bharatiya Sahayata Kendra (PBSK), the unresolved grievances remain high. The number of unresolv