“Producer’s Companies are the future of farmers in India” exclaimed Saurabh, my colleague, who had been witnessing their meetings for the past 2 years. A Producers Company is a corporate having one or all of the following as their objective: Production, harvesting, procurement, grading, pooling, handling, marketing, selling , export of produce and import of materials for the members’ benefits. The following example explains how a producers company is benefiting farmers of Chhindwara district, Madhya Pradesh:
Satpura Self Reliant Farmers Producer Company Limited was established in 2010 by Reliance Foundation. They presently work with 21 villages.
Due to increasing number of middlemen, lack of access to the market at the right time and heavy logistics cost, the farmers here had to shell out a huge chunk of their income. Satpura Producers Company has provided them with numerous benefits.
The company has tied up with manufacturers who provide them with seeds for agriculture. Every village has an appointed volunteer who collects information about the farmers’ demand for seeds. Such information for all the villages is compiled together and seeds are purchased directly from the manufacturer. The farmers thus get direct access to raw materials without the involvement of any middlemen.
Before the Producers Company, farmers had to arrange for transport to take their final produce to the market. They had to sell it at whatever price was being offered on that particular day, since they could not afford to come back again at a later time (distress selling). Now, the Producers Company goes to every village, on demand, to buy their final produce at one fair rate. They hold back all the produce until the market has to offer a rate higher than the one they purchased it for. After accounting for all operational expenses of the company, the remaining profit is distributed amongst all shareholders, who are also farmers. Although the company has now reached a level where the farmers are benefited to a good extent, they had to face a lot of challenges in the initial years.
Given the lack of money during the gestation period, they had to appoint less qualified staff who were not properly aware of the operations of a producers company. Secondly, gaining farmers’ trust was quite hard. For a marginal farmer who has no idea where his income for the next week would come from, expecting him to become part of a company that might give him benefits after a few years was a lot to ask for. Thirdly, choosing the right kind of representatives from each village was vital. These people would be the connecting links between the producers company and the village. Ensuring that they had a good rapport with everyone and were willing enough to actually donate their time and effort was tricky.
It has almost been 6 years since the inception of this company. It is now almost completely run by the farmers’ themselves. They have also extended their operations towards poultry farming. Reliance merely acts as a guiding hand to them. The farmers’ now have a sense of how to run a company. A lot villages have also appointed women as their representatives. Keeping aside all agricultural benefits, I think this has had a much bigger role to play in uplifting the community.
Upendra Kharpuse, Reliance Foundation
Rajesh Amre, Producer Company
This is well written Simant and you have understood the concept of FPO quite well and quite quick. I hope the work has started to pick up?
Thank you! Picking up super quick!