The Covid-19 pandemic has been a defining moment in public policy discourse. It has impacted all aspects of the economy across regions and countries. The trade-off between life and livelihood was a difficult choice for most governments. Strict enforcement of lockdown across the globe impacted economic activities, employment and income. India was no exception, witnessing contraction in Gross Value Added (GVA) by 6.2%. However, one sector that withstood the tsunami was agriculture, registering an above-average real growth of 3.6% in 2020–21. Agriculture was a cushion that could absorb the shock and provided much-needed succour to 49% of the total households (PLFS, 2020) who continue to depend on it as a primary livelihood option. It is but natural that special measures were to be taken to strengthen the sector.
These periods of crisis also offer opportunities to governments across the world to usher in administrative innovations. One of the initiatives that seeks to re-engineer the agri landscape of the country is an ambitious target of creating new 10,000 farmer collectives, i.e. Farmer Producer Organisations (FPOs), in the country. The legal origin of the concept can be traced to the Alagh Committee Report of 2000. This enabled creation of hybrid entities-producer companies with cooperative intent. There are a total of 14,213 producer companies on the rolls of the Ministry of Corporate Affairs as on 31.03.2021. Around 11,715 producer companies got registered after 2016–17. What distinguishes the present effort is the mission-mode approach. The total outlay is to the tune of Rs 3,000 crore to be spent over next three years, bringing together approximately 3 million farmers across the country. Unlike other agrarian interventions, there appears to be a broad consensus on the objective, intent and purpose of the scheme.
A flagship programme of the Ministry of Agriculture and Farmers’ Welfare, it is being implemented by organisations with pan-India presence such as NABARD, NAFED, Small Farmer Agribusiness Consortium (SFAC), National Cooperative Development Corporation (NCDC), etc. The basic objective underpinning the effort is to provide economic depth to small and marginal farmers and make agriculture a viable livelihood option for them. It will enable such collectives to establish value chains associated with identified agri-commodities by leveraging the available government schemes, enhance bargaining power, promote disengagement with the intermediaries through direct access to markets/market players and facilitate creation of effective pressure groups in the agrarian sector. Though the schematic outlay seems promising to various stakeholders, implementation at the grassroots has its own set of challenges.
In India, any social formation cannot be divorced from the realities of caste, class and gender. The asymmetry of power in a rural set-up will invariably get reflected in the power structures that such new-age social formations will create. Instances of dominant land-owning classes or even middlemen traders occupying vantage positions within the FPOs as directors in the board are not uncommon. This results in converting an informal exploitative mechanism into a formal one. It will be crucial on the part of the implementing agencies to undertake periodic social audits to ensure that new collectives conform to the principles of social and economic inclusion, gender participation and remain politically neutral blocks.
The administrative innovation that distinguishes present efforts of the government from past interventions is the responsibility entrusted to an intermediary group called the Cluster Based Business Organisation (CBBO) and the creation of a new cadre of agri-professionals called Local Resource Persons (LRPs). The competence, commitment and capacity of the two will decide the ultimate outcome.
The CBBOs are envisaged as professional civil society organisations drawing personnel from diverse backgrounds. Newly formed FPOs will be provided with necessary legal, financial, agronomic and marketing support through various phases of origin, growth and maturity through such professional bodies. Accordingly, selecting CBBOs with necessary credentials and periodic weeding out of non-performing ones that consistently fail to meet various deliverables are critical to adhering to various timelines associated with the scheme. The CBBOs are expected to keep experienced personnel to oversee implementation and therefore, timely payment to them should be prioritised. Most of the CBBOs do not have deep pockets and consistency in cash-flow benchmarked to deliverables is crucial to retain talent. Delayed payments have been the bane of the development sector. An appropriate SOP should be devised to avoid the pitfalls of earlier experiments. The other component for success or failure is the foot-soldier—Local Resource Persons (LRPs), who may eventually don the role of CEOs of the FPOs. Most of them hail from a rural background, with little exposure to the world of trade or to the nuances of commercial entities. What they may be lacking is compensated by the excitement of associating themselves with a venture that has the promise of transforming the rural-agri landscape. So capacity building should be an area of focus. Appropriate curriculum and career pathways should be designed that would periodically train potential FPO leaders in human resource management, demand-aggregation, logistical planning and financial management. The responsibility should not be left to the CBBOs alone. The government should identify reputed institutional partners like IIMs, IRMA, etc., to deliver content and certify successful candidates. This will make the job aspirational for rural educated youth and incentivise their participation in the national project.
Last but not the least, such a mammoth exercise in social experimentation in the agrarian sector can only succeed if various departments of the Centre and states come together on a common platform. Cutting through departmental silos, orientation and training of key officials manning relevant departments and timely inter-departmental coordination are key to the success of the governmental intervention. For instance, lack of clarity on the role and legal status of FPOs amongst the bankers is leading to inordinate delay in opening of bank accounts, adversely impacting business prospects of the newly formed entities. Absence of standardised procedure for issuing farmer identification certificates has resulted in rampant misuse by unscrupulous elements in floating FPOs using forged certificates. The certificates establish credentials of a farmer, making him eligible to be a member of the collective. A mechanism to ensure integrity of such certificates should be worked out to provide comfort to officers of the Registrar of Companies. The collectives being tax-exempt entities, due caution and care are needed, lest they are used as vehicles for tax evasion and money laundering. The fact that some 6,000 producer companies got registered during the year 2020–21, under conditions of restricted mobility on account of Covid-induced lockdown, does not sit comfortably with the overall scheme of things.
The FPOs as new-age farmer collectives have immense transformative potential for a country like India. If implemented with the right intentions and active involvement of various public and private stakeholders, this will not just boost agriculture productivity but also create an enabling ecosystem for the value chains associated with each agri-commodity. India can thus become an important player in the global food value chain.
Sambit Tripathy
Former IRS officer and Founder of Livelihood Alternatives, a start-up