DMPQ-Discuss the role of FPO’s (Farmer producers organizations) in helping small and Marginal farmers.

. One of the reasons for agrarian distress is the declining average size of farm holdings. The average farm size declined from 2.3 hectares (ha) in 1970-71 to 1.08 ha in 2015-16. The share of small and marginal farmers increased from 70 per cent in 1980-81 to 86 per cent in 2015-16. At the state level, the average size of farm holdings in 2015-16 ranged from 3.62 ha in Punjab, 2.73 in Rajasthan and 2.22 in Haryana to 0.75 in Tamil Nadu, 0.73 in Uttar Pradesh, 0.39 in Bihar and 0.18 in Kerala.

Small farmers face several challenges in getting access to inputs and marketing facilities. A number of innovative institutional models are emerging and there are many opportunities for small and marginal farmers in India. A group or collective is one of the main institutional mechanisms to help the country’s marginal and small farmers.

In the last decade, the Centre has encouraged farmer producer organisations (FPOs) to help farmers. Since 2011, it has intensively promoted FPOs under the Small Farmers’ Agri-Business Consortium (SFAC), NABARD, state governments and NGOs. The membership of an FPO ranges from 100 to over 1,000 farmers. Most of these farmers have small holdings. The ongoing support for FPOs is mainly in the form of, one, a grant of matching equity (cash infusion of up to Rs 10 lakh) to registered FPOs, and two, a credit guarantee cover to lending institutions (maximum guarantee cover 85 per cent of loans not exceeding Rs 100 lakh). India has 5,000 to 7,500 such entities as per different estimates and a majority of them are farmer producer companies. The budget for 2018-19 announced supporting measures for FPOs including a five-year tax exemption while the budget for 2019-20 talked of setting up 10,000 more FPOs in the next five years.

Some studies show that we need more than one lakh FPOs for a large country like India while we currently have less than 10,000. Among other things, we emphasise on three issues for the improvement of FPOs in order to help the small farmers. First, the above issues such as working capital, marketing, infrastructure have to be addressed while scaling up FPOs. Getting credit is the biggest problem. Banks must have structured products for lending to FPOs. These organisations lack professional management and, therefore, need capacity building. Second, they have to be linked with input companies, technical service providers, marketing/processing companies, retailers etc. They need a lot of data on markets and prices and other information and competency in information technology. Third, FPOs can be used to augment the size of the land by focusing on grouping contiguous tracts of land as far as possible — they should not be a mere grouping of individuals. Women farmers also can be encouraged to group cultivate for getting better returns. FPOs can also encourage consolidation of holdings.

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