An analysis of constraints affecting FPO performance in Telangana

Introduction

Agriculture in India is mostly production-oriented, with a significant number of fragmented small holdings, and it plays an essential role in the Indian economy. Small-holder farmers are at the basis of agricultural output, with 85% of operational holdings being less than or equal to two hectares, and 66% being less than one hectare (Singh, 2012) [6] . Small farmers in India face a variety of issues, including a lack of information, poor communication networks with larger markets, limited access to credit and high credit costs, exploitation of intermediaries in procuring inputs and marketing the produce, a small scale of operation, and, in some cases, harsh loan recovery practices. Several approaches have come about to address the issues confronting marginal and small farmers. Agricultural cooperatives established under the Cooperative Credit Societies Act of 1904 have been the most common type of farmer collective, however cooperatives have many flaws that limit effective collective action. As a result, the Indian government has been assisting a new type of collective known as Farmer Producer Organisations (FPOs) in addressing the problems faced by small and marginal farmers, particularly in providing efficient inputs, improving access to investments, technological advancements, and easy market access. According to the Food and Agriculture Organisation (FAO, 2007) [4] , 'farmers and rural producers' Organisations (FOs) are independent, non-governmental, membership-based legal institutions comprised of part-time or full-time self-employed small holders and family farmers, pastoralists, artisanal fisheries, landless people, women, small entrepreneurs, and indigenous people. The idea behind Farmer Producer Organisations (FPOs) is to bring together producers, particularly marginal and small farmers, in order to create a beneficial association that can jointly address numerous agricultural difficulties such better access to capital, technology, inputs, and markets. The primary goal is to provide backward linkages to small farmers for input services such as credit, seeds, fertilizers, insurance, extension, and knowledge services, as well as forward linkages such as marketing, processing together, and market-led agricultural production (Mondal, 2010) [5] . FPOs are thought to provide farmers more leverage through collective bargaining and by fostering an entrepreneurial spirit in a sector where small and marginal farmers would otherwise only be concerned with subsistence farming. FPOs have improved the economic and marketing skills of their farmer members, but they still face challenges that limit their effectiveness. Therefore, it was found that in order to improve their performance, the limitations faced by the farmer members of particular FPOs should be identified. So, an effort was made to learn about the difficulties that the farmer members experienced.

Research Methodology

A descriptive research design was adopted for the study. The state of Telangana was chosen purposively for the study as the investigator hails from this state. Mahaboobnagar district was selected purposively as the district is actively promoting number of FPOs under PRODUCE fund (source: NABARD). Two POPI's (Producer Organization Promoting Institutes) i.e. Child Care Organization (CCO) NGO from Nagarkurnool and Society for Integration and Rural Development (SIRD) NGO from Wanaparthy were purposively selected for the study as they are actively promoting FPOs from the last five years. Four FPOs were selected randomly from two different promoting institutes present in the Wanaparthy and Nagarkurnool mandals respectively. From each of the selected FPO, thirty farmers were selected by following random sampling procedure. The sample constituted of 120 producer members. The list of constraints was made from relevant review of literature and by conducting an opinion survey of the farmers and the findings were presented in table 1. Constraints which included Operational and technical constraints, organizational constraints, marketing constraints, constraints related to NGO support were presented to respondents. They were asked to tick mark the constraints related to which they faced in Farmer Producer Organisations. Percentage and frequency analysis were done to get meaningful interpretation of results.

Results and Discussion

The data in Table 1, presents the various constraints identified by members of FPOs which were categorized under four subheads i.e. Operational and technical constraints, Organisational constraints, Marketing constraints, constraints related to Producer Organisation Promoting Institution (POPI) support. Table 1, showed that majority (93.33%) of the respondents were facing problems with respect to irregular procurement of produce and ranked it 1 st followed by Lack of well-developed storage facilities (86.66%) with 2 nd rank. Competition among villages for getting benefits and inadequate infrastructure facilities were 3 rd and 4 th most important constraints faced by farmer members in FPOs followed by lack of credit facilities which was ranked as 5 th . It can be inferred that among the top five constraints three constraints were from the category of Operational and technical constraints. Other constraints reported by farmer members are personal gains are of utmost importance than group goals (70.83%) with 6 th rank. Nearly seventy per cent of farmer members (69.16%) felt POPI focusing only on resource rich areas, it was the major constraint faced by farmer members in the category of constraints related to POPI support with 7 th rank. The farmer members (68.33%) expressed that organisation procures produce of non-members and was found to be on 8 th position. Among the farmer members 65.83 per cent felt that each try to achieve key positions in organisation and was ranked 9 th among the constraints, exploitation by middle men and traders (65%) were the other reported constraints and was ranked 10 th and second in the category of marketing constraints. POPI focusing only on resource rich/progressive farmers (64.16%) was ranked 11 th and it is second most faced constraint in the category of constraints related to POPI support. subsequently lack of market awareness (60.83%) and was ranked on 12 th place. Lack of team spirit (60%) and delayed payment after procuring produce (59.16%) were in 13 th and 14 th positions respectively. POPI focusing their own organizational agenda on FPOs (58.33%) was on 15 th rank, 55.83 per cent members felt benefit sharing is not uniform and it was ranked 16 th . Farmer Producer Organisations were not taking the whole members' produce (55%), distant market and high cost of transportation (53.33%) were on 17 th and 18 th ranks. 51.66 per cent members faced the constraint of POPI interference in decision making process of FPOs and it was ranked 19 th . The least important constraint reported was POPI was unable to guide coordinators (49.16%) and ranked 20 th . It was observed that the members faced operational and technical constraints most followed by Organizational constraints. Constraints related to POPI support were least faced by the members as they felt that POPI was guiding them better in taking decisions and providing them financial support. Snehalatha and Reddy (1998) [7] , Bharathi (2005) [1] , Dhakal (2013) [2] , Darshan (2019) [3] also indicated similar problems faced by members of FPOs. It was also observed by the investigator that irregular procurement of produce was the major problem. There was restriction of only twenty quintals per farmer. So, shareholders felt that FPOs should be permitted every year for procuring their produce. Most of the members were of the opinion that there were no proper infrastructure facilities like storage or processing, the structure of storage was relatively distant to some villages which was hindering the farmers to harness the benefits. It was observed that distant villagers were dissatisfied with functioning of FPOs, they felt that NGOs were focusing only near the centers of operations. The members were of opinion that the opening of custom hiring centers, as well as retail shops at every village of operation can help them in getting adequate infrastructure facilities for their farming operations and rotation of board of management meetings at every village would provide adequate insight into the operation of their FPOs.

Suggested measures for scaling up and strengthening of Farmer Producer Organizations (FPOs) in Telangana:

Based on the results and observations of researcher, certain measures have been suggested for strengthening and scaling up of Farmer Producer Organisations in Telangana. These include:

1. Market linkages: The strong market ties for selling FPO goods and purchasing inputs were one of the key drivers of FPO success. FPOs that were doing well were able to either forge these connections or find a specialised market for their goods. Members lose interest and the FPO's performance declines in the absence of an assured market. Therefore, there is a need to raise awareness of alternative marketing possibilities, including internet platforms, particularly among BODs.

Programmes can be set up to teach FPO staff members how to advertise their products using social media, digital marketing, and ICTs. Additionally, the government may think about giving FPOs concessionary access to stalls for the sale of their goods in government-mandated mandis, fairs, and exhibitions. 2. Financial support: One of the biggest issues FPOs had, was a lack of sufficient working capital. As small and marginal farmers, the majority of the members are unable to contribute to raising the capital. It was noted that NABARD offers support during the initial period, but it is insufficient. Governmental agencies can offer additional assistance to FPOs and their members through agreements like credit facilities, crop loans, etc. It is also possible to investigate the possibility of getting loans from SHGs operating in the region. Collateralfree loans are made available to MSMEs, and the same arrangement may be applied to FPOs as well. 3. Warehousing: It was noted that FPO members were forced to sell their produce at a discount or in surrounding markets since they lacked a facility to keep it. This issue was particularly severe for FPOs that dealt with perishable goods (such as milk, dairy products, vegetables, etc.). This highlights the pressing need to build warehouses and cold storage facilities. The government can either build storage facilities or offer special funds to FPOs (particularly those that deal in perishable goods). Government warehouses may also offer space to FPOs on a long-term contract.

Post-harvest Management:

The ability of FPOs and its members to create value after harvest needs to be urgently improved. There are two methods to go about this. First and foremost, training and capacity building are required to raise awareness of post-harvest management and value addition skills. A substantial proportion of primary producers were shown to lack the necessary skills and knowledge during the study. Produce was consequently being sold cheaply in its raw state. Standards and quality control should also be covered in training programmes. Second, the infrastructure required for post-harvest management and value addition must be built.

Policy support:

The creation of FPOs and their operation as independent organisations have been made easier by the amendment to the corporations' act. To boost their effectiveness and guarantee their longevity, a number of legislative changes are still required. FPOs that sell packaged goods are subject to substantial tax obligations. The government can reconsider the tax system because marginal and small farmers make up the majority of FPOs. FPOs may be free from paying tax for a predetermined period of time or up to a predetermined amount, or the tax may be lowered. A steady pricing regime is also necessary because FPOs were severely constrained by it. 6. Business development: FPOs must carefully choose the activities that make up their portfolio. Activities based on local products or activities that are an essential component of the community have a higher chance of success. Additionally, it is crucial to combine production and activity, so that the members are benefitted from large volumes. To the advantage of FPOs and its members, the government can divide the state into various cropping belts and provide supporting infrastructure. It is possible to base cropping zones on ecological, meteorological, and hydrological variables to ensure that the FPOs' actions are environmentally sustainable. According to the needs of each cropping belt, the government can design storage, post-harvest, and marketing structures and offer inputs at discounted prices.

Other strategies include developing entrepreneurship training modules for FPOs, promoting awareness of the significance of FPOs in boosting the income of farming communities, and engaging in extension activities specifically targeted at FPO members.

Conclusion

According to the study's findings, the most pressing problems have been identified as marketing, erratic produce procurement, a lack of well-developed storage facilities, competition among villages for benefits, insufficient infrastructure facilities, and a lack of financial support from members to generate working capital for operating business activities as obtaining bank loans is difficult. The main limitations mentioned by them were the lack of a confirmed buyback and price as promised by FPO when joining and POPI's focus on resource-rich locations. It is evident that the challenges they experience affect one another and can be overcome by cooperation. For example, members should recognise that the FPOs are their companies and make financial contributions for their advancement.

References

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