Farmer Producer Companies and operational challenges


Image Source: Livemint

In the last week of January, I sat through an Farmer Producer Company ( FPC) ‘s annual review meeting. This FPC* is based out of Tamil Nadu. The company was formed in 2010. The FPC as it is right now is stable and profitable. The FPC has attained a reputation wherein, the coconut prices set by the FPC is now the reference for all coconut farmers in the locality. That is no trader or a mandi is anymore able to  undercut a coconut farmer. If anything a farmer may get a maximum difference of  INR 0.50( per coconut ) than the price set by the FPC . This in itself , is a huge achievement in improving farmer incomes. The variation in price no more swings in a large bracket of  Rs 3 -Rs 4 ( per coconut) from the actual mandi price of the day of procurement.

Seeing this FPC in operation provided me an opportunity to understand the nuts and bolts of what it takes to run one and the realtime challenges faced in running one. Many of this will never be perceived by someone writing a policy note from doing a desk review, as most of the challenges will be negated by basic assumptions that lay foundation to any policy.Nonetheless the laws that are in place to facilitate formation of the FPC is quite good. Since the initial days of this statute in 2002, it has slowly picked up across the country. Now the idea of formation of producer company is common place and many progressive and aware farmers are coming together to form a company to benefit from the provision of the statute.

The broad areas of FPC’s activities are that of aggregation of produce, on-farm services to aid improvement in production/ harvesting/ post harvest etc. The FPC that I observed was engaged in on farm harvest service provision as well as aggregation of produce from the farmers of the company and other non-member farmers of the company. This FPC’s primary focus is coconuts. The service they provide is harvesting of the nuts, and they aggregate the coconuts. 

When I heard about this FPC- the image that comes to me after listening to the one line scope of the FPC is  that of: All the stakeholder ( farmers) of this FPC , avail the harvesting service of FPC and sell all their coconuts to the FPCs. I was too naive to assume and expect farmers to not exercise choice like any other stakeholder of a company  a publicly listed company or a customer in a retail shop. To explain how naive my expectation was , sample this: You hold shares of Videocon company and therefore I expect you to  buy Videocon TV, Videocon satellite tele and all other products that Videocon produces that meets your need.  No shareholder of any company behaves like that, instead people buy what they consider is good quality/ value for money or with which they have any sentimental attachment. Isn’t it?  This freedom for a farmer gives way to challenges in running a FPC profitably.

In the case of the coconut FPC that I observed let us look at their pool of farmers they cater to. I try to ilustrate the group of farmers with notations below.

Let, farmers who access harvesting services  from FPC can be denoted as FH and farmers who sell their coconuts to the FPC as FC, and farmers who access both harvesting service and sell their coconuts to FPC as FHC. Lets say the total shareholders of the FPC be X. Nonmember farmers that access the FPC’s  harvestingservice is denoted as  FNH, and nonmembers who sell coconuts is denoted as FNC.

Ideally one would have assumed that in this FPC ,

FHC = FH=FC = X, That is all stakeholder farmers use both harvesting service and sell their coconuts to the same FPC.

FH: But in this FPCs case, the farmers who access the harvesting service,  need not necessarily sell to the FPC, and they are not necessarily stakeholders either. They are farmers who grow coconut and have their farms in the neighbourhood. The farmers who access the service are less than 20% of X(the total FPC members) .

FH<= 20% of X, this includes few FNH too.

FC: The farmers who give the coconuts to the FPC is less or half of the total FPC members and some of the farmers selling to the FPCs are non stakeholder members too.

FC= <=60% of X.  This includes a good number of FNCs too.

FHC : The farmers who access both harvesting service and sell the coconuts to FPC make an even more platy number.

FHC <= 10% of X.

There are two major takeaways from the above observations:

  • All members/ stakeholders need not participate in the FPC by accessing either harvesting service or selling their coconuts.
  • And the corollary is also true- Non member farmers are not restricted from accessing either the harvesting or selling to the FPC.

So if the FPCs profits are to be improved then the all member farmers should access the service and sell their produce to the FPC, and the number of nonmember farmers accessing both service and selling has to improve. To be able to do this, the FPC took up an exercise to understand the reasons behind the farmer behaviours.

The following are the broad reasons for the observed pattern :

  1. Pre-existing ecosystem of services and procurement of coconuts
  2. Bottlenecks in harvesting service
  3. Payments

1. Preexisting ecosystem: The coconut famers who are now the stakeholders of the FPC have been engaged in coconut farming for decades. Although they chose to become stakeholders of the FPC, they still have their social ties to the traders whom they sold to earlier or a moneylender or a relative  and therefore do not want to severe ties. One must not read these relationship in a negative light.  That is a trader or a money lender need not be the evil guys all the time. That is if not for the traders a farmer might not have had access to markets at all.  A trader also provides access to harvesting or transportation service along with buying the coconuts. Of course many times they have taken advantage of the information asymmetry  lie between them and  the farmer. But this in the past has worked for the farmer. And one cannot discount it. Also a farmer will take his time in understanding and trusting  a new entity like an FPC. This bit only accounts for a small portion of farmers who do not sell to the FPC. And when there is no easy way  for a farmer to access credit in the times of urgency a money lender comes to his help. There again the farmer may be showing his loyalty by selling his produce to the lender.

But the FPC by its sheer presence has made sure the coconut farmers in the locality of the FPC do not get exploited by establishing the price of the nuts.

2. Bottleneck in harvesting service: The harvesting service provided by the FPC is made available by allocating labourers skilled at harvesting. The FPC has been struggling to service the existing demand. That is when a request for harvest is placed it takes them few days before they service it and this leads to cancellation of  these request. This slack in harvesting leads to non selling of coconuts by a group of farmers too. That is many times harvesting service and uptake of coconuts is provided by all other traders or other service providers in a package. There are not many harvesters who just harvest and go.

3.Payment : Firstly, Many member and nonmember farmers who would wish to sell to the FPC end up not selling due to the fact that FPC do not pay the farmers in advance. This advance request (counterintuitively) is usually from the large farmers.  It remits money to the farmers into their bank accounts within 24 hours after the procurement. Secondly, many medium and large farms are managed by managers and not the farmers themselves. There exist a manager -trader nexus where the manager and trader  seem to have a certain cut in the profits by underquoting the number of nuts sold.

When the FPC addresses the above listed concerns it may be able to improve the number of farmers who access their service and also sell their coconuts to them. While some concerns listed above especially the preexisting ecosystem or payment expectations cannot be met by the FPC, the FPC can work on expanding the services that they provide and begin to engage in value added services like production of virgin coconut oil or other products from the nuts. . Along with it the FPC may also try to tweak and amend their bylaws to ensure the new and existing stakeholders are mandated to sell the produce to the FPC with specific terms and conditions elaborated in them.


* The name and details of the FPC  is not revealed to respect the confidentiality of the company.


Love and Work in December 2017

As much as 2018 started with a bang, it was no way preceded by any lull or silence. There was furore of activity in December as well. As I sit down to write I have forgotten half of things that happened in this month. Thankfully my flickr  photostream comes to my rescue.

Work travel in December was a continuation of the one that begun in November. The things I did in December are:

  1. International Permaculture Conference (IPC)  in Hyderabad
  2. Meetings ( with a new team) in Maharashtra
  3.  Maharashtra – Western and Vidharba region
  4. Andaman Islands on a holiday
  5. Weekend motorcycle ride to Tiratgad, Chhattisgarh

1.IPC 2017 in Hyderabad

I went to this conference based on my mentor’s instruction to attend this workshop to know more about organic farming and natural farming. It was quite nice to see people from so many countries who practice permanent-agriculture ( permaculture) there. But somehow it felt like these people although they are doing their bit of good by practicing permanent agriculture had not really given enough thought on how to take it to the world. It is not that every organisation working on a issue take the onus to thinking for the entire world. But the sense I got from sitting through some of their sessions was that the folks who are practicing or endorsing permaculture seem to be living in a bubble.

The key speakers in the conference were Vandana Shiva and Rajendra Singh. They spoke in their oratory fashion boxing the criminals ( corporations ) and victims ( the farmers ) in clear containers. As usual  such simple narratives beget thunderous  applauses form the audience. But they gave a signal if they were serious about their  in the press-meet. There was this young journalist from Economic times who drilled these people on their speeches and asked what they thought was the way forward to address the problems they mentioned in their speeches.  The responses they provided were highly disappointing and made me feel sincerely sad about the state of activism in this country. None of them had a plan to solve the problem they have been shouting about for decades. All of them in their sixties and seventies were still regurgitating the same things they spoke a decade or more ago. The discourse is anti-state, anti-corporation and pro-poor/farmer. But they could not articulate WHAT should be the pro-poor steps to address the problems of the people they stand for. I wonder if they were really serious about solving the problems at all??

2. Meetings with ( new team) in Maharashtra: One of my volunteering work  on an environmental project took me to few meetings in Maharashtra, in the role of a policy professional.  Unlike my usual work routine where I am either alone or  with just another colleague ( most an old friend), I was not with a team composite of people with experiences 20 years more than mine and one other guy who is just a year older than me, but a veterans whose experiences can be easily pegged to be 10 years more than me, especially with respect to people management and running a big department. I must say I have never smiled or laughed so much in my work life before. These guys were just fantastic. With lifelong experiences and having being in very key positions in big Multinationals or having made change to lakhs of farmers or forest dwellers, they were just normal people. No baggage, no gloating images of themselves. Earlier my commitment to the project was because of my mentor and the environmental cause of it. But not its gotten only better. I have walking talking libraries of experiences embodied in these humble people. These people have seen how things happen in the ground , the hurdles and issues in solving any problem. But they are interested in solving the issues , quietly and consistently without making much noise.

I know this coded post with very little work details may not be a great interest to a reader, but this part is a reminder about the fun time I had with this team and exciting times that lay ahead.

3. Maharashtra – Western and Vidharba region: The work in Maharashtra gave me an opportunity to meet the people in two parts of Maharashtra – Western and Vidharba region. Maharashtra can be loosely divided into Western, Maratwada, Vidharba and the Konkan region. The project I mentioned above took me to the meetings in these two regions. The saying about India is that every few kilometers the culture, customs, language and flavour of food change. If one were to take this statement seriously, the observations I am about make will look obvious. But think about it, even within a state how people work, the resources  distribution,  limelight a region gets  and access to skilled manpower differ and there is a clear advantaged and disadvantaged region. If anyone wishes to work in a region, understanding these aspects become imperative. The time spent on understanding the background of a region will go a long way in designing and setting expectation from any work done in a region.

Larger characteristics of a two regions within a state that are quite stark.Western Maharashtra due to historical context and importance and proximity to Mumbai has strong hold of government establishments, political clout good number of educational institutions and therefore skilled manpower, established and professional Voluntary organisations, good access to both government and non governmental funds, good set up of technical agencies that work on development issues.

In the case of Vidharba region (infamous for its farmer suicides) is literally one of the backward regions of the country. This region is far from the capital, little urbanisation and industrialisation in comparison to Western Maharashtra, has access to plush government funds to mitigate farmers’ plight but little access to big non-governmental funds. The skilled manpower in the region is also not many , except some very conscious individuals who have by choice moved and set up small organisations in the region to work on the issues of the region. But the lack of access to big funding to voluntary organisations has lead to NGOs working with each other like friends and the informal networks are quite strong here. The lack of funds is a necessary condition but not sufficient condition for such kind of behaviour in the region. So to see such friendly, networked way of functioning that is facilitated by whatever means is worth noticing and lauding.

4. Andaman Islands on a holiday


 A holiday that was totally organised by the  brotherinlaw to Andamans was an awesome break. We just had to pack our bags and make ourselves present in the island. The natural beauty of these islands made me dream about working from these islands for a year or so. The island looks like coastal towns of India from a decade ago.  The ride across the Baratang island to experience the closed Jarava territory was revealing and made one raise a lot of questions about this tribe.

The apparent  functioning of government system (from the interaction one had with the locals) seem far superior to the functioning of the state in the mainland. I would like to dig deeper and read more about it. But it seems, one need not look outside the country  for a functioning welfare state, it is right here in these islands. I am making this statement, mainly due to one stark fact. Everyone  use the ration shops. Everyone gets their rice and sugar from the ration shops for their personal consumption. Everyone who is well to do or not uses the ration shops. May be I am wrong in making this observation centric to my conclusion about functioning of the government in this state. I will validate this in a post when I get time.

While visiting the Marine Bio-reserve and recollecting about tsunami effect on these islands , the thing that kept coming back to me was, the issues of environment are so difficult to perceive. The islands look beautiful, green and lovely. Where is the biodiversity loss, who and what are being harmed due to changing climate. As a lay tourist, I cant see it so why will I believe it? If we really want our people to be conscious of the vagaries and loss of biodiversity and be responsible in our act in fragile regions, the issues of environment need to be made felt.

5. Weekend motorcycle ride to Tirathgarh, Chhattisgarh

This is the magnificent #chitrakootfalls. It is magnificent. Returned to this place after a decade or so, was beautiful. Can you make out the #rainbow formed by sun rays falling on the dispersed water particles (#prismaticeffect ) been so long since I use

 This should have been the first note on the month. The month started with a long motorcycle ride with my partner to Tirathgarh and Chitrakoot falls from Raipur. These falls is quite beautiful and the ride was definitely worth it. Some observations on the state from the ride is , most of the roads from Raipur to these falls are good, towns and villages that we crossed are kept clean and compared to most other tourist places these falls are kept really clean and well. At Chitrakoot falls there are shops with art works from the state. The Bastar art work from this state is simply classic, subtle and of course beautiful. These art works are mainly from the Kondgaon region that one crossed on the way to these falls from Raipur. One can also drop by and meet the artisans and artists who produce these art works.

So thats was December and thus ended 2017.

Love and Work, Series

This year’s start for me was again in transit. Most of the year beginnings since 2007 ( except last two years)  have been either in a train or a bus. There is a saying in our culture -“what you do in  first day of a year is what you mostly do through the year”. This saying has stood true in my experience too. This year the beginning was on a flight followed by a frantic chase to get an auto in the middle of the night to get to a station from there a train to home ( which is Raipur these days).  It has been quite a bit of travel since then ( Not that December was any better, but January only got even more busier).

I thought if this is how my year is going to be, there are going to be a lot of things I experience and witness and that may go past me in a whoosh! So this Love and Work series is something I am trying out to get my thoughts and reflect on my days in the month at least once. A post on an idea seems like a far fetched thing, given my travel schedules and general work load.

(  Actually the name for the series could be Love my Work rather than Love and Work. But Love and Work is a track from the movie – The Intern – that quite gently captures my life as it is right now. I love my work and for me love and work are not different, for me everything is just about living. This track comes close in capturing the juggling I am required to do between different roles – an intern to my mentor ( in agriculture), WASH Country Coordinator, life partner and all other roles that come along with being married. But don’t worry, I am going to bore you with my personal life! 🙂  Also Love and Work sounds much nicer, isn’t it? )

As I write this, I have had two days off at home, quietly unwinding by sleeping, cleaning and getting few things going on the home front. I have begun to note down things to discuss and mull over in a Moleskin notebook gifted to me by a friend. Before these thoughts and things that I consider are worth learning about become irrelevant, I would like to share here for the sake of cataloging my experiences this year and get my partner to respond on his blog  and also share with friends who now live far away nowadays.

So I guess, I will be doing at least one post a month in that frequency along with other thoughts that are  really competing enough to get me writing a blog successfully.