Agriculture

'Farmer companies have triggered changes globally'

Roberto Logo, a specialist on farmer organisations and markets with a UN agency, on the development of corporate partnerships with Farmer Producer Companies across the globe

 
By Jitendra
Last Updated: Wednesday 18 April 2018

Farmer producer companies (FPCs) were conceptualised in 2001 by the late Verghese Kurien. He created the milk cooperative Amul, but later realised cooperatives were vulnerable to political influence.

In 2002, the National Democratic Alliance government led by Atal Bihari Vajpayee enacted the Producer Companies Act. The government’s objective “was to formulate a legislation that would enable incorporation of cooperatives as companies and conversion of existing cooperatives into companies, while ensuring that the unique elements of the cooperative business remain intact. As per the 2002 Act, all FPCs are registered with the Union Ministry of Corporate Affairs.

They are a part of the post-liberalisation policy of the country in view of the decreasing landholding size and the missing link between raw materials and corporates. Similar initiatives have been witnessed outside India, too. While the cooperative model does not seem effective in the agriculture sector, FPCS have shown promise.

Logo, a senior technical specialist on farmer organisations and markets with the International Fund for Agricultural Development (IFAD) talks to Down To Earth about FPCS and how they can become sustainable. 

How do Farmer Producer Companies (FPCs) function in Africa?

IFAD formed one umbrella organisation— Farmers' Forum— in 2005 to promote farmer organisations across the world. It is the overall framework of the partnership between IFAD and these organisations, which are run by smallholder farmers. The forum facilitates a permanent process of consultation between these producer organisations, IFAD and governments, focusing on rural development and poverty reduction. It is an ongoing, bottom-up dialogue between these parties.

How has been the experience of promoting FPCs in Africa?

Experience is positive. Our forum is in either collaboration with farmers' organisations or in tripartite collaboration. We promote capacity building, like linkages to markets, create collaboration with the banking sector for loan or guarantee. It is positive that financial institutions are coming out in support for lending to these organisations. 

How has the International Fund for Agricultural Development brought changes on the ground?

We have helped in developing toolkit to take stock of the situation. IFAD has been executing 240 development projects across the globe. There are many examples how it has triggered changes. It is difficult to give the numbers of warehouses, market outlets, and the value chains created in Liberia, Congo, Madagascar, and in other east and west African countries. There are various examples. We do not have numbers regarding FPCs.

What type of activities are undertaken by such organisations?

This network promotes cooperatives which are controlled and managed by its members. There are several opportunities to promote and train members to develop market linkages between cooperatives and other value chains at national as well as regional levels. 

Farmers' Forum has tried to promote inter-regional agri-trade. East African Farmers Federation (EAFF), a forum of east African farmers organisations, pursued a legal framework to promote market linkages among themselves. After years of persuasion such legal frame has been approved by east African countries. Now it is in the process of ratification by member countries.

How can these organisations become sustainable?

They need to keep providing service to their members. They need advisory services, support for direct purchase and selling, infrastructure, like warehousing for stocking when the price is low, and linkages to financial institutions. They also require education for advocacy for their cause. Governments should help these groups in sustaining against developed countries which subsidise their products.

(This is an edited excerpt. To read the full story, read the cover story in the 1-15th April issue of Down To Earth).

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