Relative Growth & Opportunity of FPOs in Gujarat

URICM PGDM-ABM (2018-20) Gandhinagar, Gujarat
Relative Growth and Opportunity of Farmer Producer

Organisations in Gujarat
A Summer Internship Project Report
At
Prepared by, Under the Guidance of

Sayan Biswas Shri Jasjeet Singh Kalra
URICM PGDM-ABM Assistant General Manager (AGM)
Batch 2018-20 Financial Inclusion and Development Department
Reserve Bank of India, Ahmedabad
Submitted in partial fulfillment of

Post Graduate Diploma in Management- Agri Business Management
01st May- 1st July 2019
Udaybhansinhji Regional Institute of Cooperative Management

Sector 30, Gandhinagar, Gujarat (Ministry of Agriculture & Farmers’ Welfare,
Govt. of India)
“Relative Growth & Opportunity of FPOs in Gujarat”

PREFACE
“Collectivization as one of the key strategy under the 12th Five-Year Plan to boost
Agricultural growth and the 2014 is the year of the Farmer Producer Organisation.”
-Department of Agriculture & Farmers Welfare, GoI
Small and marginal farmers constitute the largest group of cultivators in Indian agriculture; 85%
of operated holdings are smaller than or about two hectares and amongst these holdings, 66% are
less than one hectare (Singh, 2012). However, if the increasing number of agricultural suicides
among small and marginal farmers (National Crime Records Bureau, 2011) is any indication,
these farmers are struggling to survive. While indebtedness is often cited as the immediate
reason for distress (Reserve Bank of India, 2006; Satish, 2007), deeper issues are related to
vulnerability to risks in agriculture production. These issues include lower scale of operation,
lack of information, poor communication linkages with the wider markets and consequent
exploitation by intermediaries in procuring inputs and marketing fresh produce, access to and
cost of credit (Dev, 2005) and, in isolated cases, aggressive loan recovery practices (Sriram,
2008). In fact, according to the Situation Assessment Survey of Farmers, for many small and
marginal farmer households, monthly per capita consumption expenditure is higher than the
monthly per capita income (Mishra, 2008).
Indian agriculture is going through a very dynamic phase. While the Government is taking every
effort to increase the income of farmers, farmers are also eager to take the initiative by adopting
new technologies and processes to improve their economic lives.
Market access is a key enabler for improving farmers’ incomes. Strong links to markets for
smallholders is essential for increasing agricultural production and generating economic growth
in rural areas. Improving these links creates a virtuous circle by boosting productivity, increasing
incomes and strengthening food security. Better access by small producers to formal regulated
markets means that they can reliably sell more produce at higher prices. This in turn encourages
farmers to invest in their own businesses and increase the quantity, quality and diversity of the
goods they produce.

Department of Agriculture and Cooperation, Ministry of Agriculture, Govt. of India has

identified farmer producer organisation registered under the special provisions of the Companies
Act, 1956 as the most appropriate institutional form around which to mobilize farmers and build
their capacity to collectively leverage their production and marketing strength. Producer
companies can help smallholder farmers participate in emerging high-value markets, such as the
export market and the unfolding modern retail sector in India. Farmers producer companies
(FPO) can be seen as hybrids between private companies and cooperative societies. The
producer-company concept is aimed to combine the efficiency of a company with the `spirit' of
traditional cooperatives. They integrate smallholders into modern supply networks, minimizing
transaction and coordination costs, while benefiting from economies of scale. Organization and
collective action can help to enhance farmers' competitiveness and increase their advantage in
emerging market opportunities.
Despite its disadvantage of being a water-deficit state and prevailing arid and semi-arid
conditions, the performance of Gujarat in terms of State GDP, agricultural GDP, per capita
income and rural development measures is consistently among the top few states in India. The
State’s agricultural growth rate has never been short of seven per cent throughout the last decade.
The farm income sources are also well diversified as farmers derive sizeable incomes from both
crop and animal sector. With 53 per cent of its work-force dependent on non-farm operations,
small-scale industries and enterprises are also flourishing in the rural areas. The state tops the
charts in milk production as well. Fisheries sector has been identified as the sunrise sector and it
is expected to contribute more to the farm income basket. Micro-Irrigation and Soil Health Card
schemes are being well implemented in the State and the water conservation efforts through
construction of over 1.25 lakh check dams and water distribution efforts through intra-state river
linking have started paying dividends. In addition, Gujarat is both pioneer and leader in
harnessing solar energy for irrigation purpose. Gujarat has 115 FPOs registered by NABARD, 14
FPOs are the sellers on e-NAM and NCDEX, and 20 FPOs are registered by SFAC. Going by all
this track record, it is no coincidence that the State proves to have high potential for doubling
farmers’ income. Accordingly, the present report has defined the “Relative Growth &
Opportunity of FPOs in Gujarat”. With the help of studying of policies regarding FPOs by
NABARD, SFAC and measuring the performance of those FPOs, there is huge opportunity of
growth as well as generating farmer’s income.

ACKNOWLEDGEMENT
I would like to offer my hearty thanks & gratitude to Reserve Bank of India (RBI), Ahmedabad
for giving me an opportunity to work as Summer Intern. During summer internship Programme I
have learnt about all practical aspects of FPOs that how they are working, credit and financing
policies, different schemes and future opportunities of FPOs in Financial Inclusion and
Development Department (FIDD).
It is my profound privilege to express my deepest sense of gratitude and indebtedness to

Shri S K Panigrahy (Regional Director), Shri D.B. Singh (Deputy General Manager, FIDD),
Project guide Shri Jasjeet Singh Kalra (Assistant General Manager, FIDD), RBI for their
guidance and support throughout the internship.
I would also like to express my deepest gratitude to all the Staff of Financial Inclusion and
Development Department of RBI Ahmedabad for their humble hospitality, review and for giving
me valuable insights into the workings of the RBI. It has been a wonderful learning opportunity
and I positively look forward for forthcoming associations with RBI in the future as well and I
feel proud to be a part of Reserve Bank of India.
It gives me immense pleasure, while expressing my profound regard and indebtedness to my

internal guide Shri Narayan Baser. For his inspirational guidance, precious help, contributions,
support, encouragement, confidence and endless patience throughout this study. I would like to
thank our Director Dr. A. K. Asthana for his continuous effort and guidance. I also would like to
thank PGDM Director Mrs. Neelu Pandey for her advice, guidance, support and confidence. I
want to thank gratefully to my URICM friends, seniors and staff for their kind support and help.
The report is the result of contributions of numerous people, too many to mention individually. I
also thank all the respondents who have given their valuable time, views and authentic
information for this project.
Sayan Biswas
PGDM-ABM (2018-20 Batch)

CERTIFICATE
This is to certify that Mr. Sayan Biswas, a bonafide student of Post Graduate Diploma in
Agribusiness Management (2018-20) at Udaybhansinhji Regional Institute of Cooperative
Management, Gandhinagar Gujarat did his summer internship at Reserve Bank of India (RBI),
Ahmedabad between periods of 1st May to 30th June 2019. He has successfully completed his
summer on Project entitled “Relative growth and opportunity of FPOs in Gujarat” towards
the partial fulfilment of his course.
(Project Guide)
Jasjeet Singh Kalra

Assistant General Manager (AGM)
Financial Inclusion and Development Department
Reserve Bank of India, Ahmedabad

DECLARATION
I the undersigned, a student of Post Graduate Diploma in Management (Agri-Business) 2018-

2020 at Udaybhansinhji Regional Institute of Cooperative Management, Gandhinagar, hereby
declare that the report of the project work on: “Relative Growth and Opportunity of Farmer
Producer Organisation in Gujarat” is based on my own work carried out during the course of my
study under the supervision of Shri D.B. Singh (Deputy General Manager, FIDD), Shri Jasjeet
Singh Kalra (Assistant General Manager, FIDD) at Reserve Bank of India, Ahmedabad and Shri
Narayan Baser (Associate Professor at Pandit Deendayal Petroleum University).
I assert that the statements made and conclusions drawn are an outcome of the project work. I
further declare that to the best of my knowledge and belief that the project report does not
contain any part of any work which has been submitted for the award of any other
degree/diploma/certificate in this University or any other University.
Sayan Biswas
PGDM-ABM
(Batch 2018-20)

PROFILE OF THE ORGANISATION
Establishment
The Reserve Bank of India was established on April 1, 1935 in accordance with the provisions of
the Reserve Bank of India Act, 1934. The Central Office of the Reserve Bank was initially
established in Calcutta but was permanently moved to Mumbai in 1937. The Central Office is
where the Governor sits and where policies are formulated. Though originally privately owned,
since nationalisation in 1949, the Reserve Bank is fully owned by the Government of India. The
general superintendence and direction of the RBI is entrusted with the 21-member Central Board
of Directors: The Governor (Shri Shaktikanta Das), 4 Deputy Governors, 2 Government Official,
10 government-nominated directors to represent important areas from Indian economy and 4
directors to represent local boards headquartered at Mumbai, Kolkata, Chennai and New Delhi.
Objectives of the Reserve Bank of India
"to regulate the issue of Bank notes

and keeping of reserves with a view to
securing monetary stability in India
and generally to operate the currency
and credit system of the country to its
advantage; to have a modern monetary
policy framework to meet the
challenge of an increasingly complex Figure: Organisation Structure
economy, to maintain price stability while keeping in mind the objective of growth."
Financial Inclusion and Development Department
This Department’s role encapsulates the essence of renewed Nation focus on Financial Inclusion,
promoting financial education and making credit available to productive sectors of the economy
including the rural and MSME.

Overview of Department:
 Credit flow to priority sectors: Macro policy formulation to strengthen credit flow to the
priority sectors. Ensuring priority sector lending becomes a tool for banks for capturing
untapped business opportunities among the financially excluded sections of society.
 Financial inclusion and financial literacy: Help expand Prime Minister’s Jan Dhan
Yojana (PMJDY) to become a sustainable and scalable financial inclusion initiative.
 Credit flow to MSME: Stepping up credit flow to micro, small and medium enterprises
(MSME) sector, rehabilitation of sick units through timely credit support.
 Institutions: Strengthening institutional arrangements, such as, State Level Bankers

Committees (SLBCs), Lead bank scheme, etc., to facilitate achievement of above
objectives.
Approach: Policy formulation by taking inputs from interaction with stakeholders and robust
and timely management information system through collection of reliable data, statutory and
otherwise.

EXECUTIVE SUMMMARY
85% of the farmers in India are small and marginal farmers. They face various problem related to
agriculture. Farmer Producer Organisations are nonpolitical entities that provide small holder
farmer member business services along with hand holding support.
Gujarat has FPOs registered under NABARD, SFAC and SLPC. FPOs are having different
business model. Based on that, I have studied sample size of 100 FPOs from different districts of
Gujarat. Data is collected from the POs who are from different sectors such as agriculture,
animal husbandry, processing unit, Agri input provider etc. Both well established and struggling
organisations are selected. Questionnaire and case studies included discussion both with
member, officials, DGM NABARD, Business Development Manager of NABKISAN in Gujarat.
Analysis of data is based on fulfillment of different objective such as, to understand the business
process & agriculture value chain, to see the opportunity of FPOs for increasing effectiveness by
adapting technologies, Examine FPOs as organisations, their Governance and management
practices and constrain in growth of FPOs, to understand the business mix of FPO and most
importantly Capital & bank finance, a cross state analysis also been conducted to understand the
position and performance of FPO in Gujarat as compared to other states.
Major finding from the study report are: Gujarat has huge opportunity for growth of FPOs but
the management system is very weak. Some FPOs are exporting several fruits, spices but
majority of FPOs are having marketing problem because of poor infrastructure, non-availability
of grading/packaging facilities and weak forward linkages. Very few FPOs are trading at
NCDEX and e-NAM where most of the FPOs at Maharashtra adapting new technologies.
Farmers are benefited by purchasing of fertilizer at lower cost from companies like Super Crop,
Meghmani fertilizer, IFFCO and F1 good quality Seeds are provided by MNCs. Most
importantly farmers are given support by providing procurement platform at the village level and
farmers are generating assured income. Apart from that farmers are also benefited by providing
them financial support, increment in shared capital, free input. It is easy for farmers for getting
loans through FPOs. There is a limitation on the amount that can be distributed as dividend.
Profit is largely distributed on the basis of “patronage”, which acts as a reward for members
contributing to the business. Small & marginal farmer who are producing very less and shared

capital is low, generating lower price as compared to the farmer who are having more share and
member of BOD. The next problem is to get the APMC (agriculture produce marketing
committee) license, which is a must for trading in Agri produce. Out of 25 FPOs registered under
SFAC, 19 FPOs are having string forward linkage and business opportunity with Bigbasket,
Ninjacart, Reliance Fresh and Hotels.
Now there is tax benefit to the FPOs who are having turnover less than ₹100 crore. There is a
need to make concerted efforts to promote and nurture producer companies. State governments
need to extend all the benefits of farmers’ cooperatives to them. The legislation concerned needs
to be amended to make these companies more attractive for investors. Then awareness has to be
created about this structure among banks so that they may provide term loans and working
capital loans to producer companies.
Recent Report of Expert Committee (June 2019) on Micro, Small and Medium Enterprises
under former SEBI chairman Shri U.K. Sinha has suggested long-term solutions for the
economic and financial sustainability of the MSME sector. He included issues related to SHGs
and suggested solution for better performance of FPOs. According to the committee;
 It is necessary to transit Farmer Producer Organisation (FPO) to Farmer Producer

Company (FPC)
 Department of Financial Services (DFS) act as Settlor for a Credit Guarantee Fund to be
operated by National Credit Guarantee Trustee Company Ltd. (NCGTC) for extending
Credit Guarantees to digitalised SHGs as well as producer collectives or Farmer Producer
Organisations (FPOs) which are registered entities. This Credit Guarantee may be
configured to provide up to 75% guarantee cover to these SHGs, FPOs, etc. for loans
between ₹20 lakh and ₹1 crore on the lines of Credit Guarantee Fund Trust for Micro and
Small Enterprises (CGTMSE), Education Loans, Skilling loans, etc. This will mean that
loans up to ₹1 crore would be effectively collateral free.

CONTENTS
Chapter: 1
INTRODUCTION......................................................................................................................... 1
1.1 Status of Small and Marginal Land Holdings in India: ......................................................... 2
1.2 Small and Marginal Farmers: Constraints and Enabling Opportunities ............................... 3
1.3 Integrating Small Farmers/Producers with Markets.............................................................. 4
CHAPTER 2
FUNDAMENTAL STUDY OF FPO ........................................................................................... 6
2.1 About PO ............................................................................................................................... 7
2.2 About FPO............................................................................................................................. 7
2.3 Benefits of FPO ..................................................................................................................... 7
2.4 Minimum share capital of Producer Company: .................................................................... 9
2.5 What are the preparatory arrangements for registration and incorporation of a
Producer Company (PC)?............................................................................................................ 9
2.6 Producer Organisation can be registered under any of the following legal provisions: ..... 10
2.7 Different types of Producer Organisations: ......................................................................... 10
2.8 Registration cost of Producer Company: ............................................................................ 12
2.9 Structure of Producer Company: ......................................................................................... 13
2.10 Role of Central Govt. ........................................................................................................ 13
2.11 Critical Ecosystem for FPOs: ............................................................................................ 14
CHAPTER 3
POLICIES, FINANCING AND INITIATIVES RELATED TO FARMERS PRODUCER

ORGANISTION .......................................................................................................................... 16
3.1 Financing the FPOs: ............................................................................................................ 17
3.2 Policy and initiatives of GoI/RBI: ....................................................................................... 17
3.3 National Bank for Agriculture and Rural Development (NABARD) ................................. 18

3.4 Bankers Institute of Rural Development (BIRD) ................................................................ 19
3.5 NABKISAN finance Ltd. (NKFL) ...................................................................................... 19
3.6. Small Farmer Agribusiness Consortium (SFAC)............................................................... 20
CHAPTER 4
GUJARAT STATE PROFILE .................................................................................................. 23
4.1 Agro-climatic zone: ............................................................................................................. 24
4.2 Operational holding ............................................................................................................. 25
4.3 Agricultural Production in Gujarat ...................................................................................... 25
4.4 Horticultural Production: .................................................................................................... 26
4.5 Animal Husbandry: ............................................................................................................. 26
4.6. FPOs in Gujarat: ................................................................................................................. 26
Figure 4.6: FPOs registered under SFAC.................................................................................. 27
CHAPTER 5
REVIEW OF LITERATURE .................................................................................................... 28
5.1 Review of the literature: ...................................................................................................... 29
5.2. Setting the Stage ................................................................................................................. 31
CHAPTER 6
OBJECTIVES AND METHODOLOGY ................................................................................. 32
6.1 Objectives in detail include: ................................................................................................ 33
6.2 Methodology: ...................................................................................................................... 33
6.3. Nature and Source of data: ................................................................................................. 33
6.4 Primary Data: ...................................................................................................................... 33
6.5 Secondary Data: .................................................................................................................. 33
6.6 Sample Design: ................................................................................................................... 34
6.7 Description of the study area:.............................................................................................. 34

6.8 Sample size: 100 FPOs........................................................................................................ 34
6.9 Method of contact: .............................................................................................................. 34
CHAPTER 7
DATA ANALYSIS AND PREPARATION OF THE STUDY REPORT .............................. 35
7.1 The Study of Business Process & Agriculture value Chain of FPOs in Gujarat and
Financial support by Government: ............................................................................................ 36
7.1.1 Value chaining of Mango in Gujarat: ........................................................................... 37

7.1.2 Agriculture input supply to the mango Orchard: .......................................................... 39
7.1.3 Financing of FPO: ........................................................................................................ 39
7.1.4 Value addition: ............................................................................................................. 42
7.1.5 Seed Production and Marketing: .................................................................................. 42
7.1.6 Procurement & Input Supply: ....................................................................................... 43
7.1.7 Aggregation of Output: ................................................................................................. 44
7.2 Role of Technology interventions in Increasing Effectiveness of FPOs in Gujarat: .......... 45
Gujarat Foods (Manufacturer & Exporter of Dehydrated onion & Garlic and other
Vegetables): ............................................................................................................................... 45
7.3 Examine the performance of FPOs as organisation, their governance, management

practices & constraints in growth: ............................................................................................. 45
7.3.1 Formation, Reach and Coverage: ................................................................................. 46

7.3.2 Operational Area, Coverage of Members and Shareholders: ....................................... 46
7.3.3 Board of Directors Roles and Responsibility: .............................................................. 49
7.4 BUSINESS MIX ................................................................................................................. 51
7.4.1 Accomplishing Growth and prosperity under the cooperative framework: (Gamnhira
Agricultural Cooperative society Ltd.) .................................................................................. 52
7.4.2 Creating a rural Distribution Network for Women Farmers: (RUDI Multi Trading
Company Ltd.) ....................................................................................................................... 52
7.4.3 Krushidhan Producer Company Ltd. Ahmedabad:....................................................... 53
7.4.4 Dhari Krishak Vikas PC (DKVPCL)............................................................................ 54
7.4.5 North Gujarat Agro PC (Promoted by NGO) ............................................................... 57
7.4.6 Maha Gujarat Agri Cotton PC ...................................................................................... 58

7.5 Performance of FPOs registered under SFAC ................................................................. 59

7.5.1 Various Program by SFAC ........................................................................................... 59
7.6 Capital and Access to Bank finance........................................................................................ 60
7.6.1 Bank Finance .................................................................................................................... 60
7.6.2 Capital and Access to Bank Finance ................................................................................ 60
7.7 Cross State Analysis ............................................................................................................... 62

CHAPTER 8
FINDINGS & SWOT ANALYSIS ............................................................................................ 67
CHAPTER 9
RECOMMENDATION & CONCLUSION ............................................................................. 73
RECOMMENDATION ............................................................................................................ 74
CONCLUSION ......................................................................................................................... 77
PHOTO GALLERY ................................................................................................................... 78
Annexure I
Questionnaire for FPO .................................................................................................................. 78
Annexure II
Questionnaire for NABARD ..................................................................................................... 80
Annexure III
CONTACT DETAILS OF GUJPRO BOARD MEMBERS & ALL MEMBERS ................... 81
Annexure IV
BASIC PROFILE OF EACH SAMPLE FPO ........................................................................... 82
Annexure V
PERFORMANCE OF FPO REGISTERED BY SFAC ............................................................ 83
REFERENCES ............................................................................................................................ 84

LIST OF FIGURES
Sl Contents Page
No. No.
1.1 Number of operational holdings as per different agriculture census 2
1.2 Area operated by operational holding in Gujarat 3
2.1 Structure of FPO 12
2.2 Ecosystem for sustainable FPO 15
3.1 Life Cycle of FPO 17
3.2 Support Available to POPI from NABARD 19
3.3 Type of Loan 20
3.4 Schemes by SFAC 21
3.5 SFAC fund flow & commodity flow 22
4.1 Gujarat Agro-Climatic Zones 24
4.2 Operational land holder in Gujarat 25
4.3 Land use pattern in Gujarat 25
4.4 Rainfall data of the last 10 years (2008-2017) 25
4.5 FPOs registered under NABARD 26
4.6 FPOs registered by SFAC 27
7.1 Crop Production in Gujarat 36
7.4 Activities by FPOs in Gujarat 41
7.5 SLPC registered FPOs & Supporting organisation in Gujarat 46
7.6 Education of CEOs 48

7.7 Various Program initiated by SFAC 58
7.8 Forward Linkages Activities 58
7.9 Purpose of Sanctioned Loan by NABKISAN 59
8.1 SWOT Analysis 63

LIST OF TABLE
SL No Contents Page No.
2.1 Fields of assistance from producer companies (PCs) to farmers 8
2.2 Approximate Registration Cost of Producer Company 11
3.1 Detail of Agro-Climatic Zones of Gujarat State 24
7.1 List of Major FPOs doing business of mango & cashewnut 37
7.2 Insecticides supplied by FPOs in collaboration with EXCEL CROP CARE 39

PVT. Ltd. in Navsari District.
7.3 Loan sanctioned to FPOs for Procurement and Processing of Mangoes & 40
Cashew nut by NABKISAN in Gujarat
7.5 Seed Producer Companies in Gujarat producing foundation and certified seed 42
7.6 FPOs Registered under e-NAM 44
7.8 Information on various aspects of FPC Boards & Their funding 47
7.9 Annual General Body Meetings 49
7.10 Selection of FPO based on unique Business strategy. 52
7.11 Business Mix & Profit Analysis of Krushidhan 54
7.12 Business Mix of FPOs in Gujarat 56
7.13 Profile of membership 56
7.14 Business Profile of PCs 57
7.15 State-wise progress of FPOs promoted by SFAC and NABARD (As on 62

30.04.2018)
7.16 State-wise number of promoting institutions involved in formation of FPOs 63
7.17 Performance of States in promotion of FPOs 65

LIST OF ABBREVIATION
ABD Agribusiness Development Board

AGM Annual General Meeting
ATMA Agriculture Technology Management Agency
BAIF Bhartiya Agro Industries Foundation
BKS Bhartiya Kisan Sangh
DAC&FW Department of Agriculture Cooperation & Farmers Welfare
DAY-NRLM Deen Dayal Antyodaya Yojana
DSC Development Support Centre
e-NAM National Agriculture Marketing
FICCI Federation of Indian Chambers of Commerce and Industry
GRISERV Gujarat Rural Institute for Socio-Economic Reconstruction, Vadodara
GUJPRO Gujpro Agribusiness Consortium Private Ltd.
MSP Minimum Support Scheme
NABARD National Bank for Agriculture & rural Development
NCEUS National Commission for Enterprises in the Un-organised Sector
NDDB National Diary Development Board
NKFL NABKISAN Finance Ltd.
NSS National Service Scheme
OGCF Onion Growers’ Cooperative Federation
PDF Project Development Facility
PODF Producers Organisation Development Fund
POPI Producer Organisation Promoting Institute
PRODUCE Producers Organization Development and Upliftment Corpus
SEBI Securities and Exchange Board of India
SEWA Self Employed Women’s Association
SFAC Small farmers’ Agribusiness Consortium
SRTT Sir Ratan Tata Trust
VCA Venture Capital Assistance Scheme
WUA Water Users Association

Chapter: 1
INTRODUCTION

1|Page
INTRODUCTION
Farmer Producer Organisations are of instrumental value for achieving Government’s target of
doubling income of farmers by 2022. Various initiatives of the Indian Government have focused
on Farmer Producer Companies as a means of addressing concerns of small farmers. The
Approach Paper to the 12th Five Year Plan reiterates its focus on aggregating the produce of the
small and marginal farmers through FPOs, enabling them to reach large and high value markets
to realise better price for their produce. Economists and agriculture experts say that market
reforms can ensure farmers a fair price. The Modi government has tried to bring in some policy
reforms like e-market, farmer producer organisations (FPOs) and the Model Contract Farming
Act, 2018.
Indian farmers have the smallest landholding on the planet. Consequently, they lose individual
bargaining capacity in the open market for their small produce. In such a scenario, the
aggregation of their produce on a large scale can be a solution. The UPA government had started
promoting FPOs from 2011-12 and put them on priority in the 12th Five Year Plan (2012-17).
The current government gave tax holidays for five years. Another new initiative of the Modi
government is the electronic marketing system (e-NAM).
1.1 Status of Small and Marginal Land Holdings in India:

Agriculture is the backbone of Indian economy. The data for 2015-16 Agriculture Census reveals
that in a total of 146 million land holdings in the country, The small and marginal holdings
taken together (0.00-2.00 ha) constituted 86.21%, Semi-medium and Medium operational
holdings (2.00-10.00 ha) constituted 13.22%, The large holdings (10.00 ha & above) were
merely 0.57%.
Agri Census was conducted in 2015-16 in Gujarat. Total number of registered farmers in Gujarat
is around 53.19 lakh; of them 20.17 lakh were marginal farmers, 16.15 lakh small farmers, 11.50
lakh semi-medium farmers, 4.95 lakh medium farmers and 39,893 big farmers.
“Relative Growth & Opportunity of FPOs in Gujarat” 2|Page

Figure 1.1 Number of operational holdings as per different agriculture census, Source
Agriculture Census 2015-16
1.2 Small and Marginal Farmers: Constraints and Enabling Opportunities

NSS, Farmers Survey of 2003 reported a number of issues related to small and marginal farmers.
Based on this NSS Survey, NCEUS (2008) observed “some of the general issues that confront
marginal-small farmers as agriculturalists are: imperfect markets for inputs/product leading to
smaller value realizations; absence of access to credit markets or imperfect credit markets
leading to sub-optimal investment decisions or input applications; poor human resource base;
smaller access to suitable extension services restricting suitable decisions regarding cultivation
practices and technological knowhow; poorer access to ‘public goods’ such as public irrigation,
command area development, electricity grids; greater negative externalities from poor quality
land and water management, etc.”

Figure 1.2 Area operated by operational holding in Gujarat as per different Agricultural
Censuses, Source, Agriculture Census 2015-16 Gujarat
Enabling setting is created for SMFs to raise their incomes by switching from cereal based
production system to high value agriculture. Returns are high from investments in agricultural
R&D, rural roads and other infrastructure and knowledge generation (Hazell, 2011). There is
need for diversification as a strategy to achieve output growth, employment generation and
natural resources sustainability. Small farmers have tremendous scope for increasing
productivity because of natural capital such as soil; the water for bio-diversity need to be
enhanced through conservation
and rejuvenation. Small farmer
need to intensify bio-diversity,
thus improving productivity
with stability and sustainability.
1.3 Integrating Small

Farmers/Producers with
Markets
The crux of the problems faced
by small and marginal farmers
may be traced to limited

bargaining power and inability to benefit from economies of scale when compared to large
farmers. Collectivization of producers, especially small and marginal farmers, into producer
organizations has emerged as one of the most effective pathways to address the many challenges
of agriculture but most importantly, improved access to investments, technology and inputs and
markets. Department of Agriculture and Cooperation, Ministry of Agriculture, Govt. of India has
identified farmer producer organization registered under the special provisions of the Companies
Act, 1956 as the most appropriate institutional form around which to mobilize farmers and build
their capacity to collectively leverage their production and marketing strength.
This approach is considered to be helpful in integrating the farmers directly, through their
institutions (producer companies/ cooperatives), to market, for both, inputs and output, collective
processing and marketing whereas production is largely left to the individual small farms. This
interest is primarily based on the premise that FPOs give small farmers bargaining power in the
market place, enable cost-effective delivery of extension services, and empower the members to
influence the policies that affect their livelihoods.
Integrating small farmer producers, however, is a challenge due to several factors like, (i) small
farmers are not a homogenous group and majority of them lack entrepreneurial faculty. (ii)
Dispersed locations posing problems in logistics like, packaging, storing and aggregation and
also in organizing them into collectives, (iii) production in small quantity and absence of primary
processing and value addition weakens their bargaining power, (iv) non-existence of price
discovery mechanism due to problems in access to market information, market inefficiencies.
However, several initiatives have been taken by the Government of India (GoI) for collectivizing
farmers into FPOs. Small Farmers’ Agribusiness Consortium (SFAC), was mandated by the GoI
to support formation of FPOs. NABARD as the apex financial institutions for financing
agriculture created its own window as Producers Organization Development Fund (PODF) in
2011 for financing FPOs.

CHAPTER 2
FUNDAMENTAL STUDY OF FPO

2. FUNDAMENTAL STUDY OF FPO
2.1 About PO
A Producer Organization (PO) is a legal entity formed by primary producers, viz. farmers, milk
producers, fishermen, weavers, rural artisans, craftsmen. A PO can be a producer company, a
cooperative society or any other legal form which provides for sharing of profits/benefits among
the members. In some forms like producer companies, institutions of primary producers can also
become member of PO.
2.2 About FPO

It is one type of PO where the members are farmers. FPO is an initiative by the agriculture
ministry to help farmers develop a professional attitude towards agriculture. Under this, farmers can
form groups and register it as a company under the Indian Companies Act. The company can
then extend technical and financial assistance to members and explore the market for their
produce.
2.3 Benefits of FPO

1. Economies of scale and increased bargaining power: FPOs bring together the business
activities of many individual small-scale producers and thereby increase the overall scale which
would lower business costs and enable high volume, improved quality, and consistency in
supply. FPOs can increase small-scale producers’ bargaining power by achieving large volume
and therefore negotiate better prices.
2. Improved market reach- Most small-scale producers are unable to get a good price for their
produce because they are unable to access markets where prices are higher. FPOs can enable
them to access remunerative markets by achieving the scale necessary to deal with buyers in
these markets, or by value addition to the commodities to access higher value markets.
3. Access to finance – financing is a key challenge for small and marginal farmers, FPOs can
access institutional finance.
4. Risk mitigation – with the increased bargaining power and access to better markets, FPOs
can help small and marginal farmers mitigate market risks by offering competitive price for the
commodities.
5. Improved access to extension services – FPOs provide production related technical and
technological services including input services, conduct training and capacity building activities.

6. Increased policy influence - Large FPOs can provide the platform for producers to promote
their interests and influence policies in the local, national, and even international environment
that affect their business and livelihood.
7. Professional management – FPOs are professionally managed entities, hence the
management has the technical and managerial expertise which would help the management of
the FPOs in ensuring better returns.
Table2.1 Fields of assistance from producer companies (PCs) to farmers
Field of Smallholder farmer Producer company

assistance
Marketing small volumes, limited aggregation and marketing

bargaining power
Market limited access, but increasing direct links between PC and

information with the spread of mobile
phones potential buyers
Transportation often time-consuming and/or transportation is organized within/

costly facilitated by the PC
Cold Storage no facility set up of cold/ripening chambers as shared

infrastructure
Irrigation no irrigation facility, or establishment of community wells;

dependence on the well
owner/ water supplier construction of collecting tanks;
laying of pi FPOs
Extension no access/one-sided farmers' education and regular training

Services and information sessions from farmer to farmer,
technology preservation of traditional farming practices
Input supply Need to buy in the market, provided by the PC at lower than market
credit problem price through bulk buying, in-house
production of organic manures links to
banks

Production short time horizon constant information flows of market

Planning processes to the farmer allow a more
systematic planning approach
Excess Risk of distress sales or waste Further processing, value addition brands
production none might be introduced by PC or the buyer
branding
2.4 Minimum share capital of Producer Company:

a) The minimum Authorized Capital of Producer Company is ₹5 lakh
b) The Authorized Capital of the company can be more than ₹5 lakh as indicated in the
Memorandum of Association.
c) The authorized share capital should be sufficient for carrying out the objects mentioned
in the memorandum.
d) The authorized share capital should be realistic.
e) The minimum paid up capital for Producer Company is ₹1 Lakh.
2.5 What are the preparatory arrangements for registration and incorporation of a
Producer Company (PC)?
a) Identification of clusters where POs can be formed.
b) Business Plan
c) Meet the villagers (primary producers) and introduce concept. The primary producer
should understand the benefit and feel need of FPOs
d) Conduct focused group meeting and motivate eligible members to become shareholders.
e) Once the primary producers are willing to form a producer company and ready to
contribute shared capital.
i. Identify Promoter Directors
ii. Prepare a draft Articles of Association (AoA)
iii. Prepare draft memorandum of an Association (MoA)
iv. Call first informal meeting of shareholders to approve.

2.6 Producer Organisation can be registered under any of the following legal provisions:
 Cooperative Societies Act/ Autonomous or Mutually Aided Cooperative Societies Act of

the respective State
 Multi-State Cooperative Society Act, 2002
 Producer Company under Section 581(C) of Indian Companies Act, 1956, as amended in
2013
 Section 25 of Indian Companies Act, 1956, as amended as Section 8 in 2013
 Societies registered under Society Registration Act, 1860
 Public Trusts registered under Indian Trusts Act, 1882
2.7 Different types of Producer Organisations:

Government Based:
 In India, National Bank for Agriculture and Rural Development (NABARD) promotes
producer organisations (POs) in rural areas in the form of producer companies with
financial support from Government of India. The formation and development is actively
encouraged and supported by the Central and State Governments and their agencies, using
financial resources from various centrally sponsored and State-funded schemes in the
agriculture sector agencies.
 Department of Agriculture and Cooperation (DAC), Ministry of Agriculture, Govt. of
India acts as the nodal agency for the development and growth of FPOs. Small Farmers’
Agribusiness Consortium (SFAC), a Society under DAC, is the designated agency of
DAC to act as a single window for technical support, training needs, research and
knowledge management and to create linkages to investments, technology and markets.
SFAC provides all-round support to State Governments, FPOs and other entities engaged
in promotion and development of FPOs.
 National Agriculture Cooperative Marketing Federation of India Ltd. (NAFED) takes
steps to include FPOs in the list of eligible institutions which act on its behalf to undertake
price support purchase operations.
“Relative Growth & Opportunity of FPOs in Gujarat” 10 | P a g e

NGO: A Corporate Social Responsibility (CSR) activity is defined as any intervention by a

company directed towards community development (NFCG, 2013). By incorporating CSR in
their business portfolio, companies have made significant achievements in the areas of education,
healthcare, livelihoods, rural development and urban development (NFCG, 2013).As per the
Indian Companies Act 2013, it is mandatory for certain classes of enterprises to spend 2 percent
of their profit for social development activities such as education, health, agriculture, animal
husbandry and rural livelihood generation (CII, 2013). The best approach of CSR companies is
making better market linkages, due to their broad linkage they used to connect farmers with good
disposal options.
Farmers’ clubs: Farmers’ clubs are informal forums at the grassroots level. Such clubs are
organised by rural branches of banks with the support and financial assistance of NABARD for
the mutual benefit of the banks and the rural people. Farmer clubs can deal with many agricultural
problems such as market access, middlemen, land fragmentation etc.
Cooperatives: Cooperatives are the one of the oldest concepts for uniting farmers. They are
registered under the State Cooperatives Societies Act and are expected to provide access to risk-
bearing capital, manage risk through product diversification, set market standards, and provide
marketing conditions and economic democracy at gross-root level. The cooperative system in our
country is affected by political interference, corruption and poor efficiency and there is a general
impression that it has failed in India.
Self-help groups : A self-help group is a self-governed, peer-controlled and informal group of

people with the same socio-economic background and having a desire to collectively achieve
common purposes. Most self-help groups are engaged in self-employment activities such as papad
making, pickles making, dairy farming and agricultural activities. There are usually 20 members
in an SHG to conduct the 16 activities. They pool their resources to become financially stable by
taking loans from the money collected by the group and by means of making everybody in that
group self-employed.

2.8 Registration cost of Producer Company:

Table 2.2 Approximate Registration Cost
Particulars Item of expenditure Amount(₹)
Application for Name of PC Fees 500
Digital signature Fees 2600
Stamp duty Memorandum of Association and 1500

Articles
of Association
Registration/Filing fees MoA, AoA, Form-1, Form-18, Form-32 17200
Fees of Chartered Accountant or Consultancy charges 10000

Company Secretary
Stamps cancellation 300
Affidavit expenses Fees of Notary 500
Share transfer fees and 5000

processing
Miscellaneous expenses 2000
Total 39600
 It is estimated that it may cost ₹40000/- approx.

 Depended on the fees charged by CA, Company Secretary and authorized Agents
 Registration process can take time around 2 to 6 months

2.9 Structure of Producer Company:

a) A Producer Company is a hybrid between a Private Limited Company and a Cooperative
Society, thus enjoying the benefits of professional management of a Private Limited Company as
well as mutual benefits derived from a Cooperative Society.
b) Ownership and membership of a Producer Company is held only by “primary producers” or

“Producer Institution/s” and member’s equity cannot be traded. Hence, nobody can take over the
company or deprive the primary producers of their organisation.
c) The liability of the members is limited to the unpaid amount of the shares held by them.
Hence, the private assets of the members are safe from company losses.
d) The minimum paid-up Capital being ₹1 Lakh and minimum authorized capital being ₹5 lakh
for a PC, it easy to mobilise the small amount.
e) Minimum number of producers required to form a PC is 10 while there is no limit for

maximum number of members and the membership can be increased as per feasibility and need.
This helps even 10 individuals start a Producer Company which is easy.
f) There cannot be any government or private equity stake in the Producer Companies, which
implies that PC cannot become a public or deemed public limited company. Hence, any
Government or other corporate threat is non-existent in professional functioning of the company.
g) The area of operation for a PC is the entire country giving flexibility to expand and do
business in a free and professional manner
2.10 Role of Central Govt.

1. Government has decided to provide matching equity grants to registered FPOs up to a
maximum of ₹10 lakh per FPO to enable them to leverage working capital from financial
institutions. A sum of ₹50 crore has been earmarked for this purpose.
2. Union Budget 2018-19: any Producer company making a turnover of up to ₹100 Crores
and Earning profit out of the same, will now not need to pay any corporate tax, The
benefit shall be available for a period of five years from the FY 2018-19. The benefit will
be available in respect of the following activities of the Producer Companies:
(a) The marketing of agricultural produce grown by the members;

(b) The purchase of agricultural implements, seeds, livestock or other articles

intended for agriculture for the purpose of supplying them to the members;
(c) The processing of the agricultural produce of the members;
3. Operation Green Mission was announced in Union Budget 2018-19 to promote farmer
producer Organisations, logistics, processing facilities and professional management. It
also help the farmer to control and limit erratic fluctuation in the prices of tomatoes,
onions and potatoes. It is essentially a price fixation scheme that aims to ensure farmers
are given a right price for their produce.
Its major objectives are:
 Price stabilization for producers and consumers by proper production planning in
TOP clusters
 Reduction in post-harvest losses.
 Enhance value realization of TOP farmers by targeted interventions to strengthen
TOP production clusters and their FPOs
 Increase food processing capacity.
 Set up market intelligence network to collect and collate real time data on demand
and supply and price of TOP crops.
4. SAMPADA YOJANA (PMKSY) is an umbrella scheme which incorporates all ongoing
schemes of the Union Ministry of food processing Industries. It include value addition,
Integrated cold chain, Creation of Forward and Backward linkages, Infrastructural Agro
processing clusters, Food preservation & preservation capacities. It will provide better price
to farmers. Supply chain management will be better from farm gate to retail outlet.
2.11 Critical Ecosystem for FPOs: A congenial ecosystem is a must for development of
producer organizations because they have to deal with the most vulnerable part of agri-value
chain, which starts from the farm and goes on till processing and the far-away markets. The
critical ecosystem services include emergency credit, consumption credit, production credit,
retail services of inputs for agriculture and other agricultural production services required by the
small and marginal farmers. Unless these services are provided by a producer organization, it
cannot divert the surplus produce from the local trader or shop keeper to the producer
organization. In addition, the producer organization can take up other services related to

facilitating linkage with the banks and line departments for ensuring the infrastructure access for
the business. In order to build a sustainable FPO, favorable ecosystem is needed besides certain
policy reforms particularly in the agricultural marketing systems. Some of the critical ecosystems
include:
(a) Policy Environment-Risk mitigation, licensing, agri-logistics, infrastructure arrangements,

contract farming (b) Technology Support- Extension service, advisory, value addition,
processing & marketing (c) Consumption/ production/ post production credit support- Banks/
financial institutions, NBFCs, Government institutions, Developmental Agencies, Corporates,
etc. (d) Retail services/ Markets- Quality inputs, retail marketing, spot markets (e-NAM,
APMC), future’s trading (NCDEX), linkages with agri corporates, exporters, direct marketing.
Figure 2.2 Ecosystem for Sustainable FPO, Source NABARD

CHAPTER 3
POLICIES, FINANCING AND INITIATIVES RELATED

TO FARMER PRODUCER ORGANISTION

3. POLICIES, FINANCING AND INITIATIVES RELATED TO FARMER PRODUCER

ORGANISTION
3.1 Financing the FPOs: FPOs are fund based on the stages of their lifecycle.
Matured Stage (Business

Expansion)
Figure 3.1 Lifecycle of FPO Debt Capital & Term
Emerging & Growing loans
Stage
Equity Financing
Incubation & Early Stage Working Capital
Grant support for training
exposure & system
development
3.2 Policy and initiatives of GoI/RBI:

Department of Agriculture, cooperation and Farmers Welfare, Ministry of agriculture and
farmers welfare, issued the National Policy and process guidelines for FPOs in March 2013 for
promoting agencies to build sustainable FPOs.
1. Declare FPOs at par with cooperatives registered under the relevant State legislation and
SHGs/federations for all benefits and facilities that are extended to member-owned
institutions from time to time.
2. Make provision for easy to trade in inputs (seed, fertilizer, farm machinery, pesticides for use
of their members, as well as routine supply of agricultural inputs through at par with
cooperatives.
3. Use FPOS as producer of certified seed saplings and other planting material and extend
production and marketing subsidies on par with cooperatives
4. Make suitable amendments in the APMC Act to allow direct sale farm produce by FPOs at
the farm gate, through FPO-owned procurement and marketing centers and facilitate contract
farming arrangements between FPOs and bulk buyers.
5. Appoint FPOs as procurement agents for MSP operations for various crops.
6. Use FPOs implementing agencies for various Agricultural development programmes,
especially Agriculture Technology Management Agency (ATMA), National Food Security

Mission (NFSM), Rashtriya Krishi Vikas Yojana (RKVY) etc and extend to benefits of
Central and state funded programs I agriculture to members of FPOs on a preferential basis.
7. Link FPOs to financial institutions like cooperative banks, State Financial Corporations
(SFCs) etc. for working capital, storage and processing infrastructure and other investment.
8. Promulgate state-level policies to support and strengthen FPOs make them vibrant
sustainable and self-governing bodies.
The Union Budget 2013-14 proposed the “Equity Grant Scheme and Credit Guarantee
Scheme and Credit guarantee Scheme” for FPCs, being implemented by the SFAC since
January 2014. The scheme enables FPCs that have a minimum 500 farmers as shareholders, can
access collateral-free loans up to ₹100 lakh from banks, which in turn, can seek credit guarantee
cover up to 85% of the sanctioned loan facility under the scheme. FPOs are authorized to procure
pulses and oilseeds at the farm gate to undertake price support operations under the MSP. SFAC
has been designated as a central procurement agency for this. The GoI included collectivization
as one of the key strategy under the 12th Five-Year Plan to boost Agricultural growth and the
DAC&FW had announced 2014 as the year of the Farmer Producer Organisation.
In the Union Budget for 2018-19, the Union Finance Minister made two major
announcements:
 100% tax deduction for the next 5 years for the FPOs with annual turnover of up to ₹100
crore
 The launch of ‘operation flood’, by promoting FPOs/Companies of individual farmers in
agriculture and allied activities as priority sector lending.
3.3 National Bank for Agriculture and Rural Development (NABARD)

NABARD provides incentives for the POPI for taking care of the PO within the overall ceiling
of 20% grant support to the PO. The incentive scheme is as below:

5 year old FPO

Morethan 5 year old FPO
Max 5% of loan
amount for POs upto Max 2.5% of loan Incentives
5 years old amount for POs The incentive is given
more than 5 years 10% in advance, 70%
old linked to timely
repayment of instalments
and rest 20% at the end
subject to satisfactory
repayment.
Figure 3.2 Support available to POPI from NABARD
NABARD provides financial support to POs only through project mode through two financial
products. A fund titled “Producers Organisation Development Fund” has been created by
NABARD
 Maximum amount given ₹25 lakhs per PO with a cap of ₹25000 per member.
 Credit support is given without any collateral security which are eligible under credit
guarantee scheme of SFAC.
3.4 Bankers Institute of Rural Development (BIRD)

NABARD with the support of the Bankers Institute of Rural Development (BIRD), Lucknow,
has been offering a certificate course for CEOs of FPOs through 10 region-specific anchor
agencies. During 2017-18, eight short term courses were supported to cover CEOs across various
states. NABARD provides hand holding support, capacity building and market intervention
effort of the FPOs.
3.5 NABKISAN finance Ltd. (NKFL)

A subsidiary of NABARD, NKFL was formed for financing FPOs. Facilitated by Credit
guarantee Scheme of NABARD, NKFL is empowered to finance FPOs during their early growth
stages, when of required collateral. The NKFL introduced different loan products for FPOs
depending on the life cycle needs and capacity to offer collateral security. Further, it has

launched a web portal to solicit loan application and loan decisions are guided by a dynamic
rating system integrated in this portal. The NKFL has been identified by SEBI as a training
partner to train FPOs in commodity derivative trading across the country, so as to increase
farmers ‘participation in the commodity derivatives market.
Loans to POs/FPOs that are eligible for assistance from SFAC towards equity/credit
guarantee cover.
2.
1. Term
Type of Loan: Working 3. Both
loan
Capital
Purpose
Figure 3.3 Type of Loan
Working capital, term loan for creation of infrastructure for storage, processing, marketing etc.
Bulk loan for on-lending, loan against warehouse receipts.
Eligible Institutions
FPOs existing for 1-2 years with at least one audited balance sheet for a financial year.
Minimum share capital ₹3 lakhs (minimum) for working capital loans and ₹5 (minimum) lakhs
for term loans
Margin Minimum 15% for Working Capital and Term Loan
Security Hypothecation of assets created out of loan.
Rate of interest Based on NABARD’s refinance rate.
Repayment 12 months for WC and 3-5 years for term loans.
Loan Amount Up to 6 times of the net worth of the FPO or ₹1 crore whichever is lower.
Processing Fee 0.5% of loan amount.
Insurance Assets acquired out of the loan will be insured
3.6. Small Farmer Agribusiness Consortium (SFAC): Small Farmers Agribusiness
Consortium (SFAC) is an Autonomous Society promoted by Ministry of Agriculture,
Cooperation and Farmers’ Welfare, Government of India. It was registered under Societies
Registration Act XXI of 1860 on 18th January, 1994.
The role of State SFACs is to aggressively promote agribusiness project development in
their respective States. The main functions of SFAC are:
 Promotion of development of small agribusiness through VCA scheme;

 Helping formation and growth of Farmer Producer Organizations (FPOs) / Farmer

Producer Companies (FPCs);
 Improving availability of working capital and development of business activities of
FPOs/FPCs through Equity Grant and Credit Guarantee Fund Scheme;
 Implementation of National Agriculture Market (e-NAM) Electronic Trading platform.
Schemes by SFAC
Agriculture
Development Credit
through Venture Equity Grant Guarantee
Capital for Farmer Fund Scheme
Assistance
(VCA) and Producer for Farmer
Project Companies Producer
Development Companies
Facility
Figure 3.4 Schemes by SFAC

1. Agri-Business Development (ABD) through Venture Capital Assistance (VCA) and
Project Development Facility (PDF): The Scheme aims to facilitate the promotion of
agri-business projects establishing backward linkages with farmers, providing assured
market to their produce, thereby generating employment and enhancing farmers’ income.
SFAC partnership with various PSU banks has so far helped support 1674 projects across
the country, investing a total of ₹495.36 Crores in venture and helping to leverage ₹
5950.76 Crores in total project investment. This has created 81396 direct employment
and linked approximately 1.53 lakhs Farmers to these units.
2. Equity Grant for Farmer Producer Companies: A grant of up to ₹ 10.00 lakh to each
registered Farmer Producer Company is given to match the member equity raised by the
institution. This enhances the equity base of the FPC and enable it to approach financial
institutions for raising working capital. SFAC has been sanctioned Equity Grant to 127
Farmer Producer Companies amounting to ₹7.04 Crore to enable them to leverage
working capital from financial institutions.

3. Credit Guarantee Fund Scheme for Farmer Producer Companies: Credit Guarantee
Fund (CGF) has been set up in SFAC with a corpus of ₹ 100.00 Crores. The CGF will
offer a cover of 85% to loans extended by banks to Farmer Producer Companies without
collateral, up to a maximum of ₹ 1.00 Crore. Under the Scheme, 21 projects in five states
have been sanctioned credit guarantee of ₹ 9.31 Crore till date. State-wise details are as
below:
Figure 3.5 SFAC fund flow & Commodity flow, Source SFAC

CHAPTER 4
GUJARAT STATE PROFILE

GUJARAT STATE PROFILE Figure 4.1 Gujarat Agro - Climatic Zones
Gujarat is located on the western coast (Source: https://www.mapsofindia.com/maps/gujarat/gujarat.htm)
of the Indian Peninsula and it is one of

the most industrialized states in the
country. The state shares its borders with
Rajasthan, Madhya Pradesh,
Maharashtra and the Union Territories
of Daman and Diu and Dadra and Nagar
Haveli. The Arabian Sea borders the
state both to the west and the south- Figure 3.1
west. The state has a coast line of 1600 Km with many natural harbors and home to large ports
like Kandla and Mundra (the largest private port in India) and is well connected to the rest of
country
4.1 Agro-climatic zone: Gujarat are fairly diverse (as presented in figure 1), with rainfall
varying from 340 mm (Western arid region) to 1800 mm (Southern hills)
Table 3.1 Detail of Agro-Climatic Zones of Gujarat State

4.2 Operational holding

The population rate of Gujarat as per year 2017 is 308 per sq. kilometer. There are about 48.85
lakh operational holders operating about 98.98 lakh ha. Land as per the agri-census 2016-17. Out
of total 48.85 lakh operational holders, 18.06 lakh Marginal (37%), 14.29 lakh small (29%),
10.80 lakh semi Medium (22%), 5.13 lakh (11%) medium and 0.49 lakh large (1%) operational
holders.
Figure 4.2 Operational Land holder in Gujarat, Source Agri census 2016-17
Figure 4.3 Land Use Pattern in Gujarat State, Source Agri census Figure 4.4 Rainfall data of the last ten years (2008-2017)
4.3 Agricultural Production in Gujarat

Major Agricultural produce of the state include cotton, groundnut (peanuts), dates, and sugar
cane, milk & milk products. Gujarat is the dominant producer of tobacco, cotton, and groundnuts
in India. Other major crops produced in state are rice, wheat, jowar, bajra, maize, pigeon pea and
gram. Castor, Groundnut and Mustard are the important oilseed s crops of the state.

4.4 Horticultural Production:

 “Gir Kesar Mango” and “Kutchi Date” have unique identity in the country.
 Gujarat state is 1st in the production of Cumin, Fennel and Date palm,
 2nd in production of Banana, Papaya and lime.
 Productivity of Onion and Potato is highest in the country where productivity of Banana,
pomegranate and sapota is 2nd highest in country.
 State enjoys monopoly in processing of Isabgul.
 Onion dehydration industry of the state is biggest in the country.
4.5 Animal Husbandry: Gujarat is rich with various indigenous pure breeds including Gir and
Kankarej breed of cow; Mahesani, Surti, Jaffrabadi and Bunni breed of Buffalo; Marwari and
Patanvadi breed of sheep; Sirohi, Surti, Mehsani, Kuchchhi, Gohilwadi and Zalawadi breed of
goat; Kutchi and Kharai breed of camel, Kathiyavadi breed of Horse etc.
4.6. FPOs in Gujarat:

Gujarat is also known for farmer co-operatives, especially in milk and sugar. It has three clear
cropping divisions-
 South Gujarat for horticulture

 North for spices and other high value crops
 Saurashtra for cotton and high value crops like mango and groundnut.
Most of the PCs in Gujarat emerged from some form of farmer collectivity as its promoter
whether it was WUAs or BKS or OGCF.
Figure 4.5: FPOs registered under NABARD
35 31
30
NO. OF FPOS
25
20 13
15 8 10
10 7 6 5 5
4 4 2 3 3 3 4 3
5 1 1 1 1
0
DISTRICTS

115 FPOs are registered under NABARD. Dahod district has 31 FPOs which is highest in no. in
a single district. After that 13 FPOs are present in Narmada District, 10 at Bharuch district.
Performance wise 6 FPOs in Navsari district, 4 in Anand district, 8 in Ahmedabad district & 4
FPOs in Mahisagar districts doing good which we will discuss below.
Figure 4.6: FPOs registered under SFAC
5
4.5
4
3.5
No. of FPOs
3
2.5 5
2
1.5 3 3
1 2 2
0.5 1 1 1 1 1
0
Districts
20 FPOs are registered under SFAC. Most of the FPOs are in Ahmedabad (5), followed by
Dahod (3), Panchmahal (3). Apart from that Banaskantha, Bharuch, Chota udaypur, Panchmahal,
Surat are having No. of FPOs
State Level Producer Companies (SLPC): Gujarat also having SLPC i.e. Gujpro Agribusiness
Consortium Producer Company Limited. Under that 25 FPOs are doing extremely good work

CHAPTER 5
REVIEW OF LITERATURE

REVIEW OF LITERATURE
5.1 Review of the literature:

FPOs started taking shape in the country in the recent decade, where 80-90 per cent of the
members are farmers with small landholding. According to a 2017 NABARD publication,
around 5,000 FPOs are operating in the country, which were formed under various initiatives of
the Central Government (including Small Farmers Agribusiness Consortium), State
governments, NABARD, and other Organisations. Of these, around 3,200 FPOs are registered as
farmer producer companies and the remaining as cooperatives/societies, etc. However, the
beginnings of FPOs have been rather unpretentious and membership is at a minuscule five lakh
only. Mere formation of FPOs doesn’t serve the purpose, as there are many dysfunctional ones
due to lack of clear strategies, inadequate capacity, lack of funding support, poor professional
management, and high turnover of CEO/professionals.
Krishi Sutra 2 (2017) has enlisted FPOs in Gujarat doing various activities in agriculture and
non-agriculture sector. Starting from rural distribution network, women farmer employment,
solving irrigation problems, promotion of tribal cuisine among urban communities and also by
accomplishing growth and prosperity under the cooperative frame work.
Shah, T (2016) argued that many FPCs formed under the new law do not have the organising
logic like the value-addition model like AMUL. Most were started to do what traders were doing
anyways, but with greater presumed efficiency and transparency. Notably, most FPCs were
formed under some Government programme or the other, which offered to cover the promotional
cost incurred by the promoting NGO. He highlighted the lack of design-thinking in the
promotional process of the FPCs and stated that the discourse in FPCs has to garner resources
and concessions from external agencies, not “mobilizing energy for growth from within.” He
further stated that attention was not paid to the growth trajectory of FPCs at the time of
formation, and this, according to him, is the reason behind the failure of the nearly 2,000 odd
NGO-promoted FPCs to take off in a big way in contrast to the milk producer companies
(MPCs) promoted by the National Dairy Development Board (NDDB) Dairy Services Company
(NDS).

Sawairam (2014) highlighted the benefits for the participating farmers to market their excess
production through the company as the company was providing appropriate knowledge to
generate excess production from within the community in order to maintain linkages to the target
markets. After economic reforms with thrust on liberation, privatization and globalization (LPG)
policy, the small and marginal farmers faced several constraints which included the inability to
create scale of economies, low bargaining power because of low quantities of marketable
surplus, scarcity of capital, lack of market access, lack of knowledge and information, market
imperfections, and poor infrastructure and communications. The farmers’ organization provided
a wide range of services to their members related to marketing, finance, technology, production
and welfare.
A study by ICRISAT (2017) observed that there was lack of convergence of government
agencies in delineating their jurisdiction for either going solo or hand-in-hand with other sister-
agencies to set up the PC/FPO in any district. The need for identifying right kind of support
agencies with appropriate technical experts on the ground with workable and scalable business
plan and management team is a key for success of any producer company.
Saravanan Raj et al., 2018 (Chaitanya Agriclinics-Service Providers for Farmers Producers
Organization) is facing Constraints:
 As providing consultancy or expert support in organizational development is an

absolutely innovative activity, the target customer group is not willing to pay for services.
 Technical know-how about formation of Companies is not in the authority of the
agripreneur.
 To mobilize farmers into community organizations is very big task. It requires very high
skills to convince individual producers / growers to form organizations.
 After incorporation of companies, to raise share capital and develop business plan are
important challenges.

5.2. Setting the Stage

Under the support of SFAC, altogether 712 FPCs have been registered. Gujarat has 20 FPOs and
NABARD has registered 115 FPOs in Gujarat. As reiterated by many research studies conducted
in past, there are varied levels of performance of FPOs in the country. A study to understand the
current status of the FPOs focusing on their business and institutional development paths and
needs and policy constraints, would not only help practitioners engaged in promoting such FPOs
but also the policy makers who are encouraging the promotion of FPOs.
One of the major problems faced by the Producer Companies has been mobilising startup equity
capital. The small farmers by virtue of being poor are not be able to put in the required start up
equity which has limited the registration of FPOs and further growth of the FPOs. There is a lack
of awareness among the farmers, and financial institutions regarding the FPOs. The FPOs
established have also been unable to attract institutional finance. There is also a lack of detailed
information on the performance of FPOs promoted on horticulture crops, food grains crops,
allied sectors, etc. Many agencies (SFAC, NABARD, Corporates), including international donor
organisations (UNDP, World Bank, Germany, Ford Foundation, USA) are involved on
promotion, hand-holding, nurturing of FPOs.
There is a need to understand the various issues and challenges at grassroots level impeding the
growth of FPOs. Therefore, as approved by Reserve Bank of India the present report is an
attempt to study current status of functions of FPOs, assess their governance and management
practices, and examine performance and constraints in their future growth in Gujarat state which
under project entitled “Relative growth and opportunity of FPOs in Gujarat”.

CHAPTER 6
OBJECTIVES AND METHODOLOGY

OBJECTIVES AND METHODOLOGY
Research is a scientific and systematic search of pertinent on a specific topic and research
methodology is systematically solving the research problem. It involves gathering data, use of
statistical techniques, interpretations and drawing conclusions about the research data.
6.1 Objectives in detail include:

 Assess the status of FPOs through critical examination of their performance and value
chaining.
 Examine FPOs, as organizations, their governance and management practices and
constraints in growth of FPOs;
 Analyze various issues, including issues for financing of FPOs;
 Suggest strategies and approaches for future policy analysis.
6.2 Methodology:
The study mainly based on the discussion with members of different FPOs in Gujarat. For
fulfilling the objectives of study, both primary and secondary information on various parameters
are collected.
6.3. Nature and Source of data:

Data is collected from the POs who are from different sectors such as agriculture, processing
unit, Agri input provider etc. Both well established and struggling organisations are selected.
Questionnaire and case studies included discussion both with member, officials and farmers.
6.4 Primary Data: Data collection was conducted using both survey (Questionnaire method)
and the case study method. Survey was conducted with FPOs, Farmers, Input companies along
with farmers who are not connected with FPO. Interview with NABKISAN Finance Ltd was
really very helpful to understand the purpose of loan and loan amount of several FPOs in the
state of Gujarat.
6.5 Secondary Data: For analysis and see the performance of FPOs in the state of Gujarat
secondary data is collected from NABARD website, SFAC website, e-NAM website for
understanding the performance of FPO. Annual Report NABARD 2017-18 and SFAC helped me
to fulfill my objective of study.

6.6 Sample Design: In order to process with investigation as per the objectives stated, it was
necessary to adopt an appropriate sampling design. Sample design was based on the FPOs
performance. Sample design was conducted as manner that each and every categories of FPO
should cover, started from the incubation, emerging and mature. Sample size is taken also based
on the business strategy of FPOs. A multi stage random sampling as well as convenience
sampling was adopted as appropriate sampling procedure for the study.
6.7 Description of the study area:

Location: Ahmedabad, Bhavnagar, Gandhinagar, Jamnagar, Junagadh, Kheda, Kutch, Mehsana,
Morbi, Navsari, Patan, Rajkot, Sabarkantha, Surat, Surendranagar, Tapi, Vadodara, Valsad.
6.8 Sample size: 100 FPOs

6.9 Method of contact:
 Questionnaire method,
 Case study method,
 Telephonic conversation.

CHAPTER 7
DATA ANALYSIS AND PREPARATION OF THE STUDY

REPORT

Data Analysis and Preparation of the Study Report: Data analysis and inferences is an
important step in report writing. The data after collection has to be processed and analysed in
accordance with the outline laid down for the purpose at the time of developing the research
plan.
7.1 The Study of Business Process & Agriculture value Chain of FPOs in Gujarat and
Financial support by Government:
Figure 7.1 Crop Production in Gujarat
“India has huge potential for a high
Total Cereals
and sustained growth in the 11%
Total Food
agriculture and allied sectors, Grains
12%
considering that there is huge
Total Oil Seed
untapped potential along the value 10%
Cash Crop &
chain. Thus, there is an urgent need for Others
67%
the forward and backward integration
Total Cereals Total Food Grains
to act as a catalyst and key enabler for
Total Oil Seed Cash Crop & Others
the industry to succeed.”-FICCI
Agriculture Value Chain refers to a range of goods and services needed for an agricultural
product to move from the farm to the consumers (farm to fork). Various actors and activities are
involved from production process to delivery of product to the market and finally to the end
consumer. The whole idea of a value chain is to generate value for all the actors while analyzing
how the various actors in the chain exchange knowledge to enter the market. Identification and
integration of value chain activities in fruits, vegetables & Spices provide an alternate approach
for realizing higher incomes, better employment, foreign exchange earnings through export and
productive credit development. Gujarat has potential for development of value chain through
FPOs. We need to understand the major crops cultivated in different districts of Gujarat and by
this, business model of FPOs in that district can be understood.

7.1.1 Value chaining of Mango in Gujarat:

Mango & Cashew nut Cultivation in Gujarat: Gujrat is traditionally known for its export-
quality mangoes. The most famous types of mangoes grown in Gujarat are Kesar, Alphanso,
Rajapuri, Totapuri, Langra, Neelum, Badam, Jamdar and Vanraj.
Gujarat is also growing superior cashew nuts. Farmers in Surat, Valsad and Dangs are doing very
well. Navsari, Surat, Valsad, Amreli districts are having good potential for growing mangoes &
Cashew nut.
Table 7.1 List of Major FPOs doing business of mango & cashewnut
No.
Total
Of Produ
Regist land
Distric villag Name of Area ction
Name of the FPO ration Male Female Total area of
t es crop (ha) 2019
date member
cover (Q)
s
ed
Karjan Vibhag Cashew, 1,202 600
Bagayat Sahkari
Mandali Ltd. Valsad 2012 1442.00 1421.00 2843.00 1803.00 24.00 Mango 601 800
Vasundhara Vrix
Vanwadi
Jalsinchan Vikas
Sahkari Mandali Navsa
Ltd. ri 2012 2000 748 2748 1112 39 Mango 2748 1000
Karchond Vibhag
Cashew, 591 45
Bagayat Sahkari
Mandali Ltd Valsad 2009 808 807 1615 359 11 Mango 295 150
Sutarpada Vibhag Cashew, 1160 400
Bagayat sahkari
Mandali ltd.
Valsad 2000 1423 1422 2845 1740 13 Mango 580 600
Tutarkhed
Vibhag Bagayat Cashew, 630 700
sahkari Mandali
ltd Valsad 2007 949 948 1897 946 12 Mango 315 900
Pindval Vibhag
Cashew, 930 400
Bagayat Sahkari
Mandali ltd Valsad 2012 1361 1360 2721 854 12 Mango 464 600
Shahyadri
Cashew, 455 300
Bagayat Sahkari
Mandali ltd Valsad 2004 801 800 1601 683 12 Mango 227 600
Dixal vibhag
Cashew, 1,311 800,
Bagayat Sahkari
mandali limited Valsad 2000 1456 1456 2912 1967 17 Mango 656 700
Amalsad Vibhag
Vividh Karyakari
sahakari Mandali Navsa
LTD ri 2012 5319 2678 7864 17 Mango 403 473
Gir Krushi
Vasant Producer Gir
Company Somna
Limited th 2005 3000 1000 4000 1800 25 Mango 400 600

Inferences:
 Average mango & cashew nut production 555 Quintal.

 Navsari, Gir Somnath, Valsad, Junagadh and Amreli has highest potential of Mango
production. Gir region has 20000 hectare area for mango cultivation.
 Gir Krushi Vasant Producer Company Limited with collaboration of Gujarat
Agribusiness Consortium Producers Ltd (GUJPRO) provides platform to the farmers for
selling Kesar mangoes in big cities like Ahmedabad.
 During visit at Mango Festival in Ahmedabad, I have conducted interview with 10 FPOs
(enlisted Table no. 6.1) and met several farmers there coming from different districts of
Gujarat. I have found some valuable information as follows during interview.
a) Interview with Farmer:
A farmer, Jayesh Hipra from Javala near Tala in Gir Region selling mangoes under
the banner of Mango Festival in Ahmedabad. He reported that Kesar mangoes
production this year cut down by 25 % than last year but hand holding support by Gir
Krushi Vasant Producer Company had given the farmers like him a big opportunity
for selling their produce in big cities like Ahmedabad. Mango prices are ₹1000 per
10kg in the wholesale market and farmers are really happy by fetching good price.
b) Interview with CEO of GUJPRO: Mr. Kuldeep Singh CEO of GUJPRO stated that
there will be some interesting twist in selling of Mango. The marketing techniques,
training and resources will be provided by GUJPRO Ltd to the FPOs. They will sale
their product in Delhi.
c) Interview with Director of FPO: Mr. Bhagirath Damalia said, “We are planning to
use innovative marketing techniques this year where we will make the mangoes
farmers from Gir brand ambassadors of their products and will chat with FM radio
jockeys. We will make videos of festival with their families and also customers and
then upload on YouTube. We will also do a Facebook live and engage our customer
directly with the farmer through social media”
d) Interview with a local Social worker: Raju Deepti has formed a special purpose
vehicle called Dedicated Initiative for Sustainable and Holistic Agriculture (DISHA)
with Avirat Agro Producer Company and Rukmavati Rural Agro Producer Company

as stakeholder. DISHA does mango marketing on the lines of cooperatives. DISHA is a

farmer-oriented multi-stakeholder agri business enterprise.
Branding of Mango: Omang is premium range of mango, Sangh is common range.
7.1.2 Agriculture input supply to the mango Orchard:

I have visited Regional office of Agriculture Input Company “Excel Crop Science” near
Navrangpura, Ahmedabad. During interview with regional head Mr Sahadeb Basu he said, “We
are currently supplying agri inputs in 5 FPOs at Navsari District. It helps the farmers to buy
products in reasonable cost excluding retail margin with bulk selling.
Table 7.2 Insecticides supplied by FPOs in collaboration with EXCEL CROP CARE PVT.
Ltd. in Navsari District
Name of FPO Date of Activity Crop

registration Handled
Adivasi utthan farmers producer company 2016 Marketing &

limited -vansda Supply of insecticides
Krishicare tribal farmers producer company 2014 in collaboration with
limited - khergam Excel Crop Care Pvt. Mango
Prakutri kisan producer company limited 2015 Ltd.
Sarjan kisan producer company limited 2016
Adivasi utthan farmers producer company 2016
limited -vansda
7.1.3 Financing of FPO:
During visit to NABARD, I had met to Mr Kuldeep Dixit (Business Development Manager
NABKISAN Finance Ltd.). He had given me detailed information related to loans sanctioned by
NABKISAN Finance Ltd. to the producer companies for procurement and processing of
Mangoes and Cashew nut.
FPOs are involved in activities like processing and value addition. It generates the income
opportunity of farmer at various level. They are getting employment opportunity at non cropping
season, fetching good market, value addition and processing reduces postharvest losses.

Big basket, Reliance Fresh companies are showing interest for buying standardized mango,
mango pickle, mango pickle which provides more opportunity for business.
Table 7.3 Loan sanctioned to FPOs for Procurement and Processing of Mangoes & Cashew
nut by NABKISAN in Gujarat
No Promoting Distri Purpose of
Name of the Borrower
. Institute ct Loan
Procurement &
Vasundhara Vriksh Vanwadi Jalsinchan Vikas
1 BAIF Valsad Processing of
Sahakari Mandali
Mango
Shikshan
Procurement of
2 Avirat Agro Producer Company Limited Ane Samaj Amreli
Mango
Kalyan
Karjun Vibhag Bagayat Sahkari Mandali
3
Limited
Mandva Vibhag Bagayat Sahkari Mandali
4
Limited
5 Dixal Vibhag Bagayat Sahkari Mandali Limited
Sutharpada Vibhag Bagayat Sahkari Mandali
6 Procurement &
Limited
Processing of
Karchond Vibhag Bagayat Sahkari Mandali BAIF Valsad
7 Cashew &
Limited Mango
Dhamni Vibhag Bagayat Sahkari Mandali
8
Limited
Pindval Vibhag Bagayat Sahkari Mandali
9
Limited
Tutarkhed Vibhag Bagayat Sahkari Mandali
10
Limited
Procurement of
Gir
Mango and
11 Gir Krushi Vasant Producer Company Limited GUJPRO Somna
supply of Vermi
th
compost bad

Figure 7.2 Activity & Business Opportunity of FPOs

in Gujarat
 According to survey I have found

Other Activities by FPOs in Gujartat
that FPOs are mostly doing
Poultry 6
business in Cold storage and Pickles/Sauces/Jam 6
Onion Dehydration 42
warehousing, 116 FPOs are linked Onion & Garlic Dhy. 89
to this activities followed by Oil Milling And Cotton Ginning 4
Misc. Spices 5
Onion and garlic dehydration unit. Misc. Fruits & Veg. 6
Manufacturing Of Dry Dosa,… 4
Food & Vegetable processing Manufacturing Of Dehydrated… 52
Facilities
Manufacturing And… 4
sectors are around 38 & 66 Manufacturing And… 10
Horticulture Crops 4
respectively. Guar Gum 10
Groundnut 7
 There is huge opportunity in Fruit & Vegetable Processing… 3
Food Processing 38
Green House cultivation. Only 2 Dehydrated Onion, Garlic And… 66
green houses are facilitated by Cotton Ginning & Pressing Unit 5
Cotton Ginning & Pressing &… 3
FPO in Gujarat. Farmers can grow Cotton 25
Cold Storage 116
their crop in off season also. It 0 20 40 60 80 100 120 140
enables cropping intensity Number of Activities
 Floriculture is one of the way to

Business Opportunity for FPOs
generate income
Vermi Compost
 Cotton ginning Pressing unit is Spices
Seed Processing And Storage
working well.
Pulses
 There is huge opportunity for Pulse Processing Unit
Processing Of Raw Cashew Nuts
cashewnut processing. Gujarat Manufacturing And Processing…
Horticulture Crops
Facilities
produces export quality Green House

Floriculture
cashewnut.
Cotton Ginning & Pressing Unit
 IFFCO is doing good business Coconut
Cleaning And Packing
with FPO. Bulk purchasing of Chicory
Cattle Feeds
fertilizers along with minimum Cashew
Aloe Vera
cost really attracts the farmer.
0 1 2 3 4 5 6 7
No. of activities

7.1.4 Value addition:

Next to Mango and Cashew nut 5 FPOs from Anand, Gandhinagar and Banaskantha districts are
doing value addition in different commodities like Banana, Wheat, Potato, and Paddy.
Procurement Value
Input Sales Marketing
addition
7.1.5 Seed Production and Marketing:

The business of seed production and marketing requires assured availability of storage facility,
stock-holding and management capacity. The certification process also involves various stages
over almost 6-7 months’ time, only selected farmers can be seed producers. The selection is
based on various factors like, the land availability of the farmer, irrigation facilities available to
the farmer, financial capacity of the farmer. They need to be registered, trained and follow a
strict protocol. FPOs in seed production can get into assured govt. market by becoming seed
wholesaler to govt agencies and sellers to other cooperative societies, etc.
Table 7.5 Seed Producer Companies in Gujarat producing foundation and certified seed
Seed Companies Address
Navbharat Seeds Pvt. Ltd. Ashram Road Ahmedabad
Narmada Sagar Agri Seeds Himatnagar
Moti Seeds Co. Mehsana
Proprietor Guru Krupa Seeds Corporation Sabarkantha
Ratna Seeds Pvt. Ltd. Rotary Hall, Near S.T. Stand Deesa 385535 (B.K.) Gujarat
Only 5 FPOs had obtained license for seed making. Narmada Sagar Agri Seeds had benefitted
from the backward linkage in procurement of high yielding potato varieties. The FPO was
involved in production of seedling/sapling for sale to shareholders. They operate a central
Nursery and seedlings were prepared based on prior collection of shareholder demand.

7.1.6 Procurement & Input Supply:

1. Out of 115 FPOs in Gujarat 18 FPOs are doing Groundnut procurement and Agri-
input business for seeds. In Junagadh District under ATMA project 3 FPOs
(Kastradhi Producer, Junagadh Krishi Vasant Producer & Gir krushi Vasant Producer Co.
Ltd) doing Groundnut procurement and Agriinput business for seeds. 500 farmers
approximately are the member of each FPOs. 9.06 laks grant has sanctioned by
NABARD.
2. 56 FPOs are supplying inputs. 5 FPOs at Sabarkantha district are selling and supplying of
input for crops like Vegetables, Saplings, Brinjal, Mango Grafts, Black Gram Seeds.
Their focus is on Value chain development and Processing also.
3. 26 FPOs are supplying inputs in Dahod. Around 30000 farmers are the members of FPO.
FPOs are under NM Sadguru Water and Development Foundation, Dahod. Inputs are
supplied for crops like Maize, Chilli, Tomato, Okra, Soyabean, Brinjal and other food
grains. 147 villages are covered in Dahod district.
4. Anand, Banaskantha & Gandhinagar FPOs are doing value addition, input selling of
Spices, Guar, Tobbaco, Wheat, Paddy, Dangar, Potato, Bottle gourd, Cucumber etc. 5
FPOs are under IFFCO Kisan Sanchar Ltd. & Anand District cooperative ltd.
5. Kutch FPOs are supplying input for cotton and Cash crop. They also supplies seeds.
6. Bhavnagar district is famous for input sales and supply for Pomegranate and lemon.
7. Mahisagar has soybean processing unit and they supplies soybean seed.
8. Fertilizers and Pesticides were procured from one or more of these sources – Local
Traders, dealers, getting a sub-dealership for a larger dealer, getting a company
dealership. 4 FPOs got direct dealership from the manufacturing company.
9. The procedure for payment for inputs ordered by the members varied across FPOs. Two
FPOs took a partial advance from members at the time of collecting indent, while others
sold inputs to members on cash-and-carry basis. Some FPOs are taking order from
farmers and payment made by KCC.
10. Inputs are paid by lower price than the market price approximately (Cost+8%) for the
shareholders.
11. All the purchases were done through the procurement committee comprising of two
Directors and one representative of the PI (LHWRF). Farmer members and non-members

were getting quality input materials in their own village with a benefit of reduction in
cost of production.
The major observation made on the input procurement mechanism by those FPOs are that these
FPOs provided necessary inputs to the members and non-members thus initiating backward
linkage and the scale of operations enabled members to save money on inputs.
7.1.7 Aggregation of Output:

Aggregation or outright purchase from shareholders and sold in local mandi or to wholesaler thus
minimized or completely wiped out middleman, which was a significant market linkage service
provided by majority FPOs.
1. All had direct marketing licenses from appropriate authorities.
2. 25 FPOs were involved in wholesale marketing, tie-up arrangement with big retail
outlets, like Ninjacart, Reliance Fresh, Star Bazar, Big Basket, etc.
3. They also had retail sale business at the local mandi or to a local wholesaler.
4. 7 FPOs are connected with APMC in different districts in Gujarat and doing business in
following commodities. Online trading is done through e-NAM (Table no. 2)
Table 7.6 FPOs Registered under e-NAM
APMC FPC Name Commodities

Godhra GODHRA KHEDUT VIKAS RAMESHBHAI Arhar Whole/Tur (Redgram), Paddy
PRODUCER COMPANY LIMITED PATEL (Dhan), Chana, Maize,
Godhra FAASAL VIKAS PRODUCER BARIA Arhar Whole/Tur (Redgram), Paddy

COMPANY LIMITED ABHESING (Dhan), Chana, Maize, Ground Nut,
CHIMANBHAI
Bharuch NETRANG PULSE CROP PRODUCER ANUJI BHAI (Arhar) Pigeon Peas, Green Gram,
COMPANY LTD BHIKJI BHA Black Gram Gram and Cotton
VASAVA
Bharuch SURYDEEP ADIVASI PULSE RAKESH (Arhar) Pigeon Peas, Green Gram,
PRODUCER COMPANY LIMITED HARISINGH Black Gram Gram and Cotton
VASAVA
Nizar LILOTRI PULSE PRODUCER TAJUBEN (Arhar) Pigeon Peas, Green Gram,
COMPANY LTD VASAVA Black Gram Gram and Cotton
Nizar BHUMIPUTRA PULSE CROP AMAR SINGH (Arhar) Pigeon Peas, Green Gram,
PRODUCER COMPANY LIMITED BHAI VASAVA Black Gram Gram and Cotton
Vyara UMARPADA PULSE CROP RAM SINGH (Arhar) Pigeon Peas, Green Gram,
PRODUCER COMPANY LIMITED VASAVA Black Gram Gram and Cotton

The conclusion drawn on the analysis of the observations is that the major objective of
integrating farmers to make agriculture profitable by involving farmers had been attempted by
majority of FPOs, who had been into business processes of both backward and forward linkages
along the entire agricultural value chain of procurement of inputs, aggregation of output,
providing direct market linkage and also initiating primary processing for making available
remunerative prices to primary producers.
7.2 Role of Technology interventions in Increasing Effectiveness of FPOs in Gujarat:
Gujarat Foods (Manufacturer & Exporter of Dehydrated onion & Garlic and other
Vegetables):
Raw material: Selection (based on Color, Aroma, Taste and Size), Purchase, Store.
Processing: Washing, Dehydrating, Grading
Storage: Safe, Hygienic, Specious
1000 small and marginal farmers are the shareholders of the company. They get prices much
better than APMC. Export of the dehydrated onion makes double profit to the farmer. Payments
are made by cash, or share capital maybe some times increased, input supply as required by the
farmer.
7.3 Examine the performance of FPOs as organisation, their governance, management

practices & constraints in growth:
A higher percentage of the land is used for cultivation in central Gujarat. Kheda, Baroda,
Bharuch and Surat districts are the main contributors to agriculture production in state. Valsad
has become India’s first integrated horticulture district. Groundnut (Highest production in
Country), Cotton, Tobacco (second highest production in country), Isabgul, wheat, cumin,
sugarcane, Jawar, Bajra, Rice, Wheat, Pulses, Tur and Gram are the important crops of Gujarat.
Honey, wax, and bamboo are produced in plenty. Forests also yield considerable quantities of
teak, khair, sadad, hadariyo manual bamboos and good quality of wood. This chapter details field
level observations on various aspects of governance of FPOs/FPCs. The first section discusses

issues of formation, reach and coverage, followed by a section on governance, Board of

Directors, General Body of the FPO and the third section on capability and sustainability of
FPOs.
7.3.1 Formation, Reach and Coverage:

This section describes the membership of the FPOs/FPCs studied as well as their operational
area. It also details the usage pattern of the services rendered by the FPOs/FPCs, both by
members as also by non-members.
7.3.2 Operational Area, Coverage of Members and Shareholders:

Most FPCs were born when various Farmers’ Interest Groups (FIGs) in the villages decided to
coalesce into an FPO, with PIs playing the role of midwives. Annexure IV contains the details
of composition of FPOs. Basic profile of each sample FPO has also been detailed in Annexure
IV. The implication is that there is much scope for increasing the shareholder-base of the FPOs.
This would also strengthen the capital base of the FPOs. As can be seen from the table, the
majority of FPCs covered and almost 1224 villages from different districts are connected to those
FPOs. Most of the FPOs are supported by SEWA & Dhruva BAIF under SLPC registered.
Figure 7.3 SLPC registered FPOs & supporting organisation in Gujarat
7
Number of FPOs covered
6
5
4
3
2
1
0
Name of Supporting organisation ,

Governance: This section delves deeper into the issues of the constitution of the FPOs Board of
Directors and the Board activities. It also discusses the Annual Gneral Body Meetings of the
FPOs, their Audit and compliance Board of directors.
Constitutions: Boards are key decision making bodies in FPCs. It is the lynchpin for proper
corporate governance in such institutions. Table 7.8 summarizes information on various aspects
of FPC Boards. As can be seen from the table, most FPC Boards have between six to 12
members (CEOs are included in the Boards’ strength)
Table 7.8 Information on various aspects of FPC Boards & Their funding
No. of Directors Education of Salary paid by

NAME OF FPO CEO
Amalsad Vibhag Vividh Karyakari 5+1 NA FPC
sahakari Mandali LTD
Anjar Taluka Kissan Producer Company 9+1 12th PASS FPC
Limited
Avirat Agro Producer Compny Private 5+1 B.A. FPC
Limited
Dhamni Vibhag Bagayat Sahkari Mandali 6+1(3 women) MA, M.phill FPC
Ltd.
Dixal vibhag Bagayat Sahkari mandali 12 (2 women) Dip in Agri PRODUCE
limited Fund
Karchond Vibhag Bagayat Sahkari 5+1 MA PRODUCE
Mandali Ltd Fund
Karjan Vibhag Bagayat Sahkari Mandali 5+1 12th Pass PRODUCE
Ltd. Fund
Mahagujarat Agri cotton Producer 5+1 B.COM PRODUCE
Company Limited Fund
Mandava Vibhag Bagayat sahakari 5+1 12th Pass PRODUCE
Mandali Ltd. Fund
Pindval Vibhag Bagayat Sahkari Mandali 10&10 12th pass FPC
ltd Promoters
Rukhmavati Rural Agro Producer 9+1 Graduate PRODUCE
Company limited Fund
Sahyog Krishi Vikas Private Limited 10 B.COM FPC
5+1 M.PHILL PRODUCE
Shahyadri Bagayat Sahkari Mandali ltd Fund
Shree AbdasaTaluka Krishi Avam 9+1 12th pass PRODUCE
Pashupalan ikas Producer Company Fund
Limited

Shree Khambhat Taluka Anusuchit Jati 112( women) PGDM Agri PRODUCE
Sahakari Kheti Utpadak Sangh Ltd. Fund
Shree Mundra Ujjas Mahila Kheti Ane 10 12th Pass PRODUCE
Pashupalan Producer Company Limited Fund
Shree Shakha Neher-2 Sinchai Sahkari 5+1 BSc Agri PRODUCE
Sangh Limited Fund
Sukhi Mahila SEWA Mandal 10+2 (women) Graduate FPC
Surendranagar Mahila and Bal Vikas 6 (Women) 12th Pass FPC
Mandal
Sutarpada Vibhag Bagayat sahkari Mandali 5+1 B.COM PRODUCE
ltd.
Swashrayi Mahila Sewa Khedu Mandal 6 (Women) B.COM PRODUCE
Swashrayi Mahila Sewa Khet Majur 5 (Women) 12th Pass FPC
Association
The Chaswad Vibhag Parivar Utthan 9+1 MA PRODUCE
Sahkari Mandali limited
The Devgadh Vibhag Parivar Utthan 10 BSc Agri FPC
Sahkari Mandali limited
Tutarkhed Vibhag Bagayat sahkari 6+1 MBA FPC
Mandali ltd
Upaj Producer Company Limited 5+1 MBA FPC
Vasundhara Vrix Vanwadi Jalsinchan 5+1 12th pass FPC
Vikas Sahkari Mandali Ltd.
Fig. 7.4 Education level of CEO

PGDM Agri
MBA
4%
MA, M.phill 8%
4% 12th PASS
MA
34%
8%
M.PHILL
4%
Graduate
8%
Dip in Agri B.A.
4% 4%
BSc
7% B.COM
15%
Most of the CEO of selected FPOs are 12th pass 34%. MA, MPhil & B.A. are 8%, 4% and 4 %
respectively. Some FPO are professionally run by CEOs with the degree of B.COM, BSc Agri,

Dip in Agri and most importantly PGDM Agri. But no. of agriculture professionals is very few.
For successfully running of FPO it is important to appoint Agribusiness Professionals as member
of BOD.
7.3.3 Board of Directors Roles and Responsibility:

The study revealed that in the board meeting, topics that come up for discussion include various
issues related to monthly business transaction, seasonal planning, long-term business planning,
membership expansion, fund mobilization. Further, in most of FPOs studied, it was found that
the board members were involved in day to day activities such as input demand generation,
distribution, stock maintenance etc.
Table 7.9 Annual General Body Meetings
NAME OF FPO Board Meetings AGMs/Yr.

Amalsad Vibhag Vividh Karyakari sahakari Mandali Monthly Once a Yr.
LTD
Anjar Taluka Kissan Producer Company Limited Monthly Once a Yr
Avirat Agro Producer Compny Private Limited Monthly Once a Yr
Dhamni Vibhag Bagayat Sahkari Mandali Ltd. Monthly Once a Yr
Dixal vibhag Bagayat Sahkari mandali limited Monthly Once a Yr
Karchond Vibhag Bagayat Sahkari Mandali Ltd Monthly Once a Yr
Karjan Vibhag Bagayat Sahkari Mandali Ltd. Monthly Once a Yr
Mahagujarat Agri cotton Producer Company Limited Monthly Once a Yr
Mandava Vibhag Bagayat sahakari Mandali Ltd. Monthly Twice/Yr.
Pindval Vibhag Bagayat Sahkari Mandali ltd Monthly Once a yr (Sept. 1st/2nd Week)
Monthly Once after Audit & Special
Rukhmavati Rural Agro Producer Company limited AGMs for crucial decisions
Sahyog Krishi Vikas Private Limited Monthly Once a Yr
Shahyadri Bagayat Sahkari Mandali ltd Monthly Once a Yr
Shree AbdasaTaluka Krishi Avam Pashupalan ikas Monthly Once a Yr
Producer Company Limited
Shree Khambhat Taluka Anusuchit Jati Sahakari Kheti Quarterly Once a Yr
Utpadak Sangh Ltd.
Shree Mundra Ujjas Mahila Kheti Ane Pashupalan Monthly Once after Audit & Special
Producer Company Limited AGMs for crucial decisions
Shree Shakha Neher-2 Sinchai Sahkari Sangh Limited Monthly Once/Twice
Sukhi Mahila SEWA Mandal Monthly Once/Twice
Surendranagar Mahila and Bal Vikas Mandal Monthly Once a Yr
Sutarpada Vibhag Bagayat sahkari Mandali ltd. Monthly Once a Yr
Swashrayi Mahila Sewa Khedu Mandal Monthly Once a Yr

Swashrayi Mahila Sewa Khet Majur Association Bi monthly (1st & 25th) Once a Yr
The Chaswad Vibhag Parivar Utthan Sahkari Mandali Quarterly Once a Yr
limited
The Devgadh Vibhag Parivar Utthan Sahkari Mandali Bi monthly (1st & 25th) Once a Yr
limited
Tutarkhed Vibhag Bagayat sahkari Mandali ltd Monthly Once a Yr
Upaj Producer Company Limited Quaterly Once a Yr
Vasundhara Vrix Vanwadi Jalsinchan Vikas Sahkari Monthly Once/Twice
Mandali Ltd.
It was found that AGMs were being conducted once in a year for majority of FPCs, mostly after
preparation of annual report. For remaining FPCs, AGMs were being conducted twice a year
(once after annual audit and once at the beginning of the crop season)
Another evidence is that many shareholders reported that they could not participate because they
were informed just one day before the AGM. Most AGMs ere one sided affairs, with the CEO/PI
presenting the audited data important data on the periodicity and attendance in the board
meetings.
Compliance:
It was observed that annual financial audit was being conducted regularly in all FPCs.
Roles & Responsibilities undertaken by CEO, Accountant & other staff in FPOs
A. Chief Executive Officer: As per the Producer company act, every producer company
shall have a full time Chief Executive Officer (By whatever name called), to be appointed
by the board from amongst persons other than members.
During discussion I have found some important roles and responsibilities followed by
CEO are; He shall operate the bank accounts with joint signatory of a member of board of
director. He shall make arrangements for safe custody of cash and other assets of the
producer company, He shall sign all business related documents in behalf of the
company. He may exercise the powers as may be necessary in the ordinary course of
business. He shall be the part of procurement and marketing committee, He shall be also
responsible for maintain proper books of account, prepare annual accounts and thereof;
placed the audited accounts before the Board and in the annual general meeting of the
members. He shall also be responsible for providing timely information to the company’s

members and Board of directors for scheduled company meetings or emergency or short
notice meetings.
B. Accountant: Each company shall have a full-time accountant who shall maintain and
keep update all accounts related books and documents like cash book, ledger, voucher,
stock register and other inventories etc. He shall also do payment in behalf of the
company through prior approval of CEO/ Chairman and per advice of the CEO of the
company. During the absence of full time accountant of the company, AFM shall depute
his assistant for the same. Accountant shall not be the bank signatory of the company.
It is found that few FPOs having professionally educated CEOs (MBA, B.Sc. Agri,
PGDM ABM, and B.COM) it is important to have the professional degree to board
members.
C. Service Provider: He must be the farmer of the same or neighboring village. He shall
also practice all Agri activities in his field simultaneously during extension
/demonstration of new agriculture practices amongst other member farmers of the
company. He shall work as extension and commission agent of the company. He shall
execute distribution and collection activities at field level. He shall also provide hand
hold support to the farmers for implementation of new/advance agricultural practices as
per required by the clients company.
7.4 BUSINESS MIX

This section describes aspect of business/activity-mix carried out by sample FPOs. It also deals
with support received in the form of government grants and corporate, market linkages. Research
is based on case study method as well as personal & telephonic conversation where the
undersigned has queried on some generic questions. I was able to gather information related to
their Business development and strategies. I have conducted interview with 4 FPOs who are
doing extremely well in their field, selection is based on Business strategy.

Table 7.10 Selection of FPO based on unique Business strategy
Name of the FPO Supporting Resource Location

Institutions (RI)
Gambhira Agriculture Access Livelohood Cpnsulting Ankalav taluka, Anand,
Cooperative Society Ltd. India Pvt. Ltd. Gujarat.
Rudi Multi Trading Company Self Employed Women Navrangpura, Ahmedabad,
Ltd. Association (SEWA) Gujarat.
Krushidhan Producer Development Support Centre- Bopal, Ahmedabad
Company Pvt. Ltd Ahmedabad (Gujarat)
Dhari Krishak Vikas PC NGO promoted PC Amreli
North Gujarat Agro PC Farmers Union & 4 NGOs Banaskantha
7.4.1 Accomplishing Growth and prosperity under the cooperative framework: (Gamnhira
Agricultural Cooperative society Ltd.)
Financial
Development Input Selling Fund Provider
literacy & KCC
 To improve the social economic condition of its member’s cooperative spends money on
development activities like building rooms for the primary and secondary schools,
constructing small bridges canals, sewage, buying medicines etc.
 Cooperative has specialized director along with educated governing body. Educational
qualification is BSc Agri and MBA in Agribusiness. The cooperative body purchases
agricultural irrigation equipment, improves seeds, chemical fertilizers, pesticide, gypsum
in minimum price to the.
 FPO provides fund to their members to hire tractors, pay irrigation charges, land revenue
taxes. Most importantly they provide financial literacy to the farmers so they can use
KCC very effective manner.
7.4.2 Creating a rural Distribution Network for Women Farmers: (RUDI Multi Trading
Company Ltd.)
Market Access to Farmers Strong supply chain &
Tie Ups with Indian MNCs
Strenthening rural economy
 RUDI is a brand signifies quality and affordability. It sales farm produce after procuring
from marginal farmers at market price. Supply chain employs 100 of poor women, who
handle management and entire chain.

 Local distribution with village level supply chain with brand assurance links farmer to
end customer. This ensures capital rotates within the village and, thus, strengthening the
rural economy.
 RUDI products are distributed around 14 districts of Gujarat through its unique rural
distribution network, Rudiben.
 Enhancing market through tie-ups with private companies, such as ITC, Gujarat
Alkaline and Chemical Ltd, National Dairy Development Board.
7.4.3 Krushidhan Producer Company Ltd. Ahmedabad:
Input supply and promote welfare

collective bargain risk mitigation
Value addition of measures and
and sale of through insurance
agricultural facilities for the
products cover
products member farmers

Table 7.11 Business Mix & Profit Analysis of Krushidhan
*Values are in Lakh
7.4.4 Dhari Krishak Vikas PC (DKVPCL)

Dhari PC (Amreli district, Gujarat) was the first of its kind to get registered in Gujarat on 23rd
June 2005 by the farmers of the Water Users Association (WUA) established by DSC. Initially
farmers of 10 villages in and around Dhari that had implemented watershed program with
Development Support Centre supporting as Project Implementing Agency (PIA), collected a
share capital of rupees one lakh each of the ten WUAs contributed ₹10000/- as share capital.

Business: The major business of the DPCL has been the supply of agricultural inputs to its
members and on lending of NABARD loan to members of WUAs for land development.
Although inputs supply is available from DPCL to farmer members of the WUAs, at present only
800 to 900 of them (out of 4000) purchase from DPCL, the main reason being that DPCL sells
on cash and carry basis and does not provide credit.
The other activities carried out are soil testing, utilizing Trichoderma and caster cake for wilt
management in groundnut crop, integrated pest management and trial of high yielding varieties
of groundnut and wheat. DPCL has also introduced rose cultivation in the area. Linkages have
also been established with agriculture universities and research stations to train the farmers and
facilitate extension of successful technologies and demonstrations in the village. The DPCL has
also initiated wheat grading, as a first step to value addition as a decentralized activity
(NABCONS, 2011).
Its turnover also increased significantly to ₹10.4 lakh in 2015-16 and ₹15.59 lakh in 2016-17 and
during these 2 years it make net profit of ₹54000 and ₹29000 respectively. By 2017, its turnover
came down to ₹10.04 lakh with loss of ₹2.06 lakh. Besides inputs procurement it also procures
groundnut and papaya in 2017-18, which was of the order of ₹1.46 lakh and ₹1.84 lakh
respectively. Its business also became restricted to pesticides and seeds in 2017-18.
The DSC has taken loan of ₹10 lakh from NABARD at 6% interest per annum. DSC, DPCL and
the WUA each charge 1% service charge to the farmers. The repayment period is three to four
years. PC is also involved in groundnut and wheat seed production, grading and sales for the last
2 years. The PC procured 165 tonnes of cotton from farmers especially from distant villages. The
total procurement in terms of amount was around ₹51.15 lakh which directly benefited 130
farmers and resulted in a saving of around ₹1.0 lakh (in terms of transportation, time and labour).
The most significant outcome of this initiative was that the farmers were able to get good prices
for their produce at their doorstep.

Table 7.12 Business Mix of FPOs in Gujarat
Table 7.13 Profile of membership

Table 7.14 Business Profile of PCs
Producer Co. > Dhari Krishik Mahagujarat Farmer Crop Care North Gujarat
Parameter Vikas (Dhari, Agricotton (Bhvnagar) Agro (Palanpur)
Amreli) (Amreli)
Main business Seed, Pesticides and Cotton pooling, Mango Seeds and fertilizer Input supply and
fertilizer Export, input retailing trading papaya and
pomegranate trading
Year(2015-16)
Turnover (₹ In lakh) 0.002114 - - -
Profit (loss) in Lakh (0.13286) - - -
Year (2016-17)
Turnover (₹ In lakh) 15.59 1000 230.61 -
Profit (loss) in Lakh 0.29533 0.61320 -
Year (2017-18)
Turnover (₹ In lakh) 10.14 2500 289.34 21
Profit (loss) in Lakh (2.06) 26.98 2.78 2.0
Source of working Grant by DSC and Own fund No SRTT provided ₹ 5L

capital loans and own funds
Corporate and Better Cotton Gujarat Seed Ajit Seed, Pioneer, Desai fruits and
Government Linkage Management Project Cooperative and Mahyco, Gujarat Seed vegetables
for IKEA Pesticides company Corporation
7.4.5 North Gujarat Agro PC (Promoted by NGO)

NGAPC was organised under the North Gujarat initiative of International Water Management
Institute (IWMI) which was in existence from 2002 to 2008 and was later converted into separate
entity called Society for Integrated Water and Land Management (Sofiwalm) 63 supported by
SRTT since 2008. The PC was promoted by a supervisor working in the IWMI project to help
farmers with marketing solutions.
Total share capital of the PC is ₹3.205 lakh and it did a business of ₹27 lakh in input sales and
₹18,66,000 in output marketing which is mainly from papaya sale. It has ₹2.14 lakh dues from
farmers. It has a net profit of 2.07 lakh.

Business: Papaya sold to the Rajasthan traders with a turnover of ₹17 lakh in one season. The
input supply through PC included fertilizer, seed, bio inputs and equipment and it had a turnover
of ₹ 21 lakh (table no 7.14) The PC has license for sale of various inputs and charges 5%
commission on seeds and 5-10% commission on pesticides.
The PC has been in profit. As part of its input supply, PC also arranged potato seed for 15
farmers, who had deposited advance for the same one month before. The PC charged ₹1 per kg
on this. The PC also had shop in the APMC yard, besides a license to deal in output. SOFIWLM
has farmers base of 15000 including partners across 200 villages. Input supply is easier to do as
there is a channel credit available in this business. Though advance booking of inputs has to be
done, except bio inputs. But, now even the input supply by the PC has been stopped as
mobilizing working capital to pay advance for input booking was not easy.
The non-member business in input is only less than 10% of total (table 7.13). The PC has not
been able to establish a strong market linkage and presence due to shortage of working capital as
farmers need immediate need of cash on sale of the produce. Since the PC did not focus on small
and marginal farmer to begin with the members, many of whom are large farmers and are not
dependent on PC are not involved in PC. The SRTT provided ₹ 5 lakh to the PC under its small
grant programme for one year to meet the salary and other expenses of the PC. The CEO left in
the middle of 2017. Now, the PC has no professional staff, since the share value per farmers is
low, the members are not serious in running the PC.
7.4.6 Maha Gujarat Agri Cotton PC
MGACPC is established by Bhartiya Kissan Sangha (BKS). Its founder Mr. Prafulbhai
Sangaliya, The PC is registered at Bhavnagar C/o Onion Growers Cooperative federation.
Business: The main business of the PC includes cotton pooling, mango export, and retailing of
agricultural inputs through Apna Kissan Mall outlet at the Village and town level. It has 212
such outlets across 6 districts of which 86 are in Amreli alone. The PC also supplies cattle feed
to the member farmers and also sells grains and pulses at reasonable price after buying in bulk.
The ginning of pooled cotton is done on job work basis and farmers are paid for cotton seed on
the spot and a small as advance payment. Most of the cotton is sold in local and national markets
where as 40% mango goes for export and 30% for national market. Mango is directly handled
from Junagarh under Kesar gold brand. It exported 432 tonnes of mangoes. Its turnover increased
from ₹10 crore last year to ₹25 crore this year.

It has also exported mango through Gujarat Agri Industries Corporation (GAIC) and had done
contract farming of groundnut, moong and black gram for the State Seed Corporation
7.5 Performance of FPOs registered under SFAC
Figure 7.5 Various Program initiated by SFAC
20% National Demonstration Project -

NFSM
45%
Pulses Programme
35%
Vegetable Initiative for Urban
Cluster (VIUC)
7.5.1 Various Program by SFAC: 24 FPOs are registered under SFAC. SFAC registered FPOs
are doing mostly National Demonstration Project (45%), out of that 35% are doing Pulses
Program and 20 % are doing Vegetable initiative for urban cluster.
Commodities handled by FPOs: Paddy, Wheat, Brinjal, Ladies Finger, Pulses Programme, Green
gram, Black Gram, Pigeon peas, Tur, Soybean, Fruits and Vegetables
Observation:
 Out of 20, 3 FPOs Did not obtain input license
 11 FPOs are under 2-year programme, where no financial assistance was provided to
FPOs, only Resource Institution were provided financial support
Fig 7.6 Forward linkages activities
3
7 Bigbasket
3
eNAM
Ninja Cart
5
Reliance Fresh

Observation: Majority of FPOs are selling their product at Bigbasket i.e. 7, 3 FPOs are having
strong forward linkage with e-NAM and NCDEX. There is huge opportunity at Reliance fresh,
Ninja Cart. They are trying to capture more market.
7.6 Capital and Access to Bank finance

Equity Capital: In sample FPOs shareholders contributed ₹1000 as equity.
7.6.1 Bank Finance

NABKISAN Finance Limited is Non-Banking Finance Company (NBFC) notified by RBI. Main
objectives are to provide credit for promotion, expansion and commercialization of enterprises
engaged in agriculture. In Gujarat 25 FPOs are sanctioned for loan in different districts. Purpose
of loans are different and FPOs are doing succesful forward and bacward linkages activity.
7.6.2 Capital and Access to Bank Finance

 The field study observed that equity capital of ₹1000/- was contributed by each farmer
shareholder.
 NABKISAN is the major loan provider for different activities. ₹9lac loan is sanctioned
by NABARD
 24 FPOs are sanctioned loan for the following purposes fig 7.7 Where majority of the
FPOs (31%) have taken loan for Procurement of mango followed by Procurement and
marketing of Green gram & Pulses.

Fig 7.7 Purpose of sanctioned loan by NABKISAN
Maize Seed Production

8% 7%
8% 8%
Marketing of Cattle Feed via NCDEX
15% Procurement & Processing of Mango
31% Procurement and Marketing of Green Gram

&Pulses
Procurement of Groundnut & Wheat, Input
23% Supply
Procurement of Groundnut, Jeera, Retail sale
od Input & Grocerry
Procurement, Value Addition & Marketing of
Wheat, Ground Nut, Jeera, Mango

7.7 Cross State Analysis

Table 7.15 State-wise progress of FPOs promoted by SFAC and NABARD (As on 30.04.2018)
As shown in table 7.15, the number of farmers mobilised towards FPOs are highest in Karnataka
with 1,76,133 farmer members. More than 50% of total mobilised farmers belong to four states
namely Karnataka, Madhya Pradesh, Tamil Nadu and West Bengal. Karnataka also has the
largest number of FPOs i.e. 303out of total 2816 accounting for 10.7% of the total FPOs
registered in the country. The state wise analysis shows that 740 FPOs are promoted and a total
of 733658 farmers were linked to FPOs by SFAC and 2076 FPOs are promoted and a total of
588127 farmers were linked to FPOs by NABARD. SFAC promoted the largest number of FPOs
in Madhya Pradesh followed by Karnataka with 135 and 117 FPOs respectively. Maximum
number of FPOs promoted by NABARD is in Karnataka followed by Tamil Nadu. It is
significant to note that the largest number of FPOs is promoted by NABARD but SFAC linked
larger number of farmers to FPOs.On the whole, the number of farmers linked to FPOs are

highest in Karnataka and is followed by Madhya Pradesh, Maharashtra, Tamil Nadu, West
Bengal etc. On an average the SFAC promoted FPOs have larger number of farmers being linked
with 991 farmers per FPO than that of NABARD promoted FPO with 283 farmers per FPO. The
state wise analysis reveals that Manipur with 795 farmers per FPO is leading and is followed by
Haryana (707), Arunachal Pradesh (618), MP (585), Maharashtra (551), etc.
Table 7.16 State-wise number of promoting institutions involved in formation of FPOs

Promoting institutes:
Highest number of promoting institutions have found in Karnataka (85) constituting about 8.9 %
of the total promoting agencies functioning in the country. Karnataka also has the highest
number of FPOs registered in the state. It clearly demonstrates the importance of promoting
institutions in formation of FPOs. Other states which have high number promoting institutions
are Uttar Pradesh, Kerala, Rajasthan with 8.7, 7.72 and 6.56 % of the total promoting institutions
respectively. Andaman & Nicobar and Nagaland showed poor performance in the establishment
of promoting institutions with one institution each. NABARD has recognised highest number of
promoting institutions in the state of Karnataka (78) and is followed by Uttar Pradesh (77),
Kerala (73), Rajasthan (57), Andhra Pradesh (57), Bihar (52) etc. Similarly, SFAC has
recognised highest number of promoting institutions in the state of Madhya Pradesh (21) and is
followed by Assam (12), Uttar Pradesh (6) etc.
Factors influencing performance of FPOs: The factors that influence the performance of states
was analysed using the linear discriminant function analysis.
The states were classified into two groups’ i.e., high performing and low performing groups
based on the indicator for performance of FPOs as viewed by number of FPOs per agriculture
GDP (No./₹billions of agriculture GDP) (table 7.17).
1. It is observed that many small states like Sikkim, Mizoram, Meghalaya, Manipur and
Kerala have emerged among the good performing states.
2. Similarly states like Uttarakhand, Himachal Pradesh, Madhya Pradesh, Karnataka,
Odisha and Jharkhand have also emerged as the good performing states, while others fall
in the low performing states.
3. The results revealed that five factors were discriminating the states into two groups. It
can be inferred that the number of FPOs promoting institutions per gross cropped area
(No./000 ha of GCA) was the significant factor which has high influence in performance
of states and which discriminates the states to the extent of 54% of all the variables under
study.

4. Further, the variables like KCC per operational holding (8.98%), rural literacy (4.69%),
ease of doing business (20.80%) and number of markets (11.85%) also contributed to the
maximum towards the gap between the high and low performing states with respect to the
performance of FPOs.
5. Thus, it is revealed that identification and recognition of more of FPO promoting
institutions and creating favorable climate for them to perform would do a great deal to
enable states to move to good performing states.
6. The growth of FPOs across country and regions has not been uniform with more than
50% of total mobilised farmers belonging to four states namely Karnataka, Madhya
Pradesh, Tamil Nadu and West Bengal.
7. The highest number of promoting institutions have found in Karnataka (85) constituting
about 8.9 % of the total promoting agencies functioning in the country.
8. The number of FPOs promoting institutions per gross cropped area, ease of doing
business, number of markets, KCC per operational holding and rural literacy are
significant factors having bearing on the performance of the states.
Fig 7.1 Factors influencing performance of

number of
FPOs
markets
12%
Ease of doing
business
21%
POPI
54%
Rural Literacy
4%
KCC per
operational land
holding
9%

Table 7.17 Performance of states in promotion of FPOs
1
GCA= Gross Cropped Area
1
Manaswi B.H., Pramod Kumar, Prakash P., P. Anbukkani, Amit Kar, G.K. Jha and D.U.M. Rao, Progress and
Performance of States in Promotion of Farmer Producer Organisations in India, Indian Journal of Extension
Education Vol. 54, No. 2, 2018 (108-113)

CHAPTER 8
FINDINGS & SWOT ANALYSIS

Findings:
 BKS Promoted PCs doing well in business and performance.

 In Gujarat, NGO promoted PCs were not able to raise authorised capital to a large extent
which was anyway small (₹1-5 lakh) and shareholding was restricted to a few groups and
farmers. They did not have many professional managers.
Based on the study report I have prepared a SWOT analysis of FPO
Figure 8.1 SWOT Analysis of FPOs in Gujarat
•Weak implementation of
•Strong Agri Value Financials
chain system
•Low skill of CEOs and
• Market Linkages BODs
•Improved Extension •Improper Business plan
Service
• Distriution of Dividend
S W
o T
• PODF & PRODUCE funds
of NABARD •Patient Capital
• SFAC support •Competition
• CSR funding •Corruption
• Deendayal Antiyoday
Yojana- NRLM guidelines
for promoting PO
• Women Empowerment

STRENGTH
Agri value chain system:
 The major objective of integrating farmers into FPOs is to make agriculture profitable by
involving farmeres along the entire agricultural valuechain. In gujarat majority of FPOs
are doing good in both forward and backward linkages.
 Business process of FPOs are very inspiring. Majority of FPOs has license for procuring
and distributing of fertilizers to its members.
 A huge marketing platform of Mango is created during Mango festival.
 FPOs are doing procurement of different agricultural commodities.
 FPOs are supplying inputs in lower cost to the farmers and along with GoI aprooved
seeds.
 Aggrigation of out put: Some FPOs are doing business in online connected by e-NAM.
 FPOs are also doing business with MNCs like Bigbasket, Ninja Cart, Reliance Fresh.
 FPOs are selling their product by Brand name with attractive lebeling and packaging.
 Gujarat has huge potential for manufacturing &exporting of dehydratd onion & garlic.
 Gujarat FPOs created rural distribution network for women farmers
 FPOs are providing financial literacy to the members. Farmers are able to know about
different loans and schemes.
 They also helping farmers to use Kisan Credit Card in effective manner.
Governance and Group Dynamics:
 The study observed that the group dynamics and the governance aspects of sample FPCs
were quite encouraging. In all sample FPCs, farmers were mobilized at the primary
village level coming together as members of farmers’ interest groups (FIGs) of different
kinds with an average of 25 to 30 members per FIG. Rigorous meetings by the PIs in
each FIG was done before formation of FPOs.
 Equally Male and Female members are involved
 It was observed that for all FPCs, the annual financial audit was observed to be regular
and systematic. In majority FPOs was a computerized accounting system. The training

inputs received by the board members were quite minimal. In about six FPOS (46%), the
board members had undertaken exposure visit.
 The Board Members, Chairman and Chief Executive Officers are all selected from the
members; no outsider can take any post in company. It brings transparency and trust
among the members. Also there are annual general meetings generally in six months in
which whole activity, transactions etc. are revealed and discussed, all members have
equal right to give their views about the functioning of organisation, this strengthen the
working structure of an organisation
WEAKNESS
Major Findings: (Computed from field survey)
 Credit requirement to cover time lag between sales and payment.

 Operational expenses after completion of establishment grant
 Lack of ware houses
 Lack of marketing linkage
 Lack of trust among the members.
 Limited stake in decision making for procurement quota.
Exception: Krushidhan is developing own warehouse for storage and primary process of
agriculture produce. It will lower the cost of handling to the farmer.
GUPRO rented the redundant godown of APMC for which they pay out monthly basis
Management: Most of the FPOs are organised by small and marginal farmers and their
contribution to equity base organisation is often insufficient to cover even the operational cost.
Although these organisation are owned and managed by farmers but remuneration of staff like
board of directors, CEOs, Chartered Accountant needs to be covered by profit margins made by
FPOs.
Dividend distribution: There is a limitation on the amount that can be distributed as dividend.
Profit is largely distributed on the basis of “patronage”, which acts as a reward for members
contributing to the business. The member who are having larger share are gaining more but the
condition of small and marginal farmer are same.

Financial support: The producer companies, when formed, were supported by NABARD or
research institutes employed by it for three years. However, often, sudden complete withdrawal
of support after three years, makes those companies which have not become sustainable stagger.
The companies which started from zero take some time to become sustainable. So, along with
financial support, they should also be aided in their way of functioning. So such Step motherly
treatment by promoting institutes should be stopped.
Indifferent Government approach: The producer companies in our country face the challenge
in getting license, such as the Agricultural Produce Marketing Committee (APMC) licenses for
processing and trading. These are not given to PC because traditional cooperatives already have
licenses in many places. Many certificates are given to the cooperatives and there are no
provisions in the by-laws to provide such licenses to producer companies. Also, banks refuse to
lend to these companies due to lack of guarantees from either Central or State Governments.
Obtaining loan from Banks: Reluctance in lending loan to FPOs with small turnover and
absence of collateral makes it difficult. So strong Agri-value network needed along with strong
agribusiness professional to build the huge gap and attract the investors.
Marketing Problem: Conventional method of selling commodities will not generate profit.
FPOs lack of innovation does not attract the corporate buyers.
Exception: Krushidhan has setup its own yard where trained farmers especially women are
engaged in sorting of pulses and vegetables based on the size and quality of these products.
Online Trading: Gujarat is little slow in adapting technology. 2 L farmers are trading online at
NCDEX but Gujarat has not adopted this technology.
OPPORTUNITIES
 Role of NABARD and SEBI: NABARD and SEBI (Securities and Exchange Board of
India) are working together to improve farmers' participation at commodity exchanges
and help them get better prices for their produce.
 Role of DAY-NRLM: Under DAY-NRLM, initiatives have been undertaken towards
building value chain development interventions such as Mahila Kisan Sashaktikaran

Pariyojana (MKSP), MKSP Annual Action Plan, SRLM Annual Action Plan and World
Bank Dedicated Fund promoted most of the FPOs in Gujarat.
SRLMs facilitated by promotion of Producers enterprises.
 CSR Support: NABARD has initiatives mainly aimed at building empowered and
financially inclusive rural India. Producers Organisation Development and Upliftment
Corpus (PRODUCE) fund of Rs.200 crore has set up and most of the FPOs in Gujarat
funded and promoted by PRODUCE.
 SFAC & e-NAM: Marketing support by e-NAM in collaboration SFAC has huge
opportunity in Gujarat.
 Major Opportunity to the Agri input companies: Fertilizers and Pesticide companies
are growing interest for doing business with FPO, e.g. Super Crops Pvt. Ltd. Some
companies are providing agriculture implements on rent to the FPOs. Because there is an
opportunity of bulk selling and growing B2B business.
Agriculture input companies sometimes faces problem to sell their product to dealers. But
by selling in FPO they have an opportunity of huge customer at one place. Bulk selling
may decrease the transportation cost also.
THREATS
 Uncertainty about the support for the proposals related to FPO establishment and
Management.
 Competition with local traders.
 Misguidance & Corruption.

CHAPTER 9
RECOMMENDATION & CONCLUSION

RECOMMENDATION
1. Patient Capital & its solution: While their robust business models maybe one of the reasons
to attract investor’s capital, a mindset needs to be created to see these entities as viable business
enterprises. Patient capital and skilled resources need to be infused in building these enterprises
with a firm business plan similar to what NDDB is currently doing with its five milk producer
companies across five different states in India with phenomenal success by far.
2. Foreign Bank Lending & its solution: It’s difficult to meet the target of PSL, especially
lending in agriculture. The revised priority-sector lending (PSL) rules extend to foreign banks
and the RBI has given a roadmap with timeframe for foreign lenders to meet PSL targets. The
Reserve Bank of India (RBI) have to support arrangements for aggregating farm produce to
facilitate credit flow to the sector, especially from foreign banks operating in India. Aggregating
farm produce through Farmer Producer Organisations (FPOs) would give foreign lenders, which
have limited branch presence in India, an opportunity to lend to the agriculture sector
3. Loan waiver should not be frequent: Debt burden is not the only problem to the farmers;
Crop failures, social, cultural, ecological factors also lead to farmer suicides. There are occasions
where loan waivers are needed, but in the long term it is important to ensure that such problems
do not reoccur. So at first Government should focus on those aspects.
4. Problem to get APMC license: The next problem is to get the APMC (agriculture produce
marketing committee) license, which is a must for trading in agri produce. It is important to fix
this problem.
5. Treat Agriculture as a business: It is equally important to create an environment to attract
people with leadership skills. MBA Agribusiness Professionals or BSC Agriculturist are needed
to improve the management of FPOs. It is not the job of the government or NABARD to set up
an FPC. They should make enabling policies.
6. Innovative capital infusion mechanisms: FPOs need to onboard financing partners who can
address their capital requirements. Currently, direct equity investments not being permitted in
FPOs limit their capital access and growth potential. Potential alternative financing structures
such as guarantee fund, results-based finance and insurance structures to facilitate capital
infusion into FPOs need to be explored.
7. Apex body for FPOs: A self-regulatory body designed to protect the interest of FPOs and
farmer members is needed. This apex body can be responsible for policy advocacy on issues

affecting FPOs, establishing standards for strengthening governance and accreditation for
rating tools and service providers. It can disseminate best practices among FPOs and research
on the sector. Microfinance Institutions Network (MFIN) is an example. Established to
regulate the businesses of member-MFIs in India, MFIN has facilitated an effective
framework for responsible lending and client protection. MFIN’s work covers establishing
industry standards, surveillance, grievance redressal for MFI clients, advancing financial
literacy, and knowledge dissemination.
8. Startup India mission: FPO should be included in startup India mission. Which would
allow them a tax holiday for the first three years as well as access to cheaper funds. More funds
could also be made available through the SFAC. FPOs up to 100 crore turnover need not pay tax.
9. Unawareness:
Operation Green Mission was announced in Union Budget 2018-19 to promote farmer
producer Organisations, logistics, processing facilities and professional management. It also help
the farmer to control and limit erratic fluctuation in the pries of tomatoes, onions and potatoes. It
is essentially a price fixation scheme that aims to ensure farmers are given a right price for their
produce.
SAMPADA YOJANA (PMKSY) It include value addition, Integrated cold chain, Creation of
Forward and Backward linkages, Infrastructural Agro processing clusters, Food preservation &
preservation capacities. It will provide better price to farmers. Supply chain management will be
better from farm gate to retail outlet.
Venture Capital Assistance (VCA) Scheme is financial support in the form of an interest free
loan provided by SFAC to qualifying projects to meet shortfall in the capital requirement for
implementation of the project.
Most of the FPOs in Gujarat don’t have storage, grading sorting facilities. Because of
unawareness of those schemes and bad management system. SFAC and NABARD should look
into those matters and build awareness about such opportunities.
10. Thinking beyond NGOs: NGOs are playing crucial role in development of Producer
companies as promoting institute. They majorly run on a philosophy of social work because
that’s the area from where donation and aid come. Political Economy of aid and donation make
them work a certain manner and ultimately making these institutes fragile units which remain

small within a region. More approaches of social enterprises must be infused to change the
discourse and thinking for developing these companies.
11. Promoter conundrum: The FPOs are generally mobilised by promoting
institutions/resource agencies (RAs). The RAs leverage the support available from governments
and agencies like NABARD to promote and nurture FPOs but attempting an assembly line for
mass production of FPOs has not given the desired results. RAs should also have a clear exit plan
once the internal systems for appropriate management, governance and marketing systems is
established in the FPO.
12. Focus on productivity enhancement per unit of land: As the farm size per household is
decreasing and commodity prices being more driven by the global value chains, the chances of
exposing the primary producers to open market will increase. Therefore, a focus on enhancing
productivity per hectare by improved seed quality, better crop planning, rotation and shifting of
crops and development of value chains to reduce the transaction cost are required to make the
business case for smaller farmers in the market. ICT tools and block chain technologies are
needed. FPOs should have smart phone-based extension guidance to help reduce the cost of
cultivation and access information about market price of commodities.
13. Understanding needs and demands of market: Better understanding of future market;
demand for certain types of food can help farmers to cultivate accordingly.
14. NABARD SFAC MoU: Around 25 FPOs are registered by SFAC. As we know that there is
MoU signed by NABARD & SFAC for development of FPOs. Most of the FPOs under SFAC
doing good work but in Gujarat, scenario is different. A scattered model of FPO is been
observed. There is no collaboration between FPOs registered by SFAC & NABARD. So as a
result, some FPOs are doing extremely good business but some FPOs are closed due to lack of
working capital.
SFAC registered FPOs are shown strong forward linkage activity with companies like
Bigbasket, Ninja Cart & Reliance Fresh but that did not seen in NABARD registered FPOs.
RBI should focus on those matters and if those suggestion is followed properly than India could
have a bright future in agribusiness field. The vision of doubling of farmer’s income will be
achieved because lots of business opportunity is being created by FPOs.

CONCLUSION
The performance of FPO has not been satisfactory in most of the districts of Gujarat. There is a
need to synchronize the stakeholders including the State and Central Govt., officials, bankers,
financial institutions, private sector organisations to popularize the concept of FPO. A concerted
comprehensive campaign by NABARD as well as RBI needed to create awareness among
farmers to start companies. Producer companies if handled and nurtured properly can help reduce
the distress of our farmers and can make a sustainable long term change in the lives of our
farmers and at the same time can bring a business case for primary producers, especially farmers
who are more vulnerable to current market and environmental situation. Collectivization through
keeping the basic concepts of business and cooperation in mind can be the best solution for
farmers in the current context of neo-liberal and globalized market improvement.
Recent Report of Expert Committee (June 2019) on Micro, Small and Medium Enterprises under
former SEBI chairman Shri U.K. Sinha has suggested long-term solutions for the economic and
financial sustainability of the MSME sector. He included issues related to SHGs and suggested
solution for better performance of FPOs. According to the committee
1. it is necessary to transit Farmer Producer Organisation (FPO) to Farmer Producer

Company (FPC)
2. Department of Financial Services (DFS) act as Settlor for a Credit Guarantee Fund to be
operated by National Credit Guarantee Trustee Company Ltd. (NCGTC) for extending
Credit Guarantees to digitalised SHGs as well as producer collectives or Farmer Producer
Organisations (FPOs) which are registered entities. This Credit Guarantee may be
configured to provide up to 75% guarantee cover to these SHGs, FPOs, etc. for loans
between ₹20 lakh and ₹1 crore on the lines of Credit Guarantee Fund Trust for Micro and
Small Enterprises (CGTMSE), Education Loans, Skilling loans, etc. This will mean that
loans up to ₹1 crore would be effectively collateral free.

PHOTO GALLERY
Visit to Super Crop Safe Ltd, Agri input Wide range of Mango Varieties, Mango fest, Ahmedabad
Company
Mr. Jaywant Singh, Member of GUJPRO FPO promoted pushcart service for vegetables
buying pesticides from super crops safe ltd.

Annexure I
Questionnaire for FPO
Dear Respondent,
I am Sayan Biswas, summer intern at RBI Ahmedabad. As per my academic requirement I am

analyzing the relative growth and opportunity of FPO in Gujarat. I assure you that your feedback
will be dealt with strict confidentiality and used for research purpose only.
Name of the FPO……………………………………………………………………………….......
Name of the interviewing person………………………………… Designation…………...............
Name of the Promoting Organisation………………………………………………………………
Year of Registration. ………......District…………………Registration under…………………….
Primary Members…………………………… Male……………….. Female…………………….
Share Capital……………………………………
No. of Directors……………Education of the CEO……………...Salary Paid by…………………
Commodities handled ………………………………………...........................................................
Nature of Activity (Awareness Creation / Capacity Building / Business Plan / Facilitation Credit
/ Export / Others)…………………………………………………………………………………...
Annual General Body Meeting……………………………………………………………………..
Available infrastructure (Grading facility/ Processing/ Drying Platform/ Storage Structures/

Transportation/ Others)……………………………………………………………………………..
………………………………………………………………………………………………………
Forward Linkages…………………………………………………………………………………..
Business Model……………………………………………………………………………………..

Annexure II
Questionnaire for NABARD
1. NABARD allocated budget for FPOs
2. How Banks are working on it
3. Provision regarding fund
4. What are the schemes related to FPOs
5. Registration cost
6. Eligibility criteria
7. How can a farmer form a producer’s organisation?
8. Farmers generally do not have skills for running company professionally. The producer’s
organisation Promoting Institute (POPI) usually provides hand holding support in initial
periods but FPOs find it difficult once the support is withdrawn. What is your suggestion
to improve this situation?
9. Detail functions of FPO in Gujarat?
NABKISAN Finance LTD
An interview was conducted with Mr Kuldip Dixit (Business Development Manager of

NABKISAN Finance Ltd). During discussion I have raised some issue related to FPOs and
following points were being covered.
1. Performance of FPO in Gujarat

2. How many FPOs had taken loan?
3. How much loan given?
4. Purpose of Loan
5. Name of the borrower.
6. Name of the promoting institute.

Annexure III
CONTACT DETAILS OF GUJPRO BOARD MEMBERS & ALL MEMBERS
Sr.
Name of Farmers Producer Name of
No Address Mobile No. Email
Organisation (FPO) Contact Person
.
Amalsad Vibhag Vividh Mr.Hemantbhai P.B. No. 6,Po.Amalsad(Western

kssamalsad@gmail.com
1 Karyakari Sahakari Khedut Bhikhubhai Rly.), Manda : Amalsad, Gandevi, 9825115351
naikhemant@yahoo.in
Mandali Ltd Naik Navsari
Shree Abdasa Taluka Krishi
Mr. Jayeshbhai AT/Post : Kothara, Abdasa,Kutch-
2 Avam Pashupalan Vikas Producer 9825858919 kfffdt@gmail.com
Lalka 370645
Company Limited
Mr. 127/128 reva Ginning & pressing

Adivasi Khet Vikas Sangathan
3 Amardasbhai Factory,Kanwant Road, At.& Post . 9913276808 cohesionbaroda@gmail.com
Producer company Liited.
Rathva Naswadi-391150,chottaUdepur
Mr. Balubhai C/O RAVI MOBILE SHOP, NEAR

Somnath Farmers Producer 9228187801,
4 Parmar, BH. BHA. HIGH SCHOOL, sfpcl.gujarat@gmail.com
Compony Limited 9662533598
Mr. Jitesh Joshi KODINAR, Gir-Somnath
Building No.66, Survey
Mrs. Kavitaben
No.733,Pashupalak Mitra,Nr.ST 9825633295,
5 Upaj Producer Company Limited Maheta, Mr. upajproducerco.ltd@gmail.com
stand, ,Indraprasth,Navi Dhudhai, 9978997233
Gautam Sharma
Anjar, Kutch-370020
Virat Rural Agro Producer Mr. Sahdev Farm survey No.5, Naliya bhuj
6 9429947361 virat_naliya@yahoo.com
Company Limited. chavda Road,Naliya-370655,Kutch
Rukmavati Rural Agro Producer VRTI Campus,NagslpurRoad,Nr.Jain rrapcl_mandvi@live.com,

7 Mr. Sendhabhai 9712958751
Company Limited. Ashram, Mandavi,Kutch- 370465 skparegi72@gmail.com
Naran Plaza, First Floor, Bhidbhanjan

Mahagujarat Agricotton Producer Mr. Nayan
8 Chowk, Amreli- 8000300400 kisansahayak@gmail.com
Company Limited. Visavaliya
365601.(Gujarat,India)
Avirat Agro Producer Company Mr. Sureshbhai Opp. Kumar Shala, Main Road,
9 9408453322 aviratagro@gmail.com
Limited. Gohil Khambha,Amreli- 365650
Anjar Taluka Kissan producer Mr. Prabhat Paras complex, C/o Anarde
10 9825856353 atkissanpcl@gmail.com
Company Limited Miyatra Foundation, Anjar, kutch- 370110
Dahod/Garbada Taluka Desai Petrol Pump Compound,

Mr. Jaswant
11 Kheshtriya Udvahan Sinchai Garbada Road, At. Po. Tal. Dist. - 9979217775 lifedrationdahod@yahoo.com
Patel
Sahkari Sangh Limited Dahod
The Vibhagiya Udvahan Sinchai
Mr. Jaswant Opp. Government Rest House, At. Po.
12 Sahkari Mandali's Sahkari Sangh 9537377863 lifedrationlimkheda@yahoo.co.in
Chauhan - Palli, Tal. - Limkheda, Dist. - Dahod
Limited
Saiyer Pasupalan Ane Khet
Mr. Iqbal
13 Utpadan Producer Company 9913060008 sjskutch@yahoo.co.in
Ghanchi
Limited
Development Support Centre,
Krushidhan Producer Company Mr. Jasvantbhai Marutinandan Villa-1, Nr. Govt.
14 9601280050 dkvpcl@gmail.com
Limited Chauhan Tubewell, Bopal, Ahmedabad - 58,
Gujarat.
Devgadh Vibhag Parivar Utthan AT/PO : Junban, Mandavi, Surat-
15 Mr.A.M.Patel 8128691118 arvindbhai40@yahoo.com
Sahkari Mandali Limited 394650
Naran Plaza, First Floor, Bhidbhanjan
Sahakar Agri Producer Company Mr. Nayan
16 Chowk, Amreli- 8000300400 kisansahayak@gmail.com
Limited Visavaliya
365601.(Gujarat,India)
Mr. Devsi
17 Adesar Producer company Ltd
Parmar 9099969601

Annexure IV
BASIC PROFILE OF EACH SAMPLE FPO
No. of Members of Members Villages POPI
FPO NAME SHG/JLG Male Female Covered
Amalsad Vibhag Vividh Karyakari sahakari 28 42 Kutch Fodder fruit & forest
Mandali LTD 5319 2678 Development
Anjar Taluka Kissan Producer Company 1 SHG + Farmers 46 Shree Vivekanand Research
Limited & Training institute
Avirat Agro Producer Compny Private Limited NA 1200 565 12 GRISERV-BAIF
Dhamni Vibhag Bagayat Sahkari Mandali Ltd. 17 813 300 13 GRISERV-BAIF
Dixal vibhag Bagayat Sahkari mandali limited 28 1456 700 24 GRISERV-BAIF
Karchond Vibhag Bagayat Sahkari Mandali Ltd 25 JLGs 808 500 39 GRISERV-BAIF
Karjan Vibhag Bagayat Sahkari Mandali Ltd. 12 1442 1000 12 Dhruva BIAF
Mahagujarat Agri cotton Producer Company 15 11 Dhruva BIAF
Limited 5000 4843
Mandava Vibhag Bagayat sahakari Mandali Ltd. 25 559 400 13 Dhruva BIAF
Pindval Vibhag Bagayat Sahkari Mandali ltd 20 1361 1360 9 Dhruva BIAF
Rukhmavati Rural Agro Producer Company 10 12 Dhruva BIAF
limited 445 37
Sahyog Krishi Vikas Private Limited 25 320 0 12 Dhruva BIAF
Shahyadri Bagayat Sahkari Mandali ltd 25 801 400 12 Dhruva BIAF
Shree AbdasaTaluka Krishi Avam Pashupalan 1 SHG + Farmers 17 Development & Support
ikas Producer Company Limited 180 30 centre
Shree Khambhat Taluka Anusuchit Jati Sahakari 12 SEWA
Kheti Utpadak Sangh Ltd.
Shree Mundra Ujjas Mahila Kheti Ane 25 40 SEWA
Pashupalan Producer Company Limited 532 532
Shree Shakha Neher-2 Sinchai Sahkari Sangh 20 SEWA
Limited
Sukhi Mahila SEWA Mandal 14 4500 55 SEWA
Surendranagar Mahila and Bal Vikas Mandal 12 3000 65 SEWA
Sutarpada Vibhag Bagayat sahkari Mandali ltd. 32 1423 200 17 SEWA
Swashrayi Mahila Sewa Khedu Mandal 26 3000 55 SEWA
Swashrayi Mahila Sewa Khet Majur Association 21 3720 60 SEWA
The Chaswad Vibhag Parivar Utthan Sahkari 21 25 SEWA
Mandali limited 2616 500
The Devgadh Vibhag Parivar Utthan Sahkari 12 12 SEWA
Mandali limited 2908 700
Tutarkhed Vibhag Bagayat sahkari Mandali ltd 21 949 948 35 SEWA
Upaj Producer Company Limited 25 25 SEWA
Vasundhara Vrix Vanwadi Jalsinchan Vikas 16 55 SEWA
Sahkari Mandali Ltd. 2000 1500
15 Ujjas Mahila Sangathan,
Shree Mundra Ujjas Mahila Kheti Ane K.V.K campus, Sadau
Pashupalan Producer Company Limited 52 Mundra

Annexure V
PERFORMANCE OF FPO REGISTERED BY SFAC
Business Activities Annual Turnover during

(2016-17)
Revenue generated Revenue ₹ (in Lakh)
Forward
Programme FPO Name Major Crops through input generated
linkages
activities through
output
activities
Pulses Programme Adivasi Khet Bigbasket Cotton, Tur, Maize, Vegetables These FPOs were formed under 2 year programme, where no financial
Vikas Sangathan asistance was provided to FPOs, Only Resourse Institution (RI) were
Producer provided financial support.
Company Ltd.
Pulses Programme Kankrej Kisan e-NAM Castor, Cotton, Wheat, Bajara, These FPOs were formed under 2 year programme, where no financial
Prducer Pulses Programme asistance was provided to FPOs, Only Resourse Institution (RI) were
Company Ltd. provided financial support.
Pulses Programme Vadhiyar Kisan Bigbasket Castor Seed, Cotton, Guar Seed, These FPOs were formed under 2 year programme, where no financial
Producer Fruits, vegetables asistance was provided to FPOs, Only Resourse Institution (RI) were
Pulses Programme Vagad Kisan Reliance Castor Seed, Guar Seed, Cumin These FPOs were formed under 2 year programme, where no financial
Producer Fresh Seed, vegetables asistance was provided to FPOs, Only Resourse Institution (RI) were
Vegetable Shri Munikripa Bigbasket Tomato, Bitter Gourd, Brinjal, These FPOs were formed under 2 year programme, where no financial
Initiative for Urban Vegetable fruits asistance was provided to FPOs, Only Resourse Institution (RI) were
Cluster (VIUC) Producer provided financial support.
Company Ltd
Pulses Programme Bhal Pradesh Ninja Cart Gram, Cumin Seed, Wheat, These FPOs were formed under 2 year programme, where no financial
Vividh Khet vegetables asistance was provided to FPOs, Only Resourse Institution (RI) were
Utpadak Ane provided financial support.
Vechan Sahakari
Mandali Ltd.
Pulses Programme Dahod Gramin e-NAM GramGreen GramBlack Gram, These FPOs were formed under 2 year programme, where no financial
Adivasi Vikas vegetables asistance was provided to FPOs, Only Resourse Institution (RI) were
Producer provided financial support.
Company
Limited
Pulses Programme Netrang Pulse e-NAM Pulses Programme-Pegion Peas, These FPOs were formed under 2 year programme, where no financial
Crop Producer Green Gram, Black Gram , asistance was provided to FPOs, Only Resourse Institution (RI) were
Company Ltd. Gram and Cotton provided financial support.
Vegetable Quality Bigbasket NA These FPOs were formed under 2 year programme, where no financial
Initiative for Urban Vegetables asistance was provided to FPOs, Only Resourse Institution (RI) were
Cluster (VIUC) Farmers Producer provided financial support.
Company Ltd.
Vegetable Kheda Farmers Reliance NA These FPOs were formed under 2 year programme, where no financial
Initiative for Urban Vegetables Fresh asistance was provided to FPOs, Only Resourse Institution (RI) were
Cluster (VIUC) Producer provided financial support.
Company Ltd.
Vegetable Ekta Farmer Bigbasket Paddy, Wheat, Caster, Brinjal, These FPOs were formed under 2 year programme, where no financial
Initiative for Urban Producer Ladiesfinger asistance was provided to FPOs, Only Resourse Institution (RI) were
Cluster (VIUC) Cooperative provided financial support.
National Surydeep Adivasi Ninja Cart Pulses Programme-Pegion Peas, 3.85
Demonstration Pulse Producer Green Gram, Black Gram ,
Project -NFSM Company Gram and Cotton
Limited
National Bhumiputra Bigbasket Pulses Programme-Pegion Peas, 15.25
Demonstration Pulse Crop Green Gram, Black Gram ,
Project -NFSM Producer Gram and Cotton
Company
Limited
National Lilotri Pulse Ninja Cart Pulses Programme-Pegion Peas, 3.84
Demonstration Producer Green Gram, Black Gram ,
Project -NFSM Company Gram and Cotton
Limited

REFERENCES
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Case Study from India, IIM Ahmedabad
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differentiation? Development in Practice, 10(20, 178-188)
Farm Sector Policy Department & Farm Sector Development Department, NABARD Head
office, Mumbai (2015): Farmer Producer Organisation- Frequently Asked Questions (FAQs),
National Bank of Agricultural & Rural Development.
GoI (2010-11) Agriculture Census Division, Department of Agriculture and Cooperation,

Ministry of Agriculture, Government of India. Accessed on August 23, 2018 from
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Department of Agriculture, Cooperation and Farmers Welfare, Ministry of Agriculture and
Farmers Welfare, Government of India.
GoI (2018a) NABARD Portal On Farmer Producers’ Organisations. Accessed on July 22, 2018
from https:/ /nabfpo.in/images/staticFPO.html
GoI (2018b). State-wise list of farmer producer organisations in India. Accessed on July 22,
2018 from http://sfacindia.com/List-of-FPO-Statewise.aspx
Gurpreet Singh, Parisha Budhiraja & Kamal Vatta. Sustainability of Farmer Producer
Organisastion under Agricultural value networks in India: A case from Punjab and Gujarat.
Indian Journal of Agricultural economics. (2018) Vol. 71, No. 3
Hema Yadav (2018): Linking Farmers to Market: Opportunities and Challenges, National
Institute of Agriculture Extension Management

Krishna D.K (2019) Farmer Producer Organizations: Implications for Agricultural Extension.
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collective efforts, Indian Journal of Agricultural Economics, 45(3), 362-366.
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URICM PGDM-ABM (2018-20) Gandhinagar, Gujarat

Relative Growth and Opportunity of Farmer Producer

Prepared by, Under the Guidance of

Submitted in partial fulfillment of

Udaybhansinhji Regional Institute of Cooperative Management

“Relative Growth & Opportunity of FPOs in Gujarat”

“Relative Growth & Opportunity of FPOs in Gujarat”

Department of Agriculture and Cooperation, Ministry of Agriculture, Govt. of India has

“Relative Growth & Opportunity of FPOs in Gujarat”

It is my profound privilege to express my deepest sense of gratitude and indebtedness to

It gives me immense pleasure, while expressing my profound regard and indebtedness to my

“Relative Growth & Opportunity of FPOs in Gujarat”

Jasjeet Singh Kalra

“Relative Growth & Opportunity of FPOs in Gujarat”

I the undersigned, a student of Post Graduate Diploma in Management (Agri-Business) 2018-

“Relative Growth & Opportunity of FPOs in Gujarat”

PROFILE OF THE ORGANISATION

Objectives of the Reserve Bank of India

"to regulate the issue of Bank notes

Financial Inclusion and Development Department

“Relative Growth & Opportunity of FPOs in Gujarat”

 Institutions: Strengthening institutional arrangements, such as, State Level Bankers

“Relative Growth & Opportunity of FPOs in Gujarat”

“Relative Growth & Opportunity of FPOs in Gujarat”

 It is necessary to transit Farmer Producer Organisation (FPO) to Farmer Producer

“Relative Growth & Opportunity of FPOs in Gujarat”

1.1 Status of Small and Marginal Land Holdings in India: ......................................................... 2

1.3 Integrating Small Farmers/Producers with Markets.............................................................. 4

FUNDAMENTAL STUDY OF FPO ........................................................................................... 6

2.1 About PO ............................................................................................................................... 7

2.2 About FPO............................................................................................................................. 7

2.3 Benefits of FPO ..................................................................................................................... 7

2.4 Minimum share capital of Producer Company: .................................................................... 9

2.7 Different types of Producer Organisations: ......................................................................... 10

2.8 Registration cost of Producer Company: ............................................................................ 12

2.9 Structure of Producer Company: ......................................................................................... 13

2.10 Role of Central Govt. ........................................................................................................ 13

2.11 Critical Ecosystem for FPOs: ............................................................................................ 14

POLICIES, FINANCING AND INITIATIVES RELATED TO FARMERS PRODUCER

3.1 Financing the FPOs: ............................................................................................................ 17

3.2 Policy and initiatives of GoI/RBI: ....................................................................................... 17

“Relative Growth & Opportunity of FPOs in Gujarat”

3.4 Bankers Institute of Rural Development (BIRD) ................................................................ 19

3.5 NABKISAN finance Ltd. (NKFL) ...................................................................................... 19

3.6. Small Farmer Agribusiness Consortium (SFAC)............................................................... 20

GUJARAT STATE PROFILE .................................................................................................. 23

4.1 Agro-climatic zone: ............................................................................................................. 24

4.2 Operational holding ............................................................................................................. 25

4.3 Agricultural Production in Gujarat ...................................................................................... 25

4.4 Horticultural Production: .................................................................................................... 26

4.5 Animal Husbandry: ............................................................................................................. 26

4.6. FPOs in Gujarat: ................................................................................................................. 26

Figure 4.6: FPOs registered under SFAC.................................................................................. 27

REVIEW OF LITERATURE .................................................................................................... 28

5.1 Review of the literature: ...................................................................................................... 29

5.2. Setting the Stage ................................................................................................................. 31

OBJECTIVES AND METHODOLOGY ................................................................................. 32

6.1 Objectives in detail include: ................................................................................................ 33

6.2 Methodology: ...................................................................................................................... 33

6.3. Nature and Source of data: ................................................................................................. 33

6.4 Primary Data: ...................................................................................................................... 33

6.5 Secondary Data: .................................................................................................................. 33

6.6 Sample Design: ................................................................................................................... 34