Agriculture & Rural Development FPO Conclave 2021 Bengal Chamber Kolkata

1st Edition of FPO Conclave 2021 - 4th & 5th October 2021

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Day 1 - 4th October 2021
Day 2 - 5th October 2021

TThe National Bank for Agriculture and Rural Development (NABARD) and The Bengal Chamber of Commerce and Industry (BCC&I) are organized a two day FPO Conclave on 4th & 5th October 2021. We are of the opinion that it is time for West Bengal to have a State Focused FPO Promotion Policy and as well as District-Based Clusters for boosting agro product marketing in the region. Keeping this perspective in mind, a two day FPO Conclave was organized to provide a platform to the policy makers, thought leaders and all stakeholders to come to a single platform to share their thoughts and ideas.

The main objectives of the conclave were:
▪  To discuss major challenges faced by the FPOs and finding out the ways to overcome them
▪  To discuss the desired structural changes in policy, technology and investments to address the various challenges faced by the FPOs
▪  To frame strategies for integration of FPOs in value-chain and minimize the role of the agents
▪  To discuss the role of the States, industry and institutions towards the trade and agri-businesses, creation of value chain through FPOs.
▪  To discuss the challenges, opportunities, and the strategies as well as the approaches that facilitate the growth of FPOs

The platform showcases the major aspects of all the deliberations of the distinguished speakers divided into various sessions and finally the recommendations which are the outcomes of the conclave.

INAUGURAL SESSION- DAY 1 - FPOS- CATALYSING FARMERS INCOME

The honorable speakers of this session were:
▪  Dr G.R Chintala, Chairman, NABARD
▪  Shri Rajesh Sinha, IAS, Secretary, Dept of Agricultural Marketing, Government of West Bengal
▪  Dr A.R Khan, Chief General Manager, NABARD
▪  Mr Jayanta Chakraborty, Chairperson, Agriculture & Rural Development Committee, The Bengal Chamber & Senior General Manager, Indofil Industries Ltd.

The conclave started with a Welcome Address by Mr Jayanta Chakraborty, Chairperson, Agriculture & Rural Development Committee, The Bengal Chamber & Senior General Manager, Indofil Industries Ltd. According to Mr Chakraborty, it is time for West Bengal to have a State focused FPO Promotion Policy and development of District-based Clusters for proper agricultural marketing. At the end of his speech he said that three very crucial challenges faced by the farmers are marginalization of farmers, fragmented land holding and climate change which are needed to be addressed by policy makers.

The Key Note Address of the conclave was delivered by Dr. G. R Chintala, Chairman, NABARD. His deliberation was focused on better returns of FPOs and specific reasons for which the income of the Indian farmers remained more or less stagnant even after a significant rise in the agricultural output and productivity. Dr Chintala revealed that in the last 8-9 years, around 5000 FPOs had been created by NABARD and around 4000 FPOs were created by the Departments of different State Governments and others. Today, there are around 11000 FPOs in the country. Based on the available information from 5000 FPOs under NABARD, an analysis was done for a period of 6 years. The main benefits were due to the trader's commission getting transferred to the farmers, lower input price and higher procurement price. Again, out of these 5000 FPOs under NABARD, around 2500 FPOs are already into grade A and grade B, that is, investment grade. They are also getting money from the banking system and NABARD subsidiaries like NABKISAN and others.

Dr Chintala said that in the process of making India a 5 trillion-dollar economy, the 140 million farmers in India play a very important role. For this, the farmers need to scale up the operations with a new kind of technology. The marginal farmers can hire machineries, warehouses etc if they lack funds of buying those. At the end of his address, Dr Chintala advised the FPOs need to get organized in a much better way and to go for a process of value addition, so that the entire money can flow back to the farmers. This will surely motivate the farmers and indirectly increase their productivity in a significant manner.

Mr Rajesh Sinha, IAS, Secretary, Department of Agricultural Marketing, Government of West Bengal spoke on 'Transition Strategies- Agriculture to Agri-business.' He said that about 6-7 stages of intermediation are involved in the process of selling agri-products from the farmers to the final consumers. The profit margin of agricultural products is not high and the existence of these intermediaries further reduces the profit margins of the farmers. The middlemen are making money either at the cost of the farmers or at the cost of the consumer. Thus, there exists large scale disguised unemployment in this sector. Mr. Sinha suggested that the removal or minimizing the involvement of the intermediaries from the agi supply chain is a crucial task and formation of FPOs can play a major role in addressing the issue.

Dr A.R Khan, Chief General Manager, NABARD focused his deliberation on necessity of forming more and more FPOs in West Bengal. He explained how FPOs can form successful cooperatives like Amul. According to him, the only difference in cooperatives and FPOs is in their organizational and legal structures. He stated that FPOs can address current challenges like:
▪  Consequences of climate change
▪  Rise in food demand, both in terms of quality and quantity
▪  Diminishing land sizes, making it difficult for the farmers to use modern equipment and tools.

A minimum support of 3-5 years needs to be provided to the FPOs. The capable and active members of the FPOs must be properly identified and should be given a desirable position in the management. The foundations of FPOs must be strong enough and must be properly designed.

He informed the audience that the problems can be addressed if the farmers get united and this is the main motive of organizing FPOs. According to Dr Khan, FPOs being unsuccessful does not mean that the farmers are unsuccessful or the product they are producing is lucrative. Unsuccessful FPOs imply that there have been certain loopholes in different aspects. Due to this, a minimum support of 3-5 years needs to be provided to the FPOs. The capable and active members of the FPOs must be properly identified and should be given a desirable position in the management. The foundations of FPOs must be strong enough and must be properly designed. This can be proved from the case of West Bengal. Data shows that FPOs which had followed a proper strategy has been successful in raising the income of their members by a rate of around 30-40%. In any FPO, collective planning is very much necessary. Thus, the design of the FPOs must be strong. He concluded his address by stating that the yardstick for determining whether a FPO is successful or not, must not be its turnover, but the fact whether there has been an increment in the income of the member farmers has to be taken into consideration in this regard.

PANEL DISCUSSION ON 'FPO GOVERNANCE, MANAGEMENT AND STATUTORY REQUIREMENTS, SUSTAINABLE BUSINESS MODELS & SUCCESS STORIES':
The honourable guests for this panel discussion were:
▪  Chairman- Prof Sukhpal Singh, Centre for Management in Agriculture (CMA), IIM Ahmedabad
▪  Rapporteur- Mr. Nirmalya Mandal, Director- Ecociate Business Consultants Pvt Ltd
▪  Panellist 1- Mr. Vilas Vishnu Shinde, Chairman & MD, Sahyadri Farms
▪  Panellist 2 - Mr. Bijan Pusti, POPI
▪  Panellist 3 - Mr. Rajib Mohanty, Senior Consultant, MART
▪  Panellist 4 - Mr. Debasish De, PRADAN

Prof Sukhpal Singh shared his experiences of working with more than 35 FPCs across five different States of India. He said that FPOs are no longer unfamiliar entities as they are very much part of the agribusiness. According to him, States like West Bengal and Tamil Nadu are working very closely with their entities and providing very active support. There are also some other States which are proactively looking after the development of these entities. There are also many corporate foundations and private sector players who are looking at promoting and working with such entities. There are variations in the character of the FPOs in terms of their business models, service networks, needs etc. These characteristics depends on who is promoting the FPOs/FPCs and the quality of help that they are receiving. He emphasised on the needs of innovations- new ways of governance and managing the entities.

Mr. Vilas Vishnu Shinde, Chairman & MD, Sahyadri Farms started his deliberation by sharing the experience of the journey of Sahyadri, a horticulture farm organisation which started on a individual scale with the production of grapes. Before setting up the organisation, in the initial stage, Mr Shinde tried to create his own value chain.

While working on this, Mr Shinde realised that with only 2-3 acres of land, it was difficult for him to create a sustainable value chain. That was the time when he started approaching other farmers to join with him.

From 2006-2010, Mr Shinde and his partners worked on enhancing the value chain for the grapes that were being produced in Nashik and started exploring the global markets. From the beginning, Mr Shinde understood that there was an urgent need for aggregating farmers together so that the farmers also have bargaining power. He realized that integrating other horticultural farmers engaged in the production of coconut, tomatoes, bananas was necessary for further expansion.

Mr Shinde also shared his experience some critical issues which they needed to keep in mind were like shelf-life of fruits, quality needed for export etc. He suggested that farmers can be benefited by:
▪  Collective farming
▪  Integrated Value Chain Approach
▪  Researching and making the organisation capable of competing in the global market.

At present, Sahyadri farms have around 1200 farmers engaged in cultivation over an area of 600 acres.

Mr. Rajib Mohanty, Senior Consultant, MART said that India has a great potential in agriculture. It is the largest producer of pulses, sugarcane, cotton and milk in the world and the second highest producer of wheat, rice, fruits and vegetables. It is the largest producer of tractors and has the second largest arable land. Agriculture also is very important from the employment point of view because it employs around 58% of the workforce in the country. Again, agriculture contributes to around 15% of the GDP and India is among the top 5 net exporters of the world. He added that the Government has been an active investor in the agricultural field. The AGRI INFRA fund of $14 bn has showered benefits to farmers, FPOs, PACs and Agri Tech entrepreneurs and start-ups.

Mr Debasish De from PRADAN, a non-government, non-profit organisation with more than 400 university educated, socially motivated professionals who are trained and placed to interface with community at the grassroots spoke about the issues that they face while working at the grass-root level. At present, PRADAN is working in 9 States in India. In West Bengal, it is working in three districts- Purulia, Bankura and Jhargram, operating in around 1230 villages. At present, it has been successful to have an outreach to 1.2 lakh people (all women).

The whole procedure of aggregating women farmers together was named as Agriculture Production Cluster. Approximately 70000 women farmers are working with PRADAN (WB) in these regions. From them, PRADAN has already created 5 FPCs, constituting of around 11000 women. In the last 6-7 months, around 900 metric tonnes of product has already been marketed via this initiative of PRADAN.

On the 2nd day of the conclave, Mr Malay Kumar Poddar, CMD, AIC India Ltd. said that even after the other risks are taken care of, the residual risk needs to be transferred though insurance mechanism via the insurance companies available in the market. There are various insurance companies in the market. With addition to these, The Agricultural Insurance Company (AIC), under Government of India, was established in the year 2002. The mandate of AIC is to implement Government supported crop insurance schemes and reduce the insurance gap in the country. AIC operates in all the States. At all-India level, the Central Government Scheme - 'Pradhan Mantri Fasal Bima Yojana' is currently functional. Three years ago, the State of West Bengal has come out of this scheme and has started its own scheme- 'Bangla Shasya Bima Scheme' (BSBS). Under BSBS, satellite remote sensing is exponentially making use of AI/ML models for various agricultural applications like crop mapping and productivity analysis. The scheme has covered over 6 million farmers of West Bengal. In collaboration with the Agriculture Insurance Company of India and the National Remote Sensing Centre, ISRO, the Government of West Bengal is implementing the scheme in the State for the last three seasons since kharif 2020.

Ms Neelkamal Darbari, IAS, MD, Small Farmer Agribusiness Consortium (SFAC) delivered her speech as the Guest of Honour of the Conclave. She said that there are no alternatives but to create collectives so that the bargaining powers and their strengths can be increased.

Ms Darbari focused on two major problems related to FPO credit facilities and market linkages. The basic problem that the FPOs face is related to availability of credit facility. In the last 5-6 years, less than Rs. 500 crores of credit has been mobilised towards the FPOs from all sources taken together. The coverage of the number of FPOs was also insignificant. Another challenge is direct access to market. For most of the FPOs, the local mandi is the only market available to sell their products. Ms Darbari shared a case study of some onion producers from Rajasthan. The onion producers wait on the roadside with trolleys full of onions. They sell these onions to truckers crossing that way at prices of Rs. 4-5 per kg. Due to the low remunerations that are attained from the resources owned by the farmers, the farmers are getting de-motivated and are migrating to towns and cities for earning a living other than agriculture.

She said that the FPOs work for facilitating resources and assets that help the farmers in earning their rightful price. She added that it doesn't make sense to buy high costs capital intensive technologies for all farmers. This led to the concept of custom hiring centres where machineries like harvesters and tractors are rented. FPOs have a role to play in the establishment of these centres too. If the FPOs engage in these activities, they can also earn additional revenues.

The next and the final speaker of the session was Shri Pradip Kumar Majumdar, Advisor to Chief Minister, Government of West Bengal. He started his speech by explaining about the inadequate amount of crop production in 1960s. He stated about PL 480, under which India received 160 lakh tonnes of wheat and 10 lakh tonnes of rice at the cost of a 32% depreciation of rupee value. From that situation, now Indian farmers are producing surplus food-grains. This surplus production without analysing the demands of the market has cause the prices of the food-grains to fall drastically, resulting in lower per unit revenue of the farmers.

In West Bengal, around 2.5 crore tons of rice is produced every year, which is the highest in the country. But due to the lack of demand, the prices remained low. Thus, he emphasized on the fact that production should always be based on the demand of the market. He suggested that different organizations including the chambers of commerce should take responsibilities in providing insights and information to the farmer regarding the market demand. At the same time, aggregation of farmers is very much necessary. Due to the attempts of the Govt of West Bengal, at present around 150 FPOs are operational in the state. While concluding his speech, Mr Mazumdar urged people capable of analyzing and determining the demand of agricultural products, to work together with agricultural extension officers and agricultural scientists, and, make sure that such standards are achieved by the farmers.

The conclave also addressed the banking and other financing options for FPOs and also promoted start-up ideas for FPOs during the Conclave.

The concerned departments of the State Government, NABARD, Agricultural and Processed Food Products Export Development Authority (APEDA), Small Farmers' Agri-Business Consortium (SFAC), Agri Exporters Association of the State, Agriculture Insurance Company of India (AIC), National Commodity Service Organizations like NCDEX, national level agri inputs companies, corporate players in agri business, agri start-ups, representatives from FPOs throughout the State, NGOs working in agricultural field, thought leaders and policy makers actively participated in the conclave.

1. Mr. Jayanta Chakraborty, Chairperson, Agriculture & Rural Development Committee, The Bengal Chamber & Senior General Manager, Indofil Industries Limited addressing the gathering.