Why Agriculture is not an economical viable business?
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Before going in to the details
of the need for formation of producers organizations we have to look in to the burning
issues which are involved in agriculture, for agriculture and disparities among
the agriculture economic indicators.
In India, 49% population is still dependent on
agriculture while its contribution in GDP is 17% only - Highly mismatch equity
Farmers are not willing to undertake
agriculture and there is suicides at alarming rate especially in area under
cash crops - Agriculture is in distress and
setback to diversifications
Farmers are getting farm gates prices @1/3rd to
1/4th of their produces which is highly mismatch with the corporate models. In
any manufacturing and food processing industry are getting more than 50% of the
consumer prices. For example tractor industry are getting more than 80 % of the
consumer prices. affect viability
Smooth flow of formal credit of in agriculture
is still a challenge especially under investment credit in direct farm sector
and agriculture allied sector also. Farmers are getting production credit at
interest rates in the range of 9-10 % and investment credit in the range of
14-15% against the stipulated interest rate of 7% and about 12%, respectively
due to the leakages and corruptions in institutional financing system. costly credit with hassle
Slow transfer of technology from lab to land in
patch up mode by different stockholders according to their mandate and not in a
integrated manner. weak extension system with non-holistic
approach
Landholding size of farm decreasing day by day.
85% of the Indian farmers are small and marginal and having only 44% of the
total land holding. Non-economical size of individual
land holdings restrict high degree of mechanization
There is lot of problems in supply of agricultural
inputs under regulated markets. Seeds, fertilisers, pesticides. insecticides,
fungicides, micronutrients, liquid bio-fertilizers are being regulated by the
States. Although, there is lot of margins by aggregation of theses inputs which
can cut the agriculture production cost. - Scope
of reduction in input cost by aggregation
Marketing is
still a challenge for the farmers. There are three main reasons : one is low
quantum of market surplus by the individual small and marginal farmers, second
one is N number of inter-mediators who are holders also and third one is lack
of price discovery of agriculture
produces. Scope
of bulk marketing by aggregation and removal some of the non value addition
inter-mediatories
What are the interventions needed to make agriculture an economical viable business ?
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1
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2
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3
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4
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5
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Agricultural
Inputs
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Technology
Transfer
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Credit
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Marketing
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Risk
mitigation Measure
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Timely
Qualitative
Cheaper
Effective
Assessable
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Demonstrative
Proven
Adoptable
Updated
Integrated
Risk bearing capacity
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Hassle free
Timely
Absorptive
Need based
Multiplying effect
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Informative
Effective
Minimum level involvement of middle man
Direct To Home (DTH) Service
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Locally available raw material based,
socially acceptable and Marketable
Insurance
Adaptation & Mitigation Support
Integration of agriculture
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Gist of required supports/interventions to fulfill 5 major areas
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1
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2
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3
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Community Mobilization
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Agricultural Inputs Support
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Credit
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ü Formation of FCs / JLGs / SHGs / Farmers’
organization / Federation of the farmers through the sensitization programmes
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ü Soil Testing Facility / Soil Health
ü Seed Bank
ü Fertilizer Bank
ü Use of bio-fertilizer
ü Insect-Pest Management system
ü Storage Infrastructure Support
ü Support for mechanization system on
custom hiring
ü Irrigation scheduling
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ü KCCs
ü JLGs
ü Immediate
credit needs of the farmers against the harvested crops to avoid distress
selling
ü Formulation
of micro potential linked plan (MPLP)
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4
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5
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6
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Technology Transfer
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Marketing Support
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Support for Other Activity
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ü Farmers Information Center (FIC)
ü Survey of existing package of practice in
respect of the existing cropping pattern
ü Making Comparison Statement of existing
package of practices (EPOP)and scientific package of practices (SPOP) for
given existing pattern
ü Analyzed the Comparison Statement by
group of experts and list out the required interventions
ü Implementation of the required
interventions through the FCs/JLGs/SHGs in a demonstrative mode @ 50-50 basis
(i.e 50 % by EPOP and 50% by SPOP)
ü FIC should be supported with Agricultural
Information Software with updating facility
ü Monitoring and Evaluation by group of
experts
ü Documentation for making replicable
models
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ü Registration of the farmers organization
ü Mobile message system linking with FIC
ü Infrastructure supports for buffer stock
for which credit advances given to the farmers to avoid distress selling of
the produce
ü Rural Hat
ü Rural Mart
ü DTH Service in selling of Agricultural
Produce
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ü Popularization of Various Centrally
Sponsored Schemes with Animal Husbandry on priority
ü For dropout students and youths –
Capacity building programmes to set up their own units
ü Implementation of UPNRM Projects on BOT
basis
ü Supporting agro base small units for
specific produce in a cluster mode
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What is FPO-GRID ?
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A FPO GRID would be networking of existing / newly formed FPOs within particular geographic locations. It may be a networks of FPOs within the State or in two or more States come together without graduating it in to any higher level federation/s.
Importance of FPO-GRID ?
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It
will provide easy market assess to newly growing FPOs with minimum efforts and
low transaction cost.
One
more level mediator can be reduced outside the District/Division.
Most
of the FPOs are graduating for doing business of specific commodity like seed
production, dairy, poultry, banana, mushroom etc. Hence, during lean period and
when there is no own surplus produce are available for marketing, in that period
produce / products of other FPOs can be traded through the APMC- Mandi Samiti.
Provide
a platform to undertake trading business of agriculture produces/inputs of
other FPOs in own area this will give additional margins to FPOs.
Ultimately
it will increase economic size of the business, lowering risk, increase margin
and a vibrant marketing network can emerged in due course which is necessary
for the sustainability of the FPOs.
Seed
capital is biggest problem for newly graduated FPOs, hence the strong FPOs can
support to weak and newly graduated FPOs.
These
FPO-GRID can become a National Market where farmers would have no
boundaries.
This
FPO GRID will enable to make platform for price discovery which is the biggest
hurdle at present while fixing wholesale prices of agriculture produces.
Example of Trading Business
of other FPOs.
Banana
produce of Kushinagar Banana Producer Company Limited in District Kushinagar
can be traded by FPOs in Lucknow, Kanpur, Ghaziabad, Noida, Ludhiana etc. and
earn additional margin as a commission agent.
Kinnoo
produce of FPOs in Haryana can be traded by Kushinagar Banana Producer Company
Limited in Gorakhpur Mandi ( KBPCL, Kushinagar is planned to undertake
trading of Kinnoo in Month of December 2015).
Mango
produce of FPOs in Lucknow and Hardoi can be traded by FPOs in Kanpur,
Ghaziabad, other cities and earn
additional margin as a commission agent.
Actions need to be taken :
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All
the stakeholder especial Producers Organization Promoting Institutes are requested to think and incorporate it trading
in their business model.
All
FPOs are requested to take licence of prominent APMC Mandi in their regions. (Kushinagar
Banana Producers Company Limited has already registered as a traders in
Gorakhpur Mandi ).
Build
up data base regarding produces available for sale in future.
Government
Promoting Agencies are required provide grant support for development of a intranet
for all the FPOs registered in UP/other States so that they can share
the availability of supply of their produces / products and updated Mandi rates
of respective regions.
Intranet
would also help in extension of technology transfer, bankable model projects,
synergy of Centrally and State Sponsored schemes and awareness of other
innovative products.
These
FPO would be our future partners / helping hands of Governments / Corporate /
Financial Institutes, who can help in outreaching our developmental and
promotional activities at gross root level as well as they will act as a
agricultural extension agencies which is very week and require extra momentum
in INDIA.