LESSONS FROM THE FIELD: HOW TO SUSTAIN FARMER PRODUCER ORGANIZATIONS IN ANDHRA PRADESH
In many rural areas of India, farming is the main source of income, and smallholder farmers account for the majority of the agricultural sector in the nation. In the nation, Farmer Producer Organisations (FPOs) have been promoted as a means of assisting small farmers in realising economies of scale and, eventually, increasing household income.
Participants at a recent learning event for Andhra Pradesh stakeholders in India agreed that the FPO structure benefits smallholder farmers. First of all, the approach supports the goal of the central government to double the income of farmers. In Andhra Pradesh, there are 113 Farmer Producer Organizations in Andhra Pradesh dispersed over districts with 37056 farmers.
However, Andhra Pradesh’s large FPO population masks the fact that FPOs now lack the competencies and resources necessary to function as a corporate organisation. In order to guarantee their expansion and prosperity, they require ongoing technical assistance and capacity building. With the help of eight “lighthouse” organisations, Search NGO and its partners are carrying out that function under the FPO initiative. The implementing partners have given these FPOs training, marketing support, market connections, and other forms of assistance over the past 2.5 years to help them move closer to reaching their full potential. Other producer organisations will thereafter be able to replicate the lighthouse FPOs as models.
In Andhra Pradesh, many NGOs conduct learning workshops that provide stakeholders with an overview of the knowledge that project implementers have previously acquired. These results might enhance other FPOs:
Learning 1: Primary evacuation from the field to Farmer Producer Organization is a challenge for farmers
Farmer leverage of the FPO structure may be inhibited by distances of more than 20 kilometres between the field and the FPO. This problem is solved by using a hub-and-spoke approach, in which the FPO acts as the hub and the spokes, which are temporary collecting points nearer farmer fields, are the spokes.
After implementing the hub-and-spoke model, a few Farmer Producer Organizations in Andhra Pradesh witnessed a significant increase in sales and procurement, which encouraged other FPOs to follow suit. Since then, the FPOs’ sales have increased by 400 per cent.
Learning 2: Community resilience will depend upon diverse sources of income
Farmers may not necessarily receive a consistent income from the Farmer Producer Organizations in Andhra Pradesh in and of themselves. A sudden loss of crops or personal belongings still results in large revenue drops for agricultural communities because of poor rural infrastructure, climatic risk, and limited insurance coverage. This problem is partially solved by income-generating activities, which guarantee a variety of revenue streams.
The ability of income-generating activities to empower women in the community and have a beneficial knock-on impact on their homes is another important advantage. Women who engage in income-generating activities are better able to make judgements about what to buy for their families and themselves.
Alongside their crops, a lot of FPOs are now making black gramme badi. It earned a profit of INR 6 Lakhs on revenue of INR 58 Lakhs in FY 2021–2022, up from a little over INR 10 Lakhs in 2019 before Search NGOs became involved. People who engage in income-generating activities have also mentioned benefits in their mental and self-esteem. The panellists expressed concern that even higher levels of productivity and member involvement would result from reducing physical labour—for example, by mechanizing—and creating an atmosphere that encourages participation in revenue-generating activities.
Learning 3: To truly benefit farmers, the goals of the Farmer Producer Organization must align with farmer interests
Farmers may profit from economies of scale and group marketing thanks to the FPO model. The goals of the FPO and the interests of the farmers must, however, coincide. Farmer needs must be at the centre of FPO operations, both in terms of procedure and vision.
Learning 4: Farmer Producer Organizations require adequate working capital to succeed
Farmer Producer Organizations in Andhra Pradesh will not succeed even with the strongest business ideas if they do not have timely access to operating finance with flexible terms and competitive interest rates. In order to be able to quickly seize any business possibilities that may present themselves, FPOs should, in fact, include frequent outreach to financial institutions in their operations.
The other two legs of this platform are interconnected and comprise market links and astute implementation. Speaking at the workshop, representatives from three of the project’s lighthouse organisations stated that they anticipated higher sales and revenues in the upcoming quarter after implementing some of the interventions. This would improve their balance sheets and give them access to more working capital.
Learning 5: Productivity increase will only occur with access to quality—and convenient—agricultural inputs
farmers require access to quality inputs, in proximity to their fields and at the optimal times for their crops. Incorporating an input shop into the FPO structure is a win–win solution for farmers and the organization alike: Farmers get access to inputs; Farmer Producer Organizations in Andhra Pradesh enjoy increased revenues.
In the end, Search NGO offers high-quality input supplies together with additional services as a part of the FPO’s future business model, according to its officials. It has already secured licences to sell fertiliser to retailers, as well as licences to produce seeds for a variety of crops.
