An Insight Into the Functioning of the Rural FPO in India

INTRODUCTION

Farmers’ producer organization has been an emerging platform to safeguard and promote the farmers’ potential and products. Being a legal entity, it provides and ensures adequate and fair income to the producers. However, small producers or farmers have a very low say in acquiring the deserving amount for their produce since the involvement of intermediaries sometimes disrupts the chain through a lack of transparency and superiority. This is where an FPO in India comes into action for the proper marketing of the products and helps producers achieve economies of scale. 

To understand the current scenario of FPOs, this paper provides an insight into the potential, problems, awareness, benefits, marketing, and functioning of the FPOs, present in the states of Uttar Pradesh and Madhya Pradesh. The survey enlists a sample size of 150 FPOs from the two states.

METHODOLOGY

We conducted a primary survey to connect the FPOs to the responses for effective data collection. We portrayed the research and results using MS Excel and SPSS and interpreted and depicted the same using figures.

MAJOR CROPS 

From the figure shown above, one can derive that Paddy and wheat formed the central part of the produce marketed and used by the FPOs in Uttar Pradesh and Madhya Pradesh. Followed by maize and potato being the third and fourth highest number of crops used by the FPOs. The pool also consisted of mustard, bajra, lentil, and gram crops. Finally, a small portion of around 20 crops (approximately) consisted of coffee, onion, garlic, sugarcane, soybean, vegetables, spices, and peppermint as the products peddled by the FPOs.

FPO IN INDIA AND ITS SIZE

The central part of our survey included FPOs with a size of 500-1000 members from the states of Uttar Pradesh and Madhya Pradesh.

Any business in the market works for a purpose. In the same way, FPOs work towards the upliftment of the farmers in an organized manner. The survey included the benefits derived from FPOs and their work. One of FPO’s most essential advantages is providing updated farm machinery and inputs to the farmers of rural India for effective and efficient production. Produce, when sold collectively, gives higher earnings, which forms the second advantage of an FPO in India. They also prove beneficial in pursuing a lower cost of production and bargaining power when they are sold in bulk.

EXISTENCE OF ISSUES IN OPERATING A FPO IN INDIA

The current operation of the FPOs indicates the existence of problems that obstruct the effective sales and marketing of the products. More than half of the people conform to facing challenges and problems in the functioning of the FPOs. On the other hand, one can see that approximately 32% of those surveyed conveyed that they don’t face any difficulties operating their businesses.

PROBLEMS EXISTING IN THE FUNCTIONING OF FPOS

As FPOs, agreed to have problems in marketing and sales of their products, the survey also highlights the difficulties. One can observe that issues related to prices, time, and place prevail in the marketing of the product more or less with the same consistency. A mismatch between the sale of harvest and its price poses a barrier to the product’s sale. It also becomes problematic for the FPOs to find a fine and appropriate market where they can sell the produce.

Sometimes the problem exists due to a lack of leads and networks. Price also directs the emerging issues for the business to work. Getting a lower cost of the produce affects the profit margin of the FPOs, further lowering the potential to benefit its stakeholders. However, a few FPOs, mainly with a bigger size of members, do not have any problems with marketing and sales of the products.

Promoting and marketing the farmers’ produce is the primary task of a recent FPO in India. And, one can observe that a more significant half of the people surveyed follow and adopt marketing methods to merchandise the products. At the same time, 14.2% of FPO are still adopting any promotional techniques to sell their products.

The survey was also designed to discover the existing marketing tools used by the FPOs to mark the presence of their products in the market. It can be noticed that offline marketing forms a significant source for the FPOs when highlighting their products among the set target. It was followed by the inclusion of local advertising by using posters and hoardings to showcase their products. Mobile marketing also plays an important role, especially in connecting rural areas. Primarily it was ascertained that ‘word of mouth’ was prominently prevalent in the target audience when it came to marketing their product. In the case of social media marketing, Facebook and WhatsApp were used as platforms to inform the public about the products.

The The survey data also showed that word of mouth is the most applied tool for promoting the product for FPOs.

As farmers from the major stakeholder of any FPO, approaching and contacting them is the foremost process for the best FPO in India to function. As a medium, the survey had enlisted two means, i.e., personal meetings or the use of any apps for contacting. It is discernible that the majority section of the surveyed preferred WhatsApp and personal meetings as a platform to connect to the farmers.

FUNCTIONAL BODIES CONNECTED TO THE FPOs

It can be interpreted from the data that FPOs mainly sold their produce from the farmers to the local mandi, a place where farmers’ produce is sold by auction. This was followed by marketing the products to the Government bodies and adopting contract farming for a particular period to trade the products and provide fair compensation to the farmers and their upliftment.

Other bodies included private societies, corporate institutions, and private mandi, where the FPOs functioned and marketed their products. However, it can also be seen in the figure that the area wholesaler holds a small share in the buyer side of the products sold by the FPOs. Some mandi and companies such as Anmol traders Rajdeep seed, Tulsi seed, Chhibramau mandi, Rural mandi, PCU Company, Khedi lal, Rakesh Patel, and Naresh Patel are some of the platforms where goods are being sold.

In the market’s current scenario, FPOs with a profitable business of mostly 5-10%. On the other hand, FPOs with a larger size of 1000 and above mostly gain a percentage of 25-30% from the business. Instances in the Covid-19 situation, where farmers had to suffer because of the government bodies’ lack of support, are also directed towards reducing their profit.

COLLABORATION WITH COMPANIES

FPOs state a high percentage of agreeing to collaborate with other companies. Since the main motive of an FPO in India is to market and promote the product, taking support and connecting with other active and potential members in the market proves to be beneficial to them and their stakeholders. Where 75.8% accepted the significance of having an acquaintance in the form of other companies, 24.2% showed disagreement in functioning with other companies in the market.

When it comes to creating awareness, FPOs help in creating a platform where knowledge of entrepreneurship and FPO can be transferred from the organization to the farmers who lack support when it comes to farming and their livelihood structure; from the survey conducted, it can be deciphered that holding meetings and group discussions with the stakeholders are considered to be the primary means of FPO connecting to the farmers.

As small farmers are not tech-savvy, personal meetings are being organized to promote the benefits of an FPO in India and the importance of entrepreneurship. Meetings are then followed by group discussion, where both the parties can reflect their insights and doubts for better understanding. Taking the help of influencers is also one of the methods through which awareness is being generated.

CONCLUSION

Upliftment of the farmers forms a valuable part of an entire nation. It is crucial to secure their livelihood and identity. Farmers’ producer Organization is a platform to provide justice to the farmers and their produce. FPO is still progressing in a developmental state. Problems such as market dimensions need consideration to make the idea of the best FPO in India effective. There is a need for appropriate marketing tools to enrich the working of FPOs.