Executive Summary

India is the land of marginal and small farmers. According to the Agriculture Census 2010-2011, more than 67 per cent of the farmers are marginal farmers i.e. they hold less than one hectare of land. Nearly 18 per cent of farmers are small land holders who possess one to two hectares of land, 10 per cent are semi-medium who have two to four hectares of land, 4.3 per cent are medium land holders who have four to ten hectares of land and only 0.7 per cent of farmers are the large land holders, who own more than ten hectares of land.

The farming community is facing a lot of constraints due to the small size of operations. These include the inability to work on economies of scale, low bargaining power because of marginal marketable surplus, lack of capital, inability to access credit and inputs at subsidised rates, lack of market access and lack of knowledge and information among others. The primary objective of forming Farmer Producer Companies (FPCs) is to organise marginal and small farmers into a group which can aggregate its own produce and collectively market the aggregated produce and collectively buy the inputs. FPCs acts as a platform to pool in resources and optimally utilise these resources for the collective benefits of the group. The broad areas of support and services provided by the FPCs are marketing, market information, transportation, cold storage, irrigation, extension services and technology, input supply, product planning and product branding.

As of the year 2017 there are more than 5,000 FPCs in India. These FPCs got initial support from the National Bank for Agriculture and Rural Development (NABARD), Small Farmers Agribusiness Consortium (SFAC) and state governments. NABARD is presently supporting 1,349 FPCs while SFAC has promoted 814 FPCs in different states. There are various schemes at the state level such as Livelihood Missions that are also promoting producer companies for various commodities and business activities.

A large number of FPCs are being promoted in Maharashtra by NABARD, SFAC and state agencies under different projects such as Maharashtra Agricultural Competitiveness Project (MACP), Agriculture Infrastructure Development Investment Project (AIDP) and Convergence of Agricultural Interventions in Maharashtra (CAIM).

According, to the Department of Agriculture of Maharashtra, Government of Maharashtra, there are 1,368 registered FPCs in the state. Maharashtra have been among the top states in FPC promotion as it houses almost 20 per cent of FPCs running in India.

However, despite all the efforts, FPCs are unable to deliver the expected outcome as they are marred by various issues and challenges which have been listed below.

1. Poor professional management due to their financial and organisational inability to have competent Chief Executive Officers (CEOs) and other professionals to manage FPCs.
2. Lack of technical, business and managerial skills in members to build and operate FPCs.
3. Lack of vision and direction from promoters and Board of Directors (BoDs).
4. Low equity base due to low share value resulting in dependence on funds/grants from outside.
5. Weak credit linkages of FPCs even after accessing support from the organisations who are promoting the FPC. Inability to attract capital or credit from outside due to poor financial climate from banks and promoters/ directors not being able to comply with the legal requirements to access finance.
6. Inability to attract capital or credit from outside due to poor financial climate from banks and promoters/ directors not being able to comply with the legal requirements to access finance.
7. Low awareness of the bankers on FPC concept.
8. Except for NABKISAN Finance Limited (NABKISAN), no other commercial/cooperative bank or Regional Rural Banks (RRB) has designed a loan product specifically for FPCs and no such loan policy has been formulated at the corporate level to finance FPCs.
9. FPCs sometimes choose their activity portfolio without keeping in mind their member centrality.
10. The negative experience of modern retailers with producer companies and vice versa. Modern retailers have not shown enough trust and patience while dealing with FPCs as they fail to understand the social dynamics of FPCs.
11. Challenges in the delivery of quality product in the required time frame.
12. Every FPC is answerable to their members and it becomes very difficult for the board of FPC, to face their members in the absence of any loan, input purchase etc.

Under this study, an effort has been made to understand the current status of the functioning of FPCs in Maharashtra. The FPCs have been categorised as per their performance and on other parameters and accordingly recommendations have been proposed, to prepare Strategic Action Plan for the state.

As per the records from the Department of Agriculture of Maharashtra, out of 1368 registered FPCs in the state, assessment of 131 FPCs have been done in 21 districts of Maharashtra. The highest number of FPCs were covered in Nashik whereas, the lowest numbers were covered in Nagpur.

Detailed profiling of FPCs covered under the study have been done, which has the following important findings:

1. In Maharashtra, FPCs have been promoted by agencies such as NABARD, SFAC, MACP, Japan Fund for Poverty Reduction (JFPR), Agriculture Technology Management Agency (ATMA) and some of the other agencies by the farmers themselves.
2. FPCs covered under the survey covers 5-50 villages and have a membership base ranging from 50 - 1000 farmers.
3. Most of the FPCs are dominated by marginal and small farmers. FPCs also have a good representation of various social classes such as Scheduled Castes (SCs) / Scheduled Tribes (STs), Other Backward Classes (OBCs) and general caste.
4. Most of the FPCs (almost 76 per cent) have appointed CEOs / Managers for taking care of their day- to-day operations of FPCs. However, educational qualification of these CEOs / Managers varies from below high school to post-graduation.
5. A large number of FPCs (29 per cent) are not conducting any marketing activity for the participation       of members. There are 28 per cent FPCs, which have a participation of fewer than 100 members in the activities conducted by the FPCs and 37 per cent FPCs have witnessed participation of 100 to 500 members in the activities conducted by them.
6. The range of turnover of FPCs varies from few lakh rupees to above a crore. However, maximum FPCs do a business of upto INR 50 lakhs only and have a profit of less than INR 5 lakhs. Almost 45 per cent of the surveyed FPCs have not mentioned any profit from the business activities during the survey.
7. There is a lack of adoption of practices for keeping accounts updated, conducting audits and fulfilling statutory requirements.

The categorisation of FPCs have been done by developing derived variables, based on the combined values of selected primary parameters, the information for which was collected during the survey. The categorisation criteria developed are discussed as under.

Based on these parameters, following categories have been defined.

Each category mentioned above has different approaches of various activities related, to membership campaign, membership engagement, FPC governance, handling of accounts and process on keeping records as well as for business promotion.

In category A, FPCs have more aggressive membership campaigns, regular BoD meetings, Annual General Meetings (AGMs) and follow the procedures of Standard Operating Procedures (SOPs) laid   out for these meetings. In addition, they have also appointed CEOs/Managers and paid accountants for managing operations of the FPCs and for adequate record keeping. A larger number of members are actively participating in the business activities of the FPCs.

In the case of Category B FPCs, the governance-related issues are not tackled adequately wherein FPCs do not have a mechanism for actively engaging members in decision making. There is a lack of structured feedback mechanism from the members to the management of FPCs. Also, there are issues with some of the FPCs related to regulatory/statutory compliances.

For Category C FPCs, there are more basic issues, which are related to the development of institutional structure and deployment of resources for day-to-day business activities.

These issues have also got reflected in the impact analyses for various categories of FPCs related to input availability, input prices for members, impact on output prices and output management, access to subsidies and credits as well as access to knowledge and infrastructure.

It has very clearly emerged from the assignment that the first category of FPCs which have achieved     a certain scale, are good as an institution and have adopted a process for governance (category A).   The second category of FPCs who are trying to adapt to the governance system and achieve financial sustainability (category B). The third category of FPCs are struggling at an initial level of sustenance, making basic institution work and then to strive for scaling-up businesses (category C).

Recommendations have also been made on specific points. Category-wise recommendations are as under.

Category-A

1. Strengthening of existing institutional structure and governance mechanism.
2. Setting-up committees under the board for taking policy and business decisions related, to specific verticals.
3. Creating a system for customer feedback mechanism and balancing demand and supply scenario.
4. Focusing on the scaling-up of business by developing formal marketing arrangements with large-scale buyers and creating its own brand.

Category – B

1. Deploying resources for hiring technical manpower for better organisation of operations and engagement with the members.
2. Setting-up proper governance structure, organising regular meetings, record keeping and procedure for decision making on policy and businesses.
3. Creating members database for adequately assessing the scale of businesses for input, output and services.
4. The thrust of adhering to requirement of compliances and proper accounts management.
5. Developing formal marketing arrangements.

Category – C

1. Focusing on developing a cohesive institution with homogenous members.
2. Actively promoting membership campaign for wider outreach, also setting up formal system for member’s active engagement in businesses and decision making.
3. Deploying required manpower for the day-to-day operation of FPCs.
4. Working for setting-up governance structure and regularisation of BoD and AGM meetings.
5. Proper accounts control system and record keeping along with arrangement for regular audits of the accounts.
6. Preparing short-term and medium-term business plans for the FPCs and arrangement of capital for execution of the proposed business plan.

Strategic Action Plan

For resolving the multifarious challenges, it is proposed that a customised FPC Incubation Centre (FIC) shall be set-up in Maharashtra. The proposed Incubation Centre, taking a clue from this report, can work further on gathering insights of FPC promotion work in the state and can develop a solution best suited for local needs. Broadly the proposed FIC shall have the focus on short-term and mid-term strategy, which is required for urgently assisting the FPCs, which are struggling for their survival.

1. Introduction & Background

1.1. Introduction

India is an agrarian economy where 53 per cent of the total population of the country is engaged in agriculture and allied sector. The sector contributes 17 per cent to India’s Gross Domestic Product (GDP). As per the 3rd advance estimates of Ministry of Agriculture and Farmers Welfare, the country is expected to produce 279.5 million tonnes of food grains, 30.6 million tonnes of oilseed, 34.8 million bales of cotton and 355.10 million tonnes of sugarcane during 2017-2018.

India is the land of marginal and small farmers. According, to the Agriculture Census 2010-2011, more than 67 per cent of the farmers are marginal farmers i.e. they hold less than one hectare of land. Around 18 per cent of farmers are small land holders who possess one to two hectares of land, 10 per cent are semi-medium who have two to four hectares of land, 4.3 per cent are medium land holders who have four to ten hectares of land and only 0.7 per cent of farmers are land holders, who own more than ten hectares of land.

The small size of the operations results into lot of constraints in farming. These include the inability of farmers,to work on economies of scale, low bargaining power because of marginal marketable surplus, lack of capital, inability to access credit and inputs at subsidised rates, lack of market access and lack of knowledge and information among others.

The Government of India (GoI) has initiated its most ambitious programme based on the objective of doubling the farm-based incomes by 2022-2023. To attain this target, the GoI has come up with various initiatives, to support the farmers in improving productivity and marketing of their produce. A programme based on the principle of aggregation has been implemented by various government organisations i.e. forming of Farmer Producer Companies (FPCs). This initiative provides an integrated platform, to support farmers from the production to market realisation of their produce, which will lead to the evolvement of the most efficient value chain.

1.2. Genesis of Farmer Producer Companies (FPCs) in India

Based on the recommendations of the Y. K. Alagh Committee, the Parliament amended the Companies Act on 6th February 2002, to incorporate a new section IXA on producer companies. Since the amendment, producer companies have been known as the fourth form of corporate entity, alongside companies limited by shares (public limited and private limited companies), companies limited by guarantees and unlimited companies.

The objective behind such an initiative was to formulate a legislation, to enable incorporation of cooperatives as companies and conversion of existing cooperatives into companies, while ensuring the presence of cooperation principles in business. FPCs are incorporated with the Registrar of Company (RoC). By the end of 2009, around 150 producer companies were registered either as a new entity or through the conversion of existing cooperatives by following an established statutory process for registering FPCs.

The structure and function of FPCs are similar to any limited company except that only entities, either individuals or institutions such as self-help groups (SHGs), cooperatives, which are connected to the primary production can form or join FPCs. While the act details the requirements and criteria for the formation of the FPC, the FPC promoting agencies have also come out with detailed guidelines for the formation of Farmer Producer Organisations (FPOs).

The primary objective of forming FPCs is to organise marginal and small farmers into groups which can aggregate its own produce, collectively market the aggregated produce and also buy the inputs. FPCs acts as a platform, to pool in resources and optimally utilise these resources for the collective benefits of the groups. The broad areas of support and services provided by the FPCs are marketing, market information, transportation, cold storage, irrigation, extension services and technology, input supply, product planning and product branding.

There are more than 5,000 FPCs in India as of the end of 2017. These FPCs are getting initial support from the NABARD, SFAC and state governments. NABARD is presently supporting 1,349 FPCs while SFAC have promoted 814 FPCs in different states. Various state level schemes such as the Livelihood Missions are also promoting producer companies for different commodities and business activities. Among the major states where a large number of FPCs have been promoted are Maharashtra, Madhya Pradesh, Tamil Nadu, Rajasthan, Andhra Pradesh and Telangana.

1.3. Status of FPCs in Maharashtra

Maharashtra contributed to 12 per cent of India’s Gross Cropped Area (GCA) and approximately 13.5 per cent of the country’s GDP from agriculture in 2013-2014. Maharashtra is an important producer of horticulture crops such as mango, cashew, banana, grapes, oranges etc. It also contributes to almost half of the country’s production of jowar, cotton, sugarcane and onion. As per the 3rd advance estimates of Ministry of Agriculture and Farmers Welfare, the state is expected to produce 13.2 million tonnes of food grains, 4.2 million tonnes of oilseed, 6 million bales (170 kg each) of cotton and 67.8 million tonnes of sugarcane during 2017-2018.

Despite Maharashtra’s role in the state’s GDP, one cannot overlook the fact that the farmers in the state are among the most distressed farmers in the country. The major cause for the distress is the dependence of farmers on the rainfall, as a major portion of the area under agriculture is rainfed. According, to the Economic Survey of Maharashtra 2017-2018, only 17.9 per cent of the GCA is under irrigation and the rest is rainfed. The state has been witnessing erratic climate changes, which is further escalating the problem for the farmers in the state.

Other than the production challenges, the farmers are also dealing with hurdles for marketing the produce. The problem is even more acute for marginal and small farmers, who form the majority of farmers in the state. FPCs are seen as a means to help farmers deal with these problems effectively. Many FPCs in Maharashtra are being promoted by the NABARD, SFAC and state agencies under different projects such as MACP, AIDP and CAIM. According, to the Department of Agriculture, Government of Maharashtra, there are 1368 FPCs in the state as of December 2017. Maharashtra has been among the top states    in FPC promotion as it houses almost 20 per cent of FPCs running in India. Maharashtra also has an apex body of FPCs in the state known as MAHA Farmers Producer Company Limited (MAHA-FPC), which helps the member companies in marketing and price stabilisation. They have also developed a web tool for procurement of produce directly from the farmers,to market it to the customers apart from the procurement of pulses on behalf of government agencies.

With around 1368 FPCs functional in the state, FPCs are expected to increase the income of the farmers through aggregation and collective marketing. An organised approach to farming is expected to help the farmers achieve economies of scale. Thus, farmers will be able to increase productivity and reduce the cost of production. The farmers are expected to benefit immensely through FPCs, as multiple government agencies are providing financial as well as capacity building support to these FPCs. Also, there are NGOs providing hand-holding support to the farmers and technical support, to the agencies promoting FPCs. However, there are many challenges that are hindering the growth of FPCs and in turn the welfare of the marginal and small farmers in the state. Thus, there is a need to assess the status of FPCs in the state.

1.3.1. Assessment of FPCs in State

FPCs are formed with an objective of enhancing and improving the income of the farmers based on the principle of aggregation. A farmer becomes a member of the FPC anticipating that he will get the appropriate support from the FPCs. However, despite all the efforts, FPCs are unable to deliver the expected outcome as they are marred by various issues and challenges which have been listed below.

1. Poor professional management due to their financial and organisational inability to have competent CEOs and other professionals to manage FPCs.
2. Lack of technical, business and managerial skills in members to build and operate FPCs.
3. Lack of vision and direction from promoters and BoDs.
4. Low equity base due to low share value resulting in dependence on funds/grants from outside.
5. Weak credit linkages of FPCs even after receiving support for promoting the organisation.
6. Inability to attract capital or credit from outside due to poor financial climate from banks and promoters/ directors being unable to comply with the legal requirements to access finance.
7. Low awareness of the bankers on FPC concept.
8. Except for NABKISAN, no other commercial bank, cooperative bank or RRB has designed a loan product specifically for FPCs and no such loan policy has been formulated at the corporate level to finance FPCs.
9. Lack of support from external stakeholders like government, donors or private sector.
10. FPCs sometime choose their activity portfolio without considering their member centrality.
11. The negative experience of modern retailers with producer companies and vice versa. Modern retailers have not shown enough trust and patience while dealing with FPCs as they fail to understand social dynamics.
12. Challenges in the delivery of quality product in the required time frame.
13. Every FPC is answerable to their members and it becomes very difficult for the board of FPC to face their members in the absence of any loan, input purchase etc.

This study has been conducted, to understand the problems, assess the capabilities and gaps, map the possibilities and suggest the best strategy to build the capacity for future operations. It would also help in bringing out variation in capacities and vulnerabilities of FPCs from the point of view of various parameters such as demography, organisation, strategy, services, governance, marketing, operations, financials and impacts

1.4. Objective of the Study

The core objective of the study is to devise state-level action for the better and efficient management of the FPCs, based on the assessment and categorisation of the same. The specific objectives of the study are.

• To assess the status of FPCs in Maharashtra, based on various parameters such as governance, organisation & administration, strategy, marketing, operations, finance, services, impacts among others.
• To develop an assessment tool and categorise FPCs based on an assessment done.
• To design a state-level action plan for different categories of FPCs as obtained.

1.5. Approach and Methodology

The following section provides the methodology used in the preparation of this report and tool. This assessment report is based on a survey of 131 FPCs in 21 districts of Maharashtra.

1.5.1. Secondary Research

Secondary research and desk review were done to understand the mechanism of FPCs in the national and state-level context. The general idea of FPC’s functioning, the aim of its formation, its role in the farmer’s development and growth, guiding principles etc. were reviewed.

1.5.2. Data Collection

The questionnaire was developed to conduct the primary research, keeping in mind the objectives of theproject. Stratified Random Sampling method was chosen for conducting the survey of FPCs. Districts of

Maharashtra were taken as the strata for collecting as many variations as possible in the FPCs. Sample FPCs were selected randomly from 21 districts. Only those FPCs that completed at least one year after registration were selected for survey. The survey was conducted by the field enumerators in the supervision of field supervisors. After the Data collection, the cleaning of data was done to remove redundancy. The data was entered in various analysis tools like SPSS and R.

1.6. Analysis & Report Writing

After the data cleaning and processing, analysis was conducted and following segments were created

1.6.1. Collective Profiling of FPCs

In this section, the collective profiling of FPCs were done on the basis of various parameters. This includes the category-wise collective analysis of the 131 FPCs surveyed in the state. The broad picture of the FPCs were drawn considering their memberships, marketing, governance and service among others.

1.6.2. Scoring, Ranking and Categorisation of FPCs

Relevant parameters were selected and categorised into five broad categories or groups. Comparative weightage to each of the parameters were defined. The more weightage were given to the parameters which caused the overall growth of the FPC in financial terms and farmers welfare. The values in each of the parameters were normalised, to percentile and scores were given from 1 to 5 using the 5 iso-quantile methods. Summation of scores of all the parameters were done.

After the summation of scores, the ranking of the FPCs were done. FPCs having the highest cumulative score got the rank one and so forth.

Following the ranking, categorisation of FPCs were done. It was based on the scores that the well performance in parameters groups were separated. For instance, the category A is formed of the FPCs who have top ranks in the cumulative as well as performed well in at least two of the parameter categories. Similarly, the category B was comprised of the FPCs who had next best score as well as performed best in at least one of the parameter categories. Rest of the FPCs were grouped in category C.

After categorisation of the FPCs, general characteristics of each category were described to provide the broader idea about the general features of each category A, B and C.

1.6.3. Co-relational and Descriptive Analysis

Correlation and descriptive analysis of each of the category were done with various parameters individually, using the cross-tabulation. This was done to capture the various features of the FPCs that were falling  in those categories. At large, it enabled us to see the broader scenario of performance and outcome of each of the category of the FPCs. Also, it provided the performance and outcome of FPCs at various parameters, at the micro-level.

1.6.4. Strategic Action Plan

Based on the information gathered during the primary survey, collective profiling, scoring, ranking &categorisation of FPCs and descriptive analysis, a strategic action plan was developed for all the three categories of FPCs. The diagrammatic flow of approach and methodology is given below:

2. Profiling Of FPCs

2.1. District-wise Spread of FPCs Assessed

There are 1368 registered FPCs in the state, as per the records of Department of Agriculture, Government of Maharashtra. Assessment of 131 FPCs located in 21 districts were done. The highest number of FPCs were covered in Nashik whereas lowest were covered in Nagpur.

After the assessment, basic profiling and categorisation were done to understand the characteristics of  FPCs in general. The collective characteristics of FPCs are described below, highlighted by various indicators.

2.2. Support Agencies & Resource Institution

Various agencies implement the concept of FPC and support them to become a full-fledged business
generating entity. The ownership of the FPC, however, remains with the members.

SFAC, NABARD, government departments, corporates and domestic & international aid agencies provide financial support or technical support or both to the Producer Organisation Promoting Institution (POPI) for promotion and hand-holding of the FPC. However, each agency has its own criteria for selecting the project/promoting institution to support. The major support agencies and their roles are described below.

Small Farmer Agribusiness Consortium (SFAC) is mandated by the Department of Agriculture Cooperation & Farmers Welfare, India to support the state governments in the formation of FPCs. SFAC provides two types of financial support to the FPCs. First, SFAC operates a Credit Guarantee Fund Scheme, to mitigate credit risks of financial institutions which lend to the FPC without collateral. This helps the FPCs to avail credit from mainstream financial institutions for establishing and operating businesses. Second, SFAC provides matching equity grant upto Rs. 10 lakhs to the FPCs, to enhance borrowing power and thus, enables the entities to access bank finance.
 
National Bank for Agriculture & Rural Development (NABARD) has a Producer Organisation Development and Upliftment Corpus (PRODUCE) fund for the promotion of FPOs (Cooperatives, FPCs and Companies). The broad objective of the fund is to promote and nurture FPOs by way of extending the required financial & non-financial support during the nascent/ formative stage.

NABARD provides financial support to the FPO or FPC only through project mode through two financial products. NABARD lends to Producer Organisations (POs) for contribution towards shared capital on matching basis (1:1 ratio), without any collateral, to enable the PO to access higher credit from banks. NABARD also provides credit support against collateral security for business operations as well as the credit support without collateral security for business operations, to FPCs which are eligible under the Credit Guarantee Scheme (CGS).

Besides, the financial assistance, NABARD also provides technical, managerial and financial support for hand-holding, capacity building and market intervention efforts of the FPO. Such support is available in the form of grants, loans, or a combination of the two based on the need of the situation and is available only to those FPOs which avail credit from NABARD.

In the chart below the share of various support agencies in the FPC formation and promotion in the state are depicted. The major support agencies of the 131 assessed FPCs in state are MACP, followed by NABARD and SFAC.

2.2.1. Resource Institution & Producer Organisation Promoting Institutions

The various support agencies extend their financial and technical support through Resource Institutions (RIs) or Producer Organisation Promoting Institutions (POPIs). The following are the key areas of support by these agencies.

1. Analysing the feasibility of forming FPO in the identified cluster and to help draft a business plan for theFPC, to share it with the members of Farmer Interest Groups (FIGs).
2. Creating awareness among farmers and motivates them to form FPOs and to undertake Training Need Assessments (TNAs) of the producers.
3.  Assessing infrastructure requirements, market intervention and other support facilities / linkages necessary for the success of FPCs.
4. Assist in organising capacity building programmes, preparation of business development plan for the FPCs’ establishment and registration under the appropriate act.
5. Facilitation in credit and market linkage.
6.  Provide hand-holding support towards maturity for a minimum period of 3 years.

RI or POPI could be Non-Governmental Organisations, trusts, corporates, state government departments, NABARD-promoted subsidiaries, Krishi Vigyan Kendra (KVK), big FPCs, farmer federations,commodity board/federations/exchanges,co-op milk unions and other experienced institution meeting the prescribed eligibility criteria.
 
The share of various RI or POPI who are supporting these 131 FPCs in the state are depicted in the chart below. ATMA is supporting maximum number of FPCs assessed, followed by Dilasa and Yuva Mitra.

2.3. Number of Villages Covered by FPCs

In any FPC, farmers of one or more than one village could become the member. In the chart given below, the number of villages covered by FPCs are represented.

Among all the 131 FPCs assessed in the state, 24 per cent of the FPCs have coverage up to five villages, 31 per cent of the FPCs have coverage in five to ten villages, 42 per cent of the FPCs have coverage in ten to fifty villages, and only 3 per cent of the FPCs have coverage in more than fifty villages.

2.4. Memberships

Number of members of any FPCs varies from ten to multiple thousands. In the chart given below, the distribution of number of members in the assessed FPCs are represented.

From the above chart, we can see that more than 60 per cent of the FPCs have up to 500 members, about 30 per cent of the assessed FPCs have greater than five hundred and less than one thousand members and only 9 per cent of the FPCs have more than one thousand members.

2.5. Land Holding Pattern of Member Farmers

The objective of forming the FPC is to support farmers, particularly the marginal and small farmers as they suffer most in the whole farming community. On an average, 1 per cent of the members are marginal farmers, 87 per cent are small farmers, 5 per cent are medium farmers, and 5 per cent are large farmers in the assessed FPCs.

2.6. Caste of FPCs members

In the chart below, the distribution of caste of FPCs’ members are represented. Among the assessed FPCs, 63 per cent of the FPCs have more than 50 per cent of SC / ST and OBC members, 2 per cent of the FPCs have an equal distribution of the SC/ST/OBC and General members.

2.7. Education of CEO/MD

During the assessment, it was observed that few of the FPCs do not have the CEO or MD. From the chart below, we can see that 76 per cent of the FPCs have CEOs or MDs and the rest of them do not have such personnel.

In the FPCs, where there is a CEO or MD, it is found that 76 per cent of FPCs have the graduate and post graduate CEOs or MDs. 20 per cent FPCs have CEO or MD who have qualified high school and higher secondary. In 4 per cent of the FPCs, the CEOs or MDs have education below high school.

As mentioned above, 76 per cent of the assessed FPCs have CEOs or MDs. It was also observed that in 47% of FPCs assessed, the CEOs or MDs have between 5 to 10 years of experience. Approximately 43 per cent of FPCs have CEOs or MDs with up to 5 years of experience and about 10 per cent of the FPCs have CEOs and MDs with more than 10 years of experience.

 
2.8. Board Meetings

Board meeting helps the FPCs to plan the business activities and farmer welfare programmes, which is the goal of the FPCs. In the chart below, the frequency of board meetings held in the assessed FPCs is represented.

In most of the FPCs, monthly meetings take place. 21 per cent of FPCs hold quarterly meeting. 4 per cent of the FPCs are pro-active enough to hold fortnightly board meetings. In most of the FPCs, the minutes of the board meeting are prepared after the meeting, as represented in the given chart.

2.9. Business Activities

FPCs provide various services to their members to enhance the production and marketing of their produce. In the chart given below, the business activities extended by the FPCs are represented. The FPCs does not provide all the activities but a combination of activities from the pool of all the activities are executed. Most of the FPCs provide agri-output marketing, extension support & advisory and agri-input sales.

Among the assessed FPCs, three FPCs provide credit services, to their members. One of those FPC provides both insurance and credit services while the remaining two FPCs provide either insurance or the credit service. A brief description of those FPCs are given in annexure 1.

2.10. Members Participation

The number of members who participated in the activities conducted by the FPCs are given below in the chart. The substantial number of member participation represents effective marketing activities and FPC’s participatory and business-oriented approach. Also, it means the better returns of the farmer’s produce.

It has been observed that many of the FPCs (29 per cent) are not conducting any such activity for the participation of the members. There are 28 per cent FPCs, which have a participation of less than 100 members in the activities conducted by the FPCs and 37 per cent FPCs have witnessed participation of 100 to 500 members in the activities conducted by them. 3 per cent of the FPCs reported that the member participation was more than 1000 in the marketing activities conducted by them. It highlights that there  is huge scope for increasing members’ active participation in various marketing activities of the member farmers and therefore, the opportunity of increasing the business prospects for the FPC.

2.11. Number of Equity Shareholder

Generally, the strength of equity shareholder represents the financial capability of any FPCs. An equity shareholder has more sense of association with the FPCs and he or she is more orientated towards the business objective of the FPCs. Hence, the number of members who are equity shareholder in the FPCs denotes the capital resources, turnover and other financial subjects of the FPCs. In the chart below the number of equity shareholder in the assessed FPCs are represented.

52% of the FPCs have greater than 100 but less than 500 equity shareholders. Only 4% of the FPCs have equity shareholders more than 1000.
 
2.12. Annual Turnover & Net Profit

Annual turnover is another indicator to judge the financial capability of any FPC. In the chart given below,
the annual turnover of the FPCs assessed during the study is represented. Almost a quarter of FPCs have not been able to mention their turnover. There are 28 per cent FPCs, which have a turnover of less than INR 10.00 lakhs and another 22 per cent have a turnover of INR 10.00 - 50.00 lakhs. Only 13 per cent of the FPCs have more than INR 1 crore of the annual turnover. 26 per cent of the FPCs have not been able to specify their annual turnover.

The net profit scenario of the assessed FPCs is summarised below.

In 44 per cent of the FPCs, the net profit is up to 5 lakhs. Only 3 per cent of the FPCs have a net profit of 1 crore. Another 3 per cent of the FPCs have a net profit of INR 5 lakhs to 50 lakhs. 5 per cent of the FPCs are facing loss and 45 per cent of the assessed FPCs have not been able to specify their net profits.
 
2.13. Annual Audits & Patronage Distribution

Annual audits are the source of credibility of the FPCs. The FPCs are supposed to carry out internal audits of its accounts at regular intervals in accordance with its articles of association. Such audits should be carried on by a chartered accountant. In the chart given below, the situation of annual audits of the FPCs assessed are represented. Although, 71 per cent of the FPCs have got their annual audits done, only 3 per cent of the FPCs were able to distribute the patronage.

Relation among the general parameters

The general characteristics of the assessed FPCs have been described in the above section. Various sets of FPCs could be visualised depending on taking various performance and outcome parameters. In the section below the various characteristics of the sets of FPC are cross-tabulated with the performance and outcome by taking the averages.

 2.14. Education of CEO & Members’ Strength

In the chart below, the relation between the education of CEO/MD in the FPCs and members’ strength of the FPCs are represented.

The average number of members is highest in FPCs where CEO / MD is post-graduate. On the other hand, the same is lowest in case of the FPCs where CEO’s educational qualification is higher secondary. It is noteworthy to see that the FPCs who do not have CEO/MD have a greater number of members on average as compared to the FPCs who have CEO/MD with educational qualification below high school and higher secondary.

2.15. Experience of CEO &Annual Turnover

Except for the CEO/MD with less than one year of experience, the FPCs who have CEO/MD with more years of experience have higher annual turnover in general. The same is represented in the chart below. On an average, the FPCs with CEO/MD having more than ten years of experience have the annual turnover of INR 34 crores per annum. However, the FPCs with CEO/MD having less than one year of experience have the annual turnover of INR 6 lakhs per annum on an average.

2.16. Number of Villages Covered and Equity Share Holder

In the graph below, the set of FPCs with village coverage are analysed against the number of equity shareholder.

From the above graph, it is visible that the number of equity shareholder are increasing with the village coverage. The highest average number of equity shareholder have been observed in the FPCs who have more than 100 villages.
 
2.17. Caste and Board Meeting

The graph below represents the relation between the caste profile of the members in the FPCs and board meeting, to assess the intensity of participation by the various group of caste in the overall functioning of the FPC.

The highest number of board meetings are observed in the FPCs who have the majority of members belonging to the general category, followed by FPCs who did not specify the caste profile of the member. The other FPCs who are more frequent on holding the board meetings are FPCs who have equal distribution of OBC and general members, followed by FPCs who have the majority of OBC members. The least number of board meetings are held in the FPCs who have equal distribution of SC / ST & OBC members.

2.18. Land holding and Turnover

The relation between the member’s landholding pattern and annual turnover have been analysed here and represented in the graph below.The highest average annual turnover is reflected in the FPCs with mostly marginal farmers, followed by FPCs with equal distribution of medium and small farmers. The next highest annual turnover are seen in FPCs with mostly small farmers, followed by FPCs with equal distribution of marginal and large farmers. The FPCs with mostly medium farmers have the lowest average annual turnover.

3. Ranking And Categorisation Of FPCs

3.1.    Categorisation of FPCs

Farmer Producer Companies (FPCs), which were surveyed under the study have been categorised based on their respective profile. For categorisation of FPCs, derived parameters have been used. These parameters have been made from the combination of various primary parameters captured during the survey. Broadly, five parameters, namely organisational profile, member profile, management profile, business profile and outcomes have been derived with a combination of various primary parameters, which have been described in the table below

Based on these derived parameters, segmentation of FPCs have been done for the purpose of categorisation. All the FPCs have been classified into three categories i.e. A, B, and C based on the scores received for derived parameters. The scoring mechanism was developed by giving higher weightage, to more relevant parameters and vice versa.

3.2. Scoring Mechanism

The four-layer scoring mechanism is used to give scores to the FPCs, which is described below.

3.2.1. Identification & Grouping of Parameters

FPC profiling parameters, which had measurable values were identified and clubbed into same groups for deriving single parameter, which represents the particular characteristic of FPC, e.g. organisational profile being derived by clubbing the scores of number of villages covered, number of members, number of equity shareholder, growth in number of members (in absolute terms) & FPC age in days. Similarly, other parameters such as members profile, management business profile and outcome have been derived (as explained in table above).

3.2.2. Normalisation of Value to percentile

The value of each of the parameter is normalised into percentile to ensure that each parameter reflects adequately in the derived parameter.

3.2.3. Marking of Scores

The value of each of the parameter were converted into percentile and each of the quantiles have    been given the score, from one to five, where five is the best. The score marking criteria for each of the parameter was defined first depending on the nature of the same .Hence, it is not applicable, and the highest percentile has got the highest score. For example, in case of turnover, higher the turnover higher is the score but this is reversed in the case of land holding pattern where small land holding of FPC members have been given the highest score.

3.2.4. Allotting Weightage to the Scores

Depending on the nature of the parameter and their role in the overall performance in the FPCs, weightage was given to derived parameters, to adequately reflect the performance of each FPC.

3.2.5. Summation of Scores

Summation of scores of each parameter of every category was done, followed by a summation of the cumulative score of each category. With this approach, the final score for each of the FPC have been derived.

3.3.    Categorisation of FPCs

Once scoring of each of the FPC was done as per the approach mentioned above, categorisation of FPCs was also done. For categorisation of the FPC into A, B and C, the following criteria have been taken into consideration.

The flow chart given below describes the process.

Category-wise number of FPCs

3.4.    Characteristics of Categories

Each category of the FPCs have different kind of characteristics based on the organisation profile, membership base, members’ profile, business activities and business outcome basis. These characteristics of each category have been described in the following paragraphs. As these characteristics have been arrived at by taking the average value for a parameter for FPCs in particular category, there are chances that in some cases the FPC may not exactly fall in same category for single parameter. However, at holistic level, the nature of FPCs categories remains the same.

3.4.1. Organisational Profile

For determining the characters relating to organisational profile of FPCs of different categories, parameters such as average number of members, average number of equity shareholder and age of FPCs (in days) have been considered.

Broadly, FPCs falling under category ‘A’ have a large number of members and shareholders. In categorisation, there are 919, 664 and 435 average members respectively for category ‘A’, ‘B’ & ‘C’. Similarly, there are 724, 498 and 375 average shareholder members for the categories of A, B and C respectively. Therefore, chances are that as number of members and shareholders are growing, FPCs can have overall better performance. It has also emerged from the analyses that, with the age, performance of FPC improves.

3.4.2. Membership Profile

Although, there has not been many variations in the membership profile for various categories from the perspective of land holding sizes, still it has been observed that category A FPCs have a larger number of marginal farmers (64.22 per cent) compared to category B (52 per cent) and category C.

Another important aspect of membership profile is the distribution of caste amongst various categories  of FPCs. Two very critical observations have been made here, one that most of the FPCs have good representation of all the caste members and second, FPCs with homogenous social background are better performing.

3.4.3. Business Activities

From the perspective of diverse business activities to be undertaken by the FPCs, category A FPCs have maximum diversity with seven different types of business activities/services being performed by each FPC. Comparatively, category B FPCs have undertaken five types of business activities, while category C FPCs have undertaken only two types of business activities. This shows that the FPCs, which are performing better, have multiple business options and are serving their member farmers in a different manner.

The above mentioned characteristics are mainly based on the profile of the FPCs surveyed. There are other parameters, which are more related to approach towards various internal and external factors, which defines specific FPCs categories. These specific characteristics have been mentioned in the following table.

Correlation of some of these characteristics of different categories (A, B & C) with various internal and external factors and impact of different categories of FPCs created by each category on its respective members / shareholders have been discussed in the following chapters. This analysis has further been used in devising customised action plan and strategy for each category.

4. Correlation Analysis For Different Categories

4.1. Correlation Assessment

As it has been described in the previous chapter, all the FPCs have been categorised into three major categories of A, B & C. The categorisation is mainly based on analysis of parameters and scoring, which is the combined outcome of profile as well as output of the FPCs. This chapter basically analyse correlation of various factors, efforts and approaches influencing the category of an FPC. Also, the correlation between different categories and other factors will also help us in devising the suitable strategy for different categories of FPCs.

The factors, which are related to Governance, Management, Memberships, Marketing, Business & Finance etc. had been analysed in context of categories of FPCs for assessing the correlation.

4.2.Memberships and Governance

Since the motive of the FPCs formation is to benefit the broader spectrum of the farmers through collectivisation, the member strength of the FPCs plays a vital role in the outcome of the same. Effective FPCs follow various strategies to associate more members with them. Similarly, better governance, which includes the board meeting, annual general meetings, feedback collection process etc. results in better communication among the management personnel and leads to better strategy formulation. It also fosters the sense of ownership and responsibility among the members. In the section below, the differentiation of FPC categories have been done to visualise the effects of the membership strategies and governance practices on them.

4.2.1. Membership Campaign Strength

It is observed from the chart below that the FPCs falling in the category A have stringent membership campaign mechanism in place. In category A FPCs, 75 per cent have conducted formal membership activities. On the other hand, only 39 per cent of the FPCs falling in the category B have conducted a formal campaign which goes further down in the case of FPCs in category C, where only 31 per cent of the FPCs have conducted such activities. This infers that the FPCs who have better membership strategies falling in category A followed by the category B.

4.2.2. Board Meeting

The regularity of board meeting and participation of members in the board meetings are highest in the FPCs of category A, as seen in the given chart. More than 63 per cent of the FPCs in category A have conducted the board meetings regularly, with satisfactory participation and active members. The FPCs of category B are little less regular compared to category A and the members are comparatively less active. However, few of the FPCs in category C are seen as irregular in conducting the board meeting and weaker in the members’ participation.

4.2.3. Annual General Meeting

All the FPCs in category A have conducted the AGM, out of which 45 per cent of the FPCs have published the formal agenda and distributed the minutes of meetings to the members and non-members. In category B, the share of FPCs who have conducted AGM with formal agenda is 85 per cent but the distribution of the minutes to the attending and non-attending members is just 14 per cent out of all the FPCs. In contrast with category A and B, only 55 per cent of the FPCs in category C have conducted AGM with formal agenda while 1 per cent of the FPCs have distributed the minutes to the attending and non-attending members. So far, 21 per cent of the FPCs in category C have not conducted any AGM.

4.2.4. Use of FPC Services by Members

In category A, the share of FPCs where more than 80 per cent of the member used at least one of the various services provided by FPCs is 45 per cent. The share of same goes down to 26 per cent in category B and gets furthermore down to 8 per cent in category C. This infers that the number of beneficiaries would be highest in the category A of the FPCs as compared to category B and category C.

4.3. Finance Management

The effective performance and management of FPCs results into better outcomes in the form of improvement in the farmers revenues as well as the profitability of the FPCs. Likewise, management and marketing, the financial and account management are equally needed, as the same lead to better planning and utilisation of the monetary resources. It is found that the best performing FPCs perform the required account and finance related activities and to keep all the records well.

4.3.1. Accountant in FPCs

In the category A, 45 per cent of the FPCs have the paid accountant with an accurate job description and clear responsibilities whereas, in category B, only 19 per cent of the FPCs have paid an accountant with an accurate job description and clear responsibilities. But none of the FPCs in category C have paid an accountant. Also, in category A, the share of FPCs who have not paid the accountant is 22 per cent, which goes as high as 43 per cent in category B and 88 per cent in category C.

4.3.2. External Audits

The external audits of all the FPCs in category A were done. The audits in 67 per cent of the FPCs in category A were done by the registered external auditor and results were shared with the members. The external audits in category B were done in 71 per cent of the FPCs, while the auditing of 35 per cent of the FPCs were done by the registered external auditor and results were shared with the members. In the category C, external audits were done in the 65 per cent of the FPCs, but only 31 per cent of the FPCs have got their audits done by registered external auditor and shared the details with members.

4.3.3. Balance Sheet

In category A, all the FPCs have reconciled balance sheets, however, the share of FPCs in category B and category C who have reconciled balance sheets is 98 per cent and 84 per cent respectively.

4.3.4. Record Keeping

Around 56 per cent of the FPCs in category A have safe, current, legible master list of the record books in adequate internal controls. But, the share of such FPCs is only 31 per cent in category B and 15 per cent in category C. Inversely, the share of FPCs which do not have any kind of master list at all is 11 per cent in category A, 10 per cent in category B and 41 per cent in category C. The observation hence concludes that the FPCs falling in the category C have the weaker record keeping capacities as compared to the FPCs in the category A and category B.

4.3.5. Access to Credit

The share of FPCs who are unprofitable or not able to determine their profitability is 11 per cent in category A, 19 per cent in category B and 61 per cent in category C. Inversely, share of FPCs who are able to demonstrate their profitability since its formation is 11 per cent in category A and 2 per cent in the category B and nil in category C.In category A the share of FPCs who have acquired a loan and reimbursed at least one loan on time is 44 per cent. While the share of such in category B and category C are 9 per cent and 2 per cent respectively. Also, the share of FPCs who do not know how to avail loan is nil in category A, 5 per cent in category B and 18 per cent in category C. These facts indicate that the FPCs in the category A are well capable of availing and repaying the loan. However, the FPCs in category C are the least capable of availing and repaying the loan among all the FPCs assessed.

4.3.6. Profitability

The share of FPCs who are unprofitable or not able to determine their profitability is 11 per cent in category A, 19 per cent in category B and 61 per cent in category C. Inversely, share of FPCs who are able to demonstrate their profitability since its formation is 11 per cent in category A and 2 per cent in the category B and nil in category C.

4.4.    Management

Being an organisation, FPCs needs certain managerial skills and expertise to be operated as a profitable entity. Various aspects like education and expertise of CEO, member participation in business planning, data collection and management, awareness of schemes among others affects the overall management of the FPCs and ultimately the outcome. In the section below the managerial capabilities of each of the categories are discussed, which will reveal the managerial efficacy of the FPCs category-wise.

4.4.1. CEO/Manager in FPCs

Around 44 per cent of the FPCs falling in category A has paid CEO or managers with an accurate job description separate from the board’s responsibilities & who receive feedback. In category B, the share of the FPCs with the availability of paid CEO or manager is 19 per cent while in category C the share is 15 per cent. It is also remarkable to see that in category A, only 12 per cent of the FPCs have no paid CEO or managers, whereas in category B the share of such FPCs goes little higher to 17 per cent and far higher to 39 per cent in category C.

4.4.2. Business Plan Preparation

In category A, 22 per cent of the FPCs consistently use the business plan to define the FPC action, evaluate the progress and report to the members and board; the share of such FPCs is just 10 per cent in category B and only 5 per cent in category C.

4.4.3. Standard Operating Procedures (SOPs)

lmost 60 per cent of the FPCs falling in category C have no Standard Operating Procedures or SOPs, whereas category B has around 31 per cent of such FPCs and category A has no such FPCs. However, 44 per cent of the FPCs in category A have documented and accessible SOPs with sampling procedure.

4.4.4. Use of Management Information System (MIS) Software

It is noteworthy that 78 per cent of the FPCs in the category A are using at least one Management Information System or MIS software, which is only 43 per cent in category B and only 19 per cent in category C. Also, there are no FPCs in category A who are not aware about the advance software or MIS system. However, there are around 17 per cent of the FPCs in category B and 38 per cent in category C, who are not aware about the advance software or MIS system at all.

4.4.5. Awareness about Schemes

There is drastic difference in the level of awareness about schemes and capacity, to avail benefits among the categories. Around 89 per cent of the FPCs falling in category A are aware, applied and have benefitted from at least one scheme. However, the share of such FPCs goes down to 62 per cent in category B and further lowers to 48 per cent in category C.

4.5.    Marketing

Traditionally, farmers are linked to commission agents who market their produce through open auctions in the regulated agriculture markets or they sell through local aggregators and traders. With the advent of FPCs, aggregation of the produce of member farmers and collective marketing of their produce have been made possible. One of the most important objectives of forming an FPC is to aggregate and collectively market the products of the farmers. Since, the main objective of the FPCs is to earn profit, they are expected to have dedicated marketing personnel, develop infrastructure for cleaning, sorting, grading &packaging and direct linkages with food processing industries or retail chains. Aggregation and collective marketing involves activities like determining pricing mechanism, primary value addition, market surveys, consumer feedback mechanism, certification and trading through commodity exchanges. The study has assessed the activities associated with the marketing of produce of the members.

4.5.1. Marketing Services to Members

Facilitating the marketing of produce of members has emerged as one of the critical business activities for FPCs. Better performing FPCs have gone further and procured from non-member farmers too. Thus, providing all-around benefits to the farmer community in the region of operations. However, many FPCs have failed, to realise this role and instead remained just input suppliers. The study tries to compare the services being provided by identified categories of FPCs.

From the category A 56 per cent FPCs procured produce from the member farmers and also possessed market intelligence system while only 19 per cent and 1 per cent of FPCs from category B and category C respectively did the same.

Majority of better-performing FPCs in category A hired dedicated personnel for marketing functions, unlike in case of category B and C wherein the marginal number of FPCs hired some dedicated personnel for marketing functions.

4.5.2. Use of Infrastructure

Farmers at the individual level do not possess the financial strength, to set up value addition infrastructures like warehousing, primary processing and packaging units. Thus, they are left with no choice but to sell their produce through traditional supply chains and are unable to realise better prices for their produce. One of the important aspects of the formation of FPCs was to organise marginal and small farmers, who are unable to invest in agriculture, into a group for commercial interests. With pooled financial resources and government support, they would be able to compete with larger farmers through technology and infrastructure interventions. During the survey, information on the use of infrastructure by the members was solicited, to determine the success of FPCs in this aspect of the agribusiness.

Members of at least 56 per cent of the FPCs in category A were found to be using the infrastructure regularly with more than 50 per cent capacity utilisation compared, to FPCs in other categories. In FPCs in category B this number dropped to 34 per cent and in category C this number further dropped to 4 per cent. Another striking difference that has been observed was that 56 per cent of the FPCs from category C does not have any infrastructure services for its members.

4.5.3. Pricing Mechanism

The pricing mechanism for the procurement of produce from the members have a major impact on the perception of the members on the functioning of the FPCs. A fixed pricing method is expected, to build trust among the members. Determination of pricing method through consultation with the members infuses transparency in the system and further builds the trust. The success of the FPCs is dependent on the compliance of the members which is strengthened through building trust with the members. Thus, the determination of pricing mechanism plays an important role in building long-lasting partnerships between members and the FPC.

It has been observed that majority of FPCs (43 per cent in category B and 67 per cent in category C) were found not to have fixed pricing or procedure. On the contrary, 78 per cent of the better-performing FPCs (category A) were found to have fixed the pricing mechanism. Furthermore, 45 per cent of the FPCs in category A determined the pricing mechanism in a transparent manner through consultation with member farmers while this number was 24 per cent in category B and just 8 per cent in category C.

4.5.4. Value Addition

alue addition of produce may happen through cleaning, sorting, and grading which is called primary processing. Even just packaging, branding and marketing add value, to the product. On the other hand, secondary processing involves converting raw material into a finished product that is directly consumed by the consumer. As the product moves through the value chain, which is the progression of product from raw material to a finished product, the price of the product increases and the price realisation of the farmer in the final product decreases. Therefore, it makes perfect business sense for the farmers to advance in the value chain and take up value addition. However, farmers lack resources to take up such processing and make matters worse by processing small quantities of produce from marginal and small land holding farmers. This is where FPCs play an important role in pooling resources of these small and marginal farmers while acting as a platform, to aggregate their produce and to take up value addition activities. The government gives preference to FPCs in the implementation of its schemes as a matter of policy.

It was observed from the survey that more FPCs in category ‘A’ were involved in value addition than in either of the other two categories. In other words, 89 per cent of FPCs in category ‘A’ were involved in value addition activities while only 38 per cent in category ‘B’ and 6 per cent in category ‘C’ were involved in value addition activities. Thus, in terms of evolution from just aggregation, to value addition, more of the FPCs in category ‘A’ were found to be evolved as compared to category ‘B’ and category ‘C’.

4.6. Services Provided by FPCs

FPCs registered under Companies Act, 2013 are free to take up commercial activities. They are also protected from government interference which is not the case in other farmer organisations like cooperatives.

4.6.1. Financial Services

Financial services by FPCs may include providing help to members, to get loans from financial institutions. These loans may be required by farmers to buy agri-inputs, financing purchase of livestock or inputs for other agri-allied activities and related loans.

Majority of FPCs in all three categories were found to be not helpful for the members,to get loans from financial institutions. This may be the case because providing agriculture credit, to farmers requires formal institutional arrangement, regulatory compliances and other requirements which most of the FPCs may not be ready for as yet. However, an information gap among the FPCs from category B and C, can be een as 27 per cent of FPCs in category C and 17 per cent of FPCs in category B are not aware that they can provide such services. On the other hand, majority of FPCs in each category are aware but they do not provide such services. 

4.6.2. Input Supply

Formation of FPCs provides an opportunity to the farmers to procure large quantities of agri-inputs at wholesale rates and distribute these inputs at lower then market prices through the FPCs. In case of FPCs from category A, a majority of FPCs (67 per cent) bought physical inputs and distributed, to member farmers which is not the case for FPCs in other categories. In the category B, only 36 per cent bought agri-inputs and distributed to the members. While the numbers for the same in category C remains at 26 per cent.

However, it was observed that a small portion FPCs (21 per cent) in category B prepared physical inputs and distributed to members with a marginal service charge which is not the case with the best performing FPCs. There are 5 per cent FPCs in category C, which also prepared inputs and distributed among members.

4.6.3. Advisory Services

The FPCs may act as advisory bodies to member farmers issuing advice on agronomics, pest control, plant nutrition, irrigation, and other farming technologies. Adoption of modern techniques and technologies is expected to increase due to the implementation of schemes targeted at increasing the adoption of the same through FPCs.

A majority of FPCs (67 per cent) in category A provides timely assistance, to the members on agronomy while 48 per cent in category B and only 25 per cent in category C provide the same to their members.  It can be inferred from the above that the best performing FPCs from category A were better at providing timely assistance, to the members as compared to FPCs from other categories.

Another important observation by the study was that majority of FPCs from category A explained to the members how to mitigate risk through physical as well as financial measures which is in contrast with majority of FPCs in other categories.

4.6.4. Transportation

Logistics involves transporting produce of member farmers to the market or to a buyer. Transportation is

The study revealed that at least 45 per cent of the best performing FPCs in category A own their own transport vehicle. In contrast to category A, only 21 per cent FPCs in category B and just 4 per cent FPCs in category C own transportation vehicle and provides services at minimal charges. Thus, providing transportation services are more widely accepted services in category A as compared to FPCs in other categories.

4.6.5. Information Service

Information plays a crucial role in decision making. The information concerning the FPCs may include demand of the members, market price trends, government schemes, policies and weather forecast.

The number of FPCs providing information on more than one service required by members decreased from category A to C through B. Most of the FPCs (45 per cent) in category A provide information on more than one service that are required by their members. It can be inferred from the above trend that the more of the better-performing FPCs are providing information on multiple services while FPCs, as compared to other categories.

4.7. Impact Assessment

The study categorised the 131 FPCs survey in Maharashtra into three categorised and defined differentiating features of the FPCs in each category. A correlation was found between the identified category and the performance of FPCs on different parameters. Going forward the study attempts, to analyse the impact of FPCs in different categories in order to determine in which areas FPCs from each category had more impact on.

It was observed that a greater majority of FPCs in category A improved the prices of inputs for member farmers compared, to other categories. At least 89 per cent of FPCs in category A, which are best- performing FPCs according to this study, had a positive impact on the prices of inputs for the members. Whereas 57 per cent of Category C FPCs had no change on price of inputs.

Similarly, a good majority (89 per cent) of FPCs in category A improved access to inputs for their members while the improvement in availability of inputs was observed by 62 per cent in category B and only 44 per cent in category C. In category C, more than 50 per cent FPCs have observed, no change for input prices as well as availability of inputs.

In case of impact on output prices and output management, FPCs in category B have performed much better compared to category A & C FPCs, wherein 83 per cent of respondents from Category B, FPCs observed improved output prices and 76 per cent have observed improved output management.

There have been improved on access to the subsidy for category A FPCs (78 per cent) and also category C FPCs (52 per cent). For category B FPCs, only 36 per cent have seen improvement on this aspect. In case of access to credit, there have been relatively a poor impact across all categories of FPCs, 56 per cent, 60 per cent and 70 per cent, respondents do not see any change on this aspect for category A, B & C respectively.

Amongst all the areas, the maximum impact have been felt by the respondents in the areas of access, to knowledge and access to infrastructure. For category A, almost all the FPCs have mentioned improved access, to knowledge and infrastructure. In case of category C FPCs access, to knowledge and infrastructure have also improved from 73 per cent and 59 per cent respondents respectively.

5. Recommendations And Strategic Action Plan

Maharashtra is amongst the leading states, where promotion of FPOs in general and FPCs have seen significant success. Certainly, the enterprising spirit and ability, to adapt to changes of farmers of Maharashtra have played a pivotal role in this movement. In Maharashtra, there are few cases of highly successful FPCs. However, there are also large number of FPCs, which are struggling for their existence.

As there have been substantial time since initiation of FPC formation in the state, now is time to look back and assess, things which have worked for the FPCs and identify issues, which need to be worked upon for better results on the ground.

n the previous chapters, information compiled from the survey of 131 FPCs have been analysed and these FPCs have been classified into three broad categories (A, B & C). Characteristics of these FPCs have also been described along with an analysis of various external and internal factors, influencing FPC’s performance. In this chapter, specific recommendations have been made for each category of FPCs for further improvement. Accordingly, a state-level Strategic Action Plan has been proposed.

Annex-I: Segmentation and Scoring

Segmentation and Scoring

Below the segmentation and scoring mechanism of each of the parameter is provided

Annex-II: Correlation Tables

Correlation Tables