Before we go to study about PO/FPO first we have to know what is an organisation and how it is important in different aspects than a single person's work.
A single person face different challenges as follows
Face difficulty in purchase of quality inputs at a competitive rate.
Can not use different machinery to enhance his production due to high cost involvement.
Face difficulty in marketing his produce in the market at a good price.
Can not get proper benefits from banks and other institutions.
Can not get proper training and knowledge etc..
The above challenges can be reduced by the concept of organisation ( Unity works).
Organisation is a group of people working together for a common goal.
people working together can achieve more than a person working alone.
The perfect example of a good organisation is the work of honey bees.
What is a producer organisation (PO)?
A Producer Organisation (PO) is a legal body formed by primary producers like farmers, milk
producers,weavers, fishermen,rural artisans, craftsmen etc. They share the profits and benefits among the members in the organisation.
Farmer Producer Organisation(FPO)
It is one type of producer organisation where the members are from farming communities..
Small Farmers’ Agribusiness Consortium (SFAC) is providing support for promotion of FPOs
What are the essential features of a PO?
It is formed by a group of producers belonging to either farm or non-farm sectors.
It is a registered body and a legal entity.
Producers are shareholders in the organisation.
It deals with business activities related to the primary produce/product.
It works for the benefit of the member producers.
A part of the profit is shared amongst the producers.
Rest of the surplus is added to its owned funds for business expansion.
The owner of producer organisation(PO)
The ownership of the producer organisation (PO) is with its members.
Different government or private institutions, individuals may promote the PO by registration, business planning and several other operations but the ownership control is always with members.
Who provides support for promotion of PO?
Government Departments,NABARD, SFAC, Corporates and Domestic & International Aid
Agencies provide financial and/or technical support to the Producer Organisation Promoting
Institution (POPI) for promotion of the PO.
An NGO may work as a POPI but it does not take part in profit sharing of PO.
Different legal forms of PO
Producer Organisation(PO) can be registered under any of the following legal provisions:
Cooperative Societies Act/ Autonomous or Mutually Aided Cooperative Societies Act of the respective State.
Multi-State Cooperative Society Act, 2002
Producer Company under Section 581(C) of Indian Companies Act, 1956, as amended in 2013.
Section 25 Company of Indian Companies Act, 1956, as amended as Section 8 in 2013.
Societies registered under Society Registration Act, 1860.
Public Trusts registered under Indian Trusts Act, 1882.
Notes
Registration as producer companies and cooperative societies have legal provisions for sharing of profit earned by the PO by way of dividend. Other legal forms may not give flexibility in profit sharing provision.
producer companies are more beneficial than cooperative societies.
What are the important activities of a PO?
The PO could undertake the following activities:
Procurement of inputs.
Disseminating market information.
Dissemination of technology and innovations.
Facilitating finance for inputs.
Aggregation and storage of produce.
Primary processing like drying, cleaning and grading.
Brand building, Packaging, Labeling and Standardization.
Quality control.
Marketing to institutional buyers.
Participation in commodity exchanges.
Export.
How would a Producer Organisation(PO) help its members?
By analysing the demand for inputs, the PO can buy in bulk, thus procuring at cheaper price as compared to individual purchase.
By transporting in bulk, cost of transportation is reduced. Thus reducing the overall cost of Production.
The PO may aggregate the produce of all members and market in bulk,which fetches a better price per unit of produce.
The PO can also provide different market information to the producers.
What is Producer Organisation Promoting Institution (POPI)?
An NGO, a bank branch, a Government Department, a Cooperative Society or any Association or the Federation can become a POPI.
POPIs may get support from SFAC and NABARD for managing part of the recurring cost incurred for promotion of the PO.
The responsibility of the POPI is to see that the members of the PO acquire proper technical and managerial skills to run the business successfully.
Expenses for registration of a PO
The main expenditures are registration fee, stamp duty, preparation of documents and facilitation charges etc.
Support from SFAC , NABARD and Govt. of India for producer organisation(PO)
From SFAC
The Small Farmers Agribusiness Consortium (SFAC) operates a Credit Guarantee Fund to mitigate credit risks of financial institutions which lend to the Farmers Producer Companies(one form of PO) without collateral.
This helps FPCs(Farmers Producer Companies) get credit from financial institutions for establishing and operating businesses.
SFAC also provides matching equity grants up to Rs. 10 lakh to the FPCs.
More details available on www.sfacindia.com
From NABARD
A fund titled “Producers Organisation Development Fund” has been created by NABARD to provide financial support to the POs.
NABARD lends to POs for contribution towards share capital on a matching basis (1:1 ratio) to enable the PO to access higher credit from banks. This is a loan without collateral which will have to be repaid by the PO after specified time. The maximum amount of such assistance is Rs. 25 lakh per PO with a cap of Rs. 25,000 per member.
NABARD also provides technical and managerial support to POs for capacity building, market intervention etc.
From Govt. of India
Government of India provides budgetary support to SFAC for its Equity Grant and CreditGuarantee Fund Scheme for the Farmer Producer Company.
For creation of storage and other agricultural marketing infrastructure under the Integrated Scheme for Agricultural Marketing (Ministry of Agriculture, Government of India), FPOs are eligible to get subsidies.Details are available at www.agmarknet.gov.in.
The Ministry of Rural Development also gives training support to POs. Details available at www.rural.nic.in.
You may also get a good understanding about FPO/PO from this audio visual clip of NABARD.https://www.nabard.org/FPO/story_html5.html
Source: NABARD, SFAC
Conclusion
I Hope this article may provide some understanding about PO/FPO/FPCs. For other details please contact SFAC, NABARD.
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