Workshop Offers Road Map Forward for Farmer Producer Organizations
The importance of transit insurance. The value of feasibility studies at Farmer Producer Organization (FPO) inception. The need to evaluate FPO success beyond membership or revenue increases. The potential of cashew in Odisha.
These were among the many strategies suggested for FPOs at a September learning workshop, “Sustainable FPO Business Models in Odisha,” by the Promotion & Stabilization of Farmer Producer Organizations (PSFPO) project. The project, implemented by Tanager, supports eight “lighthouse” FPOs in the Indian state of Odisha as part of an initiative to develop an inclusive ecosystem that ensures FPO sustainability.
The workshop was a follow-on to an earlier learning event from April. With the PSFPO project closing this month, it also served as an opportunity for Tanager to share project learnings and best practices with stakeholders.
Challenges, Focus Areas
The Government of Odisha recognized early on the economic promise of FPOs, drafting its Farmer Producer Organization (FPO) policy in 2018. Tanager began implementing PSFPO in October 2020.
According to Tanager and technical support unit Palladium, several challenges existed at the project’s start. These included:
- Low average membership (typically fewer than 150 farmers), low business turnover, and high cash transaction practices;
- Poor linkages with institutional buyers; and
- Limited access to credit.
The project focused on three areas that would improve the operations of those FPOs:
- Ecosystem, including engagement with the private sector, increased access to Good Agricultural Practices for production and quality, and increased access to finance and markets
- Government, through development of an Odisha FPO portal, supporting government schemes, and more
- FPOs, such as building FPO technical capacity and helping FPOs diversity income streams
In systematically addressing factors across those three focus areas, PSFPO has amassed several findings. Tanager presented several of these, and strategies for future FPO sustainability and success, at the workshop.
Among the findings:
- Transport efficiency is critical for FPO profitability. This is especially important for perishable items such as fresh produce. “Efficiency” in this case balances both cost and timeliness.
- Transit insurance is another important element to de-risk any losses during transport.
- It is recommended that FPOs conduct a feasibility study at inception to better understand the needs of its members and accordingly design a business plan. This will ensure greater participation and sustainability over the long run.
- Having like-minded members can drive greater engagement and contribute to smoother FPO functioning.
- Achieving an increase in membership or an increase in revenue is, by itself, not sufficient in measuring FPO success. FPO leadership should instead consider: What percentage of its members are transacting? How diversified is the revenue? Revenue with profits is meaningless if FPOs don’t factor in these considerations.
- In a state like Odisha, climate advisories must be an integral part of the services offered to FPOs.
- There is no set formula for the duration of handholding needed to make an FPO sustainable. Instead, this must be decided on a case-by-case basis. Until the FPO is profitable enough and has built enough capacity to bring on board qualified labor to run it commercially, handholding is, simply put, necessary. Pulling out support earlier will put to waste all the previous support and facilitation.
- The first consideration for any FPO sustainability is market linkages. Without a market, there is no business. Market linkages should be developed on both the output and input sides.
- Lean into digitalization for record-keeping. Keeping digital records makes for better compliance and easier and more robust monitoring business progress.
- Social sector practitioners should consider creating a knowledge platform for FPOs, where regular discussions can be entertained and information transparently shared. This will enhance the development of the FPOs in the country.
- FPOs must think of doing things differently. FPOs need to entertain innovative approaches so as not to be part of the herd. The goal is to create a niche for itself that still benefits members. As part of this concept of doing things differently, FPOs should a
- Odisha has tremendous scope for involving FPOs in developing the cashew value chain. All 30 districts grow cashew. An e-platform for cashew sellers and buyers, with linkages with banks), would enable online bidding for farmers to obtain premium pricing.
- FPOs and practitioners supporting FPOs may be able to graduate FPOs from being grant-supported to being supported by “for profit” companies. Returns can be phenomenal for both supporting corporations and FPOs if the supply chain is managed well.
A total of 51 participants attended the half-day gathering. Guests included Sukant Kumar Subudhi, additional director for the Directorate of Horticulture; Dr. Prasanjit Mishra, dean of extension education, and Dr. Sarbani Das, joint director of extension education, Odisha University of Agriculture & Technology; development professionals from different organizations; and CEOs and boards of directors of the lighthouse FPOs.