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M. KANDEEBAN, Y. PRABHAVATHI*, B. APARNA AND G. MOHAN NAIDU College of Agribusiness Management, ANGRAU, Tirupati – 517 502, A.P.
The present study aims to highlight the role played by Farmer Producer Companies (FPCs) in handling and doing the
business of agricultural commodities, market intervention in the value chain to increase the share of producer in consumer
rupee. Against this backdrop three FPCs in Telangana state and two FPCs in Karnataka state were purposively selected since
these FPCs were promoted by the same promoter. A set of pre-tested schedules were used to collect pertinent data from farmer
shareholders, FPC staff members, promoting agencies, other stakeholders of FPC, other farmers, commission agents, traders ,
processors and retailers. The highlights of the study were the sample FPCs were involved in direct marketing and handling
single commodity i.e. red gram. The marketing channel of red gram currently followed by sample FPCs was Farmers – Farmer
Producer Company – Traders – Miller – Wholesaler – Retailer – Consumer.
KEYWORDS: Farmer producer companies, Market readiness, Value chain, Marketing channel.
The number of intermediaries in the structure of agricultural market limits the price realized by the primary
producers to the lowest possible in the supply chain. At a time, when the country has been witnessing all round
economic growth, naturally the farmers aspire for prosperity from agriculture in the similar lines.
Cooperatives concept is one of the options available for the farmers to get organized themselves to move up in
the value-chain and having business ownership. The
below-par performance of cooperatives except for certain
commodities viz, milk and fertilizers, led to the emergence
of ‘New Generation Cooperatives (NGCs)’ with advanced
member-friendly profile.
Ironically, the concept of NGCs too could not
overcome certain pulling factors. One of the main
questions in addressing farmers market access capability
is as to how to improve their competitiveness. Second
important issue is the lack of power and negotiation
capacity of most of the small farmers in their relationship
with down stream agents. All these issues can be dealt
through farmers organizations and collaborations (Singh,
2008). Most of the FPOs are either simple farmer producer
aggregator functioning to increase their share in the
consumer rupee or work to eliminate one or two
intermediaries from the supply chain (Shylendra, 2009).
Despite several success stories, marketing still remains a
challenge.
OBJECTIVES OF THE STUDY
1. Market readiness of farmer producer companies in
terms of products and volumes.
2. Map the current value chain with existing FPOs value chain.
METHODOLOGY
A list of 445 producer companies including
cooperatives were identified based on secondary data
available from Small Famers Agribusiness Consortium
(SFAC) website. From the data obtained, producer
companies are classified based on the various promoters
involved in it. There were totally 8 FPCs in the state of
Karnataka and 9 in the state of Telangana promoted by
several promoters. Taking into consideration of time and
resources five FPCs (two FPCs in Bijapur district of
Karnataka state and three FPCs in Mahabubnagar district
of Telangana state) were purposively selected. A set of
pre-tested schedules were used to collect pertinent data
from farmer shareholders, FPC staff members, promoting
agencies, other stakeholders of FPC, other farmers,
commission agents, traders, processors and retailers.
Market Readiness of FPCs in terms of products and
Volumes
The market readiness of FPCs provides
comprehensive understanding of FPCs ability to handle
products and volume of business. This capture market
opportunities and addresses changing market (Javier and
Cavero, 2012).
Products Handled
Since all the FPCs are promoted by the same nongovernmental
organisation (Access Livelihood
Consultancy) the major decisions taken were quite similar
in all FPCs. The common crops cultivated in the study
area during kharif under rain fed conditions are redgram,
groundnut, sunflower, pearl millet, maize and castor.
Though there are 4 to 5 major crops cultivated in the study
area during kharif season, FPCs limited their operation
to redgram. This is because most of the farmers in the
study area were growing redgram.
Presently, redgram is the major farm produce
procured and sold by all the selected FPCs. The other
reason for FPC handling a single commodity is the fact
that it is in the initial stage of establishment. It is quite
obvious that it is difficult to handle many commodities
which require huge capital and man power. The other
reason behind single commodity business is the risk that
lies behind maintaining quality of the produce like
groundnut and cotton which needs specialized structures
to store and maintain quality.
Volume of business
Market readiness of the farmers through FPCs
exhibited different scenarios. Normally, the presence of
FPCs provides a particular mechanism while procuring
and arranging for sale. So the farmers were convinced
about the probable benefits they are going to receive once
they become members of FPCs. It is only two years since
the FPCs have been registered; the data shows certainly
that there is an element of enthusiasm by members to sell
their produce through the FPCs.
It is observed from Table 1, that in 2013 the produce
of red gram that was brought by FPCs was of 180 tonnes,
190 tonnes, 180 tonnes, 127 tonnes and 120 tonnes for
Angadiraichur Farmers Services Producer Company
Limited (AFSPC), Kodangal Farmers Services Producer
Company Limited (KOFSPC), Hasnabad Farmers
Services Producer Company Limited (HFSPC), Jalwad
Farmers Services Producer Company Limited (JFSPC)
and Kalkeri Farmers Services Producer Company Limited
(KFSPC) respectively.
In 2014 there was a uniform reduction in the
quantities that was brought for the sale with the reference
to all FPCs barring Kodangal Farmers Services Producer
Company limited. This was mainly due to two reasons.
One is only15 percent – 30 percent of the red gram grown
by farmer share holders of the companies only brought
their produce to the FPCs, others preferred to dispose the
produce on their own. The financial commitments of the
farmers to the non institutional financing agencies like
money lenders, relatives might have compelled them to
do so. Another sound reason was the price line that
prevailed in 2014 was similar to that in 2013 which was
not all that encouraging leading to the reduction in area.
A point to be highlighted here is that all the farmer
members were well convinced about the role that FPCs
played in their lives but those initial hiccups played their
role that could be observed from the percentage of produce
brought to the FPCs as detailed in Table 1. .This scenario
will be changed once the farmers get to used to this new
system in the coming years. However, the FPCs must
redefine new ways of marketing and handling the products
rather than just a follower of established marketing
practices.
Map the current value chain with existing FPOs value
chain
Marketing channels provides detailed information
regarding flow of redgram through different channels in
the study area. The important link in the marketing of
redgram is the regulated market. Most of the crop output
is sold either directly by the farmers or with the help of
village traders, produce flows to millers through the
regulated market. Village traders were also found to have
a lot of variation in their mode of operation. In some cases,
they were approaching the farmers, while in others they
were operating through their own collection centres i.e.
local private markets. As redgram is consumed in the dal
(split) form; the millers have an important presence in
the marketing of the pulses. In order to ensure smooth
supply of raw material for the dal mill, some of the millers
have vertically expanded their operations by participating
in the marketing of pulses as traders.
Though there are many marketing channels exist in
the study only few were operating efficiently and most of
the produce was found to be flowing through channel I
and channel II.
(i) Farmers – Commission Agent – Trader – Miller –
Wholesaler – Retailer – Consumer.
(ii) Farmers – Farmer Producer Company – Traders –
Miller – Wholesaler – Retailer – Consumer.
CONCLUSION
All the FPCs identified in the study area were doing
direct marketing and handling single produce. They were
handling red gram as their business because most of the
farmers in the study area were growing redgram due to
prevailing rainfed condition. Due to financial
commitments by farmer shareholders of FPCs there was
reduction in the volume of the produce handled by all the
FPCs barring Kodangal Farmers Services Producer
Company limited in 2014 compared to 2013.Taking the
consumption pattern of redgram in the form of dal, millers
have an important presence in the marketing channel.
Exploitation by commission agents was reduced in the
study area as FPCs are arranging centers for buying of
redgram from farmers shareholders and selling to traders
cum millers. This increases producer share in consumer
rupee