Today majority of the stake holders feel that farming is a non-profitable enterprise. The prices of the agricultural produce is not keeping pace with the consumer price index. The resultant effect of decreased income in rural sector has disturbed social system. The decreased land holdings and increased unemployment is building pressure on the land, which probably it is unable to sustain. One of the possible measure which can be of some help is cutting the cost of production and value addition to the agriculture produce. When I say cost cutting I do not mean adoption of zero budget farming. This may not be possible for individual farmers but if a few farmers join hands this objective can be met. This model has been tested throughout the country in the milk marketing and some parts about fruits marketing. The name given to the latter organizations is “farmer producer organizations”, in short FPO’s. Actually it is cooperation among like-minded farmers in purchase of inputs and sale of outputs. These FPO’s are different than the cooperative societies operating in the country. Cooperative societies runs under the govt. patronage and are supervised by the cooperative department of the state. The FPO’s are voluntary but for its long term sustainability and expansion it is better to get it registered and form a legal entity so that some persons are given the responsibility to run the enterprise. This concept was introduced as a world bank funded project under, NATP in 1998. Which was then taken up by Govt. of India, after the successful completion of pilot project. In Punjab initially some farmer’s farm women groups came forward in terms of production and marketing. In majority of these groups there were no operational guidelines for membership and selecting the executive body which became the major cause of the breakup of these groups. So for proper functioning of the FFO its registration is necessary for which one needs to frame the purpose and rules under which an FPO will operate.
How to Register an FPO: When some like-minded persons join hands to form an FPO/Society or company to produce, process or market any commodity, they have to get it registered under the concerned act. If a group wants to get themselves registered as a society, the society will be got registered under the Societies Act 1860 with the District Industries Officer. The society can be registered with a limited liability or unlimited liability. At the time of registration you have to elaborate the purpose of registration of society, who can be the members of a society and persons responsible for the execution of the society work and distribution of work among the members.
If the FPO is to be run as a company than it will be got registered under companies act 1956. It will be registered under section 465, provision IX A of companies’ act 2013. For this minimum authorized capital required is Rs. 5 lakh and paid up capital Rs. 1 lakh. The documents required for getting the company registered is memorandum of Association (MOA) and Articles of Association AOA. Procedure for distribution of shares to member and selection of companies directors. The other operational activities include getting digital signatures of members, director’s identity number etc. All these procedural wrangles are beyond the understanding of even commerce graduate. Thus there needs to be a trained trainer in the staff training institutes of the country.
Preparation of Business Plan: The biggest challenge for youth especially from sub-urban and rural areas is to prepare working business plan in order to get FPO registered. The business plan requires the in-depth understanding of business environment, marketing, finance, and marketing intermediaries. In addition one also need to be aware of macro-environment, which include policies of state and international business conditions and changing world policies, especially for the industry in which he wants his FPO to operate in. The crux is that before going in for registration one needs to do the SWOT analysis (strengths, weakness, opportunities and threats). The biggest task for rural folk is maintaining of accounts as in agriculture there is hardly any advancement in this field. The only thing followed in agriculture is basic accounts known as (Wahi-Khata) made by Punjab Agricutlural University. The requirement for FPO will be to maintain proper trading A/c i.e profit and loss account and balance sheet.
Today the type of FPO required should be one which is not only able to sell the raw produce. It should be able to further process the product and add value to it. This will help in generation of employment and retention of rural youth in Punjab who are spending 30 to 40 lakh rupees to go abroad. This will not only help country save foreign exchange rather it will generate revenue for state and centre governments. The most important will be that the FPO’s if formed in clusters will give competition to the monopoly of industrial houses. The social impact of such an organizations will be that the parents need not to be get separated from their children just for economic reasons. Taking an example of moong this year the govt. procured just a small percentage of crop citing the quality concerns due to discoloration, forcing the farmers to sell the crop at almost half the price of MSP. Had there been the farmers own processing units, the same moong can be processed into yellow dal and packed with brand labels. The millers who purchased this moong at half the price of MSP be doing same thing.
The requirement today is to train the youth in such a way that they develop confidence. The irony is that the state training institutes like PAMETI are just imparting the training to agriculture officers about the management concepts along with marketing so as to keep them in touch with marketing principles. The agriculture officers are further supposed to train farmers. The biggest challenge over here is that the only theory is taught and that too learned half-heartedly. Meaning there by that trainers are not trained enough to handle the project practically. As mentioned earlier right from getting the FPO’s registered, preparation of business plan and arranging the finances need to handholding facility to be arranged by some government institute. The situation in the field can be judged from the three food parks which were opened, in the state, one has been made defunct and two are just struggling to survive.
In order to improve the quality of training and make these projects workable the first step for the government should be to revamp-up the training institutes with structural changes, first and foremost is that the post of director needs to be handled by commerce graduate with MBA and PhD in Marketing, same goes with staff. In addition staff selected needs to be conversant with mercantile law. The role of these institutes should be to attract/attach youth from rural area who could be possible entrepreneurs, train and help them in setting up of a real life working projects in the field.
The government needs to have a relook on its education and training system which can develop confidence in educated and trained persons to develop and handle the projects in the field. The centre govts, schemes on skill development and skill development centers has not brought the desired results. Thus the states in general and rural folk in particular are lagging behind.
Dr. Amanpreet Singh Brar
Mob: 9653790000