In conversation with Dr Mukti Sadhan Basu

Dr M. S. Basu is currently the Managing Director SBSF Consultancy, a highly professional, data-driven group of experts from diverse scientific and technological fields. Previously, Dr Basu served the Indian Council of Agricultural Research (ICAR) for 37 years in various capacities, importantly as All India Project Coordinator and Director, National Research Centre for Groundnut. 

On superannuation from ICAR, Dr Basu joined ICRISAT (CGIAR) as Visiting Scientist and UNIDO as International Consultant on aflatoxin management in Africa. He also served National Agricultural Innovations Project (NAIP), ICAR as Independent Consultant, Business Planning and Development (Funded by World Bank).

Today we are in conversation with Dr Mukti Sadhan Basu on Farmer Producer organizations (FPO) in India. In simple words, FPOs are collections of farmers (mostly small and marginal farmers) whose objective is to form an effective alliance to collectively address the many challenges of agriculture such as improved access to investment, technology, inputs and markets. The aim of FPOs is to mobilize farmers to build their capacity to collectively leverage their production and marketing strength. Farmer, the primary producers, who have the skill and expertise in producing, often lack support for marketing what they produce. Thus, FPOs are aimed at basically bridging this gap.

Concept of FPOs

Dr Basu explains the idea behind FPOs. He says “earlier, individual farmers were going to market to buy seeds and inputs such as fertilizer, pesticides and they rarely got good deals. So, an idea germinated that if a group of farmers was made and if a farmers producer organization was created at one place, it would be a whole lot easier for them to get access to the recommended variety of seeds and good quality inputs. And due to this, production would increase and farmers could also be provided with sufficient support particularly in terms of marketing. When the farmers are ready with the produce, there is no need for brokers and outsiders; the farmers' collective can play the role of administrator, organize the marketing aspect, thereby giving each farmer a better price.”

The whole model works on economies of scale to reduce the overall cost of production. For example, by aggregating the demand for inputs, the FPO can buy in bulk, thus procuring at cheaper prices compared to individual purchases. Besides, by transporting in bulk, the cost of transportation is also reduced. Similarly, the FPO can aggregate the produce of all members and market in bulk, thus, fetching better price per unit of produce. The FPO can also provide real-time market information to the producers to enable them to hold on to their produce till the market price become favourable. All these interventions will result in more income to the primary producers (NABARD, 2015).

Dr Basu discusses that majority of the farmers are smallholders, lands are fragmented, rain-dependent and resource-poor and cannot buy inputs timely and therefore, produce efficiently. They sell everything almost immediately after harvest to meet family need keeping a portion of food grains that may be sufficient for 6 months and thereafter struggle starts for food and other essential items to survive. So, the problem revolves around fragmented land, monocropping, dryland farming by smallholder farmers with little accessibility to inputs.” Also, there is a lack of technological awareness and knowledge about good agronomic practices increasing crop productivity. Growing particular crops over years affect soil health, but most of the farmers are not aware of crop rotation, inter-cropping, and remunerative sequential cropping system to make production dynamic. Moreover, such crops are grown for decades, that could be locally marketed at ease, even at low cost. However, there are tremendous opportunities to increase cropping per cent by introducing other remunerative crops like groundnut, soybean, sesamum, green/black gram, mustard, safflower, etc, in the sequential cropping system. The FPOs can help participating farmers in realising the potential of integrated farming and blending scientific knowledge by involving professionals”. 

Dr Basu says that “currently there are approximately 5000 FPOs registered under NABARD, out of which 3000 are Farmer Producer Companies (FPC). They can be treated as registered private limited companies, whereas FPOs are registered as trusts. There are several other differences between the two such as the amount of pre-required capital, number of board members, the number of documents needed, taxes, etc. FPCs is a far big topic and needs a blog post of its own.

Farmer producer organizations can be more strengthened through various policy and structural reforms, including technology support, financial support through customized services and loan products and marketing support in the various markets available - retail, spot and futures. Small Farmers’ Agribusiness Consortium (SFAC) is providing support for the promotion of FPOs. NABARD plays an important role in managing FPOs as it supervises their proposals and funds. According to Dr Basu, “SFAC operates a Credit Guarantee Fund to mitigate credit risks of financial institutions which lend to the FPOs without collateral. This helps them to access credit. SFAC provides matching equity grant up to Rs 10 lakh to the FPOs to enhance borrowing power, and access to bank finance.” Similarly, various government-supported agencies and NABARD has provided initial funds to build capacities, technical assistance and develop innovative financial systems for the sustainability of FPOs.

Challenges facing FPOs

Dr Basu points out that a lack of professionalism and expertise in management systems is one of the biggest reasons why farmers are not doing well economically. “If they are a collective body, they can invite local agricultural experts, Subject matter specialists of KVK; retired Scientists from local Agricultural Universities, researchers and even agriculture consultants to improve the skill of farmers and build capacity over a period of time; even farmers can discuss their personal problems in a local gathering over a cup of tea.” 

The criteria to register an FPO require thorough scrutiny and far more stringent measures keeping in mind the mushrooming of NGOs in the past. On this, Dr Basu says that “the biggest problem is the diminishing agricultural labourers in villages. And the problem is getting bigger as most of the younger generations are migrating to towns. To come out from such situation mechanization in agriculture a must. 

In a recent study, it was found that some of the challenges faced by FPOs include their inefficiency to act as Managers or CEOs of the organization, understanding of various resource optimization techniques, awareness of the best agricultural practices and representation of farmers as a group in the organized market. This calls for strong handholding and capacity building initiatives, which can be governed by local authorities but delivered through local institutional development and civil society organizations or other capable institutions working with farmers. Farmers do face challenges related to customized and affordable financial services, which currently are not provided basis their future cash flows. They also face a problem in selecting the CEO, whether from inside or outside.

Final Thoughts

As with any other organization, while the FPOs are doing a lot of good, there are many areas of improvement as well. A few policy reforms suggestions from our side: A single window issuance of all licenses to FPOs to ease the process of doing business; awareness and capacity building of farmers at regular intervals to help understand the benefits and opportunities of forming a collective. What are your thoughts on the ground reality of the functioning of FPOs and ways to improve them? We’d love to know in the comments. 


  1. Sparkling insight Sir, especially on the challenges which I think it's essential to have cluster forums in critical focus to highlight missing dots & ensure the correct value is brought to the chain.

  2. Sparkling insight Sir, especially on the challenges which I think it's essential to have cluster forums in critical focus to highlight missing dots & ensure the correct value is brought to the chain.


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