Cooperative farming is an imperative for countries with small farmers who struggle with land fragmentation, lack of credit, and limited access to technology. Even in developed countries, cooperatives help farmers access larger markets, secure better prices, and ensure sustainability. The European Union has a well-developed cooperative farming system. France, Germany, and the Netherlands have strong agricultural cooperatives, often supported by policies and subsidies. For example, in Denmark, dairy cooperatives process over 90% of the milk production. The U.S. has around 2,000 agricultural cooperatives, benefiting from government-backed programs and farmer-owned businesses. India’s AMUL cooperative is a leading dairy success story.
The entry of multinational corporations (MNCs) into agriculture has intensified the challenges, as they bring in large-scale operations, superior technology, and financial power that often overshadow small farmers. As multinational corporations expand their influence in agriculture, small and marginal farmers need protection against exploitation. In this context, Farmer Producer Organizations and their federations play a crucial role in protecting farmers’ interest by ensuring collective strength, better value-addition, improved market access and financial security.
MNCs have extensive resources and reach, often control large retail chains and food processing industries, leaving individual farmers with limited options to sell their produce at competitive prices. MNCs often dominate the seed, fertilizer, and pesticide markets, making farmers in countries like India, dependent on expensive inputs with patent protection. A recent attempt to introduce gene-modified crops into Indian agriculture has been dumped by the Indian government.
Today the seed and pesticide markets globally are monopolized by the MNCs. Indeed a few agri-business corporations have formed into global oligopolies, controlling the whole of the global food chain, impacting the cultural fabric of developing countries like India. It is not just an assault on the farmers but an assault on the cultural fabric of India. This is here the FPOs and their federations can play a crucial role in protecting the interests of Indian farmers from the onslaught of global capital. FPOs and their federations can promote sustainable agricultural practices and local resource use, promote indigenous seed production, reducing dependence on costly inputs of agri-business corporations.
If farmers come together and form FPOs and FPOs merge into federations, they aggregate their produce invest in processing units, cold storages, and packaging facilities to add value to their produce, and negotiate better prices collectively, reducing exploitation by corporate buyers and middlemen. FPOs and their federations can facilitate access to institutional credit at lower interest rates, enabling farmers to invest in sustainable farming practices. They can also represent farmers in policy discussions, ensuring that laws and regulations protect their rights rather than favor large corporations.
Countries like India have seen the success of dairy cooperatives like Amul, which have empowered farmers and helped them compete with global corporate players. Similarly, various
Hiring foreign consultants involves significant costs, which could otherwise be spent on strengthening the FPOs themselves. Their high-tech recommendations could not benefit the small-holder farmers in India. Policy-making needs to prioritize local expertise and farmer-led initiatives. Instead of relying on expensive foreign consultants, the government needs to focus on building traditional and indigenous knowledge systems and farmer-oriented solutions. A more decentralized farmer-centric approach, for the development of FPOs and their federations, would be the key to strengthen the hands of small farmers in India.
The focus of CBBOs is on formation of FPOs in targeted numbers rather than ensuring their sustainability. This resulted in FPOs being established hastily without any long term objectives. CBBOs are largely responsible for fulfilling bureaucratic formalities, including FPO registration, business planning, and reporting. With this excessive focus on paperwork with no attention towards empowerment of FPOs, many CBBOs have turned into bureaucratic intermediaries that fail to address the core issues of FPOs. Mere focus on bureaucratic targets, slow disbursement of grants, complex paperwork, and rigid rule orientation discourage FPOs from growing.
Most CBBOs have failed to nurture the FPOs as they lacked a deeper understanding of agriculture. The role of CBBOs is to handhold FPOs, provide technical and business support, and ensure their sustainability for a period of five years, but their actual involvement in reality is minimal after the initial formation phase.
One of the key responsibilities of CBBOs is training and capacity building of FPO board members and farmers. However, due to limited expertise and resources, most CBBOs fail to provide meaningful training. Once their engagement period ends, many CBBOs disengage, leaving FPOs without adequate support to sustain and grow.
The CBBOs are expected to provide technical and managerial support to FPOs, but most CBBOs lack relevant experience in grass root agricultural activities. The expertise of most CBBOs remains limited to paperwork and compliance rather than real business development. Mere focus on paper work and documentation by the CBBOs has restricted the FPOs from evolving into self-sustaining entities.
CBBOs are expected to help FPOs secure working capital, but many fail to connect them with banks or financial institutions. As a result, FPOs struggle to raise funds and remain financially weak. A significant portion of the financial resources meant for the development of FPOs is absorbed by CBBOs. This leaves the FPOs with limited resources to invest in real business. Genuine farmer-led FPOs struggle to scale up due to the lack of real business mentorship and market linkages. To ensure the success of FPOs, there is an urgent need do away the CBBO model.
Instead of relying on CBBOs, existing FPOs and their federations should be encouraged to mentor new FPOs. Federations of FPOs should take over the functions hitherto handled by CBBOs, so that unnecessary bureaucratic rigidities can be done away with and FPOs would get a decentralized support. Emphasizing farmer-led federations, decentralized support, and hassle-free financial access, will be crucial for ensuring that FPOs truly succeed in transforming Indian agriculture.
Federations facilitate bulk procurement and collective marketing, enhancing price realization for farmers. Connect FPOs with large buyers, retailers, e-commerce platforms, and exporters to expand market opportunities. Support in branding, packaging, and certification of FPO products to increase competitiveness.
Federations act as a voice for FPOs by representing their interests in government policy-making forums. Advocate for better price policies, infrastructure support, and ease of doing business for FPOs. They can facilitate interactions between government agencies, corporate buyers, and regulatory bodies. Facilitate setting up common facilities centres like warehouses, cold storages, primary processing centers, and logistics support, encourage resource sharing among FPOs to reduce costs and improve efficiency.
NABARD’s Producer Organization Development Fund (PODF) provides support to federations for business promotion and capacity building. Federations can play a vital role in ensuring that FPOs in India become self-reliant, financially viable, and competitive in the agricultural value chain. By providing financial, technical, and market support, federations can ensure small and marginal farmers achieve better incomes and improved livelihoods. Strengthening federations can significantly boost the growth of FPOs and the overall agricultural sector in India and can also promote a sustainable way of natural resource management.
