It felt as if a dam broke and the poor farmers just have had enough of the injustice. Their protest was one that called out on all injustices that they have faced. This time they had the determination to not be neglected again.
If one tries to get information about the massive farmers’ protest that has been going on in India, the main reason mentioned is the three farm bills passed by the government. The protest has also been called the ‘farm bill protests.’ But one needs to dig deeper and find out why even the chilliest Delhi winters have not slowed down the rigorous protest carried out by the farmers from all over India.
What is the indian farmers protest about?
Yes, it seems like the government did provide aid to the farmers through the bill as they can sell their produces through Agricultural Produce Market Committees (APMCs) at the minimum support price and also directly to any other party if they can get a better price. But the danger is that this allows big corporate players to enter into the agriculture sector which might lead to the end of the mandi market and that directly endangers the Minimum Selling Price (MSP) these mandis provide. The farmers could be left vulnerable to the big corporations and worsen their condition.
The government has explained their stance on the bills as providing the farmers with the freedom to sell their produce directly to whoever they want. But the existing system already provided them with that opportunity through these APMCs which protected the farmers from exploitation at the hands of the MNCs. Farmers thus fear that all the bill does is give leverage to the big businesses and corporations to not abide by any minimum price to be given to them. Also, the role of arthiyas, who provide financial support to the farmers and various other aids, have been portrayed as villains neglecting the fact that many share a trusted relationship.
The role of Farmer Producer Companies in
protecting the farmers
Rushed through the Indian parliament in September 2020 amidst the melees of the COVID-19 pandemic, the laws are being called ‘kaale kanoon’ by the Indian farmers. While the government has their justifications for the new bills, the crucial thing is to make sure that the farmers get the assured price they deserve and not just simple protection against price exploitation.
Even between the disagreements, there’s one thing that both the groups can agree to – that Farmer Producer Companies (FPCs) can be the emancipator in this combat. Introduced first in 2004 in Kerala, FPCs became an organisational mechanism mobilising farmers to improve their economic and social situation and that of their communities. FPCs also have the potential to give farmers better bargaining power and create a more transparent agri-market. Assisting every farmer collective to turn themselves into a self-sufficient entity by trading their farm produces without middlemen, the role of FPCs has become undeniable in the current situation as they help farmers stay away from corporate takeovers.
Comprehending the success and possibilities that FPCs can contribute to making farmers a player in international trade from their rural settings, the Centre has recently launched a new scheme with the strategy and a budgetary provision of INR 68.65 billion to have 10,000 new farmer producer organizations around the country.
Even if the new bills turn to their worst, what can turn the potential corporate takeover into profits is contract farming and FPCs can help farmers in the process. Till now, the issues smallholders faced with contract farming were the undue quality cut on produces by firms, no procurement of produce, delayed deliveries at the factory, delayed payments, lower prices than the market value, poor quality inputs, no compensation for crop failure or higher cost of production and even stagnation of contract prices over time, known as agribusiness normalisation. The Model Contract Farming Act, 2018 also leaves out many sophisticated aspects of modern contract farming practice like contract cancellation clauses, delayed deliveries or purchase and damages therein, and ‘tournaments’ in contract farming where farmers are made to compete with each other and paid as per relative performance – a practice that is banned in many countries.
But being part of an FPC gives farmers joint access to inputs, credit, farm machinery, and more importantly, legal support and training towards corporate suppression. FPCs can also take care of the basic aspects like acreage, quantity, and time of delivery, which corporates often skip mentioning in contracts to create loopholes in their favour. FPCs can validate the contracts to have a clearly stated contract with the provision to withdraw from contract arrangement anytime without incurring any penalties.
Technology and FPCs: The nonpareil combination?
Need not say more of how FPCs can revolutionize the Indian agricultural systems and technology is their knight in shining armour. Understanding the changing face and need of disruptive technology in the country, India is opening up to a new set of business leaders- ‘agripreneurs’. These entrepreneurs bring in tech that can turn the sector that occupies 58% of the country’s workforce into players that matter in the international agriculture spectrum.
India’s market structure has long favoured staple grains. MSP incentivises farmers to grow staples and the APMC enables procurement into the public distribution system. But the system is inadequate for marketing higher-value crops. Only 6% of Indian farmers benefit from the MSP, and there are few alternative value chains for quality, high-value produce.
With innovations like traceability, the unknowns of the supply chain such as high transaction costs resulting from a low volume of farm produces, lack of operational information can be eliminated. Traceability helps in bringing clarity to the entire value chain of a product through all stages of production on farm, processing, distribution, transport and retail to the endpoint, or consumer. FPCs can avail this technology to help small-scale farmers, especially those who are in horticultural and other fresh food production to prevail over the current traceability requirements that act as barriers to international trade. The market for safe and traceable food that exclude small-scale agricultural producers can be supported by the FPCs to mitigate the lack of resources to comply with increasingly strict standards in tracing and monitoring different supply chain variables, with the help of these simple yet sophisticated technologies.
The introduction of e-commerce also helps FPCs in eliminating the difficulty in finding the right buyers and against the low bargaining power that limits their market participation. Smallholder farmers produce and sell nearly 80% of the food consumed worldwide but remain widely excluded from formal value chains. Facing significant challenges and limits to productivity, around 70% of these farmers operate in informal value chains characterised by fragmentation and overwhelming dominance of middlemen. E-commerce is disrupting the agri sector by enabling the formalisation of value chains and financial inclusion for farmers, protecting them from the opaqueness of offline trading and ensuring the right prices for their farm produces.
Another tech area that FPCs can explore is advanced innovations such as AI and IoT. These techs can help in providing quality agricultural inputs such as better guide planting and harvesting activities, and enable more effective farm management. Moreover, technology will enable the participation of smallholder farmers and the FPCs that support them in the formal financial economy. By generating a variety of transactional records and data related to the farm produces bought and sold online, FPCs can generate key data points that can enable the creation of digital footprints and identities. Transactional records can also be used by FCPs in helping farmers to get financial support by providing records to assess the creditworthiness of farmers and provide tailored credit, loan, savings and insurance products to build resilience in the farming system.
FPCs that lead the way
Cheruthazham Black Pepper Farmer Producer Company
Cheruthazham black pepper farmer producer company (CBPC) is a Kerala-based FPC with its humble origin in 2018. With around 1200 pepper cultivators and FPO had won one state award baggers under their portfolio, CBPC became the first FPC in the state to take care of pepper cultivation. The company has planted nearly 2000 sampling in the year 2018, 27000 samplings in the year 2020 and plans to increase the counts in the future. CBPC also working with 7 different farmer producer companies, expanding their services to a variety of products like honey, mango, and cabbage to name a few. To date, the company has given nearly 1,19,000 sampling of different products to the farmers and they have provided nearly 7500 winter vegetables sampling like cabbage and cauliflower. To empower the sales of their farmer members, the company has set up rural marts across the state. To expand the business beyond borders, CBPC now aims to get involved in online trading of black pepper and export the product to international markets.
Erode Precision Farmer Producer Company
Erode Precision Farmer Producer Company is a name in the limelight among agricultural enthusiasts after they won the best FPO award from the Government of Tamil Nadu. Started in 2008, Erode Precision set its journey with 50 farmers under the hood and a business of a mere 5,00,000 INR helping the farmers in procuring good quality fertilizers and pesticides and to build awareness into their rights in the supply chain. It is no amusement that the number of farmers doubled in just 6 months for the FPC as the actions rightly justify this growth. Later in 2013, Erode Precision collaborated with the Resource Institute on a tender, incorporating 88 other FPOs in the country.
Erode Precision currently works with oilseed producers and sells their farm produces as final goods under the brand name called ‘Annam’ in Indian supermarkets. The FPC has also set up farmer-owned supermarkets in major cities of Tamil Nadu such as Coimbatore and Chennai. In 2019, the company also started seed processing units to help farmers in the manufacturing of oil and conducts various training sessions for Farmer Interests Groups. The FPC now aims to help farmers with exports by collaborating with international vendors, ensuring better profits for the farmers for their farm produces.
Raithamitra Farmer Producer Company
Raithamitra Farmer Producer Company was started in the year 2014 by a group of farmers with the motive to help their community. Launched with only 10 farmers in their member list in their base region of Mysore, Raithamitra has now expanded to 10 different districts in Karnataka, with a count of 1200 farmers under the initiative.
Raithamitra is one of the most popular farmer producer companies in the country widely known for the production of chia. As a result, the Government of Karnataka has joined hands with the FPO to educate the farmers in rural areas about the benefits of chia and to provide training for the cultivation of the same. Other than chia, Raithamitra also helps farmers to sell quinoa, sugarcane, peanuts, spices and a wide variety of fruits. The sales have even expanded to other states in the country such as Kerala, Uttarakhand, Assam and Maharashtra.
Raithamitra also helps their farmers to export their farm produces to international markets with assistance from third-party traders. The FPO aims to have an independent exporting system so that they can also help farmers with the profits that come from eliminating the middlemen.
Some final thoughts...
Whether the laws will help or hinder farmers is still to be seen but it’s sure that farmers around the country are now living with the fear of the Centre’s withdrawal from the agriculture market and leaving it open to the private sector without adequate support from the law or policies in favour.
While the decision to do away with the APMC regime on grounds of inefficiency and monopsony can affect in both ways, it’s no doubt that the FPOs in the Indian agriculture market can only be a boon. The capacity of FPCs must thus be strengthened and enhanced to facilitate them to help with representation and risk management on behalf of their member-farmers.
As concerns rise over access to food, it’s worth remembering that smallholder farmers and their families make up three-quarters of the world’s hungry and undernourished. We have all seen the struggle of the farmers and their fight may continue for a long time. It is not only important for the government to take care of the farmers, but we as a community, need to help our farmers tackle obstacles that have long been bothering them.
Share the report with your friends and colleagues