In the Union Budget 2018, Finance Minister Arun Jaitley announced a 100 per cent tax deduction for Farmer Producer Companies (FPCs) for the next five years. Till now, the companies were being taxed 30 per cent of their profits. FPCs act as sub agents for government agencies in procuring agri commodities of their members under various government schemes. Many have diversified their business portfolios and entered export markets, especially in the sphere of horticultural crops. These companies are corporate entities, registered under Section 465(1) of the Company’s Act of 1956, while they work under the principles of a cooperative society.
Yogesh Thorat, managing director, MahaFPC, has been at the forefront of this movement that has seen farmers challenging the supremacy of agriculture produce market committees in the state. Thorat spoke to The Indian Express about the mission and vision of MahaFPC — the apex body of FPCs in Maharashtra.
What are the main difficulties faced by farmers in the current set-up of agricultural marketing?
The current set-up of agricultural marketing has three main lacunae — farmers do not have access to farm gate-level infrastructure such as cleaning, grading and warehousing etc; there is a lack of village-level institutional arrangement based on the principles of collectivism and mutual assistance, which prevent small and marginal cultivators from aggregating commodities for collective, selling and marketing; and, the agri business ecosystem of the country is weak with no integration between value chain stakeholders.
The biggest lacuna in the system is lack of systematic approach towards the subject of agricultural marketing. The present system is monopolised by cooperative markets (mandis) located at block or district levels. These markets have, so far, resisted adoption to various innovations and have resisted any improvements towards their value chain. Unfortunately, their resistance to chain has made them exploitative towards farmers.
Government intervention in agriculture marketing is also a problem. It is observed that as agriculture marketing is a state subject, there is no consensus and coordination among central and state governments to address the marketing issues as a holistic approach. This policy paralysis is shifting the producer-consumer struggle towards the struggle between farmers from different geographical areas.
Give us an idea about how MahaFPC aims to address this problem. Also, tell us about the previous experiences of MahaFPC in this field.
Farmers can solve this problem only by coming together under the principles of cooperation and mutual assistance. Promotion of social entrepreneurship among the next generation is the need of the hour. Usage of ICT in integration of value chain stakeholders on a common platform can also help in improvement of the situation. The movement of MahaFPC started towards this aim and to alleviate farm distress. FPCs were not unknown to farmers here. Various national and international agencies have helped these nascent companies. Yet, a need was felt for a common platform for these companies and hence MahaFPC was formed. We are the first state level producer company in the country.
We, at MahaFPC, have a two-tiered structure with the farmer producer companies at village level federated under “for profit organisation” at state level. MahaFPCs’ mission and vision is the establishment of Direct Market Linkages between shareholders of FPCs and end users of value chain, by interventions and innovations in existing marketing channel.
Apart from service charge of business activities, MahaFPC doesn’t receive any grant and donations, not only from SFAC/ government organisation but also from ‘not for profit organisations’. Our philosophy is to ensure revenue through business generation. Last year, through MahaFPC, we had taken part in the MSP procurement operations. Under PSF (price stabilisation fund) 2017 pulses procurement programme, we have successfully built the capacity of 26,000 farmers. This year, we aim towards improving the governance of the institutions and serve as a launchpad towards getting into commodity markets by system approach.
Based on PSF 2017, already, FPCs had a successful trade-off of 7,000 MT of soybean and maize in an open market. Unfortunately, state governments’ bureaucracy is not supporting this idea. We expect the state’s support on the background of huge announcements from central government to boost FPCs’ agribusiness.
What were your suggestions at the recently-held national conference in Delhi regarding doubling farm incomes?
It was a great opportunity for state FPCs to be invited for the national conference. The conference comprised seven groups, of which I was part of the ‘Trade and Export promotion’ team. On behalf of the FPCs, I had suggested institutionalisation of farmers to promote the trade and ensure profit for farmers and promotion of farmer producer organisations, especially FPCs. As price distortion and distress sale is the burning issue, proper and timely policy intervention in both domestic and international markets are required to safeguard the farmers. Legislative action should be taken to bring the markets on track. For example, commodities like onions should be scrapped from the constraints of the Essential Commodity Act, so that farmers can see value realisation to double their income. To promote export at the farm gate level, green corridors should be developed to ensure smooth handling of the supply chain.