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Maharashtra FPCs evolve business models to diversify towards non-MSP operations

Especially in the pulses and oilseed heartland of Latur, FPCs are increasingly evolving business models by tying up with processors like dal millers or oil extractors in the region.

Written by Partha Sarahti Biswas | Pune |
February 2, 2021 8:55:51 pm
Thanks to their grassroot-level organisation and reach, FPCs, especially those in Latur, Osmanabad and other pulses and oilseed producing districts of the state, have access to assured supply of both. (File)

Even as lakhs of farmers continue their agitation for preservation of government-run Minimum Support Price (MSP) procurement and oppose the three new farm laws tooth and nail, farmers producer companies (FPCs) in Maharashtra seem determined to diversify their business away from government-led MSP operations. Especially in the pulses and oilseed heartland of Latur, FPCs are increasingly evolving business models by tying up with processors like dal millers or oil extractors in the region. These steps, according to FPCs, will help create more sustainable business models.

MahaFPC — the umbrella body of farmers producers companies in the state — has been recognised as a state level agency (SLA) to participate in government-run procurement programmes. Under such operations, agencies like the National Agricultural Cooperative Marketing Federation procure commodities like soyabean, pulses etc from farmers when their prices in wholesale markets fall below their MSP.

Members of FPCs start such operations at the village level, which comes a bonus for their farmer members. While MSP operations continue to be an important component for MahaFPC, non-MSP operations have now started taking off. Yogesh Thorat, managing director of MahaFPC, said they are also asking their member FPCs to develop such value chains.

Located in the village of Takli in Latur district’s teshil of the same name, Vikas Agro FPC has, over the last two years or so, tried to consciously diversify into private trade. Vilas Uphade, director of the company, said, “Dal millers and solvent extractors dot the landscape and require constant supply of pulses like tur, chana or oilseeds like soyabean for year-round operations. We have entered into agreements with them to supply graded and sorted commodities at their gate”.

Thanks to their grassroot-level organisation and reach, FPCs, especially those in Latur, Osmanabad and other pulses and oilseed producing districts of the state, have access to assured supply of both. For FPCs like Vikas Agro, anther advantage is the presence of warehousing space and primary-level value addition, such as grading, separating and bagging, which helps them deal with processors directly.

“Unlike Latur’s wholesale market, we are in a better position to supply value-added produce. Thus processors who deal with us save on that cost,” he said. In the last fiscal, as against government business of Rs 13 crore, Vikas Agro had registered Rs 10 crore of private business.

The three new farm laws, which have been the subject of massive protests, have, in fact, allowed the FPCs to leverage their position better. The laws, especially the Farmers Produce Trade and Commerce (Promotion and Facilitation) Act, have allowed them to directly procure from farmers without having to pay a market cess to wholesale markets.

Till date, they have provided around 20,000 tonne of soyabean to various buyers to the tune of Rs 150 crore. “It’s a win-win situation for both of us… the shareholder farmers get to offload their produce at the village level, while the companies get to buy the produce without having to pay market cess,” said Thorat.

FPCs have also started supplying onions to vendor companies and a host of other super markets, he said.

“Our main advantage is that we have access to primary producers. Thanks to MSP operations, we have managed to create a value chain which we now want to expand for non-MSP operations also,” he said.

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