Over a year after the Union Budget 2018 gave Farmer Producer Companies (FPCs) a five-year tax holiday, their performance in Maharashtra shows that the central government’s step hasn’t helped them much as, of the 1,696 registered FPCs in Maharashtra, 1,048 have either reported no business or were found to be non-functional.
Formed by farmers, the FPCs are companies registered under the Company’s Act by farmers. These professionally-managed firms were expected to take the place of cooperative bodies which, over the years, have become either redundant or too politicised to work.
Recognising the importance of the FPCs in the agri-ecosystem, the 2018 budget had tried to give them a boost by announcing a five-year tax holiday. The central government had hoped that this would ensure these grassroot-level companies expand their activities and explore newer business avenues.
A survey, conducted by the Department of Agriculture, took into consideration the 1,696 FPCs that are registered with government bodies like the World Bank sponsored-Maharashtra Agriculture Competitiveness Project, which has been completed, Small Farmers Agribusiness Consortium and NABARD, among others. The survey studied the FPCs, the commodities they deal with and their turnover.
Data showed that of the 1,696 FPCs, 308 were found to be non-functional and 740 were found to have either not reported any turnover or reported a turnover of 0. Of the remaining FPCs, 204 had reported turnover between Rs 10 and Rs 50 lakh per year, while 135 had reported turnover between Rs 7 and Rs 10 lakh. Only 104 FPCs have reported a turnover above Rs 50 lakh. Aurangabad had reported the highest number of non-working FPCs, 45, while Pune had reported the highest number of FPCs which have reported 0 or no turnover, 99.
On an average, almost 50 per cent of the registered FPCs in any district have either been shut down or failed to report their turnover.
The data poses several questions about the functioning and the condition of FPCs in Maharashtra. Yogesh Thorat, managing director of the MahaFPC — the umbrella body of the FPCs in the state — said almost 50 per cent of the registered FPCs in the state were being taken care of by a government body. “Unfortunately, once the hand-holding process ended, they are at a loss about their next step. For the other half, lack of any direction has affected their growth as they were not clear about their business plan,” he said.
Thorat said as FPCs are registered under the Companies Act, they would be automatically blacklisted if they fail to file the mandated returns.
Thorat said the state FPCs needed a clear mandate and policy to outline the path forward.