100 FPO Overview & concept (1).pptx nigga

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1. Farmers’ Collective – Farmers’ Producer Organization Concept & Overview

2. Session Coverage www.birdlucknow.in [email protected] Learning Center Farmers Status in India Why Farmers Collectives Concept of Producers organization Issues & Challenges Status & Overview

3. Agriculture in India is Changing Individual to Group Mode

4. Producers’ Share in Consumers’ Rupee

5. www.birdlucknow.in [email protected] Learning Center Shrinking land asset – 86% SF/MF Rising per unit cost of cultivation Shrinking profit margins- Lacks economics of scale Poor access to critical inputs Lacking appropriate and timely technical assistance Value addition at the bottom of the chain Weak bargaining with market agents Risk mitigation - vulnerable to the vagaries of weather  No earmarking of resources for SMF in centrally sponsored programmes Agricultural Scenario in India

6. www.birdlucknow.in [email protected] Learning Center Economies of Scale Bargaining Power Access Farm level Efficiency Probable Solution

7. Concept of PO www.birdlucknow.in [email protected] Learning Center Farm level Efficiency Economies of Scale Bargaining Power Access Concept of PO

8. www.birdlucknow.in [email protected] Learning Center

9. www.birdlucknow.in [email protected] Learning Center Collectives of Small Farmers / Producers Inputs Credit Insurance Knowledge Extension service Collective marketing Processing Market led Agri. Prod . Backward linkages Forward Linkages Activities undertaken by PO Earmarking of Resources

10. Production, harvesting, procurement, grading, pooling, handling, marketing, selling, export of primary produce of members Processing Manufacture, sale/ supply of machinery, equipment to its members Rendering technical service, consultancy service, training research and development and all other activities of promotion of the interests of its members Role Play by FPOs...

11. Definition of FPO/FPC ? FPO/FPC is a Business entity of Primary Producers which replaces one or combinations of value chain actor/s for enhancement of economic rent of the member producers/farmers.

12. What is a Producer Organisation Formed and owned by a group of producers for either farm or non-farm activities It is a registered body and a legal entity Producers are shareholders in the organization It deals with business activities related to the primary produce/product. It works for the benefit of the member producers Portions of profit are shared amongst the producers and the balance goes to the share capital or reserves

13. www.birdlucknow.in [email protected] Learning Center FPO – Journey in India

14. गाँव बढ़े तो देश बढ़े Taking Rural India >> Forward 14 Support for Promotion of FPO NABARD, SFAC, Government Departments, Corporates and Domestic & International Aid Agencies provide financial and/or technical support for formation/promotion of FPO. Each agency has its own criteria for selecting the project/promoting institution to support. NABARD since 2015 is providing grant support to POPI for promotion and nurturing of FPOs. Earlier assistance for 3 years now for 5 years. Under CSS of GOI for formation and promotion of 10000 new FPOs, GOI will provide support through NABARD/ SFAC/ NCDC and other implementing Agencies for a period of 5 years

15. Equity Grant shall be in the form of matching grant up to Rs . 2000 per farmer member of FPO subject to maximum limit of Rs . 15.00 lakh per FPO . Objective  Enhance viability & sustainability of FPOs Increase credit worthiness of FPOs Enhance shareholding of members to increase their ownership and participation in their FPO Equity Grant sanctioned to be released to IA for transferring to the bank account of the FPO Within 45 days of receipt, FPO to issue additional shares to shareholder members FPO can draw the Equity Grant in a max. of 3 tranches (within a period of 4 yrs of the first application) In the event of violation, IA has the right to demand and enforce forthwith repayment of the entire amount of Equity Grant sanctioned along with appropriate damages. Equity Grant for FPO

16. Credit Guarantee Facility for Lending Institutions

17. Structure of PO www.birdlucknow.in [email protected] Learning Center General Body Board of Director Executive Body CEO PO Staff Planning Implementation Management Local Resource persons IG Farmers/ Producer IG Farmers/Producer Generally 2 Rep. per FIG

18. Cooperative Societies Act/ Autonomous or Mutually Aided Cooperative Societies Act of the respective State Multi-State Cooperative Society Act, 2002 Producer Company under Section 581(C) of Indian Companies Act, 1956, as amended in 2013 Section 25 Company of Indian Companies Act, 1956, as amended as Section 8 in 2013 Societies registered under Society Registration Act, 1860 Public Trusts registered under Indian Trusts Act, 1882 Legal Forms of PO

19. The concept of producer companies came into force on February 6 th 2002 by incorporating a new Part IXA into the Companies Act, 1956 based on the recommendations of an expert committee led by Mr. YK Alagh . This concept offers a statutory and regulatory framework that creates the potential for producer-owned enterprises to compete with other enterprises on a competitive footing. . Producer Companies Outside the purview of the State Government and Registrar Based on patronage, mutual and self help Retaining the spirit of cooperative Principles Focus on poor and small producers Insulated from political interference

20. Hybrid between a Co-operative Society and a Private Limited Company Owned and governed by the shareholder farmers/ producers but run by professional managers employed by them Possesses all good principles of Cooperatives and better & viable business management provisions of Indian Companies Act. Producer Company

21. Membership and Equity in FPC www.birdlucknow.in [email protected] Learning Center All primary producers residing in the same area and producing the same or similar produce – (Ideal – 20-30 Villages or 15-25 KM radius) . Membership is voluntary . The procedure for obtaining FPC membership depends on the bye-laws of the FPC. (AOA) Other members join the PO later. All members enjoy equal rights. One person –One Vote Can a person hold shares in more than one FPC ??AOA

22. Membership & Equity www.birdlucknow.in [email protected] Learning Center A producer company can be formed by 10 or more individuals who are producers or Two or more producer institutions or Combination of both (As per new GOI scheme on FPOs minimum farmers member size of 300 in plain area and 100 in NER/Hilly area shall be eligible for benefit under the scheme. Later average size in plain area atleast 500 and 200 in NER/Hilly area

23. Membership & Equity – some facts www.birdlucknow.in [email protected] Learning Center In context of FPC all members have to be shareholders. The liability of the member is limited to subscribed shares by them. As per company act, a member can purchase as many share as he can. But AOA of the company can restrict it. One member one Vote not one vote per share. The share of PC can not be traded publicly. Transferred only to existing active members with approval of Board.

24. Different pillars of FPC and inter-relationship among them www.birdlucknow.in [email protected] Learning Center T here are three main pillars of a FPC- Primary members or their groups such as FIG which are represented by the General Body- General Body is supreme decision making body which provides strategic direction to the Board and Management of FPC and review different activities from time to time Board of Directors ( 5 to 15) – and Executive Body which is head by the CEO

25. Characteristics of a PC PC to be registered as a private limited company These companies are with limited liabilities and limited only by share capital. Liability of members is limited to unpaid amount of the shares held by them Minimum authorized capital is of Rs . 10000 only . No limit for maximum number of members It shall never become a public (or deemed public) limited company. Members' equity cannot be publicly traded but be only transferred.

26. Steps in formation of Producer Organisation Identification of potential PO Baseline survey /Diagnostic study for feasibility analysis Mobilisation of Producer Organising and formation of PO Resource mobilization Business planning Management system development Business operation

27. गाँव बढ़े तो देश बढ़े Taking Rural India >> Forward 27 Who owns FPO? Members. It is an organization of the producers, by the producers and for the producers. One or more institutions and/or individuals may have promoted the FPO by way of assisting in mobilization, registration, business planning and operations. However, ownership control is always with members and management is through the representatives of the members.

28. Legal status of an FPO…Why Registration? www.birdlucknow.in [email protected] Learning Center To perform business activity on behalf of Farmers , FPO need to have a legal status and necessary to register. commercial transactions with other business entities requires a unique commercial identity- Only a registered legal organisation can execute a valid contract Other business entity may have problem doing business with your FPO, if it is not a registered entity. Particularly for GST registration for your business. For acquiring business licences for Input supply, Marketing support-Procurement, Processing, Packaging etc . it is necessary for organizations to be a registered body. Weights & Measures Act, Fertilizer Control Act, Seed Act, Insecticide/pesticide act, Seed Certification, Trading License from APMC stipulate a legal status Access to finance Create infrastructure - To create assets & infrastructure of its own would require a legal status.

29. MOA & AOA www.birdlucknow.in [email protected] Learning Center MOA Fundamental documents sets out the constitution and character of the company. It indicates what activities the company can undertake. It guides shareholders of the company, lenders, Bankers and third party to know the mandate of the company. AOA Rules and regulations for managing the company and its internal affairs. It specifies membership, voting rights, BOD, Funding, AGM, election of BOD Rules for Company’s operations. In case of amendment of MoA & AoA - It has to be proposed by; • Not less than 2/3 rd of the elected directors or; • Not less than 1/3 rd of the Members and adopted by special resolution .

30. Broad Approach for Formation & Promotion of vibrant FPOs

31. How to increase Shareholder & Turn over of FPO ? www.birdlucknow.in [email protected] Learning Center Planning based on Base line survey Feasibility study – considering all relevant factors Existing activities of the farmers & potential in the area What are the issues faced by farmers?- ST/MT/LT What is the solution of their problems ? Why farmers will join the FPO ? What are the benefits you are offering to farmers? Out of total shareholders of the FPOs, what is the % of active members involved in the activities of FPO? Whether FPO can offer round the year work to members?

32. For sustenance & business viability, in addition to business-as-usual (aggregation model), the focus under scheme is to explore possibilities for FPOs participation in the supply & value chain Standard Business Model Thrust on FPO participation in product value chains

33. Status of FPO in India www.birdlucknow.in [email protected] Learning Center S.N. Particulars Nos 1 No. of FPOs registered in India 16727 2 Out of 1 above, No. of FPOs promoted by NABARD 6295 3 Average membership size 470 4 FPOs registered under Company Act 80% Approx. 5 Paid up capital less than Rs . 5 Lakh 75%