A 100 difficult dreams- tracing a development professional’s journey of incubating FPOs
December 2011 was a joyous time for my organisation, BASIX. As an institution engaged in promoting the livelihoods of the poor, it had been selected by one of the largest states in India for a project of establishing 100 farmer collectives in 29 districts of the state. The selection was an endorsement for years of grassroots experience over the bigwigs of the consulting world.
Under the Sodic Land Reclamation III Project funded by World Bank that was being implemented since 2009 in the state, farmer’s lands affected by sodicity were reclaimed through the reversal of water-induced land degradation, enhancing soil fertility, and providing improved agricultural support services. One of the components of the project was enhancing the income of farmers through post-production support for value-addition to enable producers to access non-traditional markets. As the Promoting Institution (PI), BASIX was given the task to facilitate the formation of 100 Farmers’ collectives and incorporate them as Farmer Producer Companies (FPCs) with 300-400 members each and ensure that these FPCs were operated as successful business enterprises with good market linkage. The project was titled institutional strengthening for market access.
Preparing for the implementation challenge
Following the formal sanction letter, the project team was constituted with twenty experienced field officers. The three-year project necessitated a project office in the state where the team leader and support staff were stationed. The district-level field staff (Business Development Managers or BDMs) covered the 29 districts’ catchment area of the project. The team was ready by February 2012.
But by the time I took charge in June 2014, it was clear that there were serious ground-level challenges. I traveled to the field once a month over the next few years trying to address them.
With only six months left for project closure, all 100 FPCs were expected to be incorporated and the related outputs achieved. 60 of the 100 FPCs were incorporated and another 15 were awaiting incorporation. The rest of the activities comprising training, business plans, business operations, and the corresponding tasks had not even been initiated. The field activities had stopped. Dues of over Rs 1.50 crores were pending release from the client while the PI was incurring expenditure, especially on field staff travel.
The main pain points were:
1. Change of decisions: The client initially asked us to work with existing water user groups (WUGs) but subsequently said that groups were not mandatory. However, each FPC was to have 300-400 members. Precious time was lost in this confusion.
2. Project deliverables and payments: As per the contractual terms, each task had to be completed before moving to the next task. Also, the tasks were to be completed in all 100 FPCs and relevant documentation was to be submitted for verification to release payments for the completed task.
The initial tasks of the baseline survey, social mapping, awareness campaign, market survey, training need assessment were completed. Subsequently, training manuals development (of FPC members and Board of directors in both organization and business) was completed and submitted for approval. However, the bureaucrat concerned delayed approval for several months and the content had to be revised as per her wishes even though the junior officers had vetted it.
The project closure date in Dec 2014 had to be extended to complete the tasks and a no-cost extension was given up to July 2016.
Back to work
The tasks to be completed in the extended period of 18 months were daunting. Training had to be initiated with the six modules approved in all the FPCs (a total of 60,000 members were trained under this component), the remaining 25 FPCs out of the target of 100 had to be incorporated, business planning process had to be initiated with each FPC and all plans were to be submitted for approval to go ahead with the planned activities. All FPCs needed support with the processes to obtain input and mandi licenses for output sale and commence business operations. We deployed external resources to augment the project team. However, the delay in approvals hurt the project's progress.
Newer Demands Beyond the Agreement
Despite our efforts, we were behind schedule, so I met the bureaucrat once again seeking an extension.
After several rounds of deliberations with the new incumbent, the project extension was approved up to December 2017 but with several conditions. One of the conditions was to incorporate additional 20 companies making the target 120 FPCs instead of the original 100. A meager budget was provided for this expansion.
The other conditions included increasing membership in the previous 100 companies from 300 to 1000 members each (approx.75000-member mobilization) and ensuring 40 Producer groups (PG) in each FPC (4800 PGs). The share capital in each company was to progressively go up from Rs 5 to 12 lakhs by the end of the project period. Two members in each PG (approx. 10,000 farmers) were to be trained in entrepreneurship and the business turnover was expected to reach between Rs 60 lakhs to one crore based on the age of the FPC. One of the few positive outcomes of the negotiations was the agreement to release payments in tranches of 25 FPCs each instead of requirement of completion of each task in all the FPCs.
Should we let go of the project given the difficult demands placed? This would have meant leaving 100 companies and their farmer members in the lurch. The PI would suffer a big financial loss with unpaid dues for work already completed. There was a threat of losing further opportunities to work with this state Government and maybe other states too if the word spread, and finally, it would have required letting go of the staff who had worked hard. It would also tarnish our reputation with the World Bank who was funding several other projects of our organization. It was a difficult decision to make.
It was during the period of this uncertainty, we conducted a farmer’s meeting in which farmers of the FPCs we promoted in the state participated in large numbers. Several experts in the field of FPOs addressed the gathering, a few farmers spoke about our work with satisfaction and their expectation for further support to grow. Our client was conspicuously absent. I was told that they were upset that we had not signed the contract yet. I called for a team meeting and placed before them the humungous task ahead if we agreed to the new terms of the contract. The team expressed willingness to take up the challenge and promised to work hard to achieve the difficult targets. My supervisor who had dedicated his life to the upliftment of the marginalized communities advised, “Even if you could make 20 of the 120 companies sustainable, that would be a yeoman service to those farmers.”
I went back to the client’s office the next day and signed the contract. The challenges of chasing numbers that followed left us with many learnings by the time the project ended.
(This is part I of a two-part essay on the dilemmas and learning of a development professional)
KV Gouri is a Development Consultant and former CEO & MD of BASIX Consulting