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Can FPO federations replicate the Amul model and the million litre ideals in other commodities? Madhya Bharat’s experience shows the critical role of advocacy and ecosystem building even as seed production and commodity trading happens simultaneously.
Certified Seeds as Good Business for FPOs
Our visit to the seed production and distribution centre at Dewas of the Madhya Bharat Consortium of Farmer Producer Company Limited (MBCFPCL or Madhya Bharat for short) reaffirmed the centrality of quality seeds for an agricultural prosperity. It was mid-July and despite rains, the sowing for the Kharif season was completed in most fields. We visited Dewas after spending time at Ujjain, the district with the largest soybean area in the country. Sanjay Pandya, Senior Manager, Production and Processing, oversees the important business line of Madhya Bharat in the 500 MT warehouse that has been leased by the State Marketing Board since 2015.
The soybean seed season was over, and Madhya Bharat played an important role in providing farmers with quality seeds even as there were reports of shortages at government seed centres and black marketing by private parties. The facility has a grading machine and workers were busy grading and processing the wheat from certified seed farmers before packing them for sale. Providing good seeds to farmers is something that Sanjay Pandya and Yogesh Dwivedi, the CEO of MBCFPCL have been doing for over a decade. Yogesh’s journey began with his active involvement in the Participatory Varietal Selection Program in 2005 and in the MP-DPIP (District Poverty Initiatives Project) project that led to the formation of 17 FPOs in the state.
Sanjay served as the CEO of one of Madhya Pradesh’s older FPOs, the Samarth Kisan FPC, in Agar district. The branded soya seeds of Samarth helped it to raise a guarantee for 70% of finance for its warehouse. Madhya Bharat today has a good name in all the 41 districts of the state for the quality certified seeds it provides to farmers in soybean, wheat, gram, pulses, and paddy. MBCFPCL’s ground-level experience is ably supported by Bhatnagar, who serves as an expert director with over three decades of experience in the seed sector.
While the gross profit from the sale of seeds of the Madhya Bharat consortium constitutes 45-50% of its overall profit, the FPC is purpose-driven and keeps its focus on adding value to its members. Samarth, like the 16 other FPOs promoted through MP-DPIP are members of Madhya Bharat and MBCFPCL does not compete in seeds or any other line of business with its members. Providing quality seeds at a reasonable price to small and marginal farmers is valued more than the provision of other inputs such as pesticides and fertilisers. Not all FPOs can enter the seed business though due to the absence of an enabling ecosystem. By working at the state, regional and national levels, Madhya Bharat seeks to be a voice for many small FPOs like Kalisindh.
Enabling building assets for Kalisindh FPO
What should be the role of a federation of FPOs? Unlike the milk cooperatives where the primary role of a federation is well-established in the form of aggregation, value addition, and marketing, agricultural FPO federations do not provide the same margins for a mere marketing function. How does the member – federation relation work? Our visit to Ujjain district and the Kalisindh Farmer Producer Company provided some answers. The FPC has a membership of 1500 members from 20 villages in the region. Vajesingh Solanki the Board of Director and Manohar Singh Tomar the CEO narrated the journey of Kalisindh. Social mobilisation was done as a follow up to the watershed by the local NGO, CARD, and NABARD supported the formation of the FPO.
An exposure visit to Samarth and training provided to them through Madhya Bharat increased their confidence and appetite for risk. They started by providing quality inputs to members through linkages with input companies at Ujjain. Despite setbacks that included selling poor quality weedicides to its members resulting in a loss of Rs 10,000 they persisted and realised the opportunity to have an input shop of their own in the village of Dhabla-Hardu in 2018-19. Business was good and Kalisindh had a turnover of Rs. 7.5 lakhs in 2020-21 with Rs 1.79 lakhs as profit. The FPC is linked to both Nabkisan and Samunnati for credit and is likely to get an equity grant from SFAC. Apart from guidance on best practices on governance and management, Madhya Bharat is working with the FPO to plan ahead for its future growth. Vajesingh and Manohar took us on their motorcycles to the land that the FPO has purchased from its members to set up a warehouse that would also have a grading machine. The consortium helps the FPO in building its asset by making the government schemes more accessible to small and marginal farmers.
Advocating Ease of Doing Business for FPOs
Yogesh Dwivedi has been the CEO of MBCFPCL since 2014 and is a pro-active member of various groups on sustainable agriculture arguing for a middle ground for agricultural reforms rooted in member institutions and as an alternative to the corporatization of agriculture. Promoted by Small Farmers Agribusiness Consortium (SFAC) with initial support from Rajya Ajeevika Forum (RAF) and a few development organisations like ASA, MBCFPCL has 134 FPO shareholders and does business with 61. With an equity base of Rs 50.1 lakhs, it serves 1.75 lakh small farmers in 42 Districts of MP and Chattisgarh. In 2020-21 its turnover was Rs 29.3 crores with a profit of Rs 8.99 lakhs. Apart from input marketing support and seed production MBCFPCL does commodity trading (it traded over Rs 14 crore with NCDEX and won an award) and supports its members through credit linkages, infrastructure development, and capacity building of FPO functionaries.
Its most significant contribution though is in building a vibrant FPO ecosystem in MP that benefits all the 510 or more FPCs in the state. MP was the first state to have an FPO policy as early as 2007 and one of the few that created good support for FPOs through the provision of working capital. Despite a government order in 2014 that enabled FPOs to supply fertilisers, enabling these on the ground has been a continuous challenge. The strong lobbies of the agricultural marketing and credit infrastructure that were directed at large farmer-controlled cooperative societies prevented the entry of FPCs in mandis as they were often treated as private companies. Madhya Bharat worked hard to advocate the same benefits as cooperatives to these member-owned institutions through a government order in September 2017. This was followed by another order in May 2018 that declared MBC as a registered entity that could take up MSP (minimum support price) procurement for gram, pulses, and oilseeds. MBC worked further to enable aggregation by FPCs from their members even without any Mandi License at their collection centres. An APMC trade license followed in 2019 and FPCs were made eligible for use of government infrastructure that helped them reduce their monthly rent for APMC warehouses.
Yogesh widely shares these orders in national discussions to enable other states and federations as well to work towards enabling ease of doing business for FPOs. MBCFPCL is now called upon by many implementing agencies and has been nominated as a Cluster-Based Business Organisation (CBBO) in the new 10,000 FPO policy for the states of MP and Chattisgarh. While Yogesh and MBCFPCL is well aware of the challenges ahead there is guarded optimism in translating their vision of transforming agriculture of over a million small and marginal farmers by 2025, many of whom would realise a greater share of the consumer rupee.
Prof Shambu Prasad is a professor of strategic management at IRMA.
Abhishek Saxena is an FPRM student at IRMA.