FPOs Have The Potential Of Transforming The Agriculture Industry: Here’s how
India’s technology revolution is keeping up with the rest of the world and is progressing at a breakneck pace, penetrating almost every industry.
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India’s technology revolution is keeping up with the rest of the world and is progressing at a breakneck pace, penetrating almost every industry. One industry, however, has been slower in adopting technology as compared to the rest – agriculture. With a population of over 1.3 billion people and more than half of them employed in agriculture, it is, without a doubt, the backbone of the country.
Despite being one of the largest employers in the country, and seeing accelerated progress on the back of the introduction of agri-tech, farmers have often been seen expressing their woes of low income and pricing of products, lack of direct market access, and the presence of middlemen in the past. One of the key challenges for agriculture has been the informal nature of the sector. Farmers do not see farming as a business but as a way of life. This prevents farmers from maximizing the output from their farms. This is where FPOs come into the picture. One of the key factors expected to play a major role in the progress of the agriculture sector, Farmer Producer Organizations (FPOs) have been instrumental in driving the change in the agri-tech sector and helping it progress. Here is how.
What are FPOs?
An FPO is a registered body with the producers as the shareholders in the organization. The organization deals in business activities pertaining to agricultural produce and works for the benefit of the member producers. There are currently 6000 FPOs in the country to help farmers across the country receive fitting benefits to help them flourish and improve their income.
Aggregators for farmers
FPOs are not merely organizations or a kind of middleman that help farmers. They are, in fact, aggregators for farmers across the country. They possess the power to offer the farmers a higher bargaining potential. Additionally, they help create a more transparent agricultural market, one where every farmer will be able to receive a fair income as per his/her crop yield.
An important area where FPOs and Agritech companies have started converging is the ability to formalize the farm economy and bring benefits of formal scaled up businesses to farmers. FPO provides the legal and operational structure to help farmers get benefits of a scaled-up business. Agritech companies can provide the technology backbone to make this effective. Agritech companies are partnering with FPOs to provide effective ways of integrating the farmers into the FPO system and help them get benefits of scale as envisaged in its formations.
Key challenges faced by FPOs
Despite the benefits that they bring to farmers, FPOs face their fair share of challenges. For instance, the reach is an obstacle, since the ability to connect with a large number of farmers across the country on a regular basis is not easy. Apart from this, FPOs also need to connect to suppliers of inputs (farmers) and purchasers of outputs (consumers) and also avail financing at competitive rates. These hurdles make it challenging for FPOs to fulfill their goal in a hassle-free manner. Here’s a more detailed look at some of the pressing challenges:
- Access to the talent pool and getting qualified resources to manage it as a business
- Access to capital
- Engagement with farmers regularly. With 1000 farmers spread over multiple locations it becomes challenging to engage with farmers regularly
- Ability to tie-up with agri-input players at scale and find markets across the country
The above problems have been effectively solved by some FPOs through tie-ups with agritech players.
Today, with technology taking the centre stage in almost every business function, digitization of FPOs will enable them to serve farmers better and assist them in boosting their income. Particularly with the ongoing COVID-19 pandemic making social distancing and best practices of hygiene and safety the norms, roping in technology will go a long way in helping the agri-tech sector prosper.
A crucial element in spurring the agri-tech industry ahead, FPOs help improve market linkages for farmers. Market linkages offer a digital platform that connects the output of the farm with the customer and it is one of the easiest direct-to-consumer methods. This will eliminate middlemen and allow farmers to reap the benefits for their yield.
The road ahead
Although the agri-tech sector is still at a nascent stage in India, it is progressing quickly. While several industries have been hit hard by the COVID-19 pandemic, agriculture has, as always seen a rise in demand because food never goes out of business! With continuous efforts, such as the government’s aim to support 10,000 FPOs in the country, and agri-tech start-ups propelling the change by leveraging cutting-edge technology, India’s agri-tech sector is well on its way to evolve beyond its nascent stage and achieve dynamic growth.
Disclaimer: The views expressed in the article above are those of the authors' and do not necessarily represent or reflect the views of this publishing house
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