HEAVY SWAY

India developed the concept of farmer producer company (FPC) two decades ago to help small farmers own and run businesses and gain standing in the market by negotiating collectively. In 2019, the government set a target of creating 10,000 FPCs by 2024. It also introduced the concept of cluster-based business organisation (CBBO) to provide hand-holding support to farmers in forming FPCs. The move, however, has led to creation of FPCs that are controlled by the bigger companies that operate as CBBOs

- SHAGUN

ONE OF India's major private companies, ITC Limited, has achieved a remarkable feat in the past few months. Between November 2022 and February 2023, it has helped formation of 78 farmer producer companies (FPCS). Usually, it takes months to start an FPC.

FPC is a registered company, owned and operated by farmers. It is a type of farmer producer organisation (FPO) that deals in aggregated produce of a large number of member-owner farmers, helping them achieve economies of scale, increase their farm-level efficiency as well as the ability to negotiate prices in the market. Creating an FPC is a long-drawn process, involving mobilisation and training of farmers to run a company; but ITC achieved the feat by reaching out to farmers already registered on its e-Chaupal website for selling produce.

In helping formation of FPCS, ITC acted as a Cluster-Based Business Organisation (CBBO), a concept introduced in Union Budget 2019-20 under Formation and Promotion of 10,000 Farmer Producer Organisations—a Central scheme with an outlay of R6,865 crore—to provide hand-holding support to FPCs and to meet the target of creating 10,000 FPOs by 2024.

Any legal entity registered in India can be a CBBO, and receives R25 lakh from the government over a period of five years for every FPC it helps create or run. There are several other criteria an organisation needs to meet to be a CBBO (such as a minimum annual turnover of R2 crore in the plains and R1 crore in the hilly areas) which have resulted in mostly big organisations being able to qualify for the role.