Cooperatives & FPOs – Role & Challenges
🟠 Topic 90: Cooperatives & FPOs – Role & Challenges
📌 Introduction
Cooperatives and Farmer Producer Organisations (FPOs) play a critical role in rural development, agricultural growth, and economic empowerment of farmers. These entities enable collective action, providing better bargaining power, market access, credit facilities, and input supply to small and marginal farmers.
As India aims for doubling farmers’ income, cooperatives and FPOs are positioned as key vehicles to achieve scale, efficiency, and sustainability in agriculture and allied sectors.
🔹 What are Cooperatives?
📖 Definition
A cooperative is a voluntary association of individuals who come together to achieve common economic, social, or cultural goals through joint ownership and democratic control.
Key Features of Cooperatives
✔️ Democratic management – One member, one vote.
✔️ Member-driven benefits – Not profit maximisation alone.
✔️ Pooling of resources – Collective procurement and marketing.
✔️ Profit sharing – Based on participation, not capital contribution.
Types of Cooperatives in India
| Type | Focus Area | Example |
|---|---|---|
| Dairy Cooperatives | Milk production & marketing | Amul (Gujarat) |
| Credit Cooperatives | Credit for farmers & artisans | PACS (Primary Agricultural Credit Societies) |
| Consumer Cooperatives | Fair price shops | Apna Bazar |
| Fisheries Cooperatives | Collective fish marketing | Matsyafed (Kerala) |
| Housing Cooperatives | Affordable housing | Urban housing societies |
Key Contributions of Cooperatives
✔️ Credit access to small farmers.
✔️ Input supply (seeds, fertilizers) at affordable prices.
✔️ Collective marketing and better price realisation.
✔️ Promotes self-reliance and rural entrepreneurship.
✔️ Encourages women’s participation (Women Dairy Cooperatives).
Case Study – Amul
- Founded in 1946, Amul is India’s largest dairy cooperative.
- Ensures: ✔️ Fair prices for farmers. ✔️ Access to veterinary services & inputs. ✔️ Market linkages through strong distribution network.
- Amul’s model replicated nationwide under Operation Flood.
🔹 What are Farmer Producer Organisations (FPOs)?
📖 Definition
FPOs are legally registered entities formed by primary producers (farmers) to collectively undertake production, aggregation, processing, and marketing of agricultural produce.
Key Features of FPOs
✔️ Member-owned and controlled.
✔️ Provides input supply and advisory services.
✔️ Facilitates market linkages and value addition.
✔️ Registered under: ✔️ Companies Act (Producer Company).
✔️ Cooperative Societies Act.
Objectives of FPOs
✔️ Enhance bargaining power of farmers.
✔️ Ensure better price discovery and collective negotiation.
✔️ Reduce input costs through bulk procurement.
✔️ Promote processing, value addition, and branding.
✔️ Link small farmers to national and global markets.
Growth of FPOs in India (WordPress HTML Graph)
| Scheme | Focus |
|---|---|
| 10000 FPO Scheme (2020) | Formation of 10,000 FPOs by 2027 |
| Equity Grant & Credit Guarantee Fund | Financial support to new FPOs |
| SFAC (Small Farmers Agribusiness Consortium) | Nodal agency for FPO promotion |
| Agriculture Infrastructure Fund (AIF) | Credit for storage, processing by FPOs |
Case Study – Sahyadri Farms (Maharashtra)
- Successful FPO in Nashik.
- Focus on: ✔️ Grapes, pomegranates, vegetables. ✔️ Export-oriented processing.
- Generated ₹500 crore+ turnover.
- Benefits: ✔️ Direct market access. ✔️ Shared cold storage. ✔️ Better price realisation for small farmers.
🔹 Challenges Faced by Cooperatives & FPOs
1️⃣ Weak Governance & Leadership
✔️ Many cooperatives face political interference and mismanagement.
✔️ FPOs lack professional leadership and governance skills.
2️⃣ Financial Constraints
✔️ Credit access for FPOs is limited due to low collateral and creditworthiness.
✔️ Delayed payments from government procurement programs.
3️⃣ Market Linkages
✔️ Limited direct access to corporate buyers and export markets.
✔️ Dependence on middlemen reduces price realisation.
4️⃣ Infrastructure Deficit
✔️ Cold storage, processing units, packhouses often unavailable to FPOs.
✔️ High transportation costs erode profits.
5️⃣ Limited Technical Capacity
✔️ Many FPOs lack: ✔️ Market intelligence.
✔️ Product branding skills.
✔️ Knowledge of quality standards for export.
🔹 Way Forward
✔️ Provide working capital and risk mitigation funds for FPOs.
✔️ Build dedicated rural logistics & processing infrastructure for FPOs.
✔️ Train FPO leaders in financial management, marketing, and governance.
✔️ Promote digital platforms for direct farmer-buyer linkages.
✔️ Strengthen convergence between FPOs, cooperatives, and agri-tech startups.
📚 Practice MCQs
1️⃣ What is the primary objective of a Farmer Producer Organisation (FPO)?
✅ Options:
(a) Providing government subsidies
(b) Collective input purchase and output marketing
(c) Conducting agricultural research
(d) Providing agricultural education
2️⃣ Which of the following cooperatives is associated with India’s White Revolution?
✅ Options:
(a) Nafed
(b) Amul
(c) IFFCO
(d) Kribhco
3️⃣ The 10000 FPO Scheme aims to:
✅ Options:
(a) Train 10,000 farmers
(b) Form 10,000 new FPOs
(c) Distribute 10,000 tractors
(d) Create 10,000 agri-processing units
