How a body of farm collectives helped farmers in Maharashtra sell their produce at fair prices

The agricultural seasons of 2016-’17 (kharif and rabi) have not been favourable for farmers across the country. In spite of near-normal monsoon rainfall in India in 2016, coupled with record farm production, wholesale and retail prices for agricultural commodities have been depressed for most of the year.

The uncertainties associated with the government-announced minimum support price procurement operations have added to farmers’ woes. Added to this scenario is overall desperation and gloom in the countryside, leading to an increasing number of farmer suicides in Madhya Pradesh, Maharashtra and even in the North Indian states of Uttar Pradesh and Punjab.

Amidst this worrisome situation, a few examples of collective action shine as beacons of hope. The MAHA Farmers Producer Company Ltd, an apex organisation of over 200 farmer producer companies in Maharashtra, is a case in point. In the recently concluded procurement season, it did business of more than Rs 1.6 billion. This was the first year of its business operations.

The organisation was designated by the Central government as the lead agency in Maharashtra along with the National Agricultural Cooperative Marketing Federation of India Ltd and other government agencies to procure red gram under the minimum support price programme of the government. The MAHA Farmers Producer Company Ltd took up this challenge in all earnestness and ensured that all its members (the producer companies) and in turn their members benefit from active participation in the minimum support price procurement.

Showing the way

The role of the MAHA Farmers Producer Company Ltd is commendable because it is acting as an aggregator of aggregators. While the individual farmer producer companies are close to the farmers and are often the first point of contact with their members in diverse locations, the MAHA Farmers Producer Company Ltd acted as an apex organisation that aggregated the demands of their members, which were individual farmer producer companies.

While individual farmer producer companies catered to an average of 300 to 500 farmers in their area of operations, the economies of scale that an aggregator brought was the value addition as an apex. The MAHA Farmers Producer Company Ltd was effective in coordinating national organisations such as Small Farmers’ Agri Business Consortium and establish linkages with the departments of the state and Central governments.

Succour to smallholders

The MAHA Farmers Producer Company Ltd and its outreach indicated that it catered to the needs of smallholders. With a value of about Rs 1.7 billion of procured commodities from 26,800 farmers, the commodity procured per farmer was worth Rs 60,000. In terms of volume, it meant 332,270 quintals of produce from 26,803 farmers, averaging about 12 quintals per farmer. These numbers show that small farmers could participate in the minimum support price operations only because they had someone representing them in the market, namely the farmer producer companies they were members of. In 50% of the cases, the procurement centres had mechanical cleaning and grading facility that ensured that only certain accepted quality produce was procured.

There is another story beyond these numbers. When the state government announced minimum support price operations, the state machinery was not adequately prepared to receive the huge quantities of tur dal (red gram). As a result, there were long queues of farmers standing for close to seven days outside the government market yards, waiting for their turn to come in and sell their produce. In contrast, the farm gate procurement arrangement made by members of the MAHA Farmers Producer Company Ltd was a boon to farmers.

Diversified reach across regions

One noteworthy feature of the role of the MAHA Farmers Producer Company Ltd was that it covered a large number of districts, from Chandrapur and Yavatmal in the eastern part of Maharashtra to Ahmednagar in the west. The procurement covered districts of Vidharbha and Marathwada that had consistently reported distress. Districts like Sholapur, Ahmednagar, Beed and Osmanabad that are perennially drought-prone also figured in the procurement of pulses.

The credit of such a diversified procurement goes to the dispersed presence of farmer producer companies across the state. The decentralised approach thus ensured that it was not only farmers from resource-rich regions who benefited from the minimum support price operations but also those from otherwise marginalised districts.

Farmer leaders as promoters

Another noteworthy feature of the management of the MAHA Farmers Producer Company Ltd is the team of young educated farmers steering the organisation. Yogesh Thorat, managing director, is one of the key promoters of one farmer producer company in Ahmednagar. He is also the lead person in the formation of the apex organisation. A graduate in agriculture and a postgraduate in management, he represents the new face of farmers, those who have close connections with the community but are also linked to the changing dynamics of the market.

It was his initiative in 2015 that brought together many farmer producer companies in the state. He established a forum that represented to the state and the Central government authorities. It was his initiative that saw the Small Farmers’ Agribusiness Consortium entrust responsibility of the procurement of red gram this season.

At a day-long meeting organised in Pune in June, the MAHA Farmers Producer Company Ltd brought out a detailed note titled the Pulse of Agribusiness. The note reviewed its performance of the procurement season. There was a brainstorming session with all the board members and representatives of farmer producer companies. This author was present at that meeting.

It was a refreshing sight to see members of farmer producer companies debating about the future of the organisation and what other business activities they could undertake in the coming season. They looked at the national and global scenario in agriculture and how and what opportunities could be tapped by them in this scenario. Experts from the agriculture ministry were invited to guide the board members. It was a meeting organised for a purpose and managed like any other professional business meeting of a corporate entity.

Lessons for the future

The MAHA Farmers Producer Company Ltd’s work offers valuable lessons for both the government and the farming community. There is no alternative but to invest in organising and building institutions of small and marginal farmers, if they have to be supported. If small and marginal farmers have to link with input and output markets, there does not seem to be an institutional mechanism except cooperatives and newly engaged farmer producer companies.

Unfortunately, most of the cooperatives, even in the developed states of the country, have become highly politicised, and their leadership is more aligned to promoting their political agendas rather than taking care of their members’ interests. Hence, farmer producer companies are possibly the only institutional alternative left who have the potential to act as true representatives of small and marginal farmers.

The recently concluded procurement operation of red gram in Maharashtra has demonstrated the power of aggregation of small farmers and the resultant scale of economic activity. If managed well, the farmer producer companies can become a key stakeholder and represent the interests of their members, who are mostly small and marginal farmers.

Another important lesson is that the mere announcement of policy interventions such as minimum support prices are unlikely to yield desirable results, especially in terms of last mile outreach. The government needs to collaborate actively with other actors in the citizen space such as the MAHA Farmers Producer Company Ltd. Such a collaboration could possibly bring about intended benefits of minimum support price interventions for small farmers.

This article first appeared on Village Square.