The transition from "agricultural" to "agribusiness" can offer practical answers to issues faced by contemporary agriculture. Farmers must discover ways to connect to the market to grow beyond only agricultural activities.
The idea of farmer-producer organizations (FPO) has come to light as a promising solution that can help farmers in moving to the next level.
“Agribusiness includes a wide range of activities, including the acquisition of agri-inputs, production, processing, and marketing to consumers of completed goods. An agripreneur nowadays must compete not only with other farmers but also with large businesses and multinational enterprises. A solo farmer typically lacks the resources and abilities necessary to compete successfully in the situation,” according to Dr. Tejinder Singh Riar, Additional Director of Communication, at Punjab Agricultural University (PAU).
In addition to impairing procurement and production efficiency, a lack of scale also makes it difficult to carry out low-cost processing, brand building, and widespread distribution operations. As a result, it is crucial to combine resources and efforts to run an agricultural business.
The combined power of farmers can play a crucial role in aiding the efficient operation of the enterprise. In the given context FPO has emerged as a promising solution.
It is crucial to understand the concept of producer organization to grasp the basics of FPO according to Dr. Riar. Producer Organization is created by the primary producers, such as farmers, milk producers, fishers, weavers, and other rural artisans and craftsmen. It can be established in various ways, such as a production business, a cooperative society, or any other legal structure that is allowed.
“Small producers do not have the required scale of operations individually to get the benefit of economies of scale. On account of a long chain of intermediaries that connects the producers with the markets, the producers receive only a small part of the value that the ultimate consumer pays. By joining hands, the primary producers can avail the benefit of economies of scale. Economies of scale lead to better bargaining power” Dr. Khushdeep Dharni from the School of Business Studies, PAU said.
Any person or organization may endorse a PO. Individuals or any institution may use their funds to support a producer organization with the noble goal of producers' socioeconomic development and success.
Principal Features of FPOs:
-
It is formed by a group of primary producers.
-
It is a formally recognized business.
-
The shareholders are the primary producers.
-
Members can split a portion of the profits, and any remaining funds can be invested in the growth of the company's operations.
-
Members of the FPO hold the organization's ownership.
-
FPO is managed by the representatives of the members
