The Paradigm Shift - India's Journey of Corporative Act to Producer Company Act; How Sustainable the Farmers' Producer Organization Model Has Been So Far?

Over the years, in India, plethora of approaches has been taken to organize farmers, especially smallholder farmers, in order to enhance their farm profitability. The concept of ‘Cooperative' was one of the options available for the producers to get organized themselves as an active player in the supply-chain by value addition and business ownership. However, the cooperative system in the country had several shortcomings. Hence, a new legal entity, “Producer Companies” was introduced by the amendment of Companies Act 1956 during 2002. This Farmer Producer Organization (FPO) model under the new company act 2002 is a hybrid between a private limited company and a corporative society. Most of the producer companies are start-ups and promoted by NGOs. The robust governance and management of this model in India and promotion of this concept may bring prosperity among smallholder farmers. However, the best practices followed by the successful producer companies across the country in awareness creation, capacity building, promotional efforts and operational management etc. are not well documented and disseminated. This paper examines the experience of five unique set of FPOs running legally and successfully for three years from Tamil Nadu of India. The selected FPOs were NABARD and SFAC promoted. Based on the findings on the challenges faced in formulation of FPOs; the intervention for further up scaling was identified to make this a sustainable model in future.