The preamble to the 2013 National Policy of Promotion of Farmer Producer Organizations (FPOs) says that “Collectivization of producers, especially small and marginal farmers, into producer organizations has emerged as one of the most effective pathways to address the many challenges of agriculture but most importantly, improved access to investments, technology and inputs and markets.
Change in the Companies Act was brought about to allow for a new institutional architecture which would retain the principles of mutual co-operation and collective ownership and bring these entities under the purview of corporate governance, transparency and accountability akin to any corporate entity. This will help them raise investment as required for asset creation and working capital.
FPOs have to deal with varied business activities related to the farm produce and work for the benefit of the member producers through economies of scale which is the solution to most of the challenges faced by smallholder farmers. Collectivizing demand for input and aggregating supply for bulk marketing can bring about substantial change in the rural income level.
NCDEX, in line with government’s vision of doubling farmers’ income, has introduced several initiatives to provide farmers with access to commodity derivatives market to mitigate their price risks. Further, NCDEX has been handholding FPOs through a number of initiatives such as price dissemination through free SMS service, awareness cum training programmes across the country, reaching out to farmers through dedicated TV show “Mandi.com” on DD Kisan, among others. These initiatives have been able to encourage more and more FPOs to use commodity derivatives platform as a transparent and fair alternate market platform for ensuring that they are able to manage their price risk.