Walmart helps link 8 lakh producers to markets; farm groups sceptical

Subject: Geography

Section: Economic geography

Context:

Walmart has created a network across nine States and over 500 Farmer Producer Organisations, giving them access to the market; but farmer lobbies swear by the mandi system and cooperatives are sceptical.

Details:

TechnoServe, Digital Green and PRADAN (Professional Assistance for Development Action) are the NGOs working with farmers to resolve their problems and increase their production. All these NGOs are funded by the Walmart Foundation, its philanthropy arm.
The company has created a network that links farmers directly to the retail market.
This enhances its own capacity to enter India’s retail market if and when it is allowed to, tapping into retail industry.
At least 500 organisations with 8 lakh farmers, across nine States — Andhra Pradesh, Uttar Pradesh, Telangana, Karnataka, Odisha, Jharkhand, West Bengal, Maharashtra, and Madhya Pradesh — are involved.
Non-profits that implement the progamme are working among small and marginal farmers cultivating coffee, cashew, mint, mangoes, vegetables, wheat, and millet.

Initiative to increase the Farmers Producer Organisation (FPOs):

In February 2020, the Centre launched the ‘Formation and Promotion of 10,000 Farmer Producer Organisations’ scheme to push forward 10,000 new FPOs until 2027-28.
The idea was to build the collective strength of small and marginal farmers — those with land holdings of less than 1.1 hectares.
Walmart is not new at promoting FPOs.
Concern of FPOs with the involvement of private sector:
- Private firms can be profit oriented which may lead to exploitation of farmers and farmer products.

What are FPOs?

FPOs are voluntary organizations controlled by their farmer members who actively participate in setting their policies and making decisions.
They are open to all persons able to use their services and willing to accept the responsibilities of membership, without gender, social, racial, political or religious discrimination.
FPOs operatives provide education and training for their farmer members, elected representatives, managers, and employees so that they can contribute effectively to the development of their FPOs.
FPOs in Gujarat, Maharashtra and Madhya Pradesh, Rajasthan and some other states have shown encouraging results and have been able to realise higher returns for their produce.
- For example, tribal women in the Pali district of Rajasthan formed a producer company and they are getting higher prices for custard apples.

Benefits Emanating From FPO:

Delining Average Land Holding Size: The average farm size declined from 2.3 hectares (ha) in 1970-71 to 1.08 ha in 2015-16. The share of small and marginal farmers increased from 70 per cent in 1980-81 to 86 per cent in 2015-16.
- FPOs can engage farmers in collective farming and address productivity issues emanating from small farm sizes.
- Further, this may also result in additional employment generation due to the increased intensity of farming.
Negotiating With Corporates: FPO can help farmers compete with large corporate enterprises in bargaining, as it allows members to negotiate as a group and can help small farmers in both input and output markets.
Economics of Aggregation: The FPO can provide low-cost and quality inputs to member farmers. For example, loans for crops, purchase of machinery, input agri-inputs (fertilizers, pesticides, etc.) and direct marketing after procurement of agricultural produce.
- This will enable members to save in terms of time, transaction costs, distress sales, price fluctuations, transportation, quality maintenance, etc.
Social Impact: Social capital will develop in the form of FPOs, as it may lead to improved gender relations and decision-making of women farmers in FPOs.
- This may reduce social conflicts and improve food and nutritional values in the community.