Advisory body suggests creation of farmer firms

Written by fe Bureau | New Delhi | Updated: Jan 31 2013, 07:08am hrs
In a bid to help small farmers get better price realisation, the National Advisory Council (NAC) has recommended the creation of farmers companies with the support of the government, which would deal with critical issues such as market linkage and value-addition in the farm sector.

In a recent meeting, the NAC, headed by UPA-II chairperson Sonia Gandhi, urged the government to provide financial support for creation of farm producers companies under the existing Centrally Sponsored Schemes (CSS) for the farm sector.

The council had urged for fund allocation under existing CSS, such as Rastriya Krishi Vikas Yojona, National Food Security Mission, Integrated Watershed Management Programme and National Rural Livelihood Mission for creation of farmers companies.

These companies would help farmers in marketing and financing activities, among other things.

Small farmers' bodies should be included as a recognised category under the Agricultural Produce Marketing Committees (APMC) Act and be allowed to market members produce directly to buyers of their choice, through all platforms, NAC stated in its recommendation.

The council also stressed that building 'collectives of smallholders' will address many critical farm-related issues, such as those related to markets, value-addition and post-harvest activities.

Besides these collectives would also deal with input issues such as credit, plant protection, insurance and nutrients, all of which 'will have positive impact on productivity and risk mitigation directly'.

The council, which plays a crucial role in the government's policymaking, has also suggested the establishment of an apex body to support small farmers' associations and boost access of investment capital for the agricultural sector.

It has also stated that producer companies should continue to be retained as part of the proposed amendment to the Companies Act, 2011.

According to the report prepared by a working group appointed by NAC on 'enhancing farmer income for smallholders through market integration', 83 % of Indian farmers are small and marginal (2005-06), covering nearly 50% of operational holdings.

An estimated 65% of all farmers are marginal. More than 90% of small and marginal farmers are dependent on rain for their crops and there are about 9-10 crore small and marginal farmers in the country who depend on agriculture for income and employment, the working group had stated in its report.

The group had also observed that due to continued land fragmentation, 15-20 lakh new small and marginal farms are added to the tally every year.

The group had stated that for creation of a farmers' organisation with 1,000-1,200 members (in a cluster of 15-20 villages), about R35 lakh over a period of three years, or about R1,200 per farmer per year, are required.

These costs include institutional development, capacity-building and administrative overheads.