However, FPOs have to come to the mandis to sell the produce and alternatively they can sell these in futures market through the commodity exchanges.
The government is pushing the states to allow farmer producers’ organisations (FPOs) to trade from their premises through the electronic National Agriculture Market (e-NAM) platform, so that farmers get directly connected to traders and processors from across the country. If this is achieved, it could be a significant reform in agriculture marketing and may weaken the grip of APMC mandis over trade.
So far Andhra Pradesh, Telangana and Odisha have agreed to the proposal and are discussing ways to implement it without facing opposition from the existing structure in mandis, sources said. Some other states like Madhya Pradesh and Karnataka are also inclined to enable FPOs to set up eNAM facility, sources said. Under the Agriculture Produce Market Committee (APMC) law, traders are mandated to purchase agri produce from farmers only though mandis or regulated markets established by states.
Some states have allowed these FPOs to directly purchase from farmers after getting licence from local mandi. However, FPOs have to come to the mandis to sell the produce and alternatively they can sell these in futures market through the commodity exchanges. Even though FPOs have achieved the economy of scale that has increased their bargaining power, choices are very limited to sell these produce, experts said.
“It may be a good beginning for the farmers to move out of the existing mandi system. But, to emerge as an alternative platform, states will have to actively promote the scheme,” said former agriculture secretary Siraj Hussain.
Out of over 900 FPOs registered under e-NAM, close to 90 have been trading through the e-NAM platform set up at mandis. The growth of e-NAM has been slow as many states do not promote it due to pressure from traders and commission agents operating in mandis. The role of FPOs will be very crucial to build a direct link between traders and farmers.
“States have to issue an unified trading licence or allow direct marketing access by which FPOs will be able to sell products to traders from other states. The Centre has proposed to establish the e-NAM portal on their own premises having testing facilities as well so that quality parameters of the products are ensured,” a state government official said.
The Small Farmers’ Agribusiness Consortium and Nabard have been mandated to support the state governments in the formation of FPOs. The Cabinet last month approved a Rs 6,865-crore scheme to be spent for setting up of 10,000 new FPOs and ensuring their growth by FY28.
While the budgetary support of Rs 4,496 crore will be spent by FY24, an additional Rs 2,369 crore has been estimated for hand-holding of these FPOs until 2027-28. This is part of the government’s efforts to cut production cost and boost income of the farming community. The finance minister has allocated Rs 500 crore for FY21 to launch the scheme on FPOs.