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A slice of FDI pie for small farmers

Thursday, 31 January 2013 - 10:00am IST | Place: New Delhi | Agency: DNA
Sonia Gandhi-led National Advisory Council wants the UPA government to make it mandatory for foreign investors in multi-brand retail to procure 15-20% from small, marginal farmers.

Congress president Sonia Gandhi-led National Advisory Council (NAC) has asked the UPA government to make it mandatory for foreign investors in multi-brand retail to procure 15-20 per cent from small and marginal farmers. The government in its guidelines has already made it mandatory for global retail chains to procure 30 per cent of the products from small-scale industries.

The NAC in its meeting last week called for extending benefits of the FDI to small and marginal farmers to change their lot. It says the thrust of the recommendations was to promote farmer producer organisations (FPOs) for “inclusive growth”.

Ironically, the advisory council has taken a leaf out of the BJP-ruled Madhya Pradesh. The NAC report gives credit to MP that pioneered FPOs with an initial capital grant of Rs 25 lakh and infrastructure support like warehouse, land, machinery, etc under various schemes. The report says the government can give matching grant to FPOs to double the members’ equity, subject to Rs 10 lakh per FPO under the existing centrally-sponsored schemes of the rural development and agriculture ministries. “Such bodies will quickly stabilise, though with initial government funding, if they become conduit for the purchases made by the retail and wholesale shops opened under FDI,” it says.

The paper further says that FPO membership should not be based on ownership of land but on the concept of shareholding. It says this will make it open for membership to any producer, including tenant and landless farmers, women, Dalits and tribals, without any need to prove title to land.

The NAC wants the government to commit funds as grant to the FPOs for at least three years to help them “build their capacities to tap high value markets and enter into partnership with private and public entities on more equitable terms”. It says the government can give matching grant to FPOs to double the members’ equity, subject to Rs 10 lakh per FPO under the existing centrally-sponsored schemes of rural development and agriculture ministries.

“The promotional cost for an FPO of average 1000-1,200 members in a cluster of 15-20 village is about Rs35 lakh over a period of three years or about Rs 1,200 per farmer per year. Cost includes institutional development, capacity building and administrative overheads.”

It says FPOs can tackle the problems that small and marginal farmers face like shrinking land asset per head as the family dependent on the same piece of land grows, rising per unit cost of cultivation, shrinking profit margins as also difficulties in accessing critical inputs like credit, water, power, seeds and fertilisers. They suffer because of weak bargaining with market agents, giving them low returns on investment.


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