Farmers in business? I thought you'd never ask!

MANILA: ICRISAT is in business, in case you didn't know – for the farmers. The statement says it all: "ICRISAT creates business opportunities for farmer producer organizations" (ICRISAT Happenings 1647, 31 October 2014, icrisat.org):

Farmer producer organizations (FPOs) from six states of India are benefiting from the agribusiness facilitation of ICRISAT that will enable them to operate as businesses and make their farm operations sustainable and profitable.

I'm a very wide reader, but I never heard (or noticed) of "farmer producer organizations" until now. At any rate, ICRISAT, through its Agri-Business Incubation (ABI) unit, believed they were important enough to organize a 1-day summit for them, 27 October 2014, so I googled and found that, for instance, notably, 2014 has been declared by India's Department of Agriculture & Cooperation as "Year of Farmer Producer Organizations."

So, the FPOs are nationally important to India. As an earlier signal, the country's Department of Agriculture & Cooperation set up in 1994 a special unit called the Small Farmers Agri-Business Consortium (SFAC), "an autonomous body for the promotion and development of small farmers' agri-business activities" (unionbankofindia.co.in). The small farmers must learn to think bigger.

Precisely how important? The SFAC received from the Government of India from the Union Budget of 2013-2014 an initial $1 billion budget allotment to create the Credit Guarantee Fund, and $.5 billion to give a matching equity grant to each FPO a maximum of $ 22,250+ "to enable them to leverage working capital from financial institutions" (28 February 2013, facebook.com).

According to the Indian General Knowledge Today website, the SFAC is unique in that it has emerged as a developmental institution in the wide field of agriculture, providing venture capital to farmers, producer groups, even Agriculture graduates, to work out project proposals for funding by banks (gktoday.in). After 10 years, for 2014, the SFAC can report only 192 FPOs registered in all of India (sfacindia.com). It has a lot more work to do. Life's not easy.

I'm not surprised. Reading more, I see that the FPOs actually comprise a diversity of farmer organizations, associations and cooperatives. If FPOs were so successful, there would be hundreds of them after 10 years of the SFAC. I see that no matter how different they are in structure and command, the FPOs have a common problem, and it is described by TechnoServe in these words (seattlewebgroup.com):

Although FPOs are widespread in India, many depend on government and NGO support and find it difficult to continue operations when these entities withdraw. In Orissa, TechnoServe is working to strengthen three farmer cooperatives, developing comprehensive business plans and growth opportunities to ensure their sustainability.

In other words, the common problem is that those farmer groups do not grow up to become self-reliant. India, you're not alone. I know about business plans, growth opportunities – and self-reliance. We just finished a 1-year training consultancy with agrarian reform farmers in Pangasinan and La Union in the Philippines and all the cooperatives (referred to as agrarian reform beneficiary organizations) we dealt with are highly dependent on government and NGO support to stay alive.
It's the NGOs who are on the ground, so I think that NGOs, including TechnoServe, have to rethink how they help the FPOs because, even today, they think like Ed Bullard when he founded TechnoServe in 1968, the time when he saw his baby "as a different type of nonprofit, one that would help poor people by connecting them to information and market opportunities"

(seattlewebgroup.com). Bullard did not see that it is not enough that you link farmers to market information and opportunities – they are still under the influence and control of the merchants, who thereby collect the greatest returns from those who bear the costs of production, the farmers. Life's not fair.

The FPOs must become businessmen themselves, for the sake of their farmer members. They must become entrepreneurs who deal directly with buyers. And that is why I'm not surprised that FPOs have approached ICRISAT for assistance.

I will now repeat the ICRISAT statement I quoted above because these are 5 important terms embedded in that 33-word pregnant sentence:

Farmer producer organizations (FPOs) from six states of India are benefiting from the agribusiness facilitation of ICRISAT that will enable them to operate as businesses and make their farm operations sustainable and profitable.

These are the 5 significant terms from that ICRISAT sentence:
(1) farmer producer organizations (FPOs)
(2) 6 states of India
(3) agribusiness facilitation of ICRISAT
(4) operate as businesses
(5) farm operations sustainable and profitable

The FPOs of India are highly supported by their Union Government. Nationally, their importance cannot be over-emphasized seen economically and politically.

The FPOs referred to in the ICRISAT statement are from the states of Telangana (where the headquarters of ICRISAT is), Andhra Pradesh, Karnataka, Madhya Pradesh, Maharashtra and Rajasthan. In other words, their state governments sent those FPO members to ICRISAT to attend the 1-day Farmer Producer Organization (FPO) Summit. The ICRISAT statement said, "They convened to explore agribusiness opportunities in the areas of technology penetration, improving productivity and access to inputs and services, and increasing incomes for a sustainable agriculture-based livelihood."

Efficient technologies are of course necessary to produce more and cut costs; so are affordable accesses to credit schemes for seeds, fertilizers, pesticides and household needs in-between harvests; so are accesses to affordable harvesting, postharvest and processing services – and these must result in increasing incomes for the farmers. Up to this point, economists, knowledge suppliers and service providers will agree.

But even all that is not enough, as ICRISAT & partners have found out. I note that in Orissa, TechnoServe is working with 3 farmer cooperatives in "developing business plans and growth opportunities to ensure their sustainability." If TechnoServe has not graduated from its founder's idea of helping the poor producers link to markets, not capture markets, there may be increasing incomes but not sustained increasing incomes. As of today, the producers gain from their labors, the merchants gain much, much more. The risk takers increase their incomes; the non-risk takers increase their incomes many times over. Life's very unfair!

I have seen exactly that in our consultancy work in the Philippines. Through their FPOs in India or cooperatives elsewhere, farmers must learn to be businessmen through and through. They must aim at arrangements, as the ICRISAT Director General puts it, "directly linking the producer to the end-user" (see William D Dar's speech "Linking Farmers to Markets: Inclusive Agricultural Value Chains," 18 November 2010, iCRiSAT Watch, blogspot.com). Direct buyers only, not through aggregators or wholesalers. To quote myself that year, "Produce from the villages must reach the market and come back as value added, not subtracted by the marketing system" (see my essay "ICRISAT IMOD. AT Magazine encourages India's leaders," 02 October 2010, blogspot.com). How much value are we talking about here? Here's a figure: If the farmers run the market themselves, as I pointed out in an earlier essay, they can achieve an actual incredible income increase of 482%! (see my essay "ICRISAT stat. Drylands & the economics of the little," 28 September 2010, iCRiSAT Watch, blogspot.com). Almost 5 times higher income. If the market practice is right, the economics of the little is that huge, the growth of the income is that high.

And we can get that high using ICRISAT's strategy called inclusive market-oriented development (IMOD). I will again quote myself ("An African Revolution. IMOD Power to the Women!" 22 September 2010, iCRiSAT Watch, blogspot.com):

In the IMOD context of investments, (William) Dar said 3 sectors are necessary to make it all work for all: (1) the poorest of the poor are included as raisers of crops, (2) donors are sources of access to assets, inputs and technologies, and (3) the government provides support in matters of policy. Connect the farm to the market, and you will motivate the poor to grow more crops – the market becomes the motivation to raise food and cash.

Connect the farmer to the market, not to the marketman – that is the beginning and the ends of IMOD.

ICRISAT's Agri-Business Incubator (ABI) will help you connect to the market through public-science-private partnerships. It has a proud history. Set up in 2003, in 10 years ABI became a self-sustaining unit within ICRISAT (13 December 2013, icrisat.org). ABI won Asia’s Best Incubator Award given by the Asian Association of Business Incubators in 2007. And in 2008, from the Asian Association of Business Incubators (AABI), ABI won The AABI Incubator of the Year Award. As of December last year, ABI has supported 200+ agribusiness ventures and benefited 500,000+ farmers in Andhra Pradesh and neighboring states.

More about ABI, I will quote myself again, also in 2008 ("The Little People. Creative capitalism needs risk takers in science," 27 November 2008, iCRiSAT Watch, blogspot.com):

ABI is not unlike Grameen (Bank), as it is also pro-poor and a risk taker. But this one is bigger business. This is essentially where capitalists meet the poor and with the support of the Government of India, donors and with ICRISAT technology, they incubate an entrepreneurial egg until it hatches and grows into a hen that lays all those proverbial golden eggs.

With the help of ICRISAT's ABI and the IMOD strategy, farm operations should become more productive, profitable and sustainable. May each India's FPO turn out to be a hen that always lays golden eggs!