Convergence of FPOs and SHGs the two pillars of rural development A concept Note Dr. Gayathri Swahar, Fellow Designate, Department of Horticulture With inputs from Aruna Sampige, Fellow Designate, NRLM Indian Administrative Fellowship Government of Karnataka FPOs and SHGs – The Two Pillars The FPO and SHG institutions of the government has one common mission - to ensure growth among the poorest of poor and they have a potential of playing a greater role creation job and transforming rural area of India with inclusive and sustainable ways. Farmer producer organizations (FPOs) are gaining momentum in all fronts related to value chain development endeavors of their focused commodities, self-help groups (SHGs) are reaching the next orbit of livelihoods development programs through clusterbased approach. These two institutions, though envisaged for the same vision, developmental initiatives are taking place in isolation like two alien entities in the rural socio-economic eco-system. The siloed approach is mostly because of the watertight operations of two-line departments monitoring the two different important development activities – the NRLM promoting SHGs operating under the MoRD and SFAC of MoA&FW promoting FPOs. There has been a consistent push and commitment from the government in strengthening both these institutions for the benefit of the marginalized. The Union Government recently announced promotion of additional 10,000 FPOs to catalyse the FPO movement in the country ensuring resource push through SFAC backedup by government-sponsored agriculture development schemes such as Rashtriya Krishi Vikas Yojana and Integrated Mission for Horticulture Development. The FPOs, being a meeting point of cooperative spirit and corporate governance, have quickly attracted farmers across almost all states. Bankers are now not hesitant to support viable value chain development projects to FPOs. With huge investments the agtech sector has been seeing, the startups are also looking for opportunities to partner with the FPOs as a part of their business plan. On the other hand, the Union Ministry of Rural Development is giving a big push to women-based collectives ie producer groups to federate into producer enterprises in the form of producer companies that are purely women-based. There is much to gain for the rural ecosystem, if the FPOs converge with local SHGs. Such a convergence would also pave way for recognition of women’s role in agriculture. FPO Operations in addition to Divergent Stakeholder Management Image Source cdfi.in While the FPOs are envisaged to do many of these roles like corporates, however, the whole operations is mostly managed my the CEO with support from some active Board of Directors. In addition to the operations captured in the image, there is a big component in FPO operations - diverse stakeholder management. Each of the farmers in the FPOs, for simplistic understanding, have interest in varied crops during different crop cycles, and each crop have varied needs, and when it comes to aggregation and sales, there is no obligation in the part of the farmer to sell the produce to the FPOs making it challenging for the FPO to build a strong market-linked relationship. Value addition again becomes challenging for the same reasons. In addition to many needs and challenges of FPOs, having a self-driven motivated team is one of the pressing challenges. SHGs on the other hand are group of self-driven motivated women, struggling to find avenues of profitable engagement. So the very structuring of these institutions allows for a great convergence. The FIVE ‘O’s for a win-win FPO-SHG convergence Organize Operate Outsource Independent and symbiotic convergence Integrated System of convergence Outside Support Optimize Organize – Huge part of FPO activities includes organization and member-farmer management, collecting all the member details, collecting share capital, in case of potential market linkage calling up of members to understand interest, continuous updating of the current crop cycle of farmers etc. This is work that could be done by SHGs for a completion fee. Operate – The SHGs could become an integral part of operating the FPOs. For e.g., the SHGs could operate the input centers or the farm equipment leasing parts of the operations. Further SHGs could support FPOs in their value additions like grading, sorting packaging etc as well. SHGs would then work as functionaries of the FPO with a fee. Outsource – The FPOs could also outsource the entire parts of say input centers or farm equipment leasing to the SHGs. This is different from ‘operate’ in the sense that it would be an activity entirely outsourced to the SHGs and the SHGs can find the best way to operate. There could be a profit sharing model here. The funds available from both the schemes could be used to multiply the impacts. Outside Support – The community resource persons (CRPs) of the GPLFs could offer outside support to the FPOs through various models. The BC Sakhis would be able to access huge number of farmers, Krishi Sakhis trained on crop advisory could be leveraged for crop advisories for FPOs, Pashu sakhis for promoting IFS for member farmers etc Optimise – This is when both the SHG and FPOs can collaborate on for e.g., creating common facility centers which could be then leveraged both by the FPOs and SHGs Some areas of potential convergence SHG Support Organize FPO Operations Farmer Data Management Farmer loans Operate Outsource Outside support Optimize Mercury Mercury is the closest planet to the Sun Input Centres Farm Equipment leasing Produce Aggregation Warehouse operations Neptune Neptune is far away from Earth Market Access Jupiter Crop advisories Common facilities like micro processing units It’s the biggest planet in the Solar System Apart from what is outlines, there is a huge scope on how the FPOs and SHGs could converge. The SHGs into value added processing for example could also become potential buyers from the FPOs, some of the SHG products could be sold back to farmer and his families. Challenges to the convergence Systemic Challenges Capability Challenges Societal Challenges Structural Challenges Evolutionary Challenges The SHGs and FPOs are promoted and schemed governed under different ministries. Even the financing bodies are different. Hence to have a proper convergence plan, there is a need for seamless alignment and common goal acceptance across the offices promoting SHGs and FPOs Both the SHGs and FPOs are nascent institutions when it comes to running businesses. Both the institutions have been struggling to navigate the complex market ecosystems. Hence the benefit of convergence would take time to realise Indian agricultural society is still more patriarchal and despite the contribution of women to agriculture, they are seldom acknowledged or appreciated. This societal values are likely to have a rub off on the FPO – SHG convergence and hence need a thought through execution to enable bridging the rural gender divide The FPOs are organized only at the FPO level with farmers across GPs, it functions more as an independent company. The SHGs are organised at the GPLF with individual CRPs trained for different roles. It is important to see how these structural differences needs to be mitigated The evolution of these two institutions have been different, and these evolutionary differences would also have created cultural difference in the modus operandi of the systems. There is a need to have an expert panel with members from the two departments as the convergence plan is charted True Convergence – The way forward Interdepartmental Brain storming Identify all value-added avenues Getting the department, the support agencies of the insitutions and beneficiaries to brain storm the convergence plan. List all possible avenues of convergence that will add value to both the institutions with working models Common goal setting Cross domain language Convergence is not an option, but the common way forward with a common goal needs to be communicated across departments Evolve ways to synergise information and use cross domain launguage Unifying actions Bottoms up execution An action plan involving the ecosystem which will facilitate the convergence for eg., a common financial insitution A participatory planning at each GP and district levels Incentivise convergence Evolve incentive plans that would promote true convergence When the battles are the same, why fight in silos? Together we win better and faster
