POLICY & PROCESS GUIDELINES FOR FARMER …

1 FARMER PRODUCERORGANISATIONSPOLICY & PROCESSGUIDELINES FORMINISTRY OF AGRICULTUREDEPT. OF AGRICULTURE AND COOPERATIONGOVT. OF INDIADEPT. OF AGRICULTURE AND COOPERATIONM inistry of AgricultureGOVT. OF INDIA2013 ISSUED BYPOLICY & PROCESSGUIDELINES FORFARMER PRODUCERORGANISATIONSCONTENTSPART-1: NATIONAL POLICY FOR THE PROMOTION OF FARMER PRODUCER ORGANISATIONSV ision13 Mission13 Scope and Coverage13 Support for Promotion of FPOs13 Role of Central Government Institutions in Supporting FPOs14 Role of State Government Institutions in Supporting FPOs14 Miscellaneous15 PART-2: PROCESS GUIDELINES FOR PROMOTION OF FARMER PRODUCER ORGANISATIONS (FPOs)Background18 Project Considerations Objectives18 Guiding Values and Principles for Sustaining FARMER Producer Organisations Development19 Selection of Resource Institutions (RIs)19 FPO Promotion and Development Process20 FPO Service Model22 Stages of Project Development, Timeline, Deliverable and Measures of Verification24 Project Outcomes26 Budget and Payment Structure26 ANNEXURES1.

2 Details of Project Objective wise Activities, Outputs and Outcomes332. Energizing farm production systems: institutional arrangement for transition to coordinated surplus farmer343. Empanelment process354. Outline for diagnostic study365. Detailed checklist of factors for baseline study376. GUIDELINES for business planning387. GUIDELINES for by-laws398. Outline for inception report409. Institutional maturity index4110. Memorandum of Agreement between promoter organization (concerned State Department/SFAC) and Resource Institution (RI)42 PART-3: RESOURCE HANDBOOK FOR ESTABLISHING A PRODUCER COMPANYA cknowledgement49 Introduction51 CHAPTER 1: PRODUCER COMPANIES CONCEPT AND Key Characteristics of Producer Experience of ASA in Establishing PCs55 CHAPTER 2: INCORPORATION OF A PRODUCER How Different Should be the Social Processes While Setting up a PC Vis A Vis A Community Based organisation (CBO)? Whether Primary Cbos (Viz. Shgs, Forest Collectors Group, Water Users Group, Common Interest Group, Etc.)

3 Can be Transformed into PC? Whether the PROCESS of Establishing PC is Self Triggered by the Members Themselves or Externally Triggered? Who Can be the Initiator for Establishing Preparations for the Formation of a Registration of PCs60 Step 1: Digital Signature Certificate (DSC)Step 2: Director Identification Number (DIN)Step 3: Naming of a Producer CompanyStep 4: Memorandum & Articles of AssociationStep 5: Documents to be submitted to the RoC for the Incorporation of Producer CompanyStep 6: Certificate of IncorporationStep 7: Tasks to be Completed Immediately after Incorporation of the Estimated Cost for Incorporation of a Producer Company62 CHAPTER 3: ASSESSING THE CAPITAL REQUIREMENTS OF A PRODUCER Assessing the Capital Required for Initial Business Management and Office Administration Cost of Furniture & Cost of Infrastructure & Training and Capacity-Building of Bods and PC Functionaries66 CHAPTER 4: ASSESSMENT OF THE FINANCIAL VIABILITY OF THE BUSINESS OF PRODUCER The Business Planning How to Generate Business Ideas?

4 Brainstorming in small groups, is the technique that is generally used in generating ideas for new businesses. This PROCESS is done in two Opportunity and Threat Analysis & Business Opportunity Risk-Mapping and Marketing Choosing a Marketing Positioning Basis of Strategies Based on Price and The PC s Marketing Financial What is a Budget ? What is Working Capital? How to Prepare a Budget? Break-even Sources of What is Interest? What are the Various Ways of Calculating Interest? What is Net Present Value (or NPV)? What is an Internal Rate of Return? Cash Flow Sensitivity Writing a Business What is a Business Plan? What are the Elements of a Business Plan? Tips on Writing a Business Suggested Outline of a Business Plan86 CHAPTER 5: ASSESSING INSTITUTIONAL PERFORMANCE OF PRODUCER Framework of Participatory Assessment of Institutional Performance of PC88 Additional Resources89 LIST OF ACRONYMS1 AGMA nnual General Meeting2 AoAArticles of Association3 APMCA gricultural Produce Market Committee4 ASAA ction for Social Advancement5 BFBusiness Facilitator6 BoDBoard of Directors7 CAChartered Accountant8 CBCapacity Building9 CBOC ommunity Based Organization10 CEOC hief Executive Officer11 CIGC ommon Interest Group12 CSCompany Secretaries13 DACD epartment of Agriculture and Cooperation14 DIND irector Identification Number15 DPRD etailed Project Report16 DSCD igital Signature Certificate17 DSCRDebt Service Coverage Raito18 EOYEnd of Year19 FAOFood and Agriculture Organization20 FCIFood Corporation of India21 FFBF armers Field Book22 FGFarmer Group23 FIGF armer Interest Group24 FPCF armer Producer Company25 FPOF armer Producer Organization26 GBGeneral Body27 GoIGovernment of India28 GoMPGovernment of Madhya

5 Pradesh29 HRHuman Resource30 IFADI nternational Fund for Agriculture Development31 IFPRII nternational Food POLICY Research Institute32 INMI ntegrated Nutrient Management33 IPMI ntegrated Pest Management 34 IPPI ntegrated Plant Protection35 IRRI nternal Rate Of Return36 ITIncome Tax37 KCCK isan Credit Cards38 LFLead Farmer39 LSLumpsum40 LPOL ivelihood Promotion Organisation41 LRPL ocal Resource Persons42 MACSM utually Aided Cooperative Societies Act43 MADPM edicinal, Aromatic and Natural Dye Plant Programme44 MCAM inistry of Corporate Affairs45 MISM anagement Information System46 MoAMemorandum of Association47 MoUMemorandum of Understanding48MS ExcelMicrosoft Excel49 MSPM inimum Support Price50 NABARDN ational Bank for Agriculture and Rural Development51 NAFEDN ational Agriculture Cooperative Federation52 NCDCN ational Cooperative Development Corporation53 NGONon-governmental organization54 NPVNet Present Value55 NVIUCN ational Vegetable Initiative for Urban Cluster56O/T AnalysisOpportunites & Threats57 ODOrganisational Development58 PANP ermanent Account Number59 PCProducer Companies60PC*Personal Computer61PC**Procurement Centre62 PRADANP rofessional Assistance for Development Action63 PVPresent Value64 RFPR equest for Proposal65 RIResource Institution66 RKVYR ashtriya Krishi Vikas Yojana (RKVY)

6 67 RoCRegistrar of Company68S/W AnalysisStrengths and Weaknesses69 SHGSelf Help Group70 SHTS pearhead Team71 SLSCS tate Level Sanction Committee72 SMSS hort Message Service73 SWOTS trength, Weakness, Opportunity & Threats74 TDSTax Deducted at Source75 TINTax Information Network76 ToRTerms of Reference77 VATV alue Added Tax77 WHRW arehouse Receipts79 WUGW ater Users Groups1 NATIONAL POLICYfor the Promotion ofFarmer Producer OrganisationsPOLICY & PROCESS GUIDELINES FOR FARMER PRODUCER ORGANISATIONSC ollectivization of producers , especially small and marginal farmers , into producer organisations has emerged as one of the most effective pathways to address the many challenges of agriculture but most importantly, improved access to investments, technology and inputs and markets. Department of Agriculture and Cooperation, Ministry of Agriculture, Govt. of India has identified FARMER producer organisation registered under the special provisions of the Companies Act, 1956 as the most appropriate institutional form around which to mobilize farmers and build their capacity to collectively leverage their production and marketing POLICY document is meant to serve as a reference and guide to Central and State Government agencies which seek to promote and support FARMER Producer Organisations, especially producer companies and link them to benefits under various programmes and schemes of the Central and State Governments.

7 (RIs). To provide the required assistance and resources POLICY action, inputs, technical knowledge, financial resources, and infrastructure to strengthen these To remove hurdles in enabling farmers access the markets through their FPOs, both as buyers and To create an enabling POLICY environment for investments in FPOs to leverage their collective production and marketing SCOPE AND COVERAGE3 .1 The provisions of this POLICY will apply equally to FPOs already registered either under the Companies Act and under various central and state cooperative society laws and those FPOs which will be registered subsequent to the issue of this The main qualifying criterion for an FPO to attract benefits under various schemes and programmes of the Central and State Governments is that it must be a body registered and administered by farmers and the organisation must be focused on activities in the agriculture and allied SUPPORT FOR PROMOTION OF The formation and development of FPOs will be actively encouraged and supported by the Central and State Governments and their agencies, using financial resources from various Centrally-sponsored and State-funded schemes in the agriculture sector agencies.

8 This goal will be achieved by creating a coalition of partners by the concerned promoter body, involving civil society institutions, research organisations, consultants, private sector players and any other entity which can contribute to the development of strong and 1. VISION: To build a prosperous and sustainable agriculture sector by promoting and supporting member-owned Producer Organisations, that enable farmers to enhance productivity through efficient, cost-effective and sustainable resource use and realize higher returns for their produce, through collective action supported by the government, and fruitful collaboration with academia, research agencies, civil society and the private sector. 2. To promote economically viable, democratic, and self governing FARMER Producer Organisations (FPOs) To provide support for the promotion of such FPOs by qualified and experienced Resource Institutions NATIONAL POLICY FOR THE PROMOTION OF FARMER PRODUCER ORGANISATIONSPREAMBLEPART ONEDept.

9 Of Agriculture and Cooperation | GOVT. OF INDIA13operations for various DAC and its designated agencies will work with NABARD and other financial institutions to direct short and medium term credit for working capital and infrastructure investment needs of FPOs. DAC will also work with all relevant stakeholders to achieve 100% financial inclusion for members of FPOs and link them to Kisan Credit Cards. DAC will work with Ministry of Corporate Affairs and other stakeholders to further clarify and strengthen provisions of the law relating to the registration, management and regulation of FPOs with a view to fostering fast paced growth of ROLE OF STATE GOVERNMENT INSTITUTIONS IN SUPPORTING FPOS6 .1 Besides encouraging State Governments to take up formation of FPOs on a large scale through Centrally-sponsored and State-financed programmes and schemes, DAC suggests the following steps to be taken by State Governments to support and strengthen FPOs:6 . By declaring FPOs at par with cooperatives registered under the relevant State legislation and self-help groups/federations for all benefits and facilities that are extended to member-owned institutions from time to.

10 1. 2 By making provisions for easy issue of licenses to FPOs to trade in inputs (seed, fertilizer, farm machinery, pesticides etc.) for use of their members as well as routing the supply of agricultural inputs through FPOs at par with .1. 3 By using FPOs as producers of certified seed, saplings and other planting material and extending production and marketing subsidies on par with By suitable amendments in the APMC Act to allow direct sale of farm produce by FPOs at the farmgate, through FPO owned procurement and marketing centres and for facilitating contract farming arrangements between FPOs and bulk producer owned Detailed GUIDELINES for the promotion of FPOs, including methodology of selecting RIs, budgets and registration processes are annexed to this POLICY . These are meant to guide the Central and State Government agencies engaged in FPO promotion and provide a detailed roadmap to achieve the vision of building FPOs, especially if funds under Central schemes are being used to promote FPOs.