From Vulnerability to Viability: Bolstering Small Producers to Strengthen India's Agricultural Sector

India's cooperative movement, with roots tracing back to the late 19th century, gained renewed purpose after independence in 1947. Designed to secure fair market access and pricing for those in the agricultural sector, the Cooperative movement became essential for small producers to expand. Today, this system serves millions of small producers, but challenges remain.??

It is for this reason that SAP is committed to supporting India's small producers through our partnership with Vrutti, a non-profit organization working with economically and socially marginalized groups. In this instance we are supporting Vrutti to help build a more robust mechanism for Farmer Producer Organizations – a type of social enterprise – to access mainstream markets more sustainably. This is a crucial focus area for #SAP CSR as we aim to accelerate social enterprises to help the world run better.???

The Plight of Small Producers?

India's small farmers and fisher folk face are significantly vulnerable. Low and unpredictable incomes impact their livelihoods, driven by unpredictable weather patterns, volatile market demands, and limited resource access. These difficulties are further intensified by climate change and hostile soil and water conditions, making these communities even more vulnerable to disasters and pandemics. With over 100 million small farming families in India, this issue has national consequences. Improving their economic well-being and building resilience is crucial.?

Adding to this is a broken market system. Small producers receive a low share of consumer spend which is often less than 20% in some regions. Limited bargaining power forces them to sell their produce to local agents at discounted rates. This complex web of intermediaries in the value chain capturing most of the profits leaves small producers shouldering many risks. Trapped in this dynamic, they often resort to unsustainable practices like high-interest credit, unfavorable trade deals, and using low-quality seeds and inputs.? This cycle perpetuates a relentless struggle with debt.?

The Rise of Farmer Producer Organizations (FPOs)?

Advancements like e-commerce platforms, improved institutional structures for support, and easier access to credit have emerged in recent years providing a glimmer of hope. However, simply having these available isn't enough. To truly empower small producers and unlock their full potential for wealth and resilience, focused support is essential.?

One key strategy for tackling market challenges has been the rise of Farmer Producer Organizations (FPOs) or Producer Collectives across India. These FPOs are envisioned as social businesses for small producers, aimed at actively participating in the marketplace and capitalizing on opportunities to:?

• Help members access credit facilities at lower interest rates compared to traditional money lenders.?

• Consolidate their produce to gain bargaining power and can negotiate better prices with buyers, including bulk buyers and processors.?

• Explore processing, packaging, and branding opportunities to add value to their produce, fetching higher margins.?

• Leverage their collective buying power to negotiate bulk purchases of seeds, fertilizers, and other agricultural inputs at lower costs for members.?

• Provide various services to members, such as training on improved agricultural practices, post-harvest management techniques, and market trends.?

This is also made possible through support from various organizations, including the Small Farmers' Agribusiness Consortium (SFAC), State Governments, and the #NABARD - National Bank for Agriculture and Rural Development.

Additionally, FPOs are supported by non-Governmental Organizations (NGOs) which excel in reaching, mobilizing, organizing, forming, and registering producer collectives. They often support productivity and quality enhancement initiatives for member farmers. However, most NGOs lack the capacity and capability to deal with the complexities of the market system. They may struggle to provide the full suite of bundled services required, or effectively utilize technology to bring efficiency and navigate market terms and demands.?

Furthermore, the support currently offered by NGOs and public institutions is often fragmented with services being isolated and not customized to the specific needs of each FPO's business. Investments often focus on organizing FPOs and production-related areas, neglecting the crucial skills and resources needed for them to operate effectively as social businesses. This results in a situation where many FPOs, while registered and operational, are limited by their own capacity and that of their promoting NGOs. The lack of appropriate expertise and investments hinders their ability to move towards functioning as the intended social enterprises.?

Collaborating to Improve FPO Support??

The goal of our partnership with Vrutti is to improve the lives of 35,000 small producer families (farmers and fishers) covering 100,000 individuals through 40 FPOs by focusing on the following key areas:?

• Strengthening institutional capacity by professionalizing operations, establishing governance frameworks, and equipping FPOs with leadership and market strategy skills through training programs and mentorship opportunities.?

• Facilitating access to larger supply chains to connect FPOs with potential buyers, including large retailers and processors, ensuring fair prices and opening doors to value-added processes and social procurement opportunities.?

• Promoting entrepreneurship within FPOs, empowering women through leadership training and market access initiatives, and equipping members with digital literacy skills to navigate online platforms. Additionally, we focus on building climate resilience through sustainable agricultural practices training and promoting access to credit for investments in climate-smart technologies.?

• Contributing to the growth of FPOs as sustainable businesses, fostering economic resilience and social impact across rural India.?

This initiative aligns with several United Nations Sustainable Development Goals (SDGs), including SDG 1 (No Poverty), SDG 5 (Gender Equality), SDG 8 (Decent Work and Economic Growth), SDG 12 (Responsible Consumption and Production) and SDG 13 (Climate Action).?

By empowering FPOs and fostering collaboration between private sector companies, NGOs, and government institutions, we can unlock the full potential of India's small producers. This collaborative approach, coupled with long-term investments in building capacity and market access, can create a more equitable and resilient future for rural communities. Empowering small producers not only strengthens the agricultural sector but also contributes to a more inclusive and sustainable future for India.?