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Inaugural article

FPOs are the new hope for rural India

After India has achieved independence, cooperatives have been seen as the harbingers of change in India. It is expected that the cooperatives will provide solution for many a challenges faced by India, especially the rural part of it. The Bhoodhan movement, though not exactly a cooperative movement; kindled hopes on such type of collective and cooperative activities. Efforts were also made to form collectives in different arena. Consequently cooperatives have been formed among farmers, small producer groups etc; Cooperatives were also formed in traditional professions like fishermen, toddy tappers and barbers etc; the cooperatives which are not related to agriculture or rural areas are reasonable successful; such as fishermen’s cooperatives.

Failure of cooperatives

The cooperatives: The cooperative movement is considered as a failure in India; with some exceptions like AMUL. The movement failed to generate enthusiasm in the grassroots people. They were seen as the organizations of charity rather than entities of business activity. The cooperatives have been suffered from the phenomenon of Everybody’s interest is nobody’s interest. Due to the vastness of the ambitions the cooperatives, the element of entrepreneurship is missing in them.

Failure of cooperatives badly impacted rural India

The rural India still suffers from low growth in agriculture and allied activities. There is a slump in the contribution of agriculture and allied activities to the GDP. Poverty persisted in rural India vecause they were not able to get the adequate returns for the produce. There were middlemen existed and they have eaten-up the margin paid by the consumers.

Overall the agriculture sector also could not develop because the farmers do not have enough returns to re-invest in the development of agriculture. All these led to a vicious circle of poverty-low growth in agriculture & allied activities- failure of cooperatives.

Solution lies in the FPOs

The FPOs will be a good promise to the problem faced in traditional cooperative system of the producer groups. The spirit of cooperatives lies in the FPOs and the modern elements are being incorporated into it. It is an excellent bargain between cooperatives and profit motivated corporate entities. In fact they can also become a solution for dwarfism in MSME enterprises. The FPOs can grow and become medium to large scale companies if proper environment is created.

Benefits of FPOs

The FPOs have several benefits to its name which have made them more promising. They are;

· Efficient management: A CEO, who might have professionally qualified will be appointed. She will run the FPO with the support of board of directors

· Board of directors will be in place to oversee the broad policy of the company and direct it.

· Compliance is easy as the law is simplified for FPOs in comparison to cooperatives

· The misperception that cooperatives exist for charity and profit is not tis motive; is not attached with the FPOs

· The sentiment is positive about the FPOs and the beneficiaries are also motivated as they get some semblance of benefit


The government has initiated several schemes/policies to promote FPOs in the country some of them are;

· Formation and promotion of 10,000+ FPOs in India

· Producers organization development fund

· Venture capital assistance scheme

· Rastriya Krishi Vikash Yojana (RAFTAR)

· National policy on promotion of FPOs

All in all the FPOs seems the better way to go forward to solve the problems of rural producers. They have the potential as well as the promise to change the way the rural produce is being marketed. Let us hope that the FPOs will change the rural scenario in the coming future.

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