Govt to work on facilitating FPOs to get the benefit of margins charged by intermediaries

As the government tries to connect farmer producer organisations (FPOs) directly with corporates to sell their produce so that they get the 5-6 per cent margin that currently goes to intermediaries, a major challenge is the purchase price of the quality produce, which may be resolved with handholding.

The issue of farm-gate price gained prominence at the weekly webinar on Thursday, organised by Union Agriculture Ministry, at the initiative of secretary Devesh Chaturvedi, when an FPO representative asked a company why should they sell the produce at a rate in which he has to deliver the produce at his own cost at the designated warehouse if he gets the same rate from local trader in his village.

Current margin

“This is a larger issue of “mandi fees” the government should address as almost all the States have it and there is no concession for FPOs. It is high time the Agriculture Minister convened a meeting of States only on the issue of FPOs where exemption from mandi fees should be discussed on priority,” said a former top official of the Agriculture Ministry.

In a presentation at the webinar, Olam Agri’s assistant manager Praveen Sinha along with a colleague said that currently there is a 5-6 per cent margin (of profit) between farmer and processors/exporters in farm produce and the FPOs are well placed to capture that margin, provided they conform to quality standards and sustain it.

Olam’s executives said that the company rely on traders/commission agents who buy the produce from aggregators, as per its own parameters whereas past experience with some FPOs was not of consistent quality. Currently in most states, even if FPOs sell the produce directly to processors, they need to pay fees to local mandi.

Efforts to boost income

When company officials said that they currently are buying wheat at about Rs 2600/quintal in Shahjahanpur in Uttar Pradesh, a farmer representing an FPO in an adjacent district said that local traders are paying them same rate at their village. But, Olam officials said that the wheat it is buying has certain specific standards and it is ready to pay higher for better quality produce.

Many of the FPOs wanted the contact details of the companies, which the government officials promised to share with them through statewise whatsapp groups.

After achieving the target of creating 10,000 FPOs, the government has been trying to boost their income through hand holding for which Chaturvedi conceived the idea of the weekly webinar and in the first meeting assured them of all necessary help in creating the market linkage.

APEDA’s secretary Sudhanshu said that the agency is ready to help FPOs if they want to directly export and suggested them to participate in different exhibitions to showcase their produce so that they can attract importers interest. With regard to a demand by an FPO for honey export, he said that APEDA will connect it with buyers. However, it was agreed that honey export should be a topic in one of the next webinars planned where all FPOs would be invited, even if those who are currently not dealing with it.

Published on April 25, 2025