ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

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Fermenting New Wine for New Bottles

Farmer Producer Companies

India's track record of forming robust, self-sustaining farmer cooperatives has been poor ever since the early 1900s when the movement began. For long, restrictive laws were blamed for their failure. But most of the 2,000 farmer producer companies registered under a new amendment to the Companies Act 1956 appear like old wine in a new bottle. This article explores why, and argues for the need to focus on the logic and process of promoting new farmer cooperatives to improve their success rate.

With two back-to-back droughts, Indian agriculture is now in deep distress. Seldom in the past have price risk and production risk in agriculture moved in unison, as they are now. Normally, when production took a hit, farmers had less to sell, but got a better price and vice versa. With globalisation, the Indian farmer is also hit by the global free fall in commodity prices. When far more prosperous industrial farmers in California and Australia find the going tough, there is little wonder that India’s small farmers are driven to the wall, at times, to take their own lives.

Things would arguably be much better had India succeeded in organising small farmers into strong cooperatives that could guard against price as well as production risks, as, for instance, dairy cooperatives have done in places where they have taken root. We seldom hear about dairy cooperative members in a state like Gujarat committing suicide. In semi-arid North Gujarat, the entire farming system is drought-proofed by strong dairy cooperatives which experience a spurt in milk production during a drought as farmers concentrate on increasing milk production to counter the income loss from crop failure.

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