Analysis of constraints for performance improvement of FPCs in Tamil Nadu

Abstract

The urge for bringing small holders together is to offset the negative effects of increasing urbanization, decreasing land area under cultivation and the other reason being poor resource base of farmers making them unable to operate their farm with limited capital while agriculture is becoming non-competitive. Therefore to protect the interests of small and marginal farmers the farmer producer companies (FPCs) were included in the special provision of Producer Companies Act 2002. In the present study twenty FPCs were selected purposively for the study based on the highest paid-up and authorized share capital. Focus group discussion (FGD) method was employed in collecting the details of constraints of the selected FPCs where the farmers and administrative members like CEOs and BODs constituted the participants. Altogether 20 FGDs were conducted to cross check/validate the response from the farmers and the survey. The study probed the driving forces in performance of FPCs by employing qualitative tools and also assessed the challenges in the operations of FPCs. The results revealed that the driving factors were potential of branding purchase of machines and assets, scope in value addition, active dissemination of market information, price setting and credit for purchase. The challenges faced by FPCs were: problem in obtaining bank loan, no waiving off of license fee, cumbersome process of registration of FPCs, not able to raise funds from farmers and capturing market for selling the produce which were the major causes for failure of some FPCs in the state.