Help farmers build viable cooperatives

The protests at Delhi’s doorsteps against agriculture sector reforms have once again drawn attention to the much-neglected need for farmers to have more collective bargaining power through successful replication of the Amul model. Though India started experimenting with cooperatives since the 1950s, very few successful ones have managed to get good prices for farmers and evolve into complex marketers, let alone revolutionise production.

Policymakers, farmers and agricultural economists alike accept that successful cooperatives or even farmer producer organisations (FPO) could help agriculturists gain a better bargaining power in today’s marketplace. Yet this is what is lacking in the commodities market today, leaving farmers to the mercy of middlemen and vagaries of price manipulations, which they fear—justifiably or unjustifiably—would increase once large corporates enter the space. Simple steps such as collective purchase of farm inputs, sharing of farm machinery and collective sale at mandis or even through farmers’ markets directly to consumers could see a huge jump in the incomes of growers. 

One of the biggest problems for India’s millions of small and marginal farmers, many of whom are share-croppers without ownership titles, is that they are unable to access cheap bank loans for agriculture at 6-8% interest. Instead, they have to depend on moneylenders and shell out exorbitant interests of 18-36%. A cooperative or FPO could easily help access credit from large banks for their members, solving one of the biggest causes of farmer suicides. 

The Centre did launch a scheme called “formation and promotion of FPOs” in the interim Budget last year, with an aim to set up some 10,000 new FPOs with the support of Rs 6,865 crore, spread over two years. But till now nothing worthwhile has been achieved. Perhaps it is time for the Centre to walk the talk and help farmers build large, viable cooperatives or FPOs that can take on the largest corporate buyer or commodity trader and truly give farmers a choice between becoming a price-taker and a price-setter. Such a move can make the much-needed agriculture sector reforms far more palatable to the agitating farmers.