SEEDS - PRADAN

Introduction to Virudhunagar District

Virudhunagar district came into existence by the bifurcation of Ramanathapuram district in 1985. Virudhunagar district is bounded on the north by Madurai and Sivagangai districts, on the east by Ramanathapuram district, on the south by Thoothukudi, Tirunelveli and Tenkasi districts, and on the west by the state of Kerala and Theni district. The district covers a geographical area of 4,243 sqkm and had a population of 19, 42,288 in 2011.

The Virudhunagar district consists of three revenue divisions, 10 taluks, 39 firkas, and 600 panchayaths. The east part of the district depends more on rainfed agriculture and the western part of the district has industrialized towns like Sivakasi, and Rajapalayam etc.

The climate of the region is semi-arid tropic with an average rainfall of 830 mm and 425 mm of annual rainfall from the northeast monsoon. The length of the growing period is around 115 days. 90% of the area is covered by black soil and lateritic soil in the district. There are about 1,78,810 land holdings with 1,68,173 ha of land[1]. 89% of total land holdings own 93,276 Ha of land which is 55% of the total area under cultivation in the district by 2017-18.

There are no perennial rivers in Virudhunagar district. Tanks are the major source of irrigation for at least one crop. Virudhunagar district is predominantly rainfed farming with one crop during the northeast monsoon period. Major crops cultivated are green gram, black gram, red gram, maize, red sorghum, Bajra, Minor Millet like barnyard millet (kuthiravali), groundnut, cotton, and long red chili.

As per the statistical handbook of Tamil Nādu 2020-21, about 1,14,153 Ha land was under cultivation of cereals, pulses, oil seeds, and cotton. About 3,46,133 metric tons were produced at an average productivity of 3.03 tons per Ha. 68 percent of the total land holding is under cereals, pulses, oil seeds, and cotton in 2020 -21. The area under maize, groundnut, and cotton cultivation is increasing year after year. The area under red sorghum and pulses is on a decreasing trend.

The district has 8,07,160 goats and sheep, and about 2,81,071 cattle population.

Introduction to the Aspirational District Program

The government of India launched in January 2018 the Transformation of Aspirational Districts Program (ADP) aims to transform the 112 most underdeveloped districts across the country. The broad contours of the program are convergence of central and state schemes, collaboration of central, and state-level nodal officers and district collectors, and competition among districts through monthly delta ranking.

The aspirational district program is implemented with focused areas on health (30%), education (30%), agriculture and water (20%), financial inclusion (5%), skill development (5%), and Basic infrastructure (10%). There are 49 Key Performance Indicators tracked through 81 data points under these six focused areas. Monthly changes with fixed weightage for each data point are measured. The district-wise overall improvement is reported as the weighted average score of all six different focused areas. There is a separate website named Champions of Change where district-wise wise latest composite score and focused area-wise performance in terms of incremental change are reported every month. The website displays district-wise performance and also delta ranking for all districts.

IndusInd Bank Flagship project under the aspirational district program is implemented in Virudhunagar district with a focus on agriculture and water, financial inclusion, and skill development (three of the six focused areas under the Aspirational district program). IndusInd Flagship project directly contributes to 12 activities indicators out of the 81 indicators. These activities are collectively contributing 19% percentage points.

Introduction to FPOs in the district and SEEDs FPOs

The government of India launched the formation and promotion of 10,000 new Farmer Producer Organizations (FPOs) in the central sector scheme with a project cost of Rs 6,865 crore in 2021. Under this scheme, the formation and promotion of FPOs are to be done through nine implementing agencies. They are the Small Farmers Agri-Business Consortium (SFAC), National Cooperative Development Corporation (NCDC), National Bank for Agriculture and Rural Development (NABARD), National Agricultural Cooperative Marketing Federation of India (NAFED), North Eastern Regional Agricultural Marketing Corporation Limited (NERAMAC), Tamil Nadu-Small Farmers Agri-Business Consortium (TN-SFAC), Small Farmers Agri-Business Consortium Haryana (SFACH), Watershed Development Department (WDD)- Karnataka & Foundation for Development of Rural Value Chains (FDRVC)- Ministry of Rural Development (MoRD).

In Virudhunagar district, four different promoting organizations are working directly or indirectly through local development organizations for the promotion of FPOs. NABARD has promoted around 25 FPOs in the district, the agriculture marketing department has promoted 11 FPOs under TN-SFAC, NCDC has promoted 3 FPOs through the district cooperative department and TNRTP has promoted 2 FPOs. Thus, there are 41 FPOs promoted by four different agencies in the Virudhunagar district. Though so many FPOs are promoted by so many organizations, not even one FPO can reach financial self-sustainability. Most of these FPOs exist only on paper because, after registration, FPOs could not achieve considerable scale even after 2 to 3 years of operations. Based on the field visits, it is observed that FPOs are facing the following problems and because of these problems, they are not able to reach self-sustainability.

1. Legal compliance

Private traders may or may not comply with all the necessary statutory provisions. FPOs being organizations promoted by NABARD, NCDC, or SFAC (government institutions) are required to comply with all statutory provisions because there are multiple agencies involved to monitor whether all statutory compliance is done or not at the FPO level. Therefore, legal compliance adds to the significant cost of FPOs and is also a burden for small FPOs. Shri Mrinal Kanti De, GM, FSDD, NABARD stated in an FPO Conclave meeting that about 40% of FPOs promoted under the 10000 FPOs scheme have penalties (some or other type) for non-compliance.

In this context, SEEDS NGO has worked with all three central FPO promoting agencies NABARD, NCDC, and SFAC. SEEDS NGO has promoted 12 FPOs in the Virudhunagar district. These FPOs are operating in the 9 blocks of Kariapatti, Narikudi, Thiruchuli, Aruppukottai, Sattur, Vembakottai, Sivakasi, Watrap, and Virudhunagar. Srivilliputhur and Rajapalayam blocks are not covered by SEEDS NGO-promoted FPOs at present.

SEEDS-promoted FPOs are performing a crucial role in providing basic services to farmers at a nominal cost as and whenever farmers need them. FPOs provide the following services to farmers.

Facilitating seed, fertilizer, pesticides, and other inputs for agriculture operations;
Helping farmers in accessing bank loans at a lower interest rate with less paperwork;
Sensitizing farmers on the importance of crop insurance, life insurance, and general insurance;
Facilitating annual renewal of all these insurance policies in time like PMJJBY, and PMSBY. In case a farmer has no minimum balance in his or her bank account then automatic renewal of the insurance policy will not be done especially under PMJJBY and PMSBY, one needs Rs 436 plus Rs 20 balance in his or her account.
facilitating crop insurance policy under PMFBY within the due date.

In case, if the abovementioned services are not provided by FPO then farmers will be incurring a considerable amount of cost and time in accessing these services from private players.

In this context, Pradan has designed its FPO-related activities with SEEDS. Pradan has proposed to the FPOs to facilitate crop insurance, life insurance, accidental insurance, and Atal Pension Yojana to provide a safety net for individual farmers and other rural populace in case of any emergency. Pradan has also proposed Rs 6 lakh incentives to SEEDS-FPOs if they achieve 6000 policies under PMFBY and Rs 24 lakh incentives to SEEDS-FPOs if they achieve Rs 12 crore procurement and input services.

Pradan has also proposed that SEEDS-FPOs shall facilitate bank linkage of Rs 20 crores. There is no incentive proposed for the loan because incentives for loans can lead to adverse selection and moral hazard.

Pradan has recruited a professional with 10-plus years of working experience in the FPO sector and deputed the experienced professional to assist SEEDS-promoted FPOs in strategic planning for inputs, bank linkage, and procurement from farmers.

SEEDS Promoted FPO's achievement in the financial year 2023 to 2024

Pradan has chosen to strengthen FPOs by providing incentives for facilitating crop insurance and for facilitating procurement of agricultural produce from farmers. In addition to the financial incentives, Pradan has also provided professional handholding support to FPOs in facilitating all necessary services for farmers including procurement of agricultural produce. Pradan assisted the FPOs to gain vital experience in dealing with market intermediaries so that after the handholding period of 4 years the FPOs can conduct their operations efficiently. it is expected that continuous professional support to FPOs can increase procurement and marketing operations in the future. Let us have a look at the performance of SEEDs-promoted FPOs in this financial year.

1.Social security

PMFBY (plan for 6000 policies), PMJJBY (5,750 policies), PMSBY (5,750 policies), and APY (500 policies) are planned under social security. About 18000 policies are to be subscribed under all four schemes.

By the end of March 2024, SEEDS FPOs have completed;

About Rs 56,00,627 premium is mobilized from 6,238 polices against plan of 6,000 policies under PMFBY.

About 20,25,726 premium is mobilized from 4,775 policies against plan of 5,750 policies under PMJJBY.

About 1,50,020 premium is mobilized from 7,501 policies against plan of 5,750 policies under PMSBY.

About 1,91,783 contribution is mobilized from 556 persons against plan of 500 persons under APY.

Only under PMJJBY, 975 policies could not be completed as only 4,775 could be covered against the plan of 5,750 policies.

In all other policies, actual coverage is higher than that of the plan.

Total premium mobilized under all four schemes is about Rs 79,68,156 against the plane of Rs. 1,80,00,000.

The plan assumed an average premium of Rs 1000 from 18000 policies under all four schemes whereas the premium per policy under the PMSBY is just Rs 20 so there was an error in planning which will have to be corrected in next year plan.

2.Bank linkage

SEEDS promoted 12 FPOs have planned to facilitate Rs 20 crore bank loans to 4000 farmers in the financial year of 2023-24.

By the end of March 2024, all 12 FPOs have facilitated Rs 11,78,28,125 bank loans to 1,362 farmers. The achievement is about 58.91% of the planned value.

2/3^rd of the loan value is provided to individual farmers and 1/3^rd of the loan value is provided to farmers through FIG/SHG/JLG.

3.Input, procurement, and processing services to farmers

The plan was that all 12 FPOs would provide 12 crores worth of services to 12,000 farmers.

By the end of March 2024,

8 FPOs have provided 164.18 metric tons of inputs worth Rs 71,72,475 to 1,456 farmers.
10 FPOs have procured 2866 tons of different crops worth Rs 10,44,04,853 from 2,364 farmers
3 FPOs have processed 30 metric tons of pulses from 2,563 farmers and FPOs earned a fee of Rs 4,88,802 for processing services. Please note that there is a high possibility that the same farmers could be availing of processing services every month.

All three services together added up to 3060 metric tons worth Rs. 11,20,66,130 provided to 6,383 farmers in this financial year.

Achievement under this head services to farmers is about Rs 11.20 crores against the plan of Rs 12 crores which is 93.39%.

One important point to be noted is that out of 11.2 crores achieved under procurement and input services, about Rs 3 crores worth of procurement was done in February 2024 from 826 farmers, and about Rs 5.6 crores worth of procurement was done in March 2024.