Sahaja Aharam Producer Company is a federation of farmers’ cooperatives promoted by the Centre for Sustainable Agriculture (CSA), Hyderabad, India. The PCL (Producer Company Limited) established in 2004 is designed as a comprehensive entity which aims at catering to the needs of the Farmer Producer Organisations (FPOs), which includes sustainable production, marketing, knowledge management, quality management, designing livelihoods along with access to financial institutions.

The Farmer Producer Company is contributing to enhancing the income of the small farmers, contributing to doubling the income of the farmers by 2022. The PCL identified two approaches for setting up a FPO that enhances farmers’ income security and environmental sustainability:

Production-End Interventions for Building a Strong Foundation for a FPO: The Centre for Sustainable Agriculture had engaged with identified farmers for around a decade on production technologies and methods for better productivity and ensuring soil and water balance, before they initiated the organisation of the farmers in the form of a Farmer Producer Company Limited. CSA identified high input prices as one of the major barriers resulting in low profits and explored natural, locally available inputs such as bio-manures and bio-fertilisers and promoted their adoption by the farmers.

Identify Market for Organic Products, Enhance Access To Credit And Financial Services: The market support to reach out to urban markets to secure premium prices was taken by the Farmer Producer Company and the Sahaja Aharam Producer Company Limited. CSA has set up a Value Chain Fund of INR 15 lakhs which can be used as seed money for the cooperatives. The cooperatives can borrow without interest for one year and from the second year onwards the cooperatives are charged with a 10% interest. This helped the cooperatives for financial transactions based on which they can go for bigger loan from the formal banks.

The members of Sahaja Aharam also identified some of the factors that inhibit their growth. Some of the prominent concerns are as follows:

• The Trade-Offs Inherent in Organic Systems of Farming:
Organic systems of farming are understood by farmers as being good for the environment as well as the health of both the farmers and consumers of food. However, organic farming is also perceived to be associated with comparatively lower productivities and higher labour intensiveness as compared to general production systems. The barrier of low productivity can be overcome through market linkages that provide improved price support and the barrier itself becomes redundant in the long run. The choice that a farmer makes depends on the perceived potential of achieving higher margins on organic produce as well as the availability of affordable labour.

• Difficulty to Balance High Taxes and Poor Availability of Credit at the Same Time:
The Sahaja Aharam Producer Company Limited identified high taxes as one of the biggest barriers to stability in business performance of the company. High incomes attract high income tax rates, even as high as 20%. The irony here is that if the Company shows lower income on the balance sheet, it indicates poor business performance and makes it difficult to access credit from banks for operations.  

• Inadequacy of managerial skills as are required to successfully operate FPOs in their Governing Boards:
The skills set of most Governing Boards of Producer Companies substantively lack in managerial, technical and business skills that are required for running a Farmer Producer Company. The huge skill gap here is a major concern for long term sustainability of Producer Companies. For the Producer Company to operate in the best interests of its members and the larger community, with full ownership, skilling of the governing board emerges as an essential prerequisite for the long term sustainability of the FPO.

The choice of production systems and the nature of Sahaja Aharam FPO took into account market demands, nutritional demands of the farmers’ households and the environmental conditions in the region. Sustainable agriculture production system was a pre-condition in the FPO initiative by the Centre for Sustainable Agriculture. Commitment of Sahaja Aharam towards providing nurturing and handholding support to FPOs during their establishment and maturation phase is critical to the development and sustainability of Sahaja Aharam Producer Company Limited.  ■