Every business, every business starts small. It is through strategic decisions, continuous assessment of the environment and successful seizing of opportunities that one succeeds, while others ultimately fail. Often, small steps taken by small businesses deviate from the right direction; Most of the time, situations are not favorable for small businesses, plunging them into a sea of ​​uncertainty. Businesses that are able to overcome such situations thrive, while others perish.

Similarly, in an agricultural context, an agricultural producer enterprise, commonly referred to as an “FPC”, is also a particular type of organization aimed at achieving complex objectives beyond the pursuit of profit. The role of a FPC is essential in bringing growth and well-being within the agricultural fraternity. In FPCs, all farmers have a single voting right, regardless of their stake, and there is no single ownership in the company.

Usually, in the case of FPCs, resources are allocated for business promotion, but not enough emphasis is placed on building the organization within the business. Common narratives around FPC promotion suggest that a good and profitable business proposition to shareholders will ensure participation and volume generation. All FPCs need to do is aggregate and link forward, which is becoming a gap in reality. Additionally, as a new entrant, it is difficult for an FPC to find a market niche. Therefore, it is almost impossible for a new FPC to present attractive business propositions to farmers in the initial days, making it difficult to acquire shareholders.

How the FPC is losing the battle

The acquisition of shareholders is the first condition for any FPC to embark on the path to success. The FPC therefore faces rejection from all sides. It starts with farmers refusing to do business. As a result, it fails to deliver on its promises in the market and its credibility as a good business partner diminishes. Most FPCs lose the battle at this point.

FPCs that manage to overcome the initial obstacles encounter many such crisis situations before finding a solid base. Another major obstacle is the cash flow crisis. Cash flow crises arise mainly because of credit sales. Often, the pending amounts require write-offs, where small businesses like that of FPC face serious difficulties in repaying the money owed to farmers. Failure to pay on time or missing payments can permanently doom the business. Often, farmers turn to FPC when the market rate is lower than expected and turn away from it when market conditions are favorable.

Fundamental strength

Quality assurance is another major issue for new FPCs. Being relatively inexperienced and lacking robust systems and processes, these FPCs often struggle to maintain the promised quality, which can make them undesirable business partners. Marginal farmers, especially women, who have historically been excluded from the trade, find it difficult to trust and feel motivated by a purely commercial proposition. Such challenges can make the list even longer. Once the nature of these challenges is understood, the next question that arises is how to address them.

The fundamental strength of a community agricultural production enterprise lies in the community from which it originates. The stronger the community mobilization, the stronger the FPC becomes. This mobilization is not necessarily based solely on a promising financial proposal. In fact, such a narrow approach is more likely to fail than succeed in mobilizing members. The overview should be global, attractive, but business-focused. By investing in FPC leadership and genuine community engagement, we can empower these organizations to thrive, turning challenges into opportunities. As we reflect on the importance of this soul, let’s recognize that making genuine connections and understanding the intrinsic motivations of farmers can create a vibrant ecosystem in which FPCs can thrive, ensuring a brighter future for everyone involved.

The author is team coordinator, PRADAN