In India 100 per cent of the villages are covered by the cooperatives in various sectors like Agricultural credit, commercial credit, Dairy, marketing, fisheries, textile, sugar mills, spinning mills, etc,. In India the journey of cooperatives was started by the British Government by the introduction of Cooperative Credit Societies Act 1904. And after the implementation of Cooperative Societies Act, 1912 the cooperatives are started to lightening in various important sectors of India. After getting the independence the Government always taking care on cooperatives especially the government used the cooperatives as a bridge between the state and farmers. From 1951, in every five year plans, the cooperatives found an important part for the growth of the rural economy. But, the implementation of the New Economic Policy was a break to the cooperatives and it throws lot of challenges to the cooperatives for its survival and sustenance. Hence, as an alternative or substitute, the Government of India introduced Farmer Producer Organizations (FPOs) in the path of the cooperatives to strengthen their business model. The study elaborates how the FPOs are functioning in serving the members with the cooperative philosophy in the competitive market economy?

Objectives of the Study

To identify the challenges faced by the cooperatives after introduction of LPG.

explore through a case study that an FPC is an alternative or substitute to cooperatives

The data were collected both from primary and secondary sources. The primary source was from the president, board members and the members of FPO was contacted and a Focus Group Discussion was held. The secondary data from the annual report and audit report of the FPO and published literatures were collected. The Ramanar Millets Farmer Producer Company Limited,M.Reddiyapatti, Aruppukkottai (TK),Virudhunagar (Dt), Tamil Nadu was selected purposefully as the researcher came to know through the sponsors and published source that it is unique and functioning well The data were collected from its inception i.e., from 2016 to 2019-20 (upto January 2020). . The collected data were tabulated and simple percentages were used. The paper is divided into five parts, first part deals with introduction, objectives of the paper and methodology. The second part deals with the introduction on the background of farmer producer organizations and the cooperatives. The general functioning of the Ramanar Millets Farmer Producer Company Limited, Tamil Nadu and the value addition are discussed in the third part. Fourth part provides the value addition, challenges, grading etc. The fifth part discusses the future plan and the conclusions.

2.Farmer Producer Organizations (FPO)

Farmer Producer Organization is a cooperative model of platform for small and marginal farmers to create and provide quality input supply, procurement of farm produces, processing, storage, credit, technological, transportation, linkage of market and export facilities through collective farming activities, there by strengthening the sustainable agricultural based livelihood of the farmers. The scheme was introduced by the recommendations of the committee under the chairmanship of noted economist Prof. Yoginder K Alagh and amendment was made in the Companies Act, 1956 by introducing part XI A. FPOs also can do the similar activities of other companies as per the provisions of the Act.

In the Union Budget 2019-20 the Government of India targeted to form 10,000 new FPOs to ensure economies of scale for farmers over next 5 years. Currently around 6500 are registered and functioning in India. Small Farmers Agri-business Consortium (SFAC) and National Bank for Agriculture and Rural Development (NABARD) are the governmental promotional agencies for FPOs. Through the efforts of SFAC as on 28th February 2019, there are 7,60,941 farmers have been joined as a members of various FPOs in and 1,20,515 farmers are under mobilization. At the same thing 783 FPOs are registered and 114 FPOs are under the process of registration. The role of NABARD in FPO is to promote and made arrangements for linkage of markets. From 2014-15 to 2018-19 the NABARD promoted 2,154 FPOs in the country.

Effects of LPG in Cooperatives
A border-less system of economic activity is coming into being. Big multinational companies will take full advantage of the borderless world, without hindrance of national boundaries to undertake large-scale economic activities, which will dominate the world market. Such a new economic scenario, presented a threat to cooperative movement’s ability to survive.(OM Ashtankar 2015). There are many MNCs entered into Indian economy with modernized business model. Cooperatives can’t able to compete with other business models because of traditional business model. The general problems of the cooperatives are in the areas of finance, low Government support, lack of professionalism, corporate competitiveness and poor technological up-gradation etc.These problems are largely rectified by the FPOs with the aid of State and Central Governments and other Governmental agencies. Those are

Equity Guarantee Fund
Ministry Agriculture, Cooperation and Farmers welfare, Government of India mandated the Small Farmers Agri-business Consortium to promote State Governments in the formation and functioning of Farmer Producer Organizations. SFACproviding Equity Grant and Credit Guarantee fund of Rs.15 crore as maximum for increase the equity capital and leverage institutional borrowing of the FPOs. From 2014-16 to 2018-19 SFAC sanctioned Rs.25.10 crores and out of which Rs.4.07 Tamil Nadu got it as its share

Credit Guarantee Fund
The aim of providing the Credit Guarantee fund is to assure the credit guarantee cover to the eligible lending institutions of FPOs upto Rs. 1.00 Crore. From 2015 to 2018-19(upto 15.02.2019) SFAC issued Rs.17.87 crore to 43 FPOs, out of which 17 FPOs of Tamil Nadu received Rs.6.65 crore.

Venture Capital Assistance (VCA)
VCA is a scheme to provide 26 per cent of promoter’s capital or Rs.50 lakh to the FPOs and other farming organizations that are doing the activities of linkage of markets and creation of employment to the rural population. There are 1.83 lakh farmers are benefited under this scheme and 97226 persons got employment.

National Agriculture Market (e-NAM)
The aim of the scheme is to integrate markets at the level of the States and eventually across the country through a common online market platform. Economic Affairs Cabinet Committee approved the Central Sector Scheme for Promotion of National Agriculture Market through Agri-Tech Infrastructure Fund (ATIF) for implementation during 2015-16 to 2017-18 on 1st July, 2015 by Department of Agriculture, Cooperation and Farmers’ Welfare through Small Farmers’ Agribusiness Consortium.
Under the ambitious e-NAM project, 585 whole sale regulated markets (Agricultural Produce Market Commadities) of 16 States and 2 Union Territories have been integrated with e-NAM portal by 31st March 2018. As on 15.03.2019, a total of 1.55 crore farmers/ sellers, 68,429 commission agents and 1,22,171 traders/buyers have been registered on e-NAM portal. Trading of 2,42,88,397 ton agri-commodities having trade value of Rs. 64,923 crore have been recorded on e-NAM portal. The digitally e-NAM has been awarded prestigious The Hindu Business Line: Change Maker- Digital Transformation Award 2019 on 15.03.2019.

Support for Creation of infrastructure
SFAC promoting the National Food Security Mission scheme for the construction of procurement centers and marketing buildings to the farmers. Under this scheme 17 projects are completed in various states. At the same thing packing house, preservation unit, evaporative chamber and low cost vegetable storage units are created in 52 horticulture based FPOs under Mission for Integrated Development of Horticulture scheme.

Advanced Training Programmes for CEOs and Board Members
SFAC having collaboration with Bankers Institute of Rural Development(BIRD) and National Institute of Rural Development and Panchayati Raj(NIRD & PR). These training programmes focus on financial planning, compliance and marketing strategies for promoting the agricultural marketing and promotion.
During the financial year of 2017-18, totally 632 CEOs and BODs are trained by SFAC from various states.

Under the PRODUCE Fund, the NABARD has introduced a new scheme for the promotion and nurturing of 3,000 FPOs by the convergence of Producer Organization Development Fund (PODF) with the interventions under its other promotional programmes. Under this scheme, grant support will be provided for the promotion and nurturing of new FPOs over a period of five years besides Rs. 5.00 lakh additional support to FPOs for business development initiatives. PODF corpus has been augmented by ₹68.77 crore out of the interest differential under the Rural Infrastructure Development Fund (RIDF), during the year 2018-19.

3-Profile and functioning of the Ramanar Millets Farmer Producer Company Limited, Tamil Nadu

Social Education Economical Development Society (SEEDS),NGO has been working in Tiruchuli block villages, in Virudhunagar District of Tamil Naduon women empowerment, Education, Health and environment development activities. SEEDS promoted hundreds of SHGs in Tiruchuli block and federated them into PLFs and capacitated the members in financial inclusion, credit facilities, health and education with socio economical development status in the society. Through convergence SEEDS linked with government departments to mobilize the schemes to the identified target members. Being SEEDS Hunger project the women PRI members were trained and involved in their own panchayat development activities. And SEEDS insisted the members to understand the environmental changes like global warming and its impacts on all aspects and exclusively on agriculture inputs and pest management. In regular CBOs meetings the discussion on farmers and their issues were identified more and more. From these views the CBOs approached SEEDS to do special initiative to farming community. So that the federation conducted the general body meeting and resolved to form FPO with the guidance of SEEDS. Here in Tiruchuli block most of the land covered with rain fed agriculture and millets are the major crops cultivated. The block capital Tiruchuli is the traditional holy and birth place of RAMANA Maharishi. so, the members were decided to form in the name of RAMANAR MILLETS FARMER PRODUCER COMPANY LIMITED and registered under the companies act 2013 on 22nd April 2016

NABARD Assistance:

NABARD, Virdhunagar District funded to establish the FPO through SEEDS POPI in Tiruchuli Block.Initially NABARD initiated the baseline survey,Social Mapping,Resource Mapping,Identifying the issues and problems through Participatory Rural Appraisal(PRA).As per the NABARD guidelines the farmers were facilitated to organize as Farmer Interested Groups,Joint Livelihood Groups. After that from these CBOs the representatives selected to construct the FPO and the Board with constitution under the companies act.NABARD provided more training to Directors,CEO and staffs in administration,ROC compliances,Business Plan preparation,Marketing and Value addition and financial linkages.NABARD conducted Project Monitoring Committee(PMC) meeting in quarterly to assist the FPO promotional activities with Board of Directors and staffs.

Area of Operation:

Ramanar FPO engaged shareholders from 105 villages in 49 Grama Panchayats from Tiruchuli,Narikudi and Kariyapatti blocks of Virudhunagar and Kamuthi block of Ramanathapuram Districts.


The Ramanar Millets Farmer Producer Company issued one hundred shares each worth of Rs.10/- to the member farmer against their Share Capital investment. The agriculture land holding farmers were enrolled as a member.At still on 31st October 2019, 2943 were joined in the FPO company as shareholder.

Share Capital:

The authorised share capital of the FPO is Rs.30,00,000/- (Roc filing is under process for upgrade the Authorisation Capital upto Rs.1,00,00,000/-), in which the paidup share capital is Rs.36,43,000/ and the equity grant from SFAC, New Delhi was Rs.10,00,000/-.


The FPO has borrowed to tune fo Rs.14,15,00,000/-(Including Rs.3,02,90,000/-)as working capital.

Equity Grant:

The equity grant Rs.10,00,000/-received from SFAC, New Delhi and that amount converted as their additional share through ROC filing process and the report submitted to SFAC.

The financial assistance borrowed from few institutions to the company to meet their cropping season investments and for business working capital.

Equity Grand