Introduction
The world is under severe pressure, putting sustainable development at risk for most people. For example, population growth, growing inequalities, poverty, climate change, or sustainability concerns are major setbacks for human well-being. In 2015, the United Nations framed 17 Sustainable Development Goals (SDGs) aimed at promoting economic, social, and environmental sustainability on a global scale, by the year 2030 (Lafont et al., 2023). Cooperatives have emerged as a robust model for sustainable development, blending economic success with social responsibility. Since the early 2000s, new-generation cooperatives (NGCs), an alternative to traditional structures also known as producer companies (PCs) in India, have evolved. Indeed, NGCs are hybrids of cooperative societies and private limited companies, carrying both the goodness of cooperatives and the vibrancy and efficacy of private companies (Bhuyan et al., 2022). NGCs support pro-poor rural development and play a key role in achieving certain Sustainable Development Goals.
Figure 1. Chronological evolution of Farmers Producer Companies in India.
Traditional vs. New Generation Cooperatives in India: The Evolution of NGCs
In India, while thousands of cooperatives were established across various sectors, most failed except in the milk and sugar industries, primarily due to external interference, corruption, and operational restrictions or to the very lack of ‘fertile grounds; thereby, traditional cooperatives lost their vibrancy and were reputed for their loss-making practices and poor performance. To address these challenges, NGCs emerged globally in the 1990s as a more effective solution. In India, the drive has begun since the early 2000s. By the end of March 2021, there were 15,948 NGCs in India, one-third of which were registered during one year (2020–21). Previously, of the 7374 PCs registered between January 1, 2003, and March 31, 2019, 80% were registered in just 4 years (2016–2019), as reported by (Singh, 2023). Fig. 1 shows the chronological evolution of Farmers Producer Companies in India. Initially, NGCs did not attract much attention from policymakers or bankers. However, by 2011, NABARD (an apex bank in India) had introduced the ‘Producer Organization Development Fund’ with an initial corpus of 500 million INR. Additional funds were created under the Small Farmer Agribusiness Consortium (SFAC) in 2013–2014 to support these organizations. The Indian government further promoted NGCs with the ‘Producers Development and Upliftment Corpus (PRODUCE)’ fund in 2014–2015, aiming to establish 2,000 new Farmer Producer Companies (Kakati and Roy, 2021). Globally, countries like Australia, Denmark, and New Zealand have seen success with producer company models in the dairy sector. In India, NGCs can be formed under Part IXA of the Companies Act, 1956. NGCs offer several benefits over traditional structures, including higher profit shares, larger equity, broader operational areas, enhanced membership benefits, and greater autonomy. In addition, these are exempted from income tax for five years with a turnover of up to 1,000 million INR. See Table 1 for key differences between NGCs and traditional structures.
Table 1. Producer companies vs. cooperatives in the Indian context.
Source: Policy & Process Guidelines for Farmer Producer Organizations, 2013
NGCs Across Different Sectors & Their Contribution to the SDGs
While detailed data on the primary activities of NGCs is limited, it can be assumed in general that more than half of the producer companies are working in agricultural and allied activities. In contrast, there are relatively few FPCs active in the handicrafts, bioenergy, fisheries, and forestry sectors (Fig. 2).
Figure 2. Types and sectors of operation of FPCs in India. (Source: Mukherjee et al., 2018)
However, NGCs or producer companies, make significant contributions to advancing the Sustainable Development Goals across various sectors. For instance, in agriculture, NGCs empower small-scale farmers through collective efforts, boosting productivity to achieve Zero hunger (SDG 2), enhancing market access to No Poverty (SDG 1), advocating for sustainable agricultural practices, and encouraging Responsible Consumption and Production (SDG 12). Within the energy sector, producer companies propel the adoption of renewable energy sources (SDG 7: Affordable and Clean Energy) by facilitating community-led initiatives, thereby lowering carbon emissions (SDG 13: Climate Action Goal). Moreover, in dairy production, these structures improve livelihoods by providing fair prices to dairy farmers and ensuring food security (SDG 1 and 2) through reliable supply chains. NGCs in dairy production ensure access to safe and nutritious dairy products, promoting better health outcomes in communities (SDG 3: Good Health and Well-being). Across these sectors, NGCs and producer companies foster economic growth (SDG 8) by creating employment opportunities, promoting inclusive business models, improving infrastructure, and supporting sustainable industrial development (SDG 9). See Fig. 3 for sector-wise contributions to the SDGs.
Figure 3. SDGs linked with different structural reforms.
SDG 1- No Poverty; SDG 2- Zero Hunger; SDG 3- Good Health and Well-being; SDG 5- Gender Equality; SDG 7- Affordable and Clean Energy; SDG 8- Decent work and Economic growth; SDG 9- Industry, Innovation and Infrastructure; SDG 10- Reduced Inequalities; SDG 12- Responsible Consumption and Production; SDG 13- Climate Action; SDG 15- Life on Land; SDG 16- Peace, Justice and strong Institution
Overall SDG score of India is 71 for 2023-24, significant improvement from 66 in 2020-21 and 57 in 2018. Significant progress in Goals 1, 8, 13 and 15. Goal 13 (Climate Action) records highest increase in score from 54 in 2020-21 to 67 in 2023-24 followed by Goal 1 (No Poverty) from 60 to 72. Initiatives taken by the Government of India include the PM-Mudra Yojana, Saubhgaya, Ayushman Arogya Mandir, Ujjwala, Swachh Bharat, Jan Dhan, Ayushman Bharat-PMJAY, and Start-up India, had impact had impact and led to rapid improvement (NITI Aayog, 2024). Moving forward, the extensive adoption of New Generation Cooperatives model could further advance progress in SDGs 2, 3, 10, 12, and 16.
It is noteworthy to understand “Why are NGCs crucial for Sustainable Development in India?” Agriculture is the source of livelihood for over 58% of the population in the country. In India, agriculture contributes about sixteen percent (16%) of total GDP and ten percent (10%) of total exports. Though the urban sector in India has achieved substantial Development Goals, it is difficult to implement SDGs in rural areas due to various obstacles, including investment, a lack of infrastructure, social exclusion, limited access to education and healthcare, etc. (del Arco et al., 2021). NGCs, like a bundle of sticks, are stronger together than individually and provide strength and stability through collective efforts in any production and supply systems.
Policy take on NGCs by the Government of India
Under the central sector scheme, the Government of India aims to support the “Formation and Promotion of 10,000 new Farmer Producer Organizations (FPOs)” by 2027–28 with a total budgetary outlay of Rs. 6865 crores. This initiative is designed to enhance and sustain the agricultural sector by fostering a more organized and collaborative approach among farmers (MoA&FW, 2021). For a maximum of three years, financial support up to Rs 18.00 lakh will be given to each NGC through NABARD. In addition to this, each farmer member of the FPO will get an equity grant of up to Rs. 2,000, up to a maximum of Rs. 15.00 lakh per FPO. A credit guarantee facility upto Rs. 2 crores per FPO from eligible lending institution will be given.
Challenges and the Way Forward
Despite the fact that the NGCs offer India opportunities for sustainable development, several challenges remain, which include access to finance, market volatility, and the need for capacity building among cooperative members and management. To address the obstacles, the government may strengthen policies that promote cooperative development, enhance access to credit, and provide technical assistance.
In conclusion, New Generation Cooperatives in India represent a potent vehicle for achieving multiple Sustainable Development Goals. NGCs empower communities and build a more just and resilient economy by fostering innovation, social inclusion, environmental sustainability, and economic prosperity. The contribution of NGCs will be crucial to achieving India’s 2030 Sustainable Development Goals. Through collaboration, innovation, and collective action, NGCs have the potential to transform the rural landscape of India and pave the way for a more sustainable future.
References
Bhuyan R, Das B, Khound S (2022) Understanding farmer producer company (FPC) ecosystem in Assam: Issues and challenges. Journal of Asian and African Studies. https://doi.org/10.1177/00219096221120921
del Arco I, Ramos-Pla A, Zsembinszki G, de Gracia A, Cabeza LF (2021) Implementing SDGs to a sustainable rural village development from community empowerment: Linking energy, education, innovation, and research. Sustainability. 13(23), 12946. https://doi.org/10.3390/su132312946
Kakati S, Roy A (2022) Financial performance of farmer producer companies of India: A study from 2013–2014 to 2018–2019. International Journal of Rural Management. 18(3), 410-428. https://doi.org/10.1177/09730052211034700
Lafont J, Saura JR, Ribeiro-Soriano D (2023) The role of cooperatives in sustainable development goals: A discussion about the current resource curse. Resources Policy. 83, 103670. https://doi.org/10.1016/j.resourpol.2023.103670
MoA&FW (2013) Policy & Process Guidelines for Farmer Producer Organizations. Ministry of Agriculture & Farmers Welfare, Government of India. https://www.mofpi.gov.in/sites/default/files/fpo_policy_process_guidelines_1_april_2013.pdf
MoA&FW (2021) Central Sector Scheme “Formation and Promotion of 10,000 new Farmer Producer Organizations (FPOs)” of Rs. 6865 crores. Ministry of Agriculture & Farmers Welfare, Government of India. https://pib.gov.in/Pressreleaseshare.aspx?PRID=1696547
Mourya M, Mehta M (2021) Farmer producer company: India’s magic bullet to realise select SDGs? International Journal of Rural Management. 17(1), 115-147. https://doi.org/10.1177/0973005221991660
Mukherjee A, Singh P, Ray M, Satyapriya S, Burman RR (2018) Enhancing farmers income through Farmers’ Producers Companies in India: Status and roadmap. Indian Journal of Agricultural Sciences. 88(8), 1151-1161. https://doi.org/10.56093/ijas.v88i8.82441
NITI Aayog (2024) Release of SDG India Index 2023-24: India Accelerates Progress towards the SDGs Despite Global Headwinds. NITI Aayog, Government of India. https://www.niti.gov.in/sites/default/files/2024-07/SDA_INDIA.pdf
Singh S (2023) (Farmer) Producer Companies in India as new generation cooperatives: Case studies of performance and impact from West Bengal, India. Annals of Public and Cooperative Economics. 94(3), 1007-1029. https://doi.org/10.1111/apce.12436
By Dr. Shantanu Bhunia & Prof. P.K. Singh; ARF group members
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