India should try the Amul model for all Agricultural Commodities

• Current Challenges for Indian Farmers:
  • Indian farmers typically receive only one-third of the final sale price of their produce, while two-thirds go to intermediaries like wholesalers and retailers.
  • A Reserve Bank of India (RBI) research paper highlights how APMCs (Agricultural Produce Market Committees) have exacerbated the problem, increasing the burden of middlemen on farmers.
• Success of Farmer Cooperatives in India (Amul Model):
  • The Amul model has demonstrated how a well-knit farmers’ cooperative can significantly improve the livelihoods of farmers by bypassing middlemen and directly connecting producers to the market.
  • Amul, a farmer cooperative, has grown into a nationally recognized brand, with nationwide marketing and distribution, benefiting millions of farmers.
• Key Elements of the Amul Model:
  • Farmer cooperatives have proven highly successful in the dairy sector, creating a nationally recognized federation for dairy products.
  • Visionary leadership by Verghese Kurien, the architect of Amul, emphasized the importance of farmer involvement and efficiency in the entire value chain.
  • Farmers benefit from large discounts on animal feed supplies and veterinary healthcare, enhancing their productivity and lowering costs.
• The Role of Cooperative Networks:
  • The district cooperative bank network further strengthens the model, providing financial support to cooperatives at affordable rates.
  • The government’s Sahakar se Samriddhi initiative promotes cooperatives in areas like organic farming, farm exports, and seed production.
• Attraction for Commercial Banks:
  • Commercial banks are drawn to the cooperative model because it offers affordable financial products for farmers, thereby lowering overall operational costs.
• International Examples:
  • The cooperative model has been successfully implemented globally in countries like the Netherlands (e.g., Rabo Bank) and Ukraine and Russia, showing that farmer cooperatives can be economically viable.

Primary Agricultural Credit Societies (PACS) Project in India

• Project Goal:
  • The aim of the project is to digitize agriculture and better the agricultural loan distribution system.

• Cost and Timeline:
  • A budgetary allocation of ₹2,516 crore has been given for the project by the government of India. The computerization process targets 63,000 PACS operational in the entire country.

• Major Objectives and Advantages
  • Loan processing can be automated, along with documentation, data management, and information systems.
  • The on-time supply of loans and services to the farmers as well as improve the eligibility of recognition of the loans.
  • Improve PACS system for transparency, capacity, and operational efficiency.

Benefits

• Help the farmers simplify their loan process via online distribution
• Enhance agricultural loans and digitize its application processes.
• Give modern bank services in the rural sectors

Stakeholders:

• The Reserve Bank of India as well as Ministry of Agriculture.
• Streamlining and improvement of the lending distribution process so that access to finance by farmers is improved.

Future Impact:

• Upgrades in the agriculture sector; agricultural banking system becomes transparent, simple, and effective.