Outlook English - Print Subscribers Copy Outlook English, 26 February 2018 | Page 58

AGRIBUSINESS
by Lola Nayar
T
HE Budget’s announcement of a
five-year tax holiday for Farmer
Producer Organisations (FPOs)
with a turnover of up to Rs 100
crore came as a relief to the
thousands of farmers who are
members of around 4,000 such com-
panies in the country.    In December
2017, a sizeable number of farmers
gathered at a national conference org­
anised in Pune were found to be una-
ware that the FPOs were liable to pay
taxes under the Companies Act, rev­
eals B. Dasaratha Rami Reddy, secre-
tary general of the Consortium of Ind­
ian Farmers’ Associations (CIFA).
In the last six years, the government has
stepped in to promote FPOs in order to
help farmers benefit from collective
strength and resources, as seen in dairy
milk cooperatives, in a push towards
sustainability. Only farmers connected
with some primary produce can be mem­
bers of such a company, which as per the
law is liable to pay 30 per cent tax, plus 15
per cent on any dividends paid. Almost
all FPOs are expected to benefit from the
government move, giving a push to turn­
ing farmers into entrepreneurs to boost
their income, encourage value addition
and reduce wastage of fruit and vegeta­
bles resulting from spoilage.
The CIFA is, however, unhappy with
the current structure of FPOs; this is due
not just to the tax element but also to the
cumbersome procedures involved and
the fact that most farmers are “not con­
versant with the management practices”
of running a private limited company,
states Reddy. But while the CIFA is
seeking a cooperative structure, many
see advantages in maintaining the cur­
rent corporate structure complete with a
CEO and a board of directors.
“As a model, there is recognition that
FPOs have some advantages. The idea of
building them into companies was to
help give them some professional man­
agement with a CEO, a salaried employee,
who is obviously a local person,” says
Sumanta Chaudhuri, managing director
of the Small Farmers’ Agribusiness
Consortium ((SFAC), u