In a new initiative aimed at streamlining agricultural trade and increasing farmer incomes, corporates have begun directly procuring agricultural produce from farmer producer organisations (FPOs).

This development follows the government’s recent strategy of hosting weekly webinars to connect FPOs with major companies. Many FPOs were previously unaware of the possibility of selling their produce directly to companies. The government is optimistic that if these linkages are successfully established, positive results will be seen within a year or two.

According to a senior official, FPOs achieved better prices for crops such as wheat in the recently concluded marketing season by selling directly to companies, as certain transaction costs were saved by the corporates. The official also mentioned that States would be encouraged to waive mandi fees for FPOs to make market yards more competitive and facilitate better infrastructure.

Key players

Olam India has emerged as a key player in this direct procurement model, reportedly purchasing over 800 tonnes of maize and more than 3,000 tonnes of wheat from FPOs in Uttar Pradesh and Bihar. While its officials could not be reached for comment, sources indicate that other major companies, including Britannia, Mother Dairy and HIL (formerly Hindustan Insecticides), have also agreed to partner with FPOs.

The weekly webinars, organised by the Union Agriculture Ministry under the initiative of Secretary Devesh Chaturvedi for over two months, allow FPO representatives to directly interact and ask questions of company officials. Each week, one to two companies or government departments are invited for these interactions.

Despite companies showing eagerness to partner with FPOs in States where direct procurement is permitted under a licensing system, many FPOs advocate for the elimination of mandi taxes on their produce. The CEO of an FPO in Uttar Pradesh explained that “no buyer pays the mandi fee from his own pocket, it is deducted from the value of the transaction which FPOs have to bear and passed on to the farmers.”

Branding & selling on ONDC

The government is also encouraging them to brand their own produce and sell it directly to consumers online through the Open Network for Digital Commerce (ONDC) platform.

Praveen Sinha, Assistant Manager at Olam Agri, said in a recent webinar presentation that there is currently a 5-6 per cent profit margin between farmers and processors/exporters in farm produce. He noted that FPOs are well-positioned to capture this margin, provided they maintain consistent quality standards. Having achieved its target of establishing 10,000 FPOs, the government is now focused on boosting their income through sustained support.

Published on June 5, 2025