Step by Step Guide To Business Planning by Farmers Producers' Organisations

Step by Step Guide
To
Business Planning
By
Farmers Producers’ organisations
Bankers Institute of Rural Development
Lucknow
2017
FOREWORD
My grandfather used to say that once in your life you need a doctor, a lawyer, a policeman and a
preacher but every day, three times a day, you need a farmer!
-- Brenda Schoepp
Despite the important role played by the farming community, majority of the farmers are facing
distress due to a combination of several factors which include small land holding, lack of access to
quality inputs (seeds, fertilizers, pesticides, credit, etc.) and problems related to marketing of output.
These problems are faced more by small, marginal and tenant farmers who constitute 90% of the total
farmers in India.
Collectivization of such producers, into Farmers’ Producer Organisations (FPOs) has emerged as one
of the most effective ways to address the challenges faced by these farmers. The FPOs facilitate hassle
free access to financial and non-financial services at doorstep of the farmer at the right time on one
hand and in realising bigger pie of consumer rupee for their products, on the other. More than anything
farmers will have comfort of an umbrella that would be working “24X7” for their welfare.
While the FPOs are promoted by multiple development agencies like, NABARD, Small Farmer Agri-
business Consortium (SFAC), Corporates, Community Based Organisation CBO), etc., it is for the FPOs
to mould themselves from being mere sellers and buyers to business organisations with commercial
outlook. For such a thing to happen, FPOs need to have a proper vision which gets reflected in a
realistic business plan with numbers and time-lines attached to it.
Bankers Institute of Rural Development (BIRD) has been fore-runner in capacity building of FPOs from
inception of FPO movement in the country. The feedback from the field revealed that access to financial
resources is major impediment in broadening their business activities. In addition to low capital base,
lack of a sound business plan dissuade the financial institutions in extending credit facility the FPOs.
This has emerged as a critical gap in the FPO movement. To fulfil this gap, BIRD has designed a manual
on “Step by Step Guide to Business Planning by FPOs” which will be of immense help to FPOs.
Although, this manual is supposed to be like a “do it yourself” type guide, it will be preferable that it
is administered in by a trainer who has either gone through a trainers training programme (TTP) on
FPOs or has good understanding of the subject.
I congratulate Team BIRD for bringing out this, one of its kind, manual.
I look forward for suggestions from all the stakeholders for improving this small contribution by us.
(Dr D V Deshpande)
Director, BIRD
03 Aug 2017
Author’s note
With more than 85% of framers being small and marginal category, the limited requirements of
inputs, limited farm surpluses force the farmers to source the inputs in retail and sell unprocessed,
ungraded/ sorted product in bulk at village level. In such situation, sourcing the inputs and
primary processing and marketing of outputs by farmers on a collective manner is the only way
through which farmers can expect to take advantage of collective bargaining. Such collectives also
facilitate extension efforts of Government much easier and also industry can deal with one agency
for their raw materials rather than large number of farmers. Delayering in markets is very effective
through active farmers’ collectives.
More than 5000 Farmers’ Producers’ Organisations (FPOs) are established across the country
through initiatives of NABARD, SFAC and other agencies. These FPOs are expected to work on
business lines. Based on the interactions in the Programmes and other feedback from NABARD,
SFAC and other agencies, we feel that the challenges in the FPOs regarding business plans are as
under:
- Conceptualising the business potential existing in their area of operation

- Analysis of the risk involved
- Selection or scoping the business and how it can impact the FPO and it’s members
- Understand the business they can pickup
- Designing a risk mitigation plan for the business they plan to enter
- Understanding fund requirement
- Preparation of a financial plan with proper numbers
o Manpower planning
o Infrastructure plan
o Expenditure and income Statement
o Projected Balance Sheet
o Assessment of funds requirement
- Tapping the funds
- Rolling of business plan
- Designing a benefit sharing mechanism with members and ensuring adherence to same
A business plan without Governance structure and understanding the compliance requirements
will only lead to future issues on sustainability of FPO as an organisation. The present attempt is
to provide a step by step guide to preparation of business plans by FPOs.
A common refrain is that FPOs may not be in a position to prepare such business plans. Authors
of this guide book would like to reiterate that the inputs in this book are based on actual business
plans prepared by many FPOs across the country (yellow sheets) and so it would not be impossible
for any FPO aspiring to run a business to prepare a reasonably good business plan (white sheet),
perhaps, with some initial help from Producer Organisation Promoting
Institutions/departments/agencies etc.
The booklet is designed in such a way that the CEO would be seeing a chapter plan and content
from one of the business plans prepared else-where in the country and would use the same for
filling up the data in the blank sheets provided for his business plan. The sources from where the
data can be tapped or generated is also given so that he can access the same. Let us also try from
village sarpanch, block office or wiki villages in India and you would find that information is, after
all, readily available.
The contributions and suggestions of many faculty members of BIRD/NBSC and officers from
NABARD at various offices and encouragement and precise inputs and feedback from Director
and Joint Director of BIRD are invaluable in bringing this guide book to present shape and
respectfully acknowledged.
We look forward for your feedback and suggestions for improvement.
All the best! Let us say ready set go!

Address for Feedback
training.birdluckniow@nabard.org
bird@nabard.org
bhallamudi.sridhar@nabard.org
Bhallamudi Sridhar
Faculty member, or
BIRD, Lucknow
July 2017 contact me @ +91 9937197666
Contents of the Guide Book
Chapter
Contents Page no
no
Cover Page 1
FPO at a Glance 3
Model contents page 7
01 Context of the project 9
02 About Farmer Producer Company 12
03 Promoters and Proponents 15
Location map 21
04 Profile of the project area 23
05 Project Villages & Demography 46
06 Business objectives and product planning 56
07 Governance structure 94
08 Financials and business plan 103
Note :- To download the book please visit

http://notnul.com/Pages/Search.aspx?SearchText=BIRD*~BIRD*~BIRD*~BIRD*~BIRD*~BIRD*~
2. Hard copy of the book may be obtained from BIRD Library, Lucknow. Price-Rs. 1500

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Step by Step Guide

Farmers Producers’ organisations

Bankers Institute of Rural Development

- Conceptualising the business potential existing in their area of operation

We look forward for your feedback and suggestions for improvement.

All the best! Let us say ready set go!

Model contents page 7

01 Context of the project 9

02 About Farmer Producer Company 12

03 Promoters and Proponents 15

04 Profile of the project area 23

05 Project Villages & Demography 46

06 Business objectives and product planning 56

08 Financials and business plan 103

Note :- To download the book please visit

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