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Ahmednagar, Maharashtra: In Puntamba village in Maharashtra’s Ahilyanagar district, a storage structure built to hold 1,200 tonnes of onion sits nearly empty. It cost Rs 1.18 crores to build, and Sunita Dhanwate, who helped raise the capital and spearhead its construction, has had to sell personal gold and dip into her savings to repay the loan. The government procurement orders the structure was built around never came back.

"We were assured procurement for 15 years," said Dhanwate, who founded the Punyasthamb Farmer Producer Company in 2015. "Without that, we are in a dire situation."

Across Maharashtra, Farmer Producer Companies — grassroots collectives formed to give small farmers collective bargaining power — are struggling to stay afloat. The reasons vary by region and commodity, but the pattern is consistent: policy support withdrawn mid-course, working capital that is nearly impossible to access, and market conditions that have compressed margins to near zero.

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The Central government announced a scheme in February 2020 to form 10,000 such companies, offering matching grants of up to Rs 15 lakhs, operational support for three years, and credit guarantees up to Rs 2 crore. Six years on, both the FPCs and their farmer-members are asking whether the experiment delivered on its promise.

The onion sting

The onion belt has been hit hardest. In 2019-20, Dhanwate's FPC had reported a turnover of Rs 3-3.5 crores and was among 20 companies selected for state-of-the-art storage infrastructure under a public-private partnership model. 

She is not alone. Eknath Sanap, director of Goda Dharna FPC in Nashik's Sinnar taluka, was also selected under the same PPP model and is still servicing a loan of Rs 40 lakhs. "It's a hanging sword over our head," he said. His FPC procures onion at the village level at prices above the Lasalgaon wholesale market. If Lasalgaon trades at Rs 10/kg, Sanap's FPC pays Rs 11/kg, but even that premium brings little comfort when the cost of production runs between Rs 13-18/kg. "FPCs have failed to help the onion growers this year," said Dipak Pagar, a farmer from Nashik's Baglan taluka.

Mangesh Darekar, 29, formed the Nirbaha FPC in Pune's Ambegaon taluka in 2024, armed with market intelligence he had built over years working with farmers. His plan was straightforward: buy onion from farmers, store it in kanda chawls, and sell when prices rose. "Onion prices have been low throughout 2025, and the trend continues even this year," he said. Quality constraints have compounded the problem as even if prices recover, onion bought now would deteriorate in storage, turning a calculated bet into a certain loss. "Most FPCs operate on lean budgets. We do not have deep pockets to absorb losses," he said.

For Tejas Gopale, a farmer with a 15-acre holding in Ambegaon, said. "It does not make sense…infrastructure was built, and then the support was pulled. Both the FPCs and farmers are at a loss," he said. At present, farmers in his area are being forced to sell onions at Rs 600-800 per quintal.

When farmers struggle, FPCs struggle

In Latur, the oilseed capital of Maharashtra, Vilas Uphade has watched a similar story unfold in soyabean. His Vikas Agro FPC, formed in 2015 in Takli village, has an annual turnover of Rs 30-40 crores and warehouse capacity of 2,175 tonnes. By the standards of the FPC ecosystem, it is a success story. But the numbers tell a different story. 

A few years ago, when soyabean touched Rs 10,000 per quintal, the FPC paid farmers Rs 10,500, above market, and both sides prospered. This year, with the cost of production at roughly Rs 20,000 per acre and prices at Rs 4,500 per quintal, a farmer with an average yield of six quintals clears around Rs 10,000 per acre which is before accounting for their own labour or storage. Uphade's FPC was buying at Rs 4,600 and selling at Rs 4,650-4,675, working on margins of around one per cent, just enough to keep the lights on.

Prices have since risen to around Rs 7,000 per quintal, driven by the disruption of the ongoing war. But by then, both farmers and FPCs had already sold their stocks. "The only ones making money now are the corporate houses and big traders," said Uphade.

For soyabean growers, the pressure has been building over several years. Easy imports of edible oils and lower-than-expected yields have reduced farmer earnings, while FPCs trading in soyabean and pulses have found themselves operating on increasingly thin margins that often barely cover operational expenses.

The profitability slide has been steady over four years, bolstered by the proliferation of newer FPCs, some with political backing, that have eaten into Vikas Agro's catchment. And like FPCs across the state, Uphade's company struggles to access working capital. "FPCs are not rich traders who have access to accounted or unaccounted money. Many banks refuse to finance us citing operational risks," he said. Funding from NABKISAN, NABARD's financial arm, exists but comes with limits on the amounts that can be raised.

In neighbouring Dharashiv district, Swapnil Dhavale of the Annasaheb Umbare FPC described the same structural squeeze from a different angle. "We buy from farmers and are always under pressure to sell quickly to ensure we have money to pay them. Now that prices have risen, we really have nothing left to sell," he said.

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The problems confronting FPCs have also generated criticism from sections of the farming community. Bharat Dighole, president of the Maharashtra Onion Growers Association, said several FPCs that received government procurement orders in the onion belt failed to maintain transparency.

"We have seen in the onion belt that FPCs which got government procurement orders committed fraud on a large scale," Dighole alleged. "Many had political backing and were being used to ensure only their supporters got help. We do not want them back in the government procurement process any more."

In search of a new model

Those who built the FPC ecosystem are aware about what went wrong. Yogesh Thorat, managing director of MahaFPC which is  the state-level federation, said government procurement was always meant to be a launching pad. "FPCs are now required to develop alternative business models," he said, pointing to diversification into turmeric and other commodities as a way forward. "But it would take time."

The structural gap, however, runs deeper than any single policy decision. As one FPC member put it: even during procurement seasons, only a portion of the crop is bought at MSP. The rest goes to market, and FPCs — undercapitalised and unable to hold inventory — cannot offer prices that meet the cost of production.

Manikrao Kadam, a farmer from Parbhani who grows cotton and soyabean over 10 acres, gave the problem its plainest summary. "A lot has been talked about collective power, but that's just limited to production. Where is the money? If FPCs had access to funds like traders do, they could hold produce longer and pass the benefit on to their members. It's almost as if the FPCs were formed and then left midway."

[KS]

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