FPO-BUSINESS PLAN - Bhadohi

Development of Business Plan for Satyram
Fed Farmer Producer Company Limited II

Block:-Badohi II Distt:- Badohi II
State: Uttar-Pradesh
Submitted To:
National Agriculture Co-operative
Marketing Federation of India LTD
Formation & Promotion of farmer Producer

Organizations (FPO’s) Under the Central
Sector scheme for formation & promotion of
10000 FPO’s
Market & Promoted By:

INDIAN SOCIAL
RESPONSIBILITY NETWORK
Address:- K-13, 1st floor, south extension Part-11, New Delhi, Delhi-110049
Email: [email protected] II
Satyram Fed Farmer Producer company Limited
Contents
List of Tables..................................................................................................................................................4
List of Abbreviations.......................................................................................................................................5
Farmer Producer Organizations (FPO):...........................................................................................................6
Broad Services and Activities to be undertaken by FPOs:..............................................................................6
Implementing Agencies:.................................................................................................................................7
Development of Business Plan:.......................................................................................................................7
Executive Summary:.......................................................................................................................................8
Chapter 1: Introduction:................................................................................................................................10
Farmer Producer Organization (FPO) at a Glance:........................................................................................10
About Producer Company:............................................................................................................................12
Block Index Map:..........................................................................................................................................12
SWOT Analysis:...........................................................................................................................................14
Business Activity – I (Input Shop):...............................................................................................................15
Sale of inputs:................................................................................................................................................15
Business Summary – Seed Facilitation:........................................................................................................15
Critical Assumptions:....................................................................................................................................16
Business Summary – Fertilizer Facilitation:..................................................................................................17
Business Summary – Pesticides/ Insecticide:................................................................................................18
Business Activity – II (Aggregation and Sale of Produce):...........................................................................18
Operational Plan:...........................................................................................................................................19
Sale of produce..............................................................................................................................................20
Marketing Strategy:.......................................................................................................................................20
FPC can provide the marketing support to its members in two ways:...........................................................21
Business Summary – Aggregation and Sales of Produce (Trading):.............................................................21
Business Summary – Aggregation and Sales of Produce on behalf of members:..........................................22
Business Activity – III (Primary and secondary processing of surplus produce):........................................23
Need of the proposed business activity.........................................................................................................23
Operational Plan:...........................................................................................................................................23
Service charges:............................................................................................................................................24
Business Summary - Cleaning and Grading Unit..........................................................................................24
CBBO:- Indian Social Responsibility Network Page | 1

FPC village wise detail:.................................................................................................................................25
Crop wise area, production, and productivity of Block (Based on Baseline and DPR):................................26
Personal Information about BoDs:................................................................................................................27
Main Objective of the Producer Company:...................................................................................................27
Business Intervention Proposed by Producer Company:...............................................................................28
Value chain in the block for agriculture produce:..........................................................................................28
Chapter 2: Business Idea and Business Opportunity – Value Chain..............................................................29
Analysis – Scope in the area – Key Commodities / Activities:......................................................................29
Value Chain Analysis:...................................................................................................................................29
Value Chain in Practice:................................................................................................................................30
Value Chains of Interest:...............................................................................................................................30
Mapping the Value Chain:............................................................................................................................30
Chapter 3: Market Plan & Risk Analysis......................................................................................................31
Market Plan and Risk Analysis:....................................................................................................................31
Assessment of Market Opportunities:...........................................................................................................31
Designing the Strategies for Marketing:........................................................................................................33
Post Sales Service that an FPO can offer:......................................................................................................33
Customer Communication:............................................................................................................................34
Risk Management:........................................................................................................................................34
Harvesting Schedule:.....................................................................................................................................35
Plan for Purchase of Inputs and sale of Outputs:...........................................................................................35
Human Resource Plan:..................................................................................................................................37
Role and Responsibility of Staff:..................................................................................................................37
Supervisor:....................................................................................................................................................38
Role of Responsibility Governing Board (BODs + Promoters):....................................................................38
Chapter 5: Financial Plan..............................................................................................................................39
Variable Costs:..............................................................................................................................................40
Fixed Costs:..................................................................................................................................................40
Other Costs:..................................................................................................................................................40
Capital Investment:.......................................................................................................................................44
Work Shed:...................................................................................................................................................44
Variable Cost:...............................................................................................................................................48
Depreciation estimates:.................................................................................................................................49
Income estimates:..........................................................................................................................................50
Cleaning and Grading:..................................................................................................................................50
Cleaning and Grading Income Estimates:.....................................................................................................50

Trading:.........................................................................................................................................................50
Working Capital Requirement:......................................................................................................................52
Profit and Loss Statement:............................................................................................................................52
Cash Flow Statement:....................................................................................................................................53
Balance Sheet:...............................................................................................................................................54
Sensitivity Analysis:......................................................................................................................................54
Key Financial Indicators:..............................................................................................................................55
Chapter 6: Project Impact:.............................................................................................................................56
Chapter 6: Annexure.....................................................................................................................................56
Sources referred:...........................................................................................................................................57

List of Tables
FPO at a glance
SWOT Analysis
General Profile of FPC
PC village wise detail
Crop wise area, production, and productivity of block
Crop wise Area, production, and productivity of shareholders
BoD Profile
Gaps identified and interventions proposed
Administration expenses
Institution expenses
Fixed electricity expenses
Advertisement expenses
Manpower Expenses
Agri-produce purchase quantity in quintals
Agri-produce procurement expenses
Agri. Input quantity
Input purchase cost estimates
Variable electricity cost estimates
Direct manpower expenses
Depreciation employing the Straight-Line Method
Members’ and Non-Members’ Cleaned and Graded Quantity in Quintals
Cleaning and Grading Income Estimates
Agri-produce trade quantity in quintals
Agri-produce trade estimates
Agri-input trade quantity
Agri-input trade estimates
Assessment of working capital

List of Abbreviations
FPCL Farmer Producer Company Limited

BOD Board of Directors
CFC Common Facility Centre
FPO Farmer Producer Organization
FCSC Farmer Common Service Centre
Ha Hectare
HHs House Holds
Kg KiloChiraunji
KVK Krishi Vigyan Kendra
IA Implementing Agency 10,000 FPOs Formation and Promotion Project
MRP Minimum Retail Price
MSP Minimum Support Price
PPP Private Player Parties
SWC State Warehousing Corporation
NAFE
National Agricultural Cooperative Marketing Federation of India Ltd. (NAFED)
D
PA Producer Association
PC Producer Company
PG Producer Group
Sq. Ft Square Feet
Qt Quintal
MTG Multitask Group

Background
Department of Agriculture, Cooperation and Farmers’ Welfare, Ministry of Agriculture &

Farmers’ Welfare, Government of India has launched a Central Sector Scheme for formation and
promotion of 10,000 Farmer Producer Organizations (FPOs) with following objectives:
 To provide holistic and broad-based supportive ecosystem to form new 10,000 FPOs to
facilitate development of vibrant and sustainable income-oriented farming and for overall
socio-economic development and wellbeing of agrarian communities.
 To enhance productivity through efficient, cost-effective and sustainable resource use and
realize higher returns through better liquidity and market linkages for their produce and
become sustainable through collective action.
 To provide handholding and support to new FPOs up to 5 years from the year of creation
in all aspects of management of FPO, inputs, production, processing and value addition,
market linkages, credit linkages and use of technology etc.
 To provide effective capacity building to FPOs to develop agriculture entrepreneurship

skills to become economically viable and self-sustaining beyond the period of support
from government.
Farmer Producer Organizations (FPO):

FPO is a generic name, which means and includes farmer- producers’ organization incorporated/
registered either under Part IXA of Companies Act or under Co-operative Societies Act of the
concerned States and formed for the purpose of leveraging collectives through economies of scale
in production and marketing of agricultural and allied sector. However, FPOs registered under
Cooperative Societies Act of the State (including Mutually Aided or Self-reliant Cooperative
Societies Act by whatever name it is called) for the purpose of this Scheme, is to be insulated
from all kinds of interference including in election process and day to day management through
suitable provisioning in their Memorandum of Association and Bye-laws with a view to
encourage healthy growth and development of FPO.
Broad Services and Activities to be undertaken by FPOs:
The FPOs may provide and undertake following relevant major services and activities for their
development as may be necessary: -
 Supply quality production inputs like seed, fertilizer, pesticides and such other inputs at
reasonably lower wholesale rates.
 Make available need-based production and post-production machinery and equipment
like cultivator, tiller, sprinkler set, combine harvester and such other machinery and
equipment on custom hiring basis for members to reduce the per unit production cost.
 Make available value addition like cleaning, assaying, sorting, grading, packing and also
farm level processing facilities at user charge basis on reasonably cheaper rate. Storage
and transportation facilities may also be made available.

 Undertake higher income generating activities like seed production, bee keeping,
mushroom cultivation etc.
 Undertake aggregation of smaller lots of farmer-members’ produce; add value to make
them more marketable.
 Facilitate market information about the produce for judicious decision in production and
marketing.
 Facilitate logistics services such as storage, transportation, loading/un-loading etc. on shared
cost basis.
 Market the aggregated produce with better negotiation strength to the buyers and in the
marketing, channels offering better and remunerative prices.
Implementing Agencies:
In order to form and promote FPOs in uniform and effective manner so as to achieve the target of
formation of 10,000 new FPOs in 5 years and to make the FPOs economically sustainable, nine
Implementing Agencies, namely, Small Farmer Agribusiness Consortium(SFAC),National Bank
for Agriculture and Rural Development(NABARD), National Agricultural Cooperative
Marketing Federation of India Ltd (NAFED), National Cooperative Development Corporation
(NCDC),Watershed Development Department (WDD), Small Farmer Agribusiness Consortium –
Haryana (SFAC-HR),Small Farmer Agribusiness Consortium – Tamil Nadu (SFAC-TN),
Ministry of Rural Development (MoRD), North Eastern Regional Agricultural Marketing
Corporation Limited (NERAMAC)shall be responsible to form and promote FPOs.
Development of Business Plan:
Since the BoDs of FPOs are farmers, preparation of bankable business plan is a challenge for
them. Many a time the business plans are prepared by external consultants without much
involvement of Board of Directors or even CEO of FPO and as a result the business plans are not
translated into doable businesses for the FPOs.
A Good Business Plan acts as a compass to the FPO – showing the right direction needed from
time to time. Several FPOs prepare business plans for the sake of preparation and it remains a
statement of intention rather than a tool for direction. However, a good Business Plan (BP) is the
engine that drives the FPO to the destination it has envisioned.
A good business plan helps the CEO to put their efforts in proper perspective and directs the plan
of activities for the next five years. While preparing a business plan, the CEO should have the
information of all the farmer members with respect to their area under crops, the yield and
income levels, the status of value addition of the crops and the pain points in cropping, as well as
past harvest stages. This helps designing a bottom up micro plan starting from the last mile
producer.
FPO as a business model is an emerging trend in the agri-business markets in the country. A good
business plan for an FPO should handle the financial affairs and simultaneously address the
concerns regarding the burden of agriculture in terms of input logistics, quality parameters,
technology and satisfactory returns to the efforts and investments in FPOs.

This tool kit / template is an attempt to create the clear guidelines for development of
Business plan by the FPOs formed under the central sector scheme addressing all the
important aspects of a good business plan.
Executive Summary:
The executive summary is probably the most critical part of the business plan format. Many
business plan readers will read the executive summary and then decide whether to proceed further
or discard the plan.
We are here to focus on business development in the FPO. Therefore some question arises which
are mentioned below
 Is FPO Scheme works
 Is FPO’s are feasible or sustainable
 How to create value addition and provide the aim to FPO.
 Is FPO play role in developing income of farmers.
This business plan will give a vision for development of FPO, at the end we will get to know
the feasibility of FPO’s and how it will help to increase income of the farmer and how help in
raising living standard of farmers in the most possible way.
Fpo’s work on the concept of group/network,there are lot of success stories if we see
globally, there are so many groups which are doing well and really help people to increase
income and raising living standard of farmers as end-goal is same for farmer’s.
Key elements that should be included in the executive summary are:
Main Objective of the SATYRAM FED FARMER PRODUCER COMPANY LIMITED: Main
Objective of FPO is increase the income of the farmers and provides them a better life standard
by giving increment in day to day earning which will help to increase the income/life index. This
can be achieveding by gathering or collating the farmer to increase the group practice which help
farmer to reduce cost of operation in shape of Inputs and equipment’s used and help them to get
right price of their crop.
So the whole idea is to collate 1000 farmer for the FPO by end of 3 consecutive years of working.
If we run FPO in planned manner then there is surety, For ex:-“if farmer earning 1,25,000 per
annum that will increase to Rs 2,50,000 for sure”.
This is not an assumption; this will be reality if the operation of the FPO in a correct format and
operation should be according to the operational guideline.
The feasibility for success for FPO’s will always be higher as the all the activity is essential
requirement in farming/agri, We can mostly talk about following things:
(1) Input(Seed, Fertilizers & Pesticide)
(2) Equipments

(3) Output(Marketing)
(4) Training.
(5) Processing Units
(6) Storage Facilities
In lieu of all aforementioned points are to be considered as key points of working in FPO’s
Thus mostly failure in operation in any project is due to the lack of demand and abundance of
supply, which create difficult situation for any FPO. But in Fpo’s due to group and networking
we have demand and with help of effective marketing will do handsome negotiation on behalf of
farmers due to quantity raised by group..
Profile of the SATYRAM FED FARMER PRODUCER COMPANY LIMITED: FPO is formed
in the Sant Ravidas Nagar district with the progressive mind set farmers, who want to develop
there society to increase the life index.
Thus the SATYRAM FED FARMER PRODUCER COMPANY LIMITED gather 100 share
holder till the time with 10 BOD’s in the row and collect approx. Rs 3.10,000/- with 268 village
and 49 panchayat, aspire to increase the number to 1250 farmers mobilization.
SATYRAM FED FARMER PRODUCER COMPANY LIMITED handling various Inputs and
small equipment’s to cater service of farmers.
Farmers have exposure visit of the farmers has been done at the Bhadohi.
Pain points of the farmer members: As the major food producer farmer is suffering with low
income and sometime they are not able to sell their crop, that scenario is worse with family. The
basics of farming is very hard, operation cost of doing agriculture rises day by day but on other
side they are not able to get right price for their produce for which they give there lot of hard
work/blood/sweat. We often heard suicide cases in newspaper due to very low income. Some
time they will not able to afford basics facilities to their families, which lead to negative
frustration and convert in to very wrong decision.
As farmer will also able to earn with the usage of technology, but due to lack of training and
financing facilities laid farmer not open various income sources.
Generation of Business Ideas or Value Chain Proposition: The choice of selection of major
crops and major activities for the crops is to be given, based on Value Chain Index and Market
Conditions. As land of Uttar-Pradesh is full of opportunities and enriched with the nutrients by
their own. Soil quality of land is similar to organic land.
Thus the area itself a pros for various type of farming rather than traditional cropping which
definitely lead to higher profitability.
Market Strategy: Strategies to manage the target market, customers and likely competition are
mentioned here
Financial Summary: Overview in terms of revenue generation, likely profits to the
Organization, estimated financial ratios indicating the financial viability plan and the funding
requirement to execute the business as per the plan, are to be indicated here
Management Team: Management team is well progressive minds farmers and ambitious too in a
positive note and as per the 10,000 FPO development scheme, FPO has been hand holded by
professional team of Indian Social Responsibility Network(ISRN).

Main Objective of FPO is to increase the income of the farmers and provides them a better life
standard by giving increment in day to day earning which will help to increase the income/life
index. This can be achieveding by gathering or collating the farmer to increase the group practice
which help farmer to reduce cost of operation in shape of Inputs and equipment’s used and help
them to get right price of their crop.
If we run FPO in planned manner then there is surety, if farmer earning 1,25,000 per annum that
will increase to Rs 2,50,000 for sure
Chapter 1: Introduction:
Farmer Producer Organization (FPO) at a Glance:
S. No. Particulars Details
1 Name of the FPO Satyram FED Farmer Producer Company Limited

2 Legal status registerd under company act
Company Act
3 Registration act 2013 (18 of 2013) and that the company is limited by
shares.
4 Registration number and date U01409up2022ptc165902/ 17 June 2022
5 Place of registration
C/O PHOOLCHANDRA YADAV, CHANDRAPURA
6 Address of registration AJAYPUR, MOD, Sant Ravi Das Nagar, Uttar Pradesh,
India, 221304
Contact details
C/O PHOOLCHANDRA YADAV, CHANDRAPURA
· Address AJAYPUR, MOD, Sant Ravi Das Nagar, Uttar Pradesh,
India, 221304
7 · Phone/Fax 9455535805
· Email [email protected]
· Website
Board of Directors
8 · No of directors 10
· Women directors 2
Name of the CEO & Contact
9 Ashish Kumsr Pandey/ 9695453308
Number
Number of employees on
10 2
payroll
Share capital (Rs. lakh) as on
310000
11 …….
· Authorized Paid up 10000

Number of shareholders 300

· Farmer members 300
· Institutional members 0
· SHGs 0
12
· JLGs 0
· Farmer clubs 10
· Non shareholder farmers
0
Total
Bank account
· Bank and branch UCO BANK LAKSHAMANPATTI
13
· Account number 1097021000915
· IFSC UCAB0001097
Funding agency
14 · Name NAFED
· Sanction date 14/07/2021
Area of operation NON-SPECIAL
· Districts BHADOHI
· Blocks BHADOHI
15
· Panchayats AJAYPUR
· Villages CHANDAPUR
· Markets LAKSHAMANPATTI
ARAHAR, MUSTEARD, POTATO & BAJRA
PRODUCTION & Sale
MUTER, CHANA, & VEGITABLE PRODUCTION &
SALE
Sectors in which the xyz AGRI INPUT SUPPLYS
16 FARMER PRODUCER
SEED , FERTILIZER, PESTESISE SELL
ORGANIZATION is working
FARM MACHINERY ON RENT
Key commodities and core ARAHAR, MUSTEARD, POTATO & BAJRA

17
Activities PRODUCTION & Sale
Proposed commodity(s) and ARAHAR, MUSTEARD, POTATO & BAJRA
18 value chain PRODUCTION
Activities Production, procurment, selling, Mobilisation
Licenses obtained
19
· Fertilizer IN PROCESS
· Pesticide/Insecticide IN PROCESS
· Seed IN PROCESS
· FSSAI IN PROCESS
OFFICE AND OFFICE ASSOCIERIESE
Infrastructure available with
20
FPO
21 Business turnover achieved NA

22 Profit NA

1) For Sale only few local mandi are in Block.(Market

Problem)
2) lack of knowledge to adopt modern agricultural
techniques and technology Farmers don't want to adopt new
23 Major risks faced Cropping methods, technology farm mechanization(As like
organic farming, Zero budget farming, natural farming
irrigation method as like sprinkler irrigation etc )
Good practices promoted by

24
the FPO
25 Major markets and distances GYANPUR & Bhadohi Mandi 8km
26 Major banks and distances uco bank 8km
About Producer Company:
SATYRAM FED FARMER PRODUCER COMPANY LIMITED was registered on 17 June

2022 under the Companies Act 1956 and has its registered office at Bhadohi of Sant Ravidas
Nagar, Uttar-Pradesh. The SATYRAM FED FARMER PRODUCER COMPANY LIMITED has
a strong back up of committed promoters and directors who are however not very skilful in terms of
marketing and financial aspects of business management but have expertise in agriculture
production and understand collective marketing concepts. It has to apply for Rs. 15 Lakh for
Equity grant from the Implementing Agency assisted by the 10,000 FPO Formation and
Promotion of Central Sector Scheme and implemented by the Govt. of India. FPOs can get up
to Rs. 18 lakh / FPO as Management Support. This Company will have its main revenue
generating business activities in terms of collective purchase of inputs (seeds & fertilizers), product
aggregation and marketing of produce, as well as primary processing of agricultural produce i.e.
cleaning, sorting and grading of the produce.
The Producer Company is formed in Bhadohi. This FPO has been established in Bhadohi
village of Sant Ravidas Nagar district. The major crops identified for leveraging in this block
are Potato, Arhar, Mustard, Millets, Peas, and Gram & Vegetable etc. Details about the
crop portfolio in this block is detailed out in this plan. This section also highlights the number
of villages located in this block within the block. These 19 villages form the Watershed for
business for the FCSC that is proposed to be established. There are around 11942 HHs with
cultivable land of 98853 Ha in the area.
Block Index Map:
This Business Plan has been developed by generating related business ideas in consultation with the
members of the Producer Company. Accordingly, the Profile of FPO, Crop/Commodity Portfolio
details, Marketing Strategy, Operational Plan and Financial Plan including Income Expenditure
Statement, Cash Flows, Chart, etc. have been developed and incorporated. This Business Plan has
been prepared taking into consideration existing membership of 103 farmer producers from 22

Chiraunji Panchayats and 137 villages. The average land holding is 0.68 HA per producer. Also,
taking into consideration assumptions of proposed produce productivity (40qt/ha), seed rate
(1000Kg/ha), average sale price (120Rs/Kg), minimum support price of the commodity
(Rs2603/Quintal), average mandi price of the commodity (Rs2590/Quintal), quantity and no. of
times of fertilizer application and average price of the fertilizer, percentage of marketable surplus of
the produce and percentage of allocation of land for different commodities in Kharif and Rabi
season.
The major commodities identified for undertaking target business activity with SATYRAM FED
FARMER PRODUCER COMPANY LIMITEDD are Potato, Arhar, Mustard, Millets, Peas,
and Gram & Vegetable with allocation of land 60% and 55 % of the cultivated area respectively
in Kharif season, whereas in Rabi season the proportion is 60% and 52%% of the cultivated area
respectively for cultivating Potato, Arhar, Mustard, Millets, Peas, and Gram & Vegetable .
This Business Plan has been prepared in consultation with representatives of SATYRAM FED
FARMER PRODUCER COMPANY LIMITED in coordination with other stakeholders of the
10,000 Central Sector Scheme Project. This Plan has been developed for a period of 5 years.
Some vegetables are seasonal and pulses are comes in kharif, rabi, zaid crop depend on the variety.
The Potato is the edible berry of the plant Solanum lycopersicum, commonly known as the Potato
plant. The species originated in western South America, Mexico, and Central America. The
Mexican Nahuatl word tomatl gave rise to the Spanish word tomate, from which the English word
Potato derived They are low in calories and rich in vitamin C, potassium, folate and vitamin K.
They also contain lots of a powerful antioxidant called lycopene, which has been linked to a
number of health benefits, including reducing the risk of heart disease and some cancers.
The potato is a starchy tuber of the plant Solanum tuberosum and is a root vegetable native to

the Americas. The plant is a perennial in the nightshade family Salicaceae.
The pea is most commonly the small spherical seed or the seed-pod of the pod fruit Pisum sativum.
Each pod contains several peas, which can be green or yellow. Botanically, pea pods are fruit,[2] since
they contain seeds and develop from the ovary of a (pea) flower. The name is also used to describe
other edible seeds from the Fabaceae such as the pigeon pea (Cajanus cajan), the cowpea (Vigna
unguiculata), and the seeds from several species of Lathyrus.
The pigeon pea[1] (Cajanus cajan) is a perennial legume from the family Fabaceae native to the Old
World.[2] The pigeon pea is widely cultivated in tropical and semitropical regions around the world,
being commonly consumed in South Asia, Southeast Asia, Africa, Latin America and the Caribbean
Mustard seeds are the small round seeds of various mustard plants. The seeds are usually about 1 to 2
millimetres (0.039 to 0.079 in) in diameter and may be colored from yellowish white to black. They
are an important spice in many regional foods and may come from one of three different plants: black
mustard (Brassica nigra), brown Indian mustard (B. juncea), or white/yellow mustard

The charoli seed is lentil-sized, is slightly flattened and has an almond-like flavour. Though they can
be eaten and used raw they are often toasted or roasted before use, as this intensifies the flavour..
SWOT Analysis:
Strength Weakness
 Knowledge on Production Activity  Limited financial resources
 Collectivized producer individuals  Inadequate capacity to afford skilled
seeking to generate big volume. human resources
 Fine understanding of the concept of  Inexperienced board
FPO and its importance in FPOs leaders  Poor infrastructure facilities
 Membership of farmers (SF/MF)  Limited entrepreneurship skills
 Ownership by farmers  Low investment capacity of members
 Professional support from Implementing (equity)
Agency, Team NPMA  Inadequate support of Bankers and
 Possesses written constitution and article other funding organizations
to guide operations
Opportunity Threats
 Vast untapped potential to increase  Failures of crops
membership  Market fluctuation
 Scope for value addition  Changing Govt. Policies
 Diversification potential towards more  Competition from local business
remunerative crops & activities  Cooperative failure due to influence
 Internal & external financial access
through leveraging services of apt
institutions and schemes.
 Equipment hiring services
 Agri input business
 Seed production
 Joint marketing of produce (avoiding
exploitative middlemen)
 Scope for producers to secure
 To seek maximum share in consumer
price.
 To seek better and competitive marketing
opportunities.
 To minimize cost of production.
Business Activity – I (Input Shop):
The Businesses the FPO can undertake shall be classified into three main categories

• Trading – “buying and then selling” businesses such as procurement and sale of inputs,
commodities, value added products etc.
• Production – Primary / secondary processing of the goods of their farmer members
• Services – Providing services such as dissemination of latest pre and post-harvest practices
knowledge and technology, doorstep delivery of inputs, crop health monitoring, advisories on
Integrated Pest Management (IPM) and good agriculture practices (GAP) and marketing of
produce on behalf of farmer members
 Need of the proposed business activity

 Operational Plan
a) Advertisement of activities
 Input Promotion
 Output Promotion
b) Collection of indents
c) Vendor selection
d) Pricing and payments
e) Delivery of inputs to farmers
f) Pert Chart depicting the activities along with timeline for supply of inputs
Sale of inputs:
Business Summary – Seed Facilitation:
S.
N Particular Y1 Y2 Y3 Y4 Y5
o
1 No. of Members 370 570 850 1075 1300
2 No. of Active Members 300 500 750 1000 1250
3 No. of Non-Members 70 70 100 75 50
Seed Quantity Required (in KG/HA)(Average)
Potato 300 500 950 1265 1500
Arhar 450 900 1500 2000 2500
4
Mustard 120 260 400 550 700
Vegetable 500 1050 1500 2100 1500
Sub Total 1370 2710 4350 5915 6200
Seed Value (in Rs.)(Average)
Potato 35000 70000 140000 569250 675000
Arhar 35000 70000 140000 600000 750000
5 Mustard 24000 48000 96000 110000 140000
Vegetable 75000 157500 225000 315000 225000
179000
Sub Total (Rs.) 169000 345500 601000 1594250
0

Seed Revenue (in Rs.)

Potato 3500 7000 14000 56925 67500
Arhar 3500 7000 14000 60000 75000
6
Mustard 2400 4800 9600 11000 14000
Vegetable 6750 14175 20250 28350 20250
Sub Total (Rs.) 16150 32975 57850 156275 176750
Critical Assumptions:
 Producers willing to purchase seeds from FCSC is based on discussions held with BoDs
of the FPC
 The growth in members is the estimate based on consultation with the BoD’s of the FPC
 The area under these producers are based on the average area (0.68 HA) per producer in
the FPC
 Seed Rate per hectare is based on expert opinion.
 Member growth is 100% every year against total household of the block
 First year 50% of non-members against members and 2 nd year onwards 24% increase in
non-members.
 Transportation expenses for the inputs to and from the FCSC will be borne by the farmers
and the transportation cost of delivering the inputs at FCSC location will be ensured from
the supplier’s side
 4.5% inflation is considered for operating costs and revenue every year
 Rate for the seed is based on the current market rate and is subject to change over a period
of time.

Business Summary – Fertilizer Facilitation:
S.
Particular Y1 Y2 Y3 Y4 Y5
No
1 No. of Members 370 570 850 1075 1300
3 No. of Non-Members 70 70 100 75 50
Fertilizer Quantity Required (in KG)
Urea 5000 7500 14550 19950 23450
4
DAP- (di-ammonium phosphate) 5600 8200 12890 18000 24020
Any other fertilizer 4000 8100 13500 17899 22000

Fertilizer Value (in Rs.)
14550
Urea 50000 75000 199500 234500
0
12600 18450 29002
5 DAP – (di-ammonium phosphate) 405000 540450
0 0 5
19440 32400
Any other Fertilizer 96000 429576 528000
0 0
27200 45390 75952 103407 130295
Sub Total (Rs.)
0 0 5 6 0
Fertilizer Revenue (in Rs.)
Urea 5000 7500 14550 19950 23450
6 DAP – (di-ammonium phosphate) 12600 18450 29003 40500 54045
Any other Fertilizer 9600 19440 32400 42957.6 52800

Sub Total (Rs.) 27200 45390 75953 103408 130295
 The Area under these producers are based on the average area (0.68 Ha) per producer in
the FPC.
 The member growth is the estimate based on the discussions with the BoD of the FPC
 Fertilizer dose per acre is based on expert opinion
 Rate for the fertilizer is based on the current market rate and is subject to change over a
period of time
 Discount offered by the fertilizer supplier is based on the difference in the rate at the
distributor level and the retailer & subject to change over a period of time
 Member growth is 100.% every year against total household of the block
 First year 50% of non-members against members and 2 nd year onwards 24% increase in
non-members.
 4.5% inflation is considered for cost and revenue every year

Business Summary – Pesticides/ Insecticide:
S. No Particular Y1 Y2 Y3 Y4 Y5
1 No. of Members 370 570 850 1075 1300
3 No. of Non-Members 70 70 100 75 50
Pesticide application in
4 450 900 1250 1560 1945
Hectare
Cost of pesticides
5 90000 165000 270000 330000 510000
application per Ha (Rs,)
6 Pesticide value (in Rs.) 270000 540000 750000 936000 1167000
7 Pesticide revenue (in Rs.) 113400 226800 315000 393120 490140
 In market there are a range of pesticides and related suppliers. Therefore, we have
considered Approx. Rs.312/- per Hectare as purchase cost for the pesticide.
 2% margin is considered on the pesticide purchase cost.
Business Activity – II (Aggregation and Sale of Produce):

 Proposed business activity:
Farmers of this block undertake individual sale of their produce. They sell their produce to
traders in the local mandis only. They have limited exposure to other markets or sales
marketing channels. They have inadequate knowledge of business terms & conditions of
other procurers like processors, traders of terminal markets, direct license holders etc. They
submit to the dictates of the local traders due to inability to scout and link with other potential
buyers and suffer from unfavourable trading terms. About 60% of the famers in this block go
for distress sale of their produce in order to service credit availed for agro-input purchase and
domestic requirements. This becomes more pressing after kharif due to the need for
reinvesting on agro-inputs for Rabi cropping.
The FPC members decided to explore other markets with assistance from the FCSC service
provider and line department officials to help the farmers expand their market in search for
better prices and trade terms. They also decided to facilitate aggregated sale of produce.

Operational Plan:
a) Scouting buyers: FPC Leaders will scout market players and make exhaustive
commodity-wise list of potential buyers along with the terms of trade. They will shortlist
potential buyers based on negotiated settlements and draw up rate contracts. The PC will
be supported by the FCSC service provider during the 1st year of this business so as to
enable them to do it independently in subsequent years.
b) Awareness generation: The PC will brief the PC leaders the terms of trade and quality
specifications and prices prevalent at higher order markets. The PC leaders will in turn
share the same with PC members and enlist quantum of surplus produce that each
member is willing to sell collectively through FCSC. Public notices will also be put at
important locations (like GP, School, Hospital, FCSC etc.) to make other farmers of the
block aware about the initiative of the FCSC. Quality requirements and price offers of
higher order market will be mentioned in such notices along with invitation to sell
through FCSC.
c) Aggregation of produce: Each FPC leader will create a list of interested group
members along with surplus quantum available for sale through FCSC. These lists will be
submitted to the FPC BoD. Non-members can directly convey their willingness and
quantum of surplus produce to be sold through FCSC to the FPC BoD. Final list outlining
the quality and quantum of produce available for sale through FCSC will be drawn up by
the FPC BoD. 55% of produce after cleaning grading will sold immediately to the bulk
purchasers in the region and rest of the produce will be stored at nearest SWC (Farmer
will be motivated by FPC to store at least 25.% to 40.% at SWC for good remuneration
with support of pledge by nearest nationalized bank).
Following are the details of the nearest Storage facilities:
Sr. No. Name Godown Storage Capacity (MT)

d) 1 Office Room 20
Soliciting and servicing orders: The FPC will identify buyers from higher order markets
and negotiate with them for rate contract and supply orders. As per the demand from
these identified buyers the FPC will undertake supplies at pre-negotiated rates. The FPC
will also undertake regular market scouting and maintain liaison with other buyers to
ensure that regular enquiries are received by the FCSC. As and when a suitable order
comes up, the FPC will intimate the farmers through FPC leaders and open notices about
the crop, quality specifications and quantum requirement will be put up. The FPC will
intimate the terms of payment and time and location of aggregation under the same
notice.

The FPC will also take up spot sales from time-to-time based on queries from the market.
In such cases, the FPC will announce the rates to the farmers on daily or deal basis after
deducting FPC facilitation charges. Farmers will be asked to bring their produce to the
FCSC at a given time. FPC will monitor the entire process based on terms of the buyer.
Record of the quality of produce & price offered will be noted at the FCSC and supply
and payment receipts will be issued to the farmers. The FPC will keep equipment like
moisture meter and weighing machine for free use of members to facilitate trading.
e) Payment to farmers: Buyer will pay money of produce bought to FPC that the FPC will
pass on to the members either through the FPC bank account or directly to farmers in cash
after deduction of facilitation charges. FPC will then transfer money to members in case
of account transfers. For other farmers, the treasurer of the FPC will directly make the
payment from FCSC counter.
The FPC will insist on advance or spot payment from the buyer. It will pay the farmer
after receiving payment from the buyer. Under ideal circumstances, the farmer will get
money within 48 hours of the transaction.
In the financial calculations, the rates for the produce have been maintained at the average
mandi price of nearby APMCs at the time of preparation of this proposal. No variations
have been shown over the 5 years of project period. This has been done to overcome
possibility of hazardous estimation due to inconsistent movement of commodity prices
and low annual increment of MSP.
Sale of produce
Marketing Strategy:
The FPC has extensively discussed the challenges and opportunities in marketing of agro-
produce in the district and other major markets. Such deliberations were facilitated by inputs
from the FCSC service provider. The FCSC service provider gained insights on the same
through interaction with various market players covering, local traders, processing industries
and terminal market traders. It was found that willingness exists among processors and
terminal market traders to procure directly from a farmers’ organization if quality and supply
issues are suitably addressed. They are ready to offer rates that were better than those offered
by the local traders with whom the farmers of this block have been traditionally dealing.
Many of these buyers from higher order markets are ready to lift the produce from the FCSC
if supply quantity is adequate and timely availability is ensured.
The FPC will establish contacts with potential buyers. They will be guided by the FCSC
service provider in the process. Samples of produce will be sent to the buyers and purchase
terms negotiated with defined targets regarding price and payment terms.
The FPC will undertake sale facilitation for both processed (cleaned, sorted and graded) and
unprocessed (assorted) products. They will try to target specific market segments as buyers of
different categories of product. Pricing of the products will also be different for the processed
and unprocessed categories. It is assumed that the unprocessed produce will sell at a discount
of 10% to members and 5% to non-members compared to processed product.

The FPC intends to reduce its dependence on local markets for sale of the farmers’ produce
with an eye on maximizing returns. Therefore, it targets to sell 70 % or more of the produce
to processing industries and traders of terminal markets. It is assumed that better price will be
realized from the higher order markets. However, for financial calculations the lower rates
similar to those quoted at nearby APMCs have been used in keeping with the conservative
nature of accounting practices.
FPC can provide the marketing support to its members in two ways:
1. Trading: FPC may purchase the produce of its members at the rates prevailing in the local
market. Aggregate, Clean, Sort, grade, pack and sale the aggregated lots in local/ terminal
market or to the processors. In this case the ownership of produce will get transfer from
member to FPC upon purchase of the produce and FPC will be required to pay the farmer
at the committed price irrespective of loss or gain in the transactions. This is a risky
proposition for the FPCs and shall be exercised very carefully.being a risky proposition this
activity will require careful implementation
2.
3. Alternatively, FPC can provide aggregation, segregation, cleaning, sorting, grading,
packaging, standardization, quality assaying and marketing support to its members
i.e. small and marginal farmers who have small quantities by aggregating the lots of
similar qualities in trackable lots to derive economy in transport. Proper record of
Quantity and Quality received from each member shall be maintained by the FPC.
Aggregated lots shall be sent for sale to local / terminal markets or processors. Sales
realization per quintal or per Kg is derived by dividing the total sales realization of the lot
by the lot quantity. Sales realization is distributed to the members at this particular rate
multiplied by his quantity after deduction of transport charges and service charge of the
FPC for the services provided. In this case the ownership of the produce remains with the
member (farmer) till the produce is sold. FPC have neither incur any profit nor any loss on
such transactions and earn only the service charges at a fixed percentage of the sales
realization which is fixed well in advance for all the transactions.
Business plan may include the quantities transacted by both the above methods in the tables
below for the five years
Business Summary – Aggregation and Sales of Produce (Trading):
S.
o
1 No. of Members 370 570 850 1075 1300
3 No. of Non-Members 70 70 100 75 50

Budgeted Procurement Quantity (in Qtls)

Potato 480 900 1145 1600 2000
4 Arhar 220 462 660 924 1500
Mustard 250 490 865 1145 1425
Vegetable 540 1134 1620 2268 1500
Budgeted Procurement Value (in Rs.)
Potato 864000 1620000 2061000 2880000 3600000
180000
Arhar 3600000 5400000 7200000 9300000
0
5 162500
Mustard 3185000 5622500 7442500 9262500
0
Vegetable 507000 975000 1755000 2320500 2827500
479600 1483850 1984300 2499000
Sub Total (Rs.) 9380000
0 0 0 0
Budgeted Sale Value (in Rs.)
Potato 993600 1863000 2370150 3312000 4140000
207000 1069500
Arhar 4140000 6210000 8280000
0 0
6 186875 1065187
Mustard 3662750 6465875 8558875
0 5
Vegetable 583050 1121250 2018250 2668575 3251625
551540 1078700 1706427 2281945 2873850
Sub Total (Rs.)
0 0 5 0 0
7 Budgeted Profit / Loss (Rs.) 719400 1407000 2225775 2976450 3748500
Business Summary – Aggregation and Sales of Produce on behalf of members:
S.
o
1 No. of Members 370 570 850 1075 1300
3 No. of Non-Members 70 70 100 75 50
Budgeted Quantity (in Qtls)
Potato 480 900 1145 1600 2000
4 Arhar 300 600 900 1200 1550
Mustard 250 490 865 1145 1425
Vegetable 260 500 900 1190 1450
5 Budgeted Sale Value (in Rs.)
Potato 993600 1863000 2370150 3312000 4140000
207000 1069500
Arhar 4140000 6210000 8280000
0 0
Mustard 186875 3662750 6465875 8558875 1065187
0 5

Vegetable 583050 1121250 2018250 2668575 3251625

551540 1078700 1706427 2281945 2873850
Sub Total (Rs.)
0 0 5 0 0
Service charges @ 1.25% of sale value (in Rs.)
Potato 12420 23288 29627 41400 51750
6 Arhar 25875 51750 77625 103500 133688
Mustard 23359 45784 80823 106986 133148
Vegetable 7288 14016 25228 33357 40645
Service Charges received
7 68943 134838 213303 285243 359231
(Rs.)
 The Area under these produces are based on the average area (0.68 Ha) per producer in
the FPC.
 The member growth is the estimate based on the discussions with the BoD of the PC
 Only 1.25% of marketable surplus is aggregated and traded by the FPC.
Business Activity – III (Primary and secondary processing of surplus

produce):
Need of the proposed business activity

Farmers have expressed their concerns regarding lack of remunerative prices for their
produce in all group meetings. However, during interaction with market players (traders,
procurement agencies, processing units etc.) it was clearly stated that they are unable to pay
better prices as produce brought in by the farmers are a mix of good and poor quality and
supply consistency is lacking. The market players, especially the industries, expressed their
willingness to pay more for quality produce specifically for cleaned and graded products
supplied as per order and specifications. During subsequent meetings these findings were
shared with FPC leaders. The leaders discussed the matter among themselves and group
members and expressed their desire to take up basic cleaning & grading through the FCSC
and also facilitate aggregation and collective marketing of the produce to higher order
markets to achieve better price through negotiated settlements long-term tie-up. This will help
farmer members to realize better prices for their produce.
Operational Plan:
Plant capacity & product priority:
The common facility center will have a cleaning, sorting, grading and packing unit with
capacity to process 1-2 tons of produce per hour. In terms of cleaning and grading unit, it is
assumed that with 16 hours of daily operation with 80% efficiency around 2 tons of produce

will can be processed per day. This capacity will allow the processing unit to clean and grade
only a small portion of total grain production in the block. Keeping this limitation in mind,
priority will be accorded to those crops that have the highest volume of production and good
market demand. Therefore, Potato, Chiraunji, Wheat, Maize & Vegetables will be the
priority products for this processing unit.
Batching and queuing:
Particula Yea Ju Ju Au Se Oc No De Ja Fe Ma Ap Ma
rs r n l g p t v c n b r r y
Yr 1 60 60 55 60 58 60 60 60 55 60 58 60
Quantity 12 12 12 11 12 12 11
Yr 2 110 120 120 116 120
(in MT) 0 0 0 6 0 0 0
15 15 15 14 15 15 13
Yr 3 138 150 150 145 150
0 0 0 5 0 0 8
Average Yr 1 2 2 1.5 2 1.7 2 2 2 1.5 2 1.7 2
Quantity Yr 2 4 4 3 4 3.4 4 4 4 3 4 3.4 4
Daily (in 3.7 4.2
MT) Yr 3 5 5 5 4.3 5 5 5 3.8 5 5
5 5
Service charges:
Members will have to pay Rs.100 per quintal (Rs.150 per quintal for non-members) for
cleaning, sorting, grading and packing or part thereof as processing fee after weighing of the
produce at the entry gate. The payment will be entered in the processing log book and a
receipt will be issued to the farmer. The processed goods will be handed over to the farmer on
production of the receipt. The FPC Secretary will compile and maintain FPC wise records of
all processed produce on a daily basis. This information will come in handy while interacting
with buyers and fixing actual transaction days during sale of the produce. The rates and
revenue realization figures are presented in the following tables. Processing charges will be
enhanced by 5% every year.
Business Summary - Cleaning and Grading Unit
S. No Particular Y1 Y2 Y3 Y4 Y5
1 No. of Members 370 570 850 1075 1300
3 No. of Non-Members 70 70 100 75 50
Processing Quantity (in

4 1290 2490 3810 5135 6425
Qtls)

5 Service Charges (in Rs.) 129000 249000 381000 513500 642500
 80% of the aggregated commodity will be cleaned and graded so that members will
realize a good market price (apart from the traded commodity, the rest will be charged for
the services)
 The facility of FPC established is a useful infrastructure in the locality for all farmers.
 Average working of the plant will be 16 hours considering power cuts and other risks.
The 2 TPD machine will work at 80% efficiency.
 First year 50. % of non-members against members and 2 nd year onwards 24% increase in
non-members.
 4.5% inflation is considered for cost and revenue every year.
General Profile of FPO:
S. No Particulars Details
Satyram FED Farmer Producer

1 Name of Organization
Company Limited
2 Status of Organization registerd under company act
3 Type of Farmer Common Service Centre CSC's
4 Location of Producer Association Chandapur
5 Catchment Location ajaypur

6 Gram Panchayat ajaypur
7 District Bhadohi
8 Block Bhadohi
9 No. of Villages in the block 268
10 Share collection till date … Month 2021 3.10 Lakh
11 Share allotment till date …. Month 2021 0
Paid-up Capital at the time of registration

12 10000
(in Rs.)
13 Bank balance as on Date/Month/Year 3.10 Lakh
14 Proposed PC Paid-up Capital (in Rs.)
15 Authorized Paid-up Capital (in Rs.) 10000
` FPO Project Land Detail 50HA

FPC village wise detail:
Distance Average
No of
from FCSC Land Village Area
S. No Village producers in
block in Holding of (ha)
block
Kms (Ha)
1 Chandapur 13 2 60
2 Mahrbha 14 1 40
3 Chakdharni 15 1 30
4 Ajaypur 14 3 100
5 Chakbashuhi 16 1 40
6 Kuraiya 16 1 70
7 Virapatti 15 1 50
8 Sankdhih 15 1 43
9 Pipreem 12 1 500
10 Gosaipur 13 5 10
11 Moadh 16 1 50
12 Balbhdupur 13 1 60
13 Girdharpur 13 1 70
14 Panaipur 12 1 50
15 Gaderiyapur 17 1 60
16 dhuripur 22 2 70
17 Jairampur 16 1 40
18 Nandapur 17 1 70
19 Kawal 17 1 83

Crop wise area, production, and productivity of Block (Based on Baseline and DPR):
Sr. Name of the

Area (Hectares) Production (MT) Productivity (MT/Hectare)
No Crop
1 Potato 1680 3360 2.0

2 Arhar 1150 5750 5.0
3 Mustard 1870 1850 1.0
Personal Information about BoDs:
BoD Profile:
Landholdin
Designatio Gende
Name Age g Role
n r
(Hectares)
Director AKHILESH PANDEY 30 Male 1 BOD & Signatory

32.0
Director Renu Devi Male 1 Women Mobilisetion Mentor
0
28.0 Assistant Women Mobilisetion
Director Annu Devi Male 1
0 Mentor
30.0
Director Virendra Kumar Male 1 FPO Bill Approvals
0
Vimal Prakash 45.0
Director Male 0.5 BOD
Dubey 0
28.0
Pramoter Arun Male 0.5 BOD
0
29.0
Pramoter Kailash Nath Yadav Male 1.5 Helper
0
Kailash nath 52.0

Pramoter Male 0.5 Mentor
Dubey 0
35.0
Pramoter Jai prakash Yadav Male 2 FPO Bill Approvals & Signatory
0
35.0
Pramoter Rakesh Kumar Male 1 BOD
0

Main Objective of the Producer Company:

This business plan will give a vision for development of FPO, at the end we will get to know the
feasibility of FPO’s and how it will help to increase income of the farmer and how help in raising
living standard of farmers in the most possible way.
Fpo’s work on the concept of group/network, there are lot of success stories if we see globally,
there are so many groups which are doing well and really help people to increase income and
raising living standard of farmers as end-goal is same for farmer’s.
Main Objective of FPO is increase the income of the farmers and provides them a better livingfe
standard by giving increment in day to day earning which will help to increase the income/life
index. This can be achieveding by gathering or collating the farmer to increase the group practice
which help farmer to reduce cost of operation in shape of Inputs and equipment’s used and help
them to get right price of their crop.
If we run FPO in planned manner then there is surety, For ex:-“if farmer earning 1,25,000 per
annum that will increase to Rs 2,50,000 for sure”.
This is not an assumption; this will be reality if the operation of the FPO in a correct format and
operation should be according to the operational guideline.
The feasibility for success for FPO’s will always be higher as the all the activity is essential
requirement in farming/agri, we can mostly talk about following things:
(1) Input(Seed, Fertilizers & Pesticide)
(2) Equipment’s
(3) Output(Marketing)
(4) Training.
In lieu of all aforementioned points are to be considered as key points of working in FPO’s
Thus mostly failure in operation in any project is due to the lack of demand and abundance of
supply, which create difficult situation for any FPO. But in Fpo’s due to group and networking
we have demand and with help of effective marketing will do handsome negotiation on behalf of
farmers use to quantity raised by group.
Business Intervention Proposed by Producer Company:

Value chain in the block for agriculture produce:
Value chain gap versus proposed interventions:
Value Chain Gaps Interventions
Input Services High Price, Unavailabilty Availability, Low Price
Procurement High Price, Unavailabilty Availability, Low Price
Storage Lack of storage facility Proper Storage at FPO

Non availability of qnt to

Processing Feasibility for unit
process
Market Linkages Get Very low price Negotiate for right price
Gaps identified, and interventions proposed:
Proposed Business
S. No Period Issues
idea
1 Pre-sowing
2 Supply of inputs Far market, un availability At FPO door step
Agri. equipment after harvesting/ Value Affordable due to

3 Less affordable
Addition scale
Achieved Bargaining
4 Marketing No Suitable price
power
Arrange storage
5 Storage Lack of storage
facility
In order to plan the above-mentioned major business activities with reduced risk,
comprehensive consultation was held on the major issues that the producers faced from pre-
sowing activity to post-harvest activity. The FPC has decided to establish and operate an
FCSC for cereals and grains undertaking the below mentioned 3 business activities.
 Input Supply:
 Collective Marketing of Surplus Agri Produce:
 Cleaning and grading services:
Chapter 2: Business Idea and Business Opportunity – Value Chain
Analysis – Scope in the area – Key Commodities / Activities:
Value Chain Analysis:
A successful Business Plan is one that has found a way to create value for customers – i.e., a
way to address a need of customers. The customers in an FPO can be farmer members or
retailers or wholesalers depending on the type of product or service the FPO chooses to
operate with. The very foundational objective of an FPO is adding value to the produce as
against selling the raw product directly in the market.
“Value Chain Development” in the context of FPO:

Value chain development activities of an FPO, may be defined as under for easy
understanding of our share holder farmer members
“The full range of activities that is required to produce a product or service from pre-
production, soil preparation, sowing of seeds and up to packing and sale to the final
customers constitutes the Value Chain. It involves combination of physical
transformation and the input of various producer services.”
In short, a value chain effectively:
• Traces product flows and shows value addition at different stages
• Identifies key actors and their relationships in the chain
• Identifies enterprises that contribute to production, services and required financial support
• Identifies bottlenecks preventing progress
• Provides a framework for sector specific action
• Identifies strategies to help local enterprises to compete and to improve earning
Opportunities
• Identifies relevant stakeholders for proChiraunji planning
Value Chain in Practice:
Value chain thinking begins from the farmer’s point of view as well as from the consumer’s
point of view. Farmer’s point of view refers to the scope of developing the value chains based
on existing gaps in processes or activities/products of the farmers. As this is planned from the
viewpoint of farmers this can be called as supply driven value chain.
Farmers buy in retail and sell in wholesale losing at both the ends
So, an FPO should learn to buy in wholesale (Inward logistics) and sell in retail or up
markets (Outward logistics), for its farmer members.
Value Chains of Interest:
Value Chain Analysis shall be conducted for the Primary and Secondary crops allotted to the
FPOs.
Exploring Exploration the market opportunities, include:
 Displacing existing suppliers whose customers are finding them unreliable
 Import substitution
 New products
 Opportunities currently being missed such as reaching to the FMCG base of a product
 Understanding the consumers’ piece of the value chain thinking puzzle should lead
farmers to ask:
 What products, and what characteristics of those products, are consumers looking for?
 Which crops and how much should I grow and how should I grow them?

 Can I process those crops to make them more attractive/valuable to the consumers?
 How can I improve my share, in the overall process leading to the crop reaching the
consumer?
Though simple in definition, the concept of value chain holds tremendous meaning to it.
Farmers start their agricultural activities from pre-sowing and end up with marketing of their
produce, during which, the initial produce will transform into a consumer good. A full range
of value chain prism is to be visualized from pre sowing to marketing for describing this
value chain. A habit of looking at any agricultural produce through its value chain prism must
be cultivated for understanding the business elements of operation of the produce.
Mapping the Value Chain:
Value Chain of priority for our FPOs has already been identified and communicated as
primary and secondary crops allotted to FPOs. Now let us proceed with the next step of
mapping of each value chain.
Mapping the value chain has three main objectives:
 Visualize networks to get a better understanding of connections between

actors and processes in a value chain
 Demonstrate interdependency between actors and processes in a value chain
 Create awareness of stakeholders to look beyond their own involvement in the value
chain
“An FPO can become sustainable if 50 % of its activities are focused on

input supply for the 1- 4 core crops identified, 60% on marketing of one
core commodity and 40% on technology and services.”
An FPO should learn and plan to buy in wholesale (Inward logistics) and plan to sell
in retail or up markets (Outward logistics), for the benefit of its farmer members.
Chapter 3: Market Plan & Risk Analysis
Market Plan and Risk Analysis:

Once the Business Opportunities are identified, analysis should be made on markets. i.e., market
for selling the inputs to its members and non-members and market for selling its products.
Many FPOs struggle to find potential markets for their produce. Sometimes even the availability
of potential markets is not enough as they lack professional approach to markets. Due to this, they
prefer to restrict themselves to input businesses with their share holder farmers and non-
shareholders as it is a low hanging fruit and risk free.
However, the role of marketing gets very important as an FPO matures from selling the primary
products to secondary and tertiary products or processed goods. To sustain in the business, it is
advised to cater to the needs of both members as well as non-members albeit with an
advantageous treatment towards members to encourage their presence and growth with the FPO.
Assessment of Market Opportunities:
Assessment should begin with analyzing the strengths and weaknesses of an FPO in terms of its
product/service, access to consumers and the capability to reach different segments of the market.
This can be done by
Understanding the markets - Complete information about the market - its coordinates like
distance, climate, seasons, traders etc. It is good to target more than one market so that one
can hedge the other in times of eventualities
Profiling the customers - Profiling is about understanding the type of consumers, needs, and
their attitude towards the product/service of the FPO. Complete information about buyers or
consumers - their age group, ethnicity, sex, behaviour, preferences, occasions of buying,
frequency of buying, education levels and cultural demographics among others
Type of product Type of customer targeted
S.
Type of Product Type of customers targeted
No.
1 Potato Exporter, Consumer, Companies, Contract agencies
2 Arhar Consumer, Companies, Contract agencies
3 Mustard Exporter Consumer, Companies, Contract agencies
An understanding about the quality of the product - Quality is the extent to which a
product or service meet the needs, from the customers’ point of view. Quality includes

functionality, attractiveness, and safety with respect to certification requirements. Profile the
product/service to be marketed. Its uniqueness is an important aspect. Ask yourself the
question “why market should buy our product instead of the other competitor’s product?”
Profile the product in terms of its shelf life, quality, consumer preference, Price advantage,
competitiveness in processing and other special features such as organic or residue free
Understanding the Competitors - To the extent possible an FPO should match if not exceed
to the “essential needs” offered by the competitors
Understanding the pricing of the product - Pricing depends on transportation charges in
addition to cost of production, processing, value addition, packaging etc. In certain instances,
it may not be workable to handle a customer at a faraway place, if the transportation charges
are included or its shelf life doesn’t support for the duration of its transport or for any other
factors affecting its viability
Understanding features of your product – Based on the markets it is catering to, appealing
features such women produced products made from natural ingredients, product with unique
features like tribal products etc. can be marketed by emphasizing this value proposition
Robust Supply Chain Model:
Supply Chain and Market are closely existing entities. FPO should have a robust supply chain
model in place before attempting to approach markets. The key informants about of a robust
supply chain model are
 Total saleable quantity in the given season/week/sale period

 Specifications about packing/labelling/branding etc.
 Grading and quality specifications meeting the market best standards of that
commodity
 Weekly/daily/monthly volume of saleable quantity out of total saleable quantity
 Point or place of delivery (Ex-delivery point)
 Transport details
 Sample circulation norms
 Expected Price
 Payment terms
 Tax related information
Without the above informants firmly in place, any attempt by an FPO to approach markets,
may sometimes be a less remunerative exercise and on occasions may even result in a failure.
Designing the Strategies for Marketing:
Strategies for marketing in most cases are for increased sales. Sales is about contacting
potential customers and convincing them to buy the product or service of the FPO. An FPO
handles the products that are seasonal in nature. Planning for marketing requires logistics
such as warehouse, cold storage etc. In the absence of strong initial capital, it can sometimes
be difficult for an FPO to survive without a down payment by the customers. However, this
may not always be possible keeping in view the market standards and sales policy of the

competitors. In such cases setting a credit policy is also plays a major role. However, the
credit policy should clearly state:
• The customers for whom the credit will be extended
• Credit amount limits for each customer type
• Duration of the credit
• Penalties and consequences of default or delayed payment
• Maximum quantity of sales that should be allowed in credit
Post Sales Service that an FPO can offer:
• Terms of replacement of goods

• Compensation for damaged goods
• Insurance in transit
• Risk free transport without damage
Customer Communication:
Communication is a process of business (“Sender”) giving “information” related to products

and services to the customer (receiver). The receivers here can be:
 Farmer members for the input sales and product procurement requirement
 Suppliers of services such as seed and fertilizer business dealers, mulching, drip
equipment dealers etc
 Retailers, wholesalers, and the final consumers, about the products/services of the
FPO
While an FPO can do the business with both members and non-members, to sustain its
business, preferential treatment can be given to the members as a privilege feature for being
associated with the FPO. As this communication strongly reaches out to across, there is a
possibility of increasing the membership of the FPO leading to its growth. It is the
responsibility of the FPO to identify the robust suppliers of services in the market and
communicate them about the potentiality of their FPO. Similar is the case with retailers,
wholesalers, and customers of the product market.
Considerable time must be spent on communication which becomes the key factor to achieve
the desirable growth of the FPO. Hence, planning for communication involves,
• Deciding the objective

• Understanding the target audience
• Designing and executing the plan of reaching the target audience
It is better to discuss and finalize the credit policy in the FPO board meeting

Risk Management:
Identification of risks and setting possible safeguards to manage them is an integral part of the
risk analysis. Though in an ideal world all risks can be envisaged to be eliminated, it is an
impossible proposition. So, risk management must involve the process of identifying risks and
assessing whether they can be eliminated entirely or mitigated to manageable proportion through
operational resilience. If the risks seem unmanageable to the extent of affecting the very existence
of the business, then one may discard the business idea all together. As risks may continue to
remain in the business environment both internally and externally, even after starting the
business, it is extremely important to develop a risk assessment mechanism and risk mitigation
strategy. Some of them can be:
Identifying and mapping the processes/factors that would have the biggest impact on earnings,
if disrupted. For Example, a bad monsoon may severely affect crop production in rain-fed areas
thus reducing earning of the FPO considerably
Identifying critical infrastructure - including processes, relationships, people, regulations,
plant, and equipment - that supports the FPO’s ability to generate earnings.
For instance, the
break-down in the Bulk Milk Chiraunjing unit, could lead to the whole stock of milk to be spoilt
and go waste, besides adversely affecting the supply chain.
Identifying the main vulnerabilities - Vulnerability is the inability to cope with the adverse
effects of an event or risk. For Example, storage, processing, and trading of commodities can
come under new regulation, imposing conditions which the FPO may find difficult to comply
with, at a short notice.
Identifying the weakest links - the elements on which all the others depend. For instance, a
single buyer for all produces, is the weakest link in this scenario
Developing planned response to mitigate the risks. Consider an enterprise creating some
critical infrastructure like a spare refrigerated van for ferrying chilled milk as part of its
contingency plan
Support from Government departments and Corporates for market linkages
State and Central Governments have schemes for preferential procurement of produce from
FPOs. For Ex: procurement of certified seeds through FPOs has been implemented by the
Government of Chhattisgarh. The facilitating agency should be able to get the relevant
information from the respective Governments.
The corporates need continuous supply of desired quality produce for processing and value
Addition. Therefore, they prefer to enter a contract with few FPOs who will meet their
requirements.
Usually the following mechanisms are adopted:
 Retail chains tie up with FPOs for procurement, especially for continuous supply of
vegetables & fruits and processed staples

 Corporates extend dealership for farm machinery and inputs to FPOs

 Corporates provide primary processing machinery to an FPO with a buy-back
arrangement for the produce
 Corporates can initiate contract farming with buy back arrangement of assured markets
Harvesting Schedule:
Crops Jan Feb Ma Apr May Ju July Au Sept Oc No De

r n g t v c
Potato Don Don Don
e e e
Arhar Don Don Don
e e e
Mustar
d
Plan for Purchase of Inputs and sale of Outputs:
Purchase plan for inputs:
Purchase plan for inputs:
Total Amount
Items Specifications Rate/Unit
Volume (Rs.)
Potato Cherry, Roma 300 120 84000
Arhar Legume,Peigon Peas 450 55 38500
Mustard Cereal 300 140 98000

Rhizobium, PSB,
Fertilizer 100 2720 272000
Azotobacter
Pesticide 300 950 285000
Total 777500
Plan for Sale of Inputs and Outputs:
 Sales plan for Rabi & Kharif inputs

 Sales plan for Rabi inputs

 Sales plan of Agriculture outputs
Available Market and Input Traders for FPC:
Name of
S. No. Name of Input Company Location
Representative
1 Syngenta N/A N/A
2 HM Cluse Rahul FPO
3 VNR N/A N/A
4 Nunhems Harish FPO
5 Rassi(Hyveg) Girish Bhadohi
6 PestisideIndia N/A N/A
7 Biostad India N/A N/A
8 Garada Chemical N/A N/A
9 Saha Seeds Neeraj FPO
Available Market and Input Traders for FPC:
Name of
S. No. Name of Input Company Location
Representative
1 Syngenta N/A N/A
2 HM Cluse Rahul FPO
3 VNR N/A N/A
4 Nunhems Harish FPO
5 Rassi(Hyveg) Girish Gairson
6 PestisideIndia N/A N/A
7 Biostad India N/A N/A
8 Garada Chemical N/A N/A
9 Saha Seeds Neeraj FPO
Chapter4: Organizational and Management Plan

Human Resource Plan:
Human Resources required for the smooth running of the FPC
 CEO
 Accounts/MIS
 Supervisor

Role and Responsibility of Staff:
CEO:
 Manage affairs of FPO
 Operate / authorize to operate bank account
 Safe custody of cash /assets
 Sign documents as authorized by the Board
 Maintain books of accounts, prepare annual accounts, present audited accounts to Board
& Members in AGM
 Inform Members about operations & functioning of PC
 Make appointments subject to delegated powers
 Assist Board in formulation of policies / objectives /strategies
 Advise Board on legal & regulatory matters
 Exercise powers required in ordinary course of business
 Any other functions / powers as delegated by the Board
Accounts/MIS
:
 Preparing accounts and tax returns
 Administering payrolls and controlling income and expenditure
 Auditing financial information
 Compiling and presenting reports, budgets, business plans, commentaries, and financial
statement
 Analyzing accounts and business plans
 Providing tax planning
 Financial forecasting and risk analysis
 Managing colleagues, workloads, and deadlines
 Designing, Monitoring, analyzing the IT systems
Supervisor:
 Set goals for performance and deadlines in ways that comply with Company’s plans and
vision and communicate them to subordinates
 Organize workflow and ensure that employees understand their duties or delegated tasks
 Monitor the productivity and provide constructive feedback and coaching to farmers
 Receive complaints and resolve problems
 Maintain timekeeping and personnel records
 Pass on information from upper management to employees and vice versa
 Prepare and submit performance reports to CEO
 Decide on reward and promotion based on performance
 POP training to Farmers
Role of Responsibility Governing Board (BODs + Promoters):
 Approval of budget and adoption of annual accounts

 Issue of bonus shares

 Declaration of limited return & distribution of profit

 Conditions and limits of loans to Directors
 Include new members into the company
 Appointment/superintendence/Control of CEO and Staffs
 Make sure the books of accounts are maintained properly; Prepare annual accounts
 present in AGM with Annual’s report
 Buy and sell properties in the ordinary course of business
 Sanction loans to members not being the directors or his relatives
Organogram:

Chapter 5: Financial Plan
The financial plan translates all the other parts of the business - the value chain proposition,
opportunity, the operating plan, the marketing plan into anticipated financial results. It contains
the status and the future projection of financial performance of the business with the selection,
evaluation, and interpretation of financial data along with other relevant information in financial
decision making. It represents the best estimates of the risks involved and the return on
investment.
Three financial areas are generally discussed in the financial plan:

A. Capital requirement and financing pattern
B. Financial projections indicated in the form of statements
C. Financial returns indicated in the form of financial ratios
A. Capital Requirement and Financing Pattern:

Any FPO will have financial requirement to start and run the business. The capital requirement
will depend on the nature and volume of business which would vary from one business to
another. Both fixed costs and variable costs determine the capital requirement of an FPO.
Estimating Costs and Margins for an FPO:
Measuring costs and margins enables the FPO to determine the priority with which the activities
are to be taken up among the core processes identified. It compares profit potential of one value
chain with that of another, to assess whether it may be worthwhile to switch from one chain to
another.
Margins for FPO may not always be the top priority. If farmer members’ margins are increased
because of the FPO activities, they remain loyal to the organization. Loyalty pays off in terms of
patronage-based business and equity payment.

Variable Costs:
These are costs that are dependent on the production output. While calculating some of the
variable costs such as transport costs, they may change based on volume as well as distance to be
transported. Cost of transit losses are also to be accounted while calculating transport costs,
storage costs etc.
Examples of Variable Costs of an FPO:
 Procurement of raw material, storage cost, processing, transportation, insurance, etc.

 Management and administration cost for day to day activities, which may include staff
 Salary, (Manager/CEO, Production Officer, Accountant, Marketing officer, etc.) travel,
 Electricity, water, meeting expenses of BoD/GB, insurance & other statutory fee and
other miscellaneous expenses
 Training and Capacity Building of BoDs and PC functionaries: Training on subjects as
 Provisions in the act, rules and regulations, statutory compliances, roles and
responsibilities of BoD/General Body, banking operations and also by exposure visits to
successful FPOs.
Fixed Costs:
 These are the costs, for the expenses paid out regularly that do not fluctuate with the sales
level.
 Examples include general office expenses, rent, depreciation, utilities, telephone, property
tax etc.
 Land tenant charges, an amortization, capital costs (interest on long term loans) then it
should be counted as fixed costs.
Other Costs:
 Money spent on repaying loans

 Money spent on buying productive assets (e.g. machinery, land etc.)
 Direct costs - Money spent specifically for production of goods or providing services. The
examples are raw material cost and labor cost
 Indirect Costs are money spent on running the business but on activities not directly
related to production of goods or services. For Ex: interest on loans
Understanding Revenue:
Revenue is the money that a business earns by selling its products or services
Following are NOT accounted as revenues
 Borrowing money for running the business

 Capital investment by the owner
 Money received through selling of productive assets (like building, machinery)

Understanding Profitability
 Profitability, as a percentage number, tells us how many rupees out of 100 rupees revenue
is the profit
 Profitability % = (Profit/Revenue) x100
Understanding Capital:
 Capital is the total amount of money needed by the business to perform business
operations
 Capital in business consists of Fixed Capital and Working Capital
 Fixed Capital is necessary for buying productive things (assets) such as machinery, land,
 buildings, storage etc. Working Capital is used for the day-to-day tasks such as buying
 materials, paying wages, paying salaries, etc.
Sources of Capital: Equity capital, Reserves and Short-Term Loans
Opportunity Cost:
It is defined as the foregone benefit that would have been derived by the option not chosen.
For Ex: an FPO has a working capital of Rs.2 Lakhs. It has two choices for doing business. One
is supplying high quality seed and the other is supplying fertilizers at wholesale price to the
farmer members. Only one business can be done with its limited working capital availability. The
business the FPO will forego to undertake the other business is the opportunity cost.
Financial Statements Include:
 Trading and Profit & Loss Account (Expenses & Losses and Incomes & Gains)
 Cash Flow Statements (How cash flows through operations, investing and financial
activities)
 Balance Sheet (Assets, Liabilities and Capital)
Working on Variables (Assumptions):

The CEO of an FPO along with key office bearers and board members should collect the basic
financial data regarding the FPO. Profiling on basic business aspects of FPO including its present
position in terms of members, share capital collected, asset position and costs will help in
working out the financial statements. The assumptions regarding the yield, procurement cost,
transportation cost, storage costs etc., should also be considered based on the current year ’s data
by discussing with experts. An example sheets for Basic Assumptions are placed below for ready
reference.

Area, Yield and Production of the shareholders of primary and secondary crops:
Total
Total Area Producti Estimat
Total
under Average on ed Unit Total
Crops or No of Producti
sharehold yield of the market rate for Procureme
Commoditi Shareholde on of the
er Crop(Q/Ac Surplus FPO nt Cost
es rs Crop (in
members re) available (Rs. (Rs.)
Q)
(Acres) for FPOs /Quintal)
(in Q)
1 2 3 4 5 6 7 6x7
Potato 120 111.6 204 22766.4 400 2635 1054000
Arhar 80 74.4 510 37944 1200 1800 2160000
Mustard 40 37.2 150 5580 200 2800 560000
Millets 50 46.5 400 18600 600 2250 1350000
Vegetables 30 27.9 408 11383.2 380 2530 961400
Input requirement of the crops based on area (in Tonnes)

Guide to Business Plan Development in FPOs:
Total
Area
No.
under Se approx Bio
of Appro DA approx pot Appro Com approx approx Total Cost
Crops or shareh ed imate Fertil Pestici
Sha ximate P imate ash ximate post imate imate on input
Commodit older s cost izers de(in
reho cost (To cost (To cost (in cost cost requiremen
ies memb (in (Rs./Qt (tonn l)
lder (Rs./qt) nes) (Rs.) nes) (Rs.) Q) (Rs.) (Rs.) t (Rs)
ers Q) ) )
s
(Acres
)
(5+7+9+11+
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15
13+15)
Potato 120 111.6 3 63612 222 149850 1.5 75330 1.5 66960 2232 89280 15.624 212040 657072
Arhar 80 74.4 4.5 63612 210 99900 1.3 50220 1.3 44640 1488 59520 10.416 141360 459252
Mustard 40 37.2 1.2 8481 208 50220 1.1 25110 1.1 22320 744 29760 5.208 70680 206572
Millets 50 46.5 3 26505 197 62775 1.2 31387.5 1.2 27900 930 37200 6.51 88350 274118
Vegetable
30 27.9 2.2 11662 138 37665 1 18832.5 1 16740 558 22320 3.906 53010 160230
s
Projected P&L in Rs.
Source Income Expenditure Remarks
Input 24,25,000 13.85,000 N/a
Output trading 32,00,000 17,75,000 N/a
Capital Investment:
The infrastructure and machinery equipment enlisted below are as per the need of the FPC
in that block to establish a FCSC for (C&G). This is in accordance with the support that
Implementing Agency has proposed for primary processing during Stage – I of
establishment of FCSC. The FPC even highlighted the need for storage facility as currently
they do not have any in their village. They propose to have rural go down of around 200
MT after few years of establishment of FCSC. During the first few years of the business,
the FPC will be able to assess the no. of producers that would be interested in availing
storage facility and also the quantum that would be stored in the go down before sale of the
produce through FCSC.
Work Shed:
FPC had approached for government land and got Chiraunji panchayat approval and they
are waiting for district collector’s approval. A pucca structure with concrete floor and tin
roof will be constructed having 4000 sq. ft. plinth area. The work shed will have 3 sections
 Produce Receiving Area (preferably raised dock)

 Office equipped with computer, printer, internet and telephone
 cleaning and grading section equipped with necessary equipment
 storage section and
 input shop
 Going forward a Generator of suitable capacity
An electric motor driven machine with sieves will segregate dirt and refuse matter from the
grains under the first step and grade it into used or unused categories as per the operations.
The machine has a processing capacity of 2 tonne per day @ 80 % efficiency but taking
into consideration of external factors like electricity cut. It will require 4 labours to feed and
operate the machine. Output will be collected in sacks.
Moisture Meter:
A multi-grain digital moisture meter fit for simple use will be procured with guidance from
experts from the Implementing Agency. It may be battery operated with changeable power
cells.
Weighing Machine:
A platform type digital weigh scale with capacity of 150 Kg and sensitivity of 10 g will be
purchased through shopping. The machine will be electric powered with provision for
operation through batteries.
Bag Stitching Machine:

Electric/battery operated handheld bag stitching machine with double run stitch facility will
be procured. It will be used to seal the sacks after weighing.
Capital Investment that would be needed to start the FCSC and undertake the Business of
FPO.
PC Contribution
S. No Particulars Amount (Rs.) Grant (Rs.)
(Rs.)
A Building and Interiors 500000 40,000 460,000
C Plant and Machinery 1200000 240000 960,000
Working Capital
E 300000 150000 150,000
Margin
Total 2000000 430000 1570000
Add Assumption:
Capital Investment Details:
Total
Per unit Total Cost
S. No Particulars Unit No. of unit Cost
cost (Rs.) (Rs.)
(Rs.)
Building and
A. 2 2 200000 400000 400000
Interiors
Work-shed
Construction (sq. 2000 2 50000 100000 100000
ft.)
Sub-total - 2 250000 500000 500000

Plant and
C. -
Machinery
Weighing Machine
- 2 12000 24000 24000
(Kg)
Moisture Meter - 4 8000 32000 32000
Spies Cleaning,
Grading & Sorting
- 1 900000 900000 900000
Processing
Machine (TPH)
Machine
- 4 50000 200000 200000
Transportation
Bag Stitching
- 1 15000 15000 25000
Machine
Miscellenous - - - 29000 29000
Sub-total - - - 1200000 1210000
Working Capital
E. - - - 300000 300000
Margin
Sub-total - - - 300000 300000
Grand total - - - 2000000 2000000
Expenditure Estimates:
Fixed Cost
S.
N Description Y1 Y2 Y3 Y4 Y5
o
Administratio 32000 65000 112500 132500
1 167000
n expenses 0 0 0 0
i. Repair and maintenance cost

Repair and Maintenance expenses:
S. No Description Y1 Y2 Y3 Y4 Y5
8000
1 Repair and maintenance cost 50000 80000 100000 110000
0
ii. Institutional expenses:
S.
Description Y1 Y2 Y3 Y4 Y5
No
1 Institution expenses 20000 100000 250000 350000 500000

iii. Fixed Electricity Expenses:
S.
No
Fixed monthly connection charge
1 78000 152000 180000 200000 220000
(minimum connected load)
iv. Advertisement Expenses:
S.
No
Conservativ
Advertisement
1 e lump-sum 200000 220000 240000 260000 260000
expenses
estimate
Manpower Expenses (Indirect):
S.No. Manpower Description Year1 Year2 Year3 Year4 Year5

Operation of
1 CEO 300,000 345,000 362,250 380,362 399,380
FPO
Business
Marketing
2 Development 240,000 252,000 264,000 277,830 291,721
Manager
of FPO
MIS, Record
Keeping,
Saturator
3 Accountant Compliance 180,000 189,000 198,450 208,372 218,792
& Financial
Management
of FPO
Social
Mobilization,
4 Supervisory Staff 144,000 151,200 158,760 166,698 175,032
Crop & Data
Collection,
Machine Work on
5 96,000 105,600 116,160 127,776 140,553
Operator Machine
Watchmen/ Safety/
6 90,000 99,000 108,900 119,790 131,769
Scurity Security
1,050,00 1,141,80 1,208,52 1,280,82 1,357,24
Sub Total
0 0 0 8 7

Variable Cost:
i. Raw Material Cost – Agriculture Produce:
Input Purchase Cost: Agri. Input quantity
S.
No
A Seed Quantity (in kg)
1 Potato 300 500 950 1265 1500
2 Arhar 450 900 1500 2000 2500
3 Potato 300 500 950 1265 1500
B Fertilizer (in qt)
2345
1 Urea 5000 7500 14550 19950
0
2402
2 DAP 5600 8200 12890 18000
0
2200
Bio Fertilizer 4000 8100 13500 17899
0
C Pesticide (in Ha)
Pesticide 450 900 1250 1560 1945
Variable Electricity Expenses:
Variable electricity cost estimates:
Expenditure
S. No Y1 Y2 Y3 Y4 Y5
component
1 Net drawn power
2 No. of working hours 5840 6000 6000 N/a N/a
Variable tariff per
3 8 8 8 8 8
unit
Total variable tariff 46720 48000 4800 - -

Manpower Expenses (Direct):
Direct manpower expenses:
S.
Component Particulars Y1 Y2 Y3 Y4 Y5
No
Aggregation and Collection of
1 96,000 105,600 116,160 127,776 140,553
marketing Agri Produce
Cleaning and Cleaning &
2 90,000 99,000 108,900 119,790 131,769
grading Sorting
Seed,Fertilizers
3 Input Shop 90,000 99,000 108,900 119,790 131,769
& equi
Total 276,000 303,600 333,960 367,356 404,091
Depreciation estimates:
Depreciation employing the Straight-Line Method:
Depreciation Y1 Y2 Y3 Y4 Y5
Building
Asset Value 500,000 500,000 500,000 500,000 500,000
Depreciation 25,000 25,000 25,000 25,000 25,000
Accumulated
25,000 50,000 75,000 100,000 125,000
Depreciation
Net Fixed Assets 475,000 450,000 425,000 400,000 375,000
Plant and Machinery
1,200,00 1,200,00 1,200,00 1,200,00 1,200,00
Asset Value
0 0 0 0 0
Depreciation 120,000 120,000 120,000 120,000 120,000
Accumulated
120,000 240,000 360,000 480,000 600,000
Depreciation
1,080,0
Net Fixed Assets 960,000 840,000 720,000 600,000
00
1,700,0 1,700,0 1,700,0 1,700,0 1,700,0
Gross Fixed Asset
00 00 00 00 00
Total Depreciation 145,000 145,000 145,000 145,000 145,000
Accumulated
145,000 290,000 435,000 580,000 725,000
Depreciation
1,555,0 1,410,0 1,265,0 1,120,0
Net Fixed Assets 975,000
00 00 00 00

Income estimates:
Cleaning and Grading:
Members’ and Non-Members’ Cleaned and Graded Quantity in Quintals:
No. of Members 370 570 850 1075 1300
No. of Active
300 500 750 1000 1250
Members
No. of Non-
70 70 100 75 50
Members
Cleaning and Grading Income Estimates:
Cleanin
g&
Commodit
S. No Grading Y1 Y2 Y3 Y4 Y5
y
Charges
(Rs)
16500 27000 33000 51000
1 Member 300 90000
0 0 0 0
Non- 14000 10500 14000 10500
2 350 70000
Members 0 0 0 0
16000 30500 37500 47000 61500
Total
0 0 0 0 0
Trading:

Agri-produce trade quantity in quintals:
S.
No
Traded Quantity (in Q)
1 Potato 480 900 1145 1600 2000
2 Arhar 220 462 660 924 1500
3 Mustard 250 490 865 1145 1425
4 Vegetable 540 1134 1620 2268 1500
Agri-produce trade estimates:
S. No Commodit Y1 Y2 Y3 Y4 Y5
y
1 Potato 993600 1863000 2370150 3312000 4140000
2 Arhar 2070000 4140000 6210000 8280000 10695000
3 Mustard 1868750 3662750 6465875 8558875 10651875
4 Vegetable 583050 1121250 2018250 2668575 3251625
Total 1078700 1706427 2281945
5515400 28738500
0 5 0
Input Shop:
Agri-input trade quantity:
S. Particular Y1 Y2 Y3 Y4 Y5
No
A Seed Quantity (in kg)
1 Potato 300 500 950 1265 1500
2 Arhar 450 900 1500 2000 2500
3 Mustard 120 260 400 550 700
B Fertilizer (in qt)
1 Urea 5000 7500 14550 19950 23450
2 DAP 5600 8200 12890 18000 24020
Bio Fertilizer 4000 8100 13500 17899 22000
C Pesticide (in Ha)
Pesticide 450 900 1250 1560 1945
Agri-input trade estimates:
S.
Commodity Y1 Y2 Y3 Y4 Y5
No

A Seed
1 Potato 35000 70000 140000 569250 675000
2 Arhar 35000 70000 140000 600000 750000
3 Mustard 24000 48000 96000 110000 140000
4 Vegetable 75000 157500 225000 315000 225000
B Fertilizer
145500 199500 234500
1 Urea 500000 750000
0 0 0
2 DAP 180000 360000 540000 600000 720000
140000 196000
3 Bio Fertilizer 280000 560000 840000
0 0
112500 140400 175050
C Pesticide 405000 810000
0 0 0
Tota 112900 201550 343600 558925 681500

l 0 0 0 0 0
Working Capital Requirement:
Assessment of working capital has been considered based on the following calculation:
S. No Particulars Year 1 Year 2 Year 3 Year 4 Year 5

A Current assets
1 Stock of Finished 450000 900000 125000 150000 200000
Goods 0 0 0
2 Stock of Raw Material 150000 260000 650000 800000 900000
Total current assets 600000 116000 190000 230000 290000
0 0 0 0
B Current liabilities
1 Creditors- raw 20000 400000 550000 700000 110000
material 0
2 Creditors- others 280000 260000 550000 600000 300000
3 Debt 150000 155000 170000 175000 190000
0 0 0 0 0
Total current liabilities 152000 195000 225000 245000 300000
0 0 0 0 0
Working capital 300000 500000 800000 100000 150000
0 0
Profit and Loss Statement:

Figures in Rs.
Particulars Y1 Y2 Y3 Y4 Y5
Income from C&G job
50000 800000 900000 100000 1500000
work services
Income from commodity 150000 400000
1000000 2200000 5000000
trading and input sales 0 0
Closing stock of finished 230000 500000 800000 100000 1200000

goods 0
280000 510000
Total Revenue 1280000 3900000 7700000
0 0
Opening stock of closing
120000 250000 400000 600000 700000
goods
Variable Cost 10000 15000 20000 25000 30000
Fixed Cost
Administrative Expenses 67000 84000 96000 122000 155000
Institutional Expense 20000 30000 40000 60000 90000
Manpower – Indirect 1050000 2215000 3600000 4645000 4130000
Repair and maintenance
5000 8000 8000 10000 11000
cost
Fixed electricity cost 22000 24000 24000 26000 28000
Marketing and
20000 22000 24000 26000 26000
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Total Operational
1194000 2398000 3812000 4914000 4470000
Expenses
Earnings Before Interest,
Depreciation, Taxes and 206000 652000 488000 786000 3930000
Amortization (EBITDA)
Depreciation 22,000 24,000 24,000 26,000 28,000
Earnings Before Interest 3,902,00
184,000 628,000 464,000 760,000
and Taxes (EBIT) 0
Interest Expense 18400 62800 46400 76000 390200
Earnings Before Taxes 3,511,80
165,600 565,200 417,600 684,000
(EBT) 0
Tax N/a N/a N/a 68400 753540
Earnings After Taxes 2,758,26
165,600 565,200 417,600 615,600
(EAT) 0
Cash Flow Statement:
S.
N Particulars Y1 Y2 Y3 Y4 Y5
o
Profit After Tax 2,758,26
1 165,600 565,200 417,600 615,600
(PAT) 0
Working Capital
2 300000 500000 800000 1000000 1500000
loan
Equity/ Share
3 110000 220000 330000 440000 550000
capital
IA Investment
4 110000 220000 330000 440000 550000
Grant
Increase of current
5 1520000 1950000 2250000 2450000 3000000
liabilities
6 Depreciation 145,000 145,000 145,000 145,000 145,000
2,350,60 3,600,20 5,090,60 8,503,26
Sub Total (A) 4,272,600
0 0 0 0

Cash Outflow (Rs.)
1 Capital Expenditure
Building and
A 500000 500000 500000 500000 500000
Interiors
Plant and
B 1200000 1200000 1200000 1200000 1200000
Machinery
Increase of current
2 450000 800000 1200000 1500000 1950000
asset
3 Loan Repayment
Working capital
A loan (interest + 33750 56250 90000 112500 219375
instalment)
Sub Total (B) 2183750 2556250 2990000 3312500 3869375
Net Cash Flow (A- 1,043,95 1,778,10 4,633,88
166,850 1,282,600
B) 0 0 5
Balance Sheet:
Figure in Rs.
Particulars Y1Y2 Y3 Y4 Y5
ASSETS
Current Assets 600000 1160000 1900000 2300000 2900000
Cash and Bank Balance 350000 520000 650000 800000 1000000
Accounts Receivables 400000 600000 800000 1000000 1200000
Other Current Assets 600000 1160000 1900000 2300000 2900000
Total Current Assets 1950000 3440000 5250000 6400000 8000000
Gross Fixed Assets 1,700,00 1,700,00 1,700,00 1,700,00 1,700,00
0 0 0 0 0
Less: Depreciation 145,000 145,000 145,000 145,000 145,000
TOTAL ASSETS 3,505,00 4,995,00 6,805,00 7,955,00 9,555,00
0 0 0 0 0
LIABILITIES & SHAREHOLDERS EQUITY
CURRENT LIABILITIES
Accounts Payable & Accrued 639,400 819,800 1,487,40 1,789,40 -203,260
Expenses. Other Current 0 0
Total Current Liabilities 1800000 2210000 2800000 3050000 3300000
TOTAL LIABILITIES 2,439,40 3,029,80 4,287,40 4,839,40 3,096,74
0 0 0 0 0
Share capital 300000 550000 900000 1100000 1700000
Grant 300000 550000 900000 1100000 1700000
Reserves and Surplus 300000 300000 300000 300000 300000

Profit & Loss) During the Year 165,600 565,200 417,600 615,600 2,758,26
0
Appropriation – Dividend 165.6 282.6 139.2 153.9 551.652
Sensitivity Analysis:
Sensitivity Analysis
Quantity Variation (%) Y1 Y2 Y3 Y4 Y5
80000 90000 10000 150000
Income from C&G job work services 50000
0 0 0 0
Income from commodity trading and input 10000 15000 22000 40000 500000
sales 00 00 00 00 0
23000 50000 80000 10000 120000
Closing stock of finished goods
0 0 0 00 0
165,60 565,20 417,60 684,00 3,511,8
Total Income
0 0 0 0 00
12000 25000 40000 60000
Opening stock of closing goods 700000
0 0 0 0
Variable Cost 10000 15000 20000 25000 30000
119400 239800 381200 491400
Total Operational Expenses 4470000
0 0 0 0
145,00 145,00 145,00 145,00
Depreciation 145,000
0 0 0 0
165,60 565,20 417,60 684,00 3,511,8
Earnings Before Interest and Taxes
0 0 0 0 00
Key Financial Indicators:

 Internal Rate of Return (IRR):
The project internal rate of return should be more than 15% as per the current financial
scenario of the country. The project IRR is 24-5 %, therefore, it is clearly indicating that the
project is feasible for investment.
 Break Even Point:

The average break-even percentage is 42 % and as per financial standards.
 Payback Period:
The Payback period for the project is almost 3 yr year 2 months whereas equity payback is
24 Months. It should be less than 4 to 5 years therefore the project payback periods are
within the limit.
 Return on Capital Employed:

The return on capital employed for the project is 20% for the 1st year which is above the
expected financial standards of 15 % - 40%.

Chapter 6: Project Impact:
 Individual member benefit:
The members of the FPC are envisaged to gain from the activities of the FSCS. Such
benefits can be categorized into direct and indirect benefits. Under direct benefit, the PC is
set to benefit from their share in the profit due to ownership of shares in the PC. However,
the indirect benefits far outweigh the direct ones. Such benefits are noted hereunder.
1 Purchase of inputs:
 Reduction in transport cost and time due to availability of inputs in the village.
 Lower price of inputs due to passing on of bulk purchase discounts by PC.
 Timely availability of quality inputs due to planned and negotiated purchases by FPC.
2 Aggregated sale of produce:

 Better rates than APMC due to lower deductions in weight and lower transaction
charges.
 Proper weighing and rate fixation due to transparent operations.
 Stability in rates due to negotiated rate settlement with buyers by PC.
3 Processing of produce:
 Availability of facility for value addition where there was none.
 Better rates for produce after Processing.
4 Leasing of agro-equipment:
 Availability of mechanized farming facility where very few options exist.
 Cheaper access and user rates for thresher.
 Savings through low or no labour costs and reduced exposure to vagaries of nature.
5 Incremental asset:
 Increased value of shares in a profitable business entity leading to asset enhancement.
Chapter 6: Annexure
S. No Documents Required
1 Certificate of Incorporation
2 MoA
3 AoA
4 Route Map
5 Registration Copy
Copies of Licenses
6  GST
 PAN
 Seed
 Fertilizer

 Pesticides/Insecticide
7 OrganoChiraunji
8 Board Structure
Audited/Unaudited Financials
9
Year
10 List of FPGs
11 List of working Committees
12 Area Map
13 Copies of MoA and AoA
14 Copies of Business Rules if any
Copies of Service conditions if
15
any
16 Bank Statement
17 Subsidy Sanction letters
18 Merit Certificates/Testimonials
Case Studies/Success Stories if
19
any
20 Photographs of Activities
Sources referred:
Practioners’ Guide for Business Development Planning om FPOs: National Institute of
Rural Development and Panchayati Raj, Ministry of Rural Development, Government of
India and Policy and process guidelines for Farmer Producer Companies, Department of
Agriculture, GOI
Operational Guidelines: Formation and Promotion of 10,000 FPOs, Department of

Agriculture, Co-operation & Farmers’ Welfare, Ministry of Agriculture & Farmers’
Welfare

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Development of Business Plan for Satyram

Fed Farmer Producer Company Limited II

Formation & Promotion of farmer Producer

Market & Promoted By:

CBBO:- Indian Social Responsibility Network Page | 1

CBBO:- Indian Social Responsibility Network Page | 2

CBBO:- Indian Social Responsibility Network Page | 3

Assessment of working capital

CBBO:- Indian Social Responsibility Network Page | 4

FPCL Farmer Producer Company Limited

CBBO:- Indian Social Responsibility Network Page | 5

Department of Agriculture, Cooperation and Farmers’ Welfare, Ministry of Agriculture &

 To provide effective capacity building to FPOs to develop agriculture entrepreneurship

Farmer Producer Organizations (FPO):

CBBO:- Indian Social Responsibility Network Page | 6

CBBO:- Indian Social Responsibility Network Page | 7

 Is FPO Scheme works

 Is FPO’s are feasible or sustainable

 How to create value addition and provide the aim to FPO.

 Is FPO play role in developing income of farmers.

Key elements that should be included in the executive summary are:

CBBO:- Indian Social Responsibility Network Page | 8

CBBO:- Indian Social Responsibility Network Page | 9

S. No. Particulars Details

1 Name of the FPO Satyram FED Farmer Producer Company Limited

CBBO:- Indian Social Responsibility Network Page | 10

Number of shareholders 300

Key commodities and core ARAHAR, MUSTEARD, POTATO & BAJRA

21 Business turnover achieved NA

CBBO:- Indian Social Responsibility Network Page | 11

1) For Sale only few local mandi are in Block.(Market

Good practices promoted by

About Producer Company:

SATYRAM FED FARMER PRODUCER COMPANY LIMITED was registered on 17 June

Block Index Map:

CBBO:- Indian Social Responsibility Network Page | 12

The potato is a starchy tuber of the plant Solanum tuberosum and is a root vegetable native to

CBBO:- Indian Social Responsibility Network Page | 13

Business Activity – I (Input Shop):

CBBO:- Indian Social Responsibility Network Page | 14

 Need of the proposed business activity

CBBO:- Indian Social Responsibility Network Page | 15

Seed Revenue (in Rs.)

CBBO:- Indian Social Responsibility Network Page | 16

Business Summary – Fertilizer Facilitation:

Any other fertilizer 4000 8100 13500 17899 22000

6 DAP – (di-ammonium phosphate) 12600 18450 29003 40500 54045

Any other Fertilizer 9600 19440 32400 42957.6 52800

CBBO:- Indian Social Responsibility Network Page | 17

Business Summary – Pesticides/ Insecticide:

6 Pesticide value (in Rs.) 270000 540000 750000 936000 1167000

7 Pesticide revenue (in Rs.) 113400 226800 315000 393120 490140

Business Activity – II (Aggregation and Sale of Produce):

CBBO:- Indian Social Responsibility Network Page | 18

Sr. No. Name Godown Storage Capacity (MT)

CBBO:- Indian Social Responsibility Network Page | 19

CBBO:- Indian Social Responsibility Network Page | 20