Readers Note: Optimal Design of FPO ICCo’s Strategic Pilot on Incubating Producer Companies

In 2013, ICCo launched a Strategic Pilot on ‘Incubating Producer Companies’ to bring about a paradigm shift in the way Producer Companies are promoted in the country through the Determine Exit based on targets Focused BI Services (Demand Side) Identify key gaps and develop B Plan •Business model canvas exercise •Legal compliances •Governance and stakeholders •Market orientation and value chain •Management control and metrics

•Establishing Establishing Systems & Processes •Financial Financial management & Training •Implementing Implementing Business Plan •Consultancy Consultancy Services for advanced POs

following three- staged approach. The pilot focused on moving away from a Capacity Building Approach for PCs, which need to be treated as business organizations. The pilot provided immense learnings on the best practices to be adopted for or incubating POs. Objective of the Project: Incubate 4 Producer Companies in the state of Jharkhand and Odisha in a span of 2 Years with the following objectives: 1. Strengthened rural entrepreneurship through producer companies; 2. Inclusive value chain development lopment and 3. Improved access to suitable and affordable financial services

The objectives approach the value chains from different angles: Strengthening rural entrepreneurship and producer companies work bottom up from production to demand. Inclusive value chain development works top top-down down from the demand to the production, while financial services are crosscutting. Where possible a regional approach will be applied, as especially challenges in the enabling environment do require a joint broad approach.

Parameters for Incubating Producer Companies:

ICCo supported NGOs to assess the POs based on nine scientifically developed parameters.The parameters are: 1. 2. 3. 4. 5. 6. 7. 8. 9.

Internal Management Operations Financial Management Market Supply Chain Identify and plan to minimize External risks Continuous improvement of Financial Performance Identify and optimize use of Enablers and Focus on Sustainability

Lessons Learned So far •

Principles of business incubation support can be extended to producer companies at a broad level, although outcomes of the same entail significant sharing of responsibility, in-location support and presence of a strong leadership in the PCs.

•

Success of a business plan depends not only on meticulous, comprehensive modeling based on sound economic logic, but also requires significant responsiveness for implementation and materialization.

•

While NGOs can support and accelerate the formation and early-stage functioning of as enabling agencies for producer companies, it has been our observation that the notfor-profit approach at the leadership and management level of producer companies might deter the business potential. The eye to generate efficiencies and tap larger markets requires a strong management team with focus on growing business profitably.

•

It is important to have champions in PCs who can drive activity and strategic steering in PCs, just like any other business entity.

•

Difficulty in frequent geographical accessibility has been an impediment in the project right from the beginning, and more so in the business planning and implementation phase as it was difficult to motivate them to work on the respective action plans and take organization-wide initiatives to foster growth and productive planning.

•

Lack of responsiveness from PCs led several of the connects not materializing into market traction.