Government of India

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Farmer Producer Organisations (FPOs)

Posted On: 13 DEC 2021 18:48 PM

(Ministry of Agriculture and Farmers’ Welfare)

December 13, 2021

“Unity is strength. And with this collective power, the farmers will also progress
towards prosperity. The collective strength of the farmers will now be used to get fair
prices to the farmers. Today the same idea runs behind the new FPOs i.e. Farmer
Producer Organizations started in Chitrakoot.”
-Prime Minister Narendra Modi[1]

(February 29, 2020)

1. Introduction

Farmer Producer Organisation (FPO)[2] is a generic name, which refers to 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.The concept behind Farmer Producer Organizations is that farmers, who are the
producers of agricultural products, can form groups. To facilitate this process, the Small
Farmers’ Agribusiness Consortium (SFAC) was mandated by Department of Agriculture and
Cooperation, Ministry of Agriculture, Govt. of India, to support the State Governments in the
formation of Farmer Producer Organizations (FPOs).[3]

The Government of India has approved and launched a Central Sector Scheme of “Formation and
Promotion of 10,000 Farmer Producer Organizations (FPOs)” to form and promote 10,000 new FPOs till 2027-
28.[4]Prime Minister Narendra Modi, on 29 February 2020[5], launched 10,000 FPOs across
India from Chitrakoot.
Under the scheme, the formation and promotion of FPO is based on Produce Cluster Area
approach and specialized commodity-based approach. While adopting cluster-based
approach, formation of FPOs will be focussed on “One District One Product” for development
of product specialization.[6]

2. Need for FPOs[7]

Nearly 86 per cent of farmers are small and marginal with average land holdings in the
country being less than 1.1 hectare.
These small, marginal and landless farmers face tremendous challenges during agriculture
production phase such as for access to technology, quality seed, fertilizers and pesticides
including requisite finances.
They also face tremendous challenges in marketing their produce due to lack of economic
strength.
FPOs help in collectivization of such small, marginal and landless farmers in order to give
them the collective strength to deal with such issues. Members of the FPO will manage their
activities together in the organization to get better access to technology, input, finance and
market for faster enhancement of their income.

3. Objectives of FPOs[8]

i. To provide holistic and broad-based supportive ecosystem to form 10000 new FPOs to
facilitate development of vibrant and sustainable income-oriented farming and for
overall socio-economic development and wellbeing of agrarian communities.
ii. 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.
iii. To provide handholding and support to new FPOs up to five years from the year of its
creation in all aspects of management of FPO, inputs, production, processing and value
addition, market linkages, credit linkages and use of technology etc.
iv. 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 the government.

4. Implementation of the Scheme[9]

Under this scheme, formation &promotion of FPOs are to be done through theImplementing
Agencies (IAs). As of February 2021, nine IAs had been finalized for formation and promotion
of FPOs viz.:

i. Small Farmers Agri-Business Consortium (SFAC)

ii. National Cooperative Development Corporation (NCDC)
iii. National Bank for Agriculture and Rural Development (NABARD)
iv. National Agricultural Cooperative Marketing Federation of India (NAFED)
v. North Eastern Regional Agricultural Marketing Corporation Limited (NERAMAC)
vi. Tamil Nadu-Small Farmers Agri-Business Consortium (TN-SFAC)
vii. Small Farmers Agri-Business Consortium Haryana (SFACH)
viii. Watershed Development Department (WDD)- Karnataka
ix. Foundation for Development of Rural Value Chains (FDRVC)- Ministry of Rural
Development (MoRD)

IAs will engage Cluster Based Business Organizations (CBBOs) to aggregate, register & provide
professional handholding support to each FPO for a period of five years.
NAFED would form the specialized FPOs which should necessarily be forwardly linked to the
market, agri-value chain, etc. NAFED will provide market and value chain linkages to the FPOs
formed by other Implementing Agencies.
FPOs will be provided financial assistance upto Rs 18.00 lakh per FPO for a period of three
years. In addition to this, provision has been made for matching equity grant upto Rs. 2000
per farmer member of FPO with a limit of Rs. 15.00 lakh per FPO and a credit guarantee
facility upto Rs. 2.00crore of project loan per FPO from eligible lending institution to ensure
institutional credit accessibility to FPOs.
There are well defined training structures in the scheme and the institutions like Bankers
Institute of Rural Development (BIRD), Lucknow and LaxmanraoInamdar National Academy
for Co-operative Research & Development (LINAC), Gurugram have been chosen as the lead
training institutes for capacity development & trainings of FPOs. Training & skill development
modules have been developed to further strengthen the FPOs.
5. Outcomes

During 2020-21, a total of 2200 FPO produce clusters have been allocated for formation of
FPOs, which also include specialized FPO produce clusters such as100 FPOs for Organic, 100
FPOs for Oil seeds etc. Of these, 369 FPOs are targeted for formation during current year for
formation in 115 aspirational districts in the country.[10]
As of July 2021, a total of 4465 new FPOs produce clusters have been allocated to
Implementing Agencies for formation of FPOs, of which a total of 632 no. of FPOs have been
registered.[11]
As per the Evaluation Report of PricewaterhouseCoopers (PwC) on FPO component titled
“Impact Study 7- Enhanced realization of agriculture produce marketed through PCs/FCSCs
under Maharashtra Agricultural Competitiveness Project (MACP)”:[12]
Sale through Farmer Producers Companies (FPCs) has resulted in increased price realization
by members by 22%
Incidence of cost of marketing is 31% lower than other channels
28 percent of members have purchased inputs from PCs and it has resulted into net savings of
Rs.1384 per acre.

Details of Producer Companies for the year 2020, State-wise:[13]

Sr. No. State No. Of Producer companies

1 Andhra Pradesh 147

2 Arunachal Pradesh 15

3 Assam 87

4 Bihar 221

5 Chandigarh 1

6 Chattisgarh 32

7 Delhi 7

8 Gujarat 108

9 Haryana 257

10 Himachal Pradesh 7

11 Jammu & Kashmir 10

12 Jharkhand 70

13 Karnataka 195

14 Kerala 53

15 Madhya Pradesh 237

16 Maharashtra 1950

17 Manipur 26

18 Meghalaya 1

19 Mizoram 4

20 Nagaland 6

21 Orissa 177
 22 Puducherry 1

23 Punjab 13

24 Rajasthan 114

25 Tamil Nadu 241

26 Telangana 119

27 Tripura 8

28 Uttar Pradesh 654

29 Uttarakhand 14

30 West Bengal 184

31 Grand Total 4959

Formation & promotion of FPOs is the first step for converting Krishi into AtmanirbharKrishi.
This will enhance cost effective production and productivity and higher net incomes to the
member of the FPO. Also improve rural economy and create job opportunities for rural youths
in villages itself. This was the major step towards improving farmers’ income substantially.
[14]
References:

https://dmi.gov.in/Documents/FPO_Scheme_Guidelines_FINAL_English.pdf
https://enam.gov.in/web/stakeholders-Involved/fpos
https://pib.gov.in/PressReleasePage.aspx?PRID=1739593
https://pib.gov.in/PressReleseDetail.aspx?PRID=1604679
https://pib.gov.in/PressReleseDetail.aspx?PRID=1740833
https://www.pib.gov.in/PressReleseDetail.aspx?PMO=3&PRID=1604772
https://pib.gov.in/Pressreleaseshare.aspx?PRID=1696547
https://twitter.com/mygovindia/status/1299613029483462657?t=9JtXis7-ZByX8uct9-V7Fg&s=08

AG/HP/LP/SA/SS

[1]https://www.pib.gov.in/PressReleseDetail.aspx?PMO=3&PRID=1604772

[2]https://dmi.gov.in/Documents/FPO_Scheme_Guidelines_FINAL_English.pdf

[3]https://enam.gov.in/web/stakeholders-Involved/fpos

[4]https://pib.gov.in/PressReleasePage.aspx?PRID=1739593

[5]https://pib.gov.in/PressReleasePage.aspx?PRID=1604743

[6]https://pib.gov.in/PressReleasePage.aspx?PRID=1739593

[7]https://pib.gov.in/PressReleseDetail.aspx?PRID=1604679

[8]https://dmi.gov.in/Documents/FPO_Scheme_Guidelines_FINAL_English.pdf

[9]https://pib.gov.in/Pressreleaseshare.aspx?PRID=1696547

[10]https://pib.gov.in/Pressreleaseshare.aspx?PRID=1696547

[11]https://pib.gov.in/PressReleasePage.aspx?PRID=1739593
[12] Ibid

[13] Ibid

[14]https://pib.gov.in/Pressreleaseshare.aspx?PRID=1696547
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