Formation and Promotion of FPOs

The Cabinet Committee has given its approval for 10,000 FPOs to be formed in five years period from 2019-20 to 2023-24 to ensure economies of scale for farmers.

What are Farmer Producer Organizations?

• A Producer Organisation (PO) is a legal entity formed by primary producers, viz. farmers, milk producers, fishermen, weavers, rural artisans, craftsmen.
• A PO can be a producer company, a cooperative society or any other legal form which provides for sharing of profits/benefits among the members.
• In some forms like producer companies, institutions of primary producers can also become member of PO.
• FPO is one type of PO where the members are farmers. Small Farmers’ Agribusiness Consortium (SFAC) is providing support forthe promotion of FPOs.

About the Scheme :-

• It would be a new Central Sector Scheme titled “Formation and Promotion of Farmer Produce Organizations (FPOs)” to form and promote 10,000 new FPOs.
• Initially there will be three implementing Agencies to form and promote FPOs, namely Small Farmers Agri-business Consortium (SFAC), National Cooperative Development Corporation (NCDC) and National Bank for Agriculture and Rural Development (NABARD).
• States may also, if so desire, nominate their Implementing Agency in consultation with DAC&FW.
• DAC&FW will allocate Cluster/States to Implementing Agencies which in turn will form the Cluster-Based Business Organization in the States.

Modes for promotion :-

• FPOs will be promoted under “One District One Product” cluster to promote specialization and better processing, marketing, branding & export by FPOs.
• There will be a provision of Equity Grant for strengthening equity base of FPOs.
• There will be a Credit Guarantee Fund of up to Rs. 1,000.00 crore in NABARD.

Benefits :-

• Small and marginal farmers do not have the economic strength to apply production technology, services and marketing including value addition.
• Through the formation of FPOs, farmers will have better collective strength for better access to quality input, technology, credit and better marketing access through economies of scale for better realization of income.