The Cabinet Committee on Economic Affairs 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. Support for each FPO will be continued for 5 years from its year of inception.
- The report of 'Doubling of Farmer’s Income (DFI)'
- It has emphasized this fact and recommended the formation of 7,000 FPOs by 2022 towards convergence of efforts for doubling the farmers' income.
- Union Budget 2019-20:
- The Government has announced the creation of 10,000 new FPOs to ensure economies of scale for farmers over the next five years,
- For which a dedicated supporting and holistic scheme as the Central Sector Scheme is proposed for the targeted development of FPOs and its sustainability.
Formation and Promotion of Farmer Producer Organizations (FPOs) scheme
Formation of FPOs
FPOs will be formed and promoted through Cluster-Based Business Organizations (CBBOs) engaged at the State/Cluster level by implementing agencies.
Membership in FPOs
Initially, the minimum number of members in FPO will be 300 in plain area and 100 in North East & hilly areas.
DAC&FW may revise the minimum number of memberships based on experience/need with approval of the Union Agriculture Minister.
Initially, there will be three implementing Agencies to form and promote FPOs, namely
- Small Farmers Agri-business Consortium (SFAC)
- National Cooperative Development Corporation (NCDC)
- National Bank for Agriculture and Rural Development (NABARD)
States may also nominate their Implementing Agency in consultation with DAC&FW.
Cluster-Based Business Organization(CBBO)
DAC&FW will allocate Cluster/States to Implementing Agencies which in turn will form the Cluster-Based Business Organization in the States.
It will have five categories of specialists from the domain of
- Crop husbandry
- Agri marketing / Value addition and processing
- Social mobilization
- Law & Accounts
These CBBOs will be the platform for an end to end knowledge for all issues in FPO promotion.
It is a central sector scheme with a total budgetary provision of Rs. 4496.00 crore for five years (2019-20 to 2023-24)
They will be further committed to the liability of Rs. 2369.00 crore for the period from 2024-25 to 2027-28 towards the handholding of each FPO for five years from its aggregation and formation.
There will be a provision of Equity Grant for strengthening the equity base of FPOs.
Credit Guarantee Fund of up to Rs. 1,000.00 crore in NABARD with an equal contribution by DAC&FW and NABARD.
Credit Guarantee Fund of Rs.500.00 crore in NCDC with equal contribution by DAC&FW and NCDC for providing suitable credit guarantee cover to accelerate flow of institutional credit to FPOs by minimizing the risk of financial institutions for granting loan to FPOs.
States/UTs will be allowed to avail loan at prescribed concessional rate of interest under Agri-Market Infrastructure Fund (AMIF) approved for setting up in NABARD for developing agriculture marketing and allied infrastructure in GrAMs
Marketing & allied infrastructure including the Common Facilitation Centre / Custom Hiring Centre for FPOs will be an eligible category for providing assistance to States / UTs.
Training and handholding
Adequate training and handholding will be provided to FPOs. CBBOs will provide initial training.
Professional training of CEO / Board of Directors / Accountant of FPOs will be provided in organizational training, resource planning, Accounting/management, marketing, processing, etc in reputed National / Regional training Institutes.
There will be a National Project Management Agency (NPMA) at SFAC for providing overall project guidance, data compilation, and maintenance through integrated portal and Information management and monitoring.
Priority will be given for the formation of FPOs in aspirational districts in the country with at least one FPO in each block of aspirational districts.
FPOs will be promoted under the "One District One Product" cluster to promote specialization and better processing, marketing, branding & export by FPOs.
About Farmers Producers Organisations (FPO)
- FPOs are a legalized form of farmer-owned institutions,
- It consists of farmer members with common interests and concerns.
- It is formed by primary producers, like farmers, milk producers, fishermen, weavers, rural artisans, craftsmen, etc.
- It can be established in the form of Producer Company, a Cooperative Society or any other legal form which provides systems for sharing of profits/benefits among the members.
- These institutions are registered under the company’s activities and are governed by a set of bye-laws and rules.
- The objective of an FPO: To ensure better income for the producers through an organized system of their own. As small producers do not have the large marketable surplus individually (both inputs and produce) to get the benefit of economies of scale
Benefits of the FPOs
- 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.
- Small and marginal farmers will benefit the most as they do not have the economic strength to apply production technology, services, and marketing including value addition.
Also read: Farmers Science Congress