The Central Sector Scheme for “Formation and Promotion of 10,000 Farmer Producer Organizations (FPOs) was launched by Prime Minister Shri Narendra Modi on 29th February, 2020. The scheme was launched with a budget outlay of Rs 6,865 Crore till 2027-28. Since the launch of the scheme, Rs 254.4 Crore in equity grants has been released to 4,761 FPOs and credit guarantee cover worth Rs 453 Cr. has been issued to 1,900 FPOs.
Recently, on the occasion of the release of the 19th instalment of PM-KISAN in Bhagalpur, Bihar, Prime Minister Shri Narendra Modi launched the 10,000th FPO. The 10,000th FPO has been registered in Khagaria district and focuses on maize, banana, and paddy. FPOs are not just organizations but an unprecedented force to increase farmers’ income and provide small farmers with direct access to significant market benefits, bargaining power and improving market access. Approximately 30 lakh farmers in the country are connected to FPOs, with around 40 percent of them being women. These FPOs are now conducting business worth thousands of crores in the agricultural sector.
Under this scheme, there is a provision for handholding support for a period of five years to each new FPO formed, and financial assistance to the tune of Rs.18 lakhs to each FPO under the scheme towards management cost for 3 years. Additionally, matching equity grant upto Rs. 2,000 per farmer member of FPO with a limit of Rs. 15.00 lakh per FPO and a credit guarantee facility upto Rs. 2 crore of project loan per FPO from eligible lending institutions to ensure institutional credit accessibility to FPOs
Farmer Producer Organisation (FPO) 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).
The “Formation and Promotion of 10,000 Farmer Producer Organizations (FPOs)” scheme was launched with the main focus on leveraging economies of scale in production and marketing with a view to enhance productivity through efficient, cost effective and sustainable resource use for ensuring sustainable income-oriented farming, thus helping in reduction of cost of farm production and increase in farmers’ income.[6]
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.
OBJECTIVES
To provide a 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.
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 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.
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.