Factsheet Details:

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]

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.
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.

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.:

Small Farmers Agri-Business Consortium (SFAC)
National Cooperative Development Corporation (NCDC)
National Bank for Agriculture and Rural Development (NABARD)
National Agricultural Cooperative Marketing Federation of India (NAFED)
North Eastern Regional Agricultural Marketing Corporation Limited (NERAMAC)
Tamil Nadu-Small Farmers Agri-Business Consortium (TN-SFAC)
Small Farmers Agri-Business Consortium Haryana (SFACH)
Watershed Development Department (WDD)- Karnataka
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]

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