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Govt to set up 1,000 farmer producer organisations, allocates Rs 6,865 crore

During 2020-21, a total of 2,200 FPO produce clusters have been allocated for formation of FPOs, which also include specialised FPO produce clusters such as 100 for organic, 100 for oil seeds

twitter-logoBusinessToday.In | February 9, 2021 | Updated 20:51 IST
Govt to set up 1,000 farmer producer organisations, allocates Rs 6,865 crore
Prime Minister Narendra Modi had launched "Formation and Promotion of Farmer Producer Organisations FPO)" on February 19, 2020

In a bid to transform agriculture into a sustainable enterprise through farmer producer organisations (FPOs), the central government has proposed to form and promote 10,000 new FPOs in the country with budgetary provision of Rs 6,865 crore, says Ministry of Agriculture and Farmers Welfare.

Prime Minister Narendra Modi had launched "Formation and Promotion of Farmer Producer Organisations" on February 19, 2020, to promote 10,000 FPOs in the next five years, starting 2019-20, which would help small, marginal and landless farmers to enhance their income. The objective of the scheme is to provide small and marginal farmers "better collective strength for better access to quality input, technology, credit and better marketing access through economies of scale for better realisation of income".

The Agriculture Ministry said the FPOs have been launched to facilitate small and marginal farmers with access to improved technology, credit, better input and more markets to incentivise them to produce better quality commodities.

"The goal is to achieve doubling of export by 2022," the ministry said.  

Also read: Rebooting Economy 55: Farmer producer organisations best bet for small, marginal farmers

Formation and promotion of FPOs is the first step for converting Krishi (farmer) into "Atmanirbhar Krishi", which will enhance cost effective production and productivity and higher net incomes to the member of the FPO, it said. The move would also help improve rural economy and create job opportunities for rural youths in villages itself, it added.

As per the ministry, FPOs will be developed in produce clusters, wherein agricultural and horticultural produces are grown or cultivated, for leveraging economies of scale and improving market access for members. During 2020-21, a total of 2,200 FPO produce clusters have been allocated for formation of FPOs, which also include specialised FPO produce clusters such as 100 for organic, 100 for oil seeds, etc. Of these, 369 FPOs are to be formed during current year in 115 aspirational districts of the country, it said.

The ministry said that FPOs will be provided financial assistance up to Rs 18 lakh per FPO for a period of 3 years. Adding to it, provision has been made for matching equity grant up to Rs 2,000 per farmer member of FPO with a limit of Rs 15 lakh per FPO and a credit guarantee facility up to Rs 2 crore of project loan per FPO from eligible lending institution to ensure institutional credit accessibility to FPOs.

The FPOs include farmer producer companies (FPCs) registered under the Companies Act as well as farmers' cooperatives registered under the Cooperative Societies Act of state governments. FPO is now defined as "farmer" in the new Farmers' Produce Trade and Commerce (Promotion and Facilitation) Act of 2020 for the purpose of trading in agricultural produce.

Under this central sector scheme with funding from Government of India, formation and promotion of FPOs are to be done through implementing agencies (IAs). Presently, 9 IAs have been finalised for formation and promotion of FPOs, the ministry said.

The IAs will engage cluster based business organisations (CBBOs) to aggregate, registere and provide professional handholding support to each FPO for a period of 5 years. CBBOs have been empanelled and engaged by IAs. CBBOs will be the platform for end-to-end knowledge for all issues related to FPO promotion. 

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