Farmer Producer Organization (FPO) is a legal entity incorporated under the Companies Act or Co-operative Societies Act of the concerned States and formed to leverage collectives through economies of scale in production and marketing of agricultural and allied sectors.
Key Points of FPO
Initially, the minimum number of members in the Farmer Producer Organization is 100 in North East & Hilly Areas and 300 in plain areas.
The Farmers Producers Organizations are formed and promoted through the Cluster-Based Business Organizations and engaged at the State or Cluster level by implementing the agencies.
Farmer Producer Organization is promoted under “One District One Product” to promote the specialization and better branding, marketing, processing, and exports by FPO.
The Farmers Producer Organization provides adequate training & handholding and the CBBOs provide the initial training.
Priority is given for the formation of the Farmer Producer Organization in aspirational districts with at least one FPO in each block of the aspirational districts.
Role of central government Institutions in supporting FPOs
Department of Agriculture and Cooperation (DAC), Ministry of Agriculture, Govt. of India will act as the nodal agency for the development and growth of FPOs.
Small Farmers’ Agribusiness Consortium (SFAC), a Society under DAC, will be the designated agency of DAC to act as a single window for technical support, training needs, research, and knowledge management and to create linkages to investments, technology, and markets. SFAC will provide all-around support to State Governments, FPOs, and other entities engaged in the promotion and development of FPOs. In particular, SFAC will create sustainable linkages between FPOs and inputs suppliers, technology providers, extension and research agencies, and marketing and processing players, both in the public and private sectors. The mandate of the National Cooperative Development Corporation (NCDC) will be expanded to include FPOs in the list of eligible institutions which receive support under the various programs of the Corporation.NAFED will take steps to include FPOs in the list of eligible institutions which act on its behalf to undertake price support purchase operations.DAC and its designated agencies will work with NABARD and other financial institutions to direct short and medium-term credit for working capital and infrastructure investment needs of FPOs. DAC will also work with all relevant stakeholders to achieve 100% financial inclusion for members of FPOs and link them to Kisan Credit Cards.DAC will work with the Ministry of Corporate Affairs and other stakeholders to further clarify and strengthen provisions of the law relating to the registration, management, and regulation of FPOs with a view to fostering the fast-paced growth of FPOs.
Role of state government institutions in supporting FPO’s
Besides encouraging State Governments to take up the formation of FPOs on a large scale through Centrally sponsored and State-financed programs and schemes, DAC suggests the following steps to be taken by State Governments to support and strengthen FPOs: By declaring FPOs at par with cooperatives registered under the relevant State legislation and self-help groups/federations for all benefits and facilities that are extended to member-owned institutions from time to time. By making provisions for easy issue of licenses to FPOs to trade in inputs (seed, fertilizer, farm machinery, pesticides, etc.) for use of their members as well as routing the supply of agricultural inputs through FPOs at par with cooperatives.By using FPOs as producers of certified seed, saplings, and other planting material and extending production and marketing subsidies on par with cooperatives. By suitable amendments in the APMC Act to allow the direct sale of farm produce by FPOs at the farmgate, through FPO owned procurement and marketing centers, and for facilitating contract farming arrangements between FPOs and bulk buyers.
Eligibility criteria of FPO
The FPO should be a legal entity as mentioned above
FPO has raised equity from its Members as laid down in its Articles of Association/ Bye-laws
Minimum 50% of the FPO’s shareholders are small, marginal, and landless tenant farmers, and Women farmers’ as shareholders are to be preferred.
The maximum shareholding of the members should not be above 10% of the total equity of the FPO.
A farmer can be a member in more than one FPO with different produce clusters but he/she will be eligible only once for the matching equity grant up to his/her share.
Implementing Agencies to Form and Promote FPOs
The following three implementing Agencies will form and promote Farmer Producer Organizations
Small Farmers Agri-business Consortium (SFAC)
National Cooperative Development Corporation (NCDC)
National Bank for Agriculture and Rural Development (NABARD)
Benefits to Farmer
Through the formation of FPOs, farmers will have better collective strength for better access to quality input and technology. The farmer will also avail better credit and better marketing access through economies of scale for better realization of income.
Activities to be undertaken by FPO
The FPO can supply quality production inputs like seed, fertilizer, pesticides at reasonably lower wholesale rates.
FPO can make available need-based production and post-production machinery and equipment on a custom hiring basis for members to reduce the unit production cost.
FPO can engage in the process of value addition like cleaning, grading, packing, and also farm-level processing facilities at a user charge basis at a reasonably cheaper rate.
The FPO can make the facility for storage and transportation for its members.
The FPO must undertake higher income-generating activities like seed production, beekeeping, mushroom cultivation, etc.
FPO needs to undertake aggregation of smaller lots of farmer-members produce; add value to make them more marketable.
Facilitate logistics services such as storage, transportation, loading/unloading, etc. on a shared cost basis.
FPO can market the aggregated produce with better negotiation strength to the buyers and in the marketing with better and remunerative prices.
