The Ministry of Agriculture and Farmers Welfare recently marked a year since the launch of the Central Sector Scheme called “Formation & Promotion of 10,000 Farmer Produce Organizations (FPOs)”.
Launching and Overview of the Scheme
The Scheme was launched in February 2020 in Chitrakoot, Uttar Pradesh, with an allocated budget of Rs. 6865 crore. Since its inception, over 2200 FPOs produce clusters have been allocated for the formation of such organizations in the 2020-21 period.
Implementing Agencies (IAs) have been working with Cluster-Based Business Organizations (CBBOs) to aggregate, register, and provide professional support to each FPO. This support will last for a duration of five years. CBBOs serve as a platform for comprehensive knowledge on all FPO-related promotion issues.
Financial Assistance under the Scheme
The scheme provides financial aid of up to Rs. 18.00 lakh per FPO for a three-year period. There is also a provision for matching equity grant of up to Rs. 2,000 per farmer member of FPO, with a limit of Rs. 15.00 lakh per FPO. A credit guarantee facility of up to Rs. 2 crores of project loan per FPO from the eligible lending institution has been established to ensure that FPOs have access to institutional credit.
Significance of the Scheme
The primary aim of the scheme is to increase farmers’ income by promoting the sale of farmers’ produce directly from their farm gates. By shortening the supply chain, marketing costs are reduced, which in turn increases the farmers’ income. Additionally, the scheme accelerates investment in marketing and value-added infrastructure near farm gates, creating more employment opportunities for rural youth. Finally, farming is made more viable by aggregating land.
Other initiatives for the benefit of farmers launched by the government include the National Mission for Sustainable Agriculture, Pradhan Mantri Krishi Sinchayee Yojana, Rashtriya Krishi Vikas Yojana (RKVY), Nutrient Based Subsidy (NBS) Programme, Rashtriya Gokul Mission, Pradhan Mantri Fasal Bima Yojana, and Paramparagat Krishi Vikas Yojana.
About Farmer Producer Organizations
A Producer Organisation (PO) is a legally formed entity by primary producers like farmers, milk producers, fishermen, weavers, and rural artisans. It’s a general term for any organization made up of producers of any produce, whether agricultural or artisan products.
These organizations can take various forms such as production companies, cooperative societies, or any other legal form that allows for profit-sharing among members. In some forms, like producer companies, primary producer institutions can also be PO members.
A Farmer Producer Organization (FPO) is a type of PO where the members are farmers. These organizations are usually mobilized by promoting institutions or resource agencies (RAs). Small Farmers’ Agribusiness Consortium (SFAC) is providing support for the promotion of FPOs. The RAs leverage the support available from governments and agencies like the National Bank for Agriculture and Rural Development (NABARD) to promote and nurture FPOs.
