In recent years, Farmer Producer Organizations (FPOs) have emerged as a powerful tool for transforming Indian agriculture.
These organizations are collectives of small and marginal farmers, coming together to enhance their bargaining power, access modern technology, improve market linkages, and collectively address challenges.
FPOs have played a vital role in empowering farmers and fostering sustainable agricultural practices, thereby contributing to rural development and food security.
Understanding Farmer Producer Organizations (FPOs)
Farmer Producer Organizations, as the name suggests, are entities created and run by farmers themselves, often with the help of government and non-government organizations.
These collectives aim to empower farmers by pooling their resources, sharing knowledge, and collectively engaging in various agricultural activities, including production, marketing, and value addition.
Work carried out by FPOs include-
- Supply of quality inputs like seed, fertilizer, pesticides, etc;
- Undertaking value addition like cleaning, assaying, sorting, grading and processing of agri produce.
- Making available machinery and equipment on custom hiring basis for members;
- Undertaking aggregation of farmer-members’ agri produce for marketing/selling.
Advantages and Objectives of FPOs
a. Enhanced Bargaining Power: By consolidating their produce and resources, FPOs provide farmers with better bargaining power in the market. This helps them secure fair prices for their produce and reduces their dependence on middlemen.
b. Access to Technology and Knowledge: FPOs facilitate the adoption of modern agricultural techniques, better seeds, and advanced technologies. Farmers gain access to training and workshops, empowering them to make informed decisions.
c. Efficient Resource Management: By collectively managing resources, such as seeds, fertilizers, and machinery, FPOs can achieve economies of scale and reduce input costs.
d. Market Linkages: FPOs help farmers access markets beyond their immediate vicinity. They can negotiate directly with processors, exporters, and retailers, resulting in higher profits.
e. Value Addition and Processing: FPOs encourage value addition and processing of agricultural produce, enabling farmers to fetch higher prices for processed goods.
f. Risk Mitigation: FPOs promote crop diversification and collective risk management, enabling farmers to cope better with market fluctuations and crop failures.
Challenges Faced by FPOs
Despite their numerous advantages, FPOs encounter various challenges that need to be addressed:
a. Limited Financial Resources: Many FPOs struggle with inadequate financial resources and face difficulty in accessing credit and loans.
b. Capacity Building: Strengthening the managerial and technical skills of FPO members is crucial for their sustained success.
c. Infrastructural Constraints: Poor road connectivity and inadequate storage facilities hinder the timely transportation and storage of agricultural produce.
d. Inclusivity and Social Dynamics: Ensuring the participation of marginalized farmers, including women and tribal communities, is essential for the equitable growth of FPOs.
Evolution and Growth of FPOs in India
FPOs in India have a relatively recent history, with their development gaining significant momentum over the past decade.
Various government schemes, like the Small Farmers Agri-Business Consortium (SFAC), National Bank for Agriculture and Rural Development (NABARD), and the National Rural Livelihood Mission (NRLM), have actively promoted and supported the establishment of FPOs.
The growth of FPOs has been particularly prominent in states like Maharashtra, Madhya Pradesh, Karnataka, and Gujarat, where these organizations have successfully brought positive changes in the lives of thousands of farmers.
10000 FPOs Scheme
The Government of India has launched the Central Sector Scheme for “Formation and Promotion of 10,000 Farmer Producer Organizations (FPOs)” in the year 2020 with a total budgetary outlay of Rs.6865 Crores.
It will enable farmers to enhance their bargaining power, leverage economies of scale, reduction in cost of production and enhancing farmers’ incomes through aggregation of their agricultural produce, thus playing a major role towards sustainable incomes.
Under the said scheme, FPOs being provided financial assistance upto Rs.18.00 lakh per FPO for a period of 03 years.
In addition to this, provision has been made for 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 institution to ensure institutional credit accessibility to FPOs.
Further, Rs.25 Lakhs are given to CBBOs for hand holding each FPO over a period of five years.
Considering the significance and strategic role of the State Government and its machinery down the line in synergizing the efforts in mobilizing the farmers, offering various services relating to production and post-production and also periodically reviewing the development and functioning of FPOs, the Government has made provisions in Operational Guidelines of the 10,000 Farmer Producer Organizations (FPOs) scheme wherein a State Level Consultative Committee called SLCC is constituted with Additional Chief Secretary/Secretary, In-charge of Agriculture/ Agriculture Marketing as its Chairperson.
In addition to above, under 10,000 FPOs scheme, at district level, a District Level Monitoring Committee (D-MC) is constituted under the Chairmanship of District Collector/ CEO/ Zilla Parishad with representatives of different line departments and experts which provides approval for potential produce clusters in the block and also responsible for overall coordination, monitoring and implementation of the scheme at the district level. Provisions have also been made in Government of India schemes for availing benefits by FPOs.
As on 30 June, 2023, 10,000 FPOs have been allocated to various Implementing Agencies (IAs) out of which 6319 FPOs have been registered across the country.
Farmer Producer Organizations have emerged as a game-changer in Indian agriculture, empowering small and marginal farmers and revitalizing rural economies.
With continued support from the government, NGOs, and other stakeholders, FPOs have the potential to drive sustainable agricultural growth, reduce farmer distress, and ensure food security in the country.
As these organizations continue to evolve, they will remain instrumental in creating a prosperous and resilient farming community in India.
