1,100 new FPOs to be set up in cooperative sector

• The ministry of cooperation has decided to form 1,100 new Farmer Producer Organisations (FPOs)  in the cooperative sector under a central scheme.

• Since February 2020, the agriculture ministry is implementing a Central Sector Scheme — Formation and promotion of 10,000 Farmer Producer Organisations (FPOs) — with a budgetary provision of Rs 6,865 crore.

• Under the scheme, a target of establishing 1,100 additional FPOs has been allocated to the National Cooperative Development Corporation (NCDC).

• Primary Agricultural Credit Societies (PACS), which have a member base of around 13 crore farmers and are primarily engaged in short-term credit and distribution of seeds and fertilisers, will now be able to undertake other economic activities as well.

• Integration of PACS in the FPO scheme will enable them to expand their business in the areas of supply of production inputs, agricultural equipment like cultivator, tiller and harvester, and processing.

• PACS will also be able to undertake high income generating activities like bee-keeping, mushroom cultivation, and others.

Farmer Producer Organisations (FPOs)

• The government of India launched the Central Sector Scheme for ‘Formation and Promotion of 10,000 Farmer Producer Organizations (FPOs)’ on February 29, 2020.

• The scheme has a total budgetary outlay of Rs 6,865 crore.

• FPOs will be provided financial assistance up to Rs 18 lakh per FPO for a period of three years. In addition to this, provision has been made for matching equity grant up to Rs 2,000 per member  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 institutions to ensure institutional credit accessibility to FPOs. Suitable provisions have been made for training and skill development of FPOs.

• Implementing agencies have been approved under the scheme for formation & promotion of FPOs. 

• FPOs are to be developed in produce clusters, wherein agricultural and horticultural produces are grown/cultivated for leveraging economies of scale and improving market access for members.

Need for FPOs

• 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 collectivisation 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 organisation to get better access to technology, input, finance and market for faster enhancement of their income.

Objectives of FPOs

• To provide a holistic and broad-based supportive ecosystem to form 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 realise higher returns through better liquidity and market linkages for their produce and become sustainable through collective action.

• To provide hand-holding 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.

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