Recently Prime Minister Shri Narendra Modi launched the 10,000th Farmer Producer Organization (FPO) in Khagaria district, Bihar, marking a major milestone in the Central Sector Scheme for “Formation and Promotion of 10,000 Farmer Producer Organizations (FPOs).” 

About the “Formation and Promotion of 10,000 Farmer Producer Organizations (FPOs)” Scheme

• The “Formation and Promotion of 10,000 Farmer Producer Organizations (FPOs)” scheme was launched to strengthen the farming community through collective action.
• It aims to enhance farmers’ income by improving market access, bargaining power, and financial support.
• Launch: The scheme was introduced in 2020 by the Prime Minister.
• Budget: A budget allocation of ₹6,865 crore has been made for the scheme, covering the period until 2027-28.
• Objectives: 
• • It focuses on small and marginal farmers, helping them benefit from economies of scale in production and marketing.
  • The objective is to increase farmers’ income and ensure sustainable, cost-effective, and resource-efficient farming.

Initiatives under the Scheme

• Credit Guarantee Fund: Provides financial institutions with credit guarantees to encourage lending to FPOs.
• ONDC Integration: Over 5,000 FPOs have been onboarded onto the Open Network for Digital Commerce (ONDC) to enhance online market reach.
• CSC Partnership: An MoU between CSC SPV (Common Services Centres Special Purpose Vehicle) and the Ministry of Agriculture enables 10,000 FPOs to function as Common Service Centers (CSCs), offering digital services and generating employment in rural areas.

Milestone Achievement under the Scheme

• The 10,000th FPO was recently registered in Khagaria district, Bihar.
  • The FPO focuses on maize, banana, and paddy cultivation, catering to regional agricultural strengths.
• Currently, around 30 lakh farmers are associated with FPOs, with 40% being women.
• FPOs have collectively generated business worth thousands of crores in the agricultural sector.

Financial and Institutional Support

• Handholding support for five years is provided to each newly formed FPO.
• Financial assistance up to ₹18 lakh is granted for management costs over three years.
• Matching equity grant of ₹2,000 per farmer (capped at ₹15 lakh per FPO) is provided.
• Credit guarantee coverage up to ₹2 crore is available for project loans to ensure institutional credit access.

About Farmer Producer Organizations (FPOs)

• FPOs are farmer-led entities registered under the Companies Act or State Cooperative Societies Act.
• They help small and marginal farmers by leveraging collective strength in production, marketing, and financial access.
• The concept behind Farmer Producer Organizations is that farmers, who are the producers of agricultural products, can form groups.
• To facilitate this process, the Small Farmers’ Agribusiness Consortium (SFAC) was mandated by the Department of Agriculture and Cooperation, Ministry of Agriculture.
• The SFAC is responsible for supporting the formation and promotion of FPOs across India

Key roles of FPOs

• Providing quality seeds, fertilizers, and other inputs at wholesale rates.
• Offering farm machinery on a rental basis.
• Aggregating and marketing member’s produce for better price realization.
• Facilitating storage, transportation, and value addition.
• Providing market information and financial services.

Ministry-Level Support for FPOs

• Ministry of Agriculture & Farmers Welfare: Provides FPOs with seed, fertilizer, and pesticide licenses and links them to e-commerce platforms like ONDC and e-NAM.
• Ministry of Food Processing: Offers financial incentives such as 35% capital subsidies and 50% grants for branding and marketing.
• Ministry of Micro, Small & Medium Enterprises (MSME): Provides FPOs with access to funds, equity grants, credit guarantees, and capacity-building programs.
• Ministry of Fisheries, Animal Husbandry, and Dairying: Allocates ₹500 crore for dairy FPOs and promotes 100 Fodder Plus FPOs through NDDB.
• APEDA (Agricultural & Processed Food Products Export Development Authority): APEDA provides assistance to APEDA registered FPOs for export and MSME under its scheme of Fund for Regeneration of Traditional Industries (SFURTI), which provides assistance for setting up enterprises
• Spices Board: Implements the Sustainability in Spice Sector through Progressive, Innovative and Collaborative Interventions for Export Development (SPICED)  scheme to enhance spice production and export.

The government’s commitment to promoting FPOs reflects a significant step towards Atmanirbhar Krishi (Self-Reliant Agriculture), empowering small and marginal farmers, and transforming India’s agricultural sector.