Scheme for Promotion of FPO

The Small Farmers Agribusiness Consortium (SFAC) was set up by the Ministry of Agriculture, Government of India. The SFAC was mainly developed to increase the income of small and marginal farmers through the development of agribusiness. Under SFAC, the scheme for promotion of Farmer Producer Organization (FPO) was proposed to promote and support farmer producer organizations by providing sustainable finance. In this article, we look at the Farmer Producer Organization Scheme in detail.

Objectives of the Scheme

The objectives of the FPO scheme are listed below:

To build a sustainable agriculture sector by promoting and supporting Farmer Producer Organisations, that enables farmers to improve production and productivity in the state.
To provide support for the promotion of Farmer Producer Organisations through the qualified Resource Institutions (RIs).
To promote economically viable and self-governing Farmer Producer Organisations.
To provide the required assistance and resources such as technical knowledge, inputs, financial resources, and infrastructure to strengthen the FPOs.
To enable farmers in accessing the markets through their FPOs, both as buyers and sellers.
To create a policy environment for investments in FPOs to leverage their production and marketing strength.

Eligibility Criteria

The following are the eligibility criteria for the farmer-producer organization:

Any FPOs already registered under the Companies Act or various central and state cooperative society laws is eligible for the FPO scheme.
The FPOs should be registered and administered by farmers, and also the organisation should be focused on activities related to agriculture and allied sectors.

Support for Promotion of FPOs

The formation of FPOs will be supported by the Central and State Governments and their agencies, through various state-funded schemes and sponsors in the agriculture sector. This target will be achieved by creating a partnership with the concerned promoter body, research organisations, civil society institutions, consultants, private sector and any other entity which can contribute to the development of strong and viable FPOs.

FPO Promotion and Development Process

The list of the process involved under the promotion and development of FPO are given below:

Cluster Identification
Diagnostic Study
Feasibility analysis
Baseline assessment
Business Planning
Mobilisation of farmers
Organising and formalising
Resource mobilisation
Systems development
Business operations
Assessment and audit

Support from Central Government in Promoting FPOs

To support and strengthen FPOs, the Department of Agriculture and Cooperation (DAC) suggests Central Governments with the following steps:

The DAC, Ministry of Agriculture regulated under the Government of India will work as the nodal agency for the implementation and growth of FPOs.
Small Farmers Agribusiness Consortium (SFAC) regulated under DAC, will be the respective agency of DAC to serve 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 overall support to State Governments, FPOs and other entities engaged in the promotion and development of FPOs. Also, SFAC will create a sustainable relationship between FPOs and inputs suppliers, technology providers, extension and research agencies and marketing and processing members, both in the public and private sectors.
The National Cooperative Development Corporation (NCDC) will be extended to incorporate FPOs in the eligible institution's list to receive support under the various programmes of the Corporation.
The National Agricultural Cooperative Marketing Federation of India (NAFED) will take measures to include FPOs in the list of eligible institutions which undertakes price support purchase orders.
DAC will act with State Governments and Food Corporation of India (FCI) to incorporate FPOs procurement agencies under the minimum support price procurement agencies.
DAC, along with its respective agencies, will work with NABARD and other financial institutions to provide term loan for working capital and infrastructure investment requirements of FPOs. DAC will also work with all applicable stakeholders to reach 100% financial inclusion for members of FPOs and associate them to Kisan Credit cards.
Also, DAC will work with the Ministry of Corporate Affairs and other stakeholders to improve the provisions under the law relating to the registration, management and regulation of FPOs.

Support from State Government in Promoting FPOs

To support and strengthen FPOs, DAC suggests State Governments with the following steps, By:

Declaring FPOs with cooperatives registered under the relevant State legislation and self-help groups/federations to avail all benefits and facilities that are extended to institutions from time to time.
Making provisions for the issuance of licenses to FPOs for trading inputs such as seed, fertilizer, farm machinery, pesticides etc.
Utilising FPOs as producers of certified seed, saplings and other planting material, extending production, marketing subsidies with cooperatives.
Allowing the direct sale of farm produce by FPOs at the farm gate, through FPO owned marketing centres and for facilitating contract farming arrangements between FPOs and bulk buyer.
Designating FPOs as procurement agents for MSP operations for various crops.
Utilising FPOs as implementing agencies for various agricultural development programmes, especially RKVY, NFSM, ATMA etc. and extending the benefits of central and state-funded programmes in agriculture to FPOs members on a priority basis.
Associating FPOs to financial institutions like cooperative banks, State Financial Corporations etc. for working capital, storage and processing infrastructure and other investments.
Implementing state-level policies to support and strengthen FPOs to make them feasible, sustainable and self-governing bodies.

Note: The Department of Agriculture and Cooperation (DAC) will circulate updates to this policy statement and guidelines from time to time as required. The copies of this document will be on the DAC, SFAC, NCDC, NAFED and State Government portal and also translated into all official languages for wide publicity and information.

Also, read about Food Security Card