Overview

Agriculture in India has been growing at a very fast pace since independence.

Increase in population and the resultant demand for produce has been one of the major factors to propel growth of agricultural practices in India. A substantial quantity of the produce comes from the farmers with small land holdings for cultivation, across the country. These farmers, due to the absence of an aggregated approach, are unable to realize the benefits of collective farming, namely lower cost of inputs, market linkages, advisory services etc., that would result in better yields and returns. One of the ways to ensure these farmers get a better yield and returns per unit of land would be the promotion of Farmer Producer Organizations.

Promotion of Farmer Producer Organizations is one of the initiatives encouraged by the Department of Agriculture and Cooperation of the Ministry of Agriculture to mainstream the idea of promoting and strengthening member-based institutions of farmers. Farmer Producer Organizations were proposed as a way forward to ensure integration of smallholder farmers within an agricultural value chain. In India, smallholder farmers have already begun to come together and form Farmer Producer Organizations (FPOs), most of which are Farmer Producer Companies (FPCs).

Government of India has been providing support in order to make this initiative a success. The Government has issued a National Policy and Process Guidelines document on formation of FPOs. This set of Guidelines has encouraged State Governments to provide incentives, including credit for and support of the formation and ongoing operations of FPOs in various states. The Government had announced that FPOs with a turnover of up to 100 crores would be eligible for tax exemption for 5 years, thereby ensuring a strong foundation to create a sustainable structure for agriculture practices.

Benefits of FPOs

Cost of production can be reduced by procuring all necessary inputs in bulk at wholesale rates

Aggregation of produce and bulk transport reduces marketing cost, thus, enhancing net income of the producer

Access to modern technologies, facilitation of capacity building, extension and training on production technologies and ensuring traceability of agriculture produce

Post-harvest losses can be minimized through value addition and efficient management of value chain

Regular supply of produce and quality control is possible through proper planning and management

Price fluctuation can be managed

Easy in communication for dissemination of information about price, volume and other farming related advisories

Access to financial resources against the stock, without collaterals

Easy access of funds and other support services by the government / donors / service providers

Improved bargaining power and social capital building

Current Scenario

Current Scenario

NABARD has supported around 4000 FPOs across the country at the end of FY’18 of which over 2000 are registered entities actively doing business in agricultural activities. As many as 507 FPOs are engaged in bulk input procurement and distribution while 223 FPOs are involved in aggregation and marketing of fruits and vegetables. Agro processing, Government procurement scheme, dairy, organic farming, seed production and marketing, fishery and other allied activities are also undertaken by the FPOs.

Presently, around 5000 FPOs are in existence in the country, formed under various initiatives of the Government of India (including SFAC), State Governments, NABARD and other organizations over the last 8-10 years. Of these, around 3200 FPOs are registered as Producer Companies and the remaining as Cooperatives/ Societies, etc.

(Credit - www.nabard.org)

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