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.