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Formation & Promotion of 10,000 FPOs

  • 02 Mar 2021
  • 4 min read

Why in News

Recently, the Ministry of Agriculture and Farmers Welfare celebrated the first anniversary of the Central Sector Scheme titled 'Formation & Promotion of 10,000 Farmer Produce Organizations (FPOs)’.

Key Points

  • Launch:
    • In February 2020, at Chitrakoot (Uttar Pradesh) with a budgetary provision of Rs. 6865 crore.
  • About:
    • More than 2200 FPOs produce clusters have been allocated for the formation of FPOs in 2020-21.
    • Implementing Agencies (IAs) are engaging Cluster-Based Business Organizations (CBBOs) to aggregate, register & provide professional handholding support to each FPO for a period of 5 years.
      • CBBOs will be the platform for an end to end knowledge for all issues related to FPO promotion.
  • Financial Assistance:
    • Up to Rs. 18.00 lakh per FPO for a period of 3 years.
    • Provision has also been made for matching equity grant up to Rs. 2,000 per farmer member of FPO with a limit of Rs. 15.00 lakh per FPO.
    • Provision of a credit guarantee facility up to Rs. 2 crores of project loan per FPO from the eligible lending institution to ensure institutional credit accessibility to FPOs.
  • Significance:
    • Increase Farmers Income:
      • It will promote the selling of farmers' produce from the farm gate of farmers thereby enhancing farmers’ income.
      • This will shorten the supply chain and accordingly marketing costs will get reduced resulting in better income for farmers.
    • Create Employment:
      • It will accelerate more investment in marketing and value addition infrastructure near to farm gates creating more employment opportunities for rural youth.
    • Make Farming Viable:
      • It will make farming more viable by aggregating land.
  • Other Initiatives for Farmers:

Farmer Producer Organization

  • A Producer Organisation (PO) is a legal entity formed by primary producers, viz. farmers, milk producers, fishermen, weavers, rural artisans, craftsmen.
    • PO is a generic name for an organization of producers of any produce, e.g., agricultural, non-farm products, artisan products, etc.
  • A PO can be a production company, a cooperative society or any other legal form which provides for sharing of profits/benefits among the members.
    • In some forms like producer companies, institutions of primary producers can also become a member of PO.
  • The concept of 'Farmer Producer Organizations, (FPO)' consists of collectivization of producers especially small and marginal farmers so as to form an effective alliance to collectively address many challenges of agriculture such as improved access to investment, technology, inputs, and markets. FPO is one type of PO where the members are farmers.
  • FPOs are generally mobilized by promoting institutions/resource agencies (RAs).
  • The resource agencies leverage the support available from governments and agencies like National Bank for Agriculture and Rural Development (NABARD) to promote and nurture FPOs.


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