Context: 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)’.
About Scheme

• It was launched by the Prime Minister in February 2020 at Chitrakoot (Uttar Pradesh) with a budgetary provision of Rs 6865 crore.
• Under the scheme, FPOs are to be developed in production clusters, wherein agricultural and horticultural products are grown/cultivated for leveraging economies of scale and improving market access for members.
• The scheme intends to bring more and more small and marginal farmers on a bigger platform as a joint entity to help them become ‘Atma Nirbhar’ (self-reliant) in the long run.
• At the National level, National Project Management Agency (NPMA) as a professional organization has been engaged in providing overall project guidance, coordination, a compilation of information relating to FPOs, maintenance of MIS and monitoring purpose.

Features 

• There are well-defined training structures in the scheme and the institutions like Bankers Institute of Rural Development (BIRD), Lucknow and Laxmanrao Inamdar National Academy for Co-operative Research & Development (LINAC), Gurugram have been chosen as the lead training institutes for capacity development & training of FPOs.
• FPOs will be provided financial assistance up to Rs 18.00 lakh per FPO for a period of 03 years.
• In addition to this, provision has 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 and 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

Objectives 

• To provide small and marginal farmers "better collective strength for better access to quality input, technology, credit and better marketing access through economies of scale for better realisation of income".

Significance 

• The formation of the FPOs scheme will promote the selling of farmers produce from the farm gate of farmers.
• This will shorten the supply chain and accordingly marketing cost will get reduced resulting in better income for farmers.
• It will accelerate more investment in marketing and value addition infrastructure near to farm gate creating more employment opportunities for rural youth.

Progress

• More than 2200 FPOs produce clusters have been allocated for the formation of FPOs in the current year, of which 100 FPOs for specialized Organic produce, 100 FPOs from Oilseeds & 50 commodity-specific FPOs with value chain development will be formed.
• In addition to SFAC, NABARD & NCDC, 06 more implementing agencies have been approved for the formation and promotion of FPOs.
• 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.

Farmers’ Producer Organizations (FPOs)

• It is a registered body with a group of farm producers that are shareholders in the organisation.
• It deals with business activities related to the farm produce and it works for the benefit of small, marginal and landless farmers.
• It acts as an aggregator for member farmers including from inputs to output which will enhance the economy of scale and bargaining power.
• The Small Farmers’ Agribusiness Consortium (SFAC) was mandated by the Department of Agriculture and Cooperation, Ministry of Agriculture to support the State Governments in the formation of Farmer Producer Organizations (FPOs).