Context:

The Ministry of Agriculture and Farmers Welfare has released the draft National Policy on Farmer Producer Organisations (FPOs) for public consultation, aiming to strengthen FPOs and enhance farmer welfare.

What are FPOs?

Farmer Producer Organisations (FPOs) are voluntary collectives formed by farmers to:

• Improve bargaining power,
• Access inputs, credit, markets, and technology, and
• Undertake joint farming and marketing activities.

Over 5,000 FPOs are currently registered on the Open Network for Digital Commerce (ONDC) for online produce sales.

Key Objectives of the Proposed Policy:

1. Mass Formation: Establish 50,000 new FPOs, benefiting around 2.5 crore farmers.
2. Scheme Evaluation: Review existing schemes including the 2021 Central Sector Scheme for the promotion of 10,000 FPOs.
3. Capacity Building: Follow the AMUL three-tier model with focus on professional management and collective business goals.
4. End-to-End Value Chains: Enhance market linkages from production to sale.
5. Financial Incentives: Offer financial assistance, incentives, and easier access to credit.
6. Policy Support: Build an enabling multi-level policy framework (national, state, local).
7. Technology Integration: Promote adoption of modern farming techniques and practices.

Key Features of the Draft Policy:

• Eligibility Criteria:
  • Minimum 300 members (100 in NE/hilly/UT regions).
  • Must be registered under the Companies Act, 2013 or Cooperative Societies Act.
  • Mandatory registration on the FPO Registry Portal.
• Institutional Framework:
  • Central Nodal Department: Department of Agriculture & Farmers’ Welfare (DA&FW) to allocate funds and facilitate institutional credit.
  • Central Nodal Agency: Small Farmers’ Agribusiness Consortium (SFAC), New Delhi.

Transformational Potential of FPOs:

• Reduce Input Costs & Increase Income: Through bulk procurement, collective marketing, and transport.
• Modernisation of Agriculture: Shared access to expensive, modern farm equipment for small and marginal farmers.
• Collective Farming: Mitigates challenges of small average landholding size (1.08 ha as per 2015-16 data).
• Greater Bargaining Power: Enables farmers to compete with large agribusinesses.
• Access to Credit and Tech: Facilitates loans, modern technologies, and extension services.
• Eliminating Middlemen: Direct marketing increases farmer profits.
• Value Addition: Reduces post-harvest losses and enhances supply chain efficiency.
• Crisis Management & Communication: Supports price stability, contract farming, and dissemination of real-time advisories.

Challenges Faced by FPOs:

1. Lack of Professional Management: Shortage of trained rural professionals.
2. Weak Financial Base: Dominated by small and marginal farmers with limited capital.
3. No Business Risk Coverage: Unlike farm-level crop insurance, FPO-level risks remain unprotected.
4. Poor Market Access: Limited linkages with industry and major retailers.
5. Infrastructure Deficit: Gaps in logistics, storage, value addition, and branding.
6. Low Awareness & Technical Skills: Lack of training and support agencies at the grassroots level.

Government Measures to Address Challenges:

• Equity Grant Fund Scheme: Improves financial sustainability and creditworthiness.
• Credit Guarantee Fund Scheme: Enables collateral-free loans.
• Backward-Forward Linkages Scheme: Improves supply chain efficiency.
• Operation Greens (TOP to TOTAL): Promotes infrastructure, processing, and professional management for FPOs.
• 100% Tax Exemption: For FPOs with annual turnover up to ?100 crore.

Notable Success Stories:

• Oriental FPO (J&K): Built a cold chain and launched ‘Safe N Fresh’ brand.
• Prayag Raj FPO (UP): Set up input retail outlets benefiting local farmers and consumers.
• Rameshwar FPO (UP): Opened wholesale counters for vegetables, increasing farmer margins.
• Rampur FPO (UP): Partnered with local administration for a nutrition drive, supplying Anganwadi centres.

Way Forward:

• Amend APMC Acts to allow more FPO participation in procurement.
• Strengthen farm-level infrastructure for FPOs.
• Direct procurement under MSP through FPOs.
• Encourage private investment and PPP models.
• Extend Equity Grant & Credit Guarantee schemes to all types of FPOs.
• Develop flexible and inclusive policy frameworks across states.
• Launch mass awareness campaigns among rural farmers.

Conclusion:

FPOs have the potential to transform Indian agriculture by empowering small farmers, improving incomes, and integrating them into modern value chains. With effective policy support, institutional strengthening, and capacity building, FPOs can become the backbone of rural agricultural development.