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Explained: How Forming FPO’s Can Double Farmer's Income

Farmer Producer Organizations (FPOs) are critical to achieving the goal of doubling farmers' income by utilising economies of scale in production and marketing.

Chintu Das

Farmer Producer Organizations (FPOs) are critical to achieving the goal of doubling farmers' income by utilising economies of scale in production and marketing. Cluster-Based Business Organizations (CBBOS) have gone to great efforts to optimise FPOs, from mobilising farmers to finding markets.

At the inauguration of the Conference of CBBOs and FPOs on May 6, Union Minister of State for Agriculture and Farmers Welfare Kailash Choudhary praised these efforts. The Union minister asked CBBOs to reach out to local elected officials in order to entice small and marginal farmers to the FPO movement. The 'Scheme of Formation and Promotion of 10,000 FPOs' was used to hold the conference.

The Importance Of FPOs

FPOs act as a collective force to enhance agro output via resource efficiency, ensuring income-oriented farming for the long term. This helps farmers make more money by lowering the cost of farm output.

Small and marginal farmers dominate Indian agriculture, with average land holdings of less than 1.1 hectares. Small and marginal farmers, who account for more than 86 percent of total land holdings, face significant challenges in both production and post-production scenarios, such as access to production technology, high-quality inputs at reasonable prices, seed production, custom hiring, and value addition. Most crucially, they're having trouble finding markets. As a result, forming FPOs to collectivise such producers is critical to addressing these issues.

10,000 FPOs Formation and Promotion Scheme

The government started this Central Sector Scheme in 2021 with the goal of forming and promoting 10,000 new FPOs. Professional handholding support for new FPOs is provided for a period of five years under this scheme.

The scheme uses a produce cluster method to boost output, productivity, market access, diversification, value addition, processing, and export. The establishment of FPOs will be centred on 'One District One Product' for the development of product specialisation while using a cluster-based strategy.

The scheme provides for financial assistance of up to Rs.18.00 lakh per FPO for three years as management costs in order to make them sustainable and commercially successful. There is also provision for matching equity grant of up to Rs. 2000/- per member with a limit of Rs. 15 lakh /FPO and Credit Guarantee facility up to bankable project loan of Rs. 2.00 crore to strengthen the financial foundation of FPOs and entice them to access collateral free loan.

Success Till Now

As of April 21, more than 5.87 lakh farmers have been mobilised under the Scheme, with nearly 3 lakh farmers having enrolled as FPO shareholders. Farmer members have contributed INR 36.82 crores in equity. There have been 201 women-focused FPOs registered.

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