NABARD to Promote 5000 Farmer Producer Organizations in Next 2 Years

Union Finance Minister Shri Arun Jaitley expressed optimism that the apex development bank would achieve the milestone of promoting 5000 FPOs in the next couple of years. Applauding NABARD’s initiatives in promotion of farmer producer organizations (FPOs) in line with Centre’s call for doubling farm income by 2022. Speaking on 37th Foundation Day commemoration seminar on “Collectivization and Market Linkages: Farmer Producer Organizations”, Shri Jaitley said that NABARD’s activities and its influence on Indian agriculture have been immense.

Speaking through video conferencing facility, Shri Jaitley explained the recent decision of the government to enhance MSP for agri produce. He advised that there is a need to work for a federal structure involving both Central and State Governments for effective marketing of agricultural produce. The Minister said small and marginal farmers benefit from economies of scale when they come together as collectives.

“Majority of land holdings belong to small and marginal farmers. Being unorganized, they are unable to realise desired value from their produce. Organizing them into FPOs will benefit them from economies of scale in purchase of inputs, processing and marketing of their produce,” he said.

Referring to the announcement made in the latest Union Budget allowing tax exemption to FPOs with a turnover up to Rs 100 crore, the Minister reiterated the government’s commitment to extend support to FPOs for their promotion, up scaling and growth.

NABARD has supported around 4000 FPOs across the country at the end of FY’18 of which over 2000 are registered entities actively doing business in agricultural activities. As many as 507 FPOs are engaged in bulk input procurement and distribution while 223 FPOs are involved in aggregation and marketing of fruits and vegetables. Agro processing, government procurement scheme, dairy, organic farming, seed production and marketing, fishery and other allied activities are also undertaken the FPOs.

Earlier in the day, inaugurating the seminar, Shri Shiv Pratap Shukla, Union Minister of State, Finance announced that NABARD would promote 5000 more FPOs in the next two years. He said government is duty bound to double farmers’ income by 2022 and various efforts undertaken for promotion of FPOs will help in achieving the goal.

Outlining the initiatives undertaken by NABARD in raising agricultural productivity and farm income, Shri Harsh Kumar Bhanwala, Chairman, NABARD said the apex bank has taken a lead role in promoting collectives like farmers’ clubs, village watershed committees, self-help groups and joint liability groups. “Steps are being taken to consolidate these efforts by transforming existing farmer collectives into sustainable FPOs. The aim is to promote FPOs in a mission mode and make FPO a nationwide movement,” he said.

The seminar stressed on the need to create a congenial ecosystem for FPOs highlighting key needs including skilled manpower, venture capital, infrastructure for aggregation and storage, affordable credit and market linkages. It advocated for flexible state-specific policies to boost collectivization. Panelists called for reforms in the APMC Act to provide direct market access to FPOs. The idea to accord Gramin Agri Market (GRAM) status to FPOs was discussed too. 

Suggestions like creation of essential infrastructure to be owned and managed by FPOs, procurement of agricultural commodities through FPOs under MSP scheme, relief to FPOs from statutory compliances for initial five years and provision for limited equity participation of the private investors in the FPOs were made in the seminar to ensure sustainability and professional management.

NABARD has dedicated Funds like Producer Organization Development Fund (PODF) and PRODUCE for promotion of FPOs. Financing FPOs through NABARD’s subsidiary NABKISAN Finance Ltd., digitization of FPO data, development of performance measurement tool, etc. have also contributed to the ongoing efforts. Besides, NABARD is running an awareness campaign on the role of FPOs in building resilience against climate change, increase in productivity and optimal efficiency in the agri value chain.

Shri S K Pattanayak, Secretary, Ministry of Agriculture & Farmers’ Welfare stressed on the need for farmers to have direct access to the supply chain to maximize profit. He said India is presently facing a problem of plenty in agricultural produce, which need to be managed well by proper marketing mechanism, value addition and processing for which FPOs can play a vital role.

Smt. Surekha Marandi, Executive Director, RBI said the central bank is open to lend a helping hand in designing tailor-made loan products for the FPOs, which was done in the case of SHG-Bank Linkage Programme earlier.

Professor Ashok Gulati, Director, ICRIER, addressing the valedictory session of the seminar said there is a need to amend the Essential Commodities Act 1955 and APMC Act to facilitate better remuneration for agricultural produce. He added that India needs to replicate the lead farmer model practised in Indonesia and the FPO concept can achieve the same provided the necessary legislative amendments are made.

Deputy Managing Directors of NABARD, Shri H R Dave and Shri R Amalorpavanathan, top officials from SEBI, NCDEX, the banking industry spoke on the occasion.