The government is planning to create at least 500 Farmer Produce Organisations (FPOs) by the end of March, having rolled out the relevant guidelines five months ago. The target is to facilitate rolling out of 10,000 such bodies across the country by FY24.
The agriculture ministry is under pressure to meet the target as the government wants to prove that changes can be brought about in the whole gamut of agriculture marketing after the reforms initiated through the three farm laws.
“The FPOs will play a crucial role in organising small farmers and bring in the economy of scale while bargaining the selling price of farmers’ produce with a buyer,” an agriculture ministry official said.
Concluding the government’s reply to the President’s address to Parliament, prime minister Narendra Modi on Monday had stated that many of the agriculture related schemes have been aimed at benefitting small and marginal farmers, who together constitute about 86% of total land-owning farmer households of 14.6 crore. As many as 68% of total farmers own less than one-hectare land, he stressed.
The cabinet in February 2020 had approved the Rs 6,865 crore scheme to be spent for setting up of 10,000 new FPOs and ensuring their growth by FY28. While budgetary support of Rs 4,496 crore will be spent by FY24, an additional Rs 2,369 crore has been estimated for hand-holding of these FPOs until FY28. The finance minister has allocated Rs 700 crore for FY22, up by 40% from FY21 for FPO scheme. So far, Rs 102 crore has been disbursed under the scheme. This is part of the government’s efforts to cut production cost and boost income of the farming community, the official said adding the scheme will help achieve the goal of doubling agricultural export to $60 billion by 2022 from an estimated $30 billion during FY18.
“We aim at specialized FPOs of 100 for organic products and another 100 for oilseeds. Also, nearly 370 FPOs will be formed in 115 aspirational districts,” the official said. Under the scheme, FPOs will be provided direct financial assistance up to Rs 18 lakh each over 3 years. The Centre also will contribute a matching equity grant up to Rs 2,000/farmer member of each FPO with a limit of Rs15 lakh per organisation and a credit guarantee facility up to Rs 2 crore per FPO to help them access credit from banks and other agencies.
The Centre has allocated formation of 2,200 FPOs produce clusters for nine agencies — Small Farmers Agri-Business Consortium (SFAC), National Cooperative Development Corporation (NCDC), Nabard, Nafed, Tamil Nadu- SFAC, Haryana-SFAC, Watershed Development Department of Karnataka, Ministry of Rural Development and North Eastern Regional Agricultural Marketing Corporation (NERAMAC).
“There is a need to facilitate our farmers with access to improved technology, credit, better input and more markets to incentivize them to produce a better quality commodity. For this, aggregation of small, marginal and landless farmers into FPOs will help enhance economically strength and market linkages of farmers for enhancing their income,” an an official statement said.