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A Year of Creating FPOs: This is How They Are Enabling Small Farmers to Play Big

One among the several changes in the farm sector ever-since the Modi government came in is its pursual to enable small farmers to play big. It is important, given the fact that over 86% of farmers have small landholdings. The Farmers’ Producer Organisations (FPOs), which unite small farmers as one single entity in each region, is an important measure in this regard. It was back in February 2020 that Prime Minister Narendra Modi kickstarted the process of creating 10,000 FPOs across the nation.

So, What Has been the Progress Now?

More than 2,200 FPOs produce clusters have been allocated for the formation of FPOs in the current year, of which 100 FPOs are for specialized Organic produce, 100 FPOs from Oilseeds, and 50 commodity-specific FPOs with value chain development will be formed. In addition to SFAC, NABARD and NCDC, six more implementing agencies have been approved for the formation and promotion of FPOs.

What Assistance These FPOs Get?

Financial assistance up to ₹18 lakh will be provided to each FPO for a period of 3 years. In addition to this, provision has been made for matching equity grant of up to ₹2,000 per farmer member of FPO with a limit of ₹15 lakh per FPO. Also, a credit guarantee facility up to ₹2 crore of project loan per FPO from the eligible lending institution has been set up to ensure institutional credit accessibility to FPOs.

At the National level, the National Project Management Agency (NPMA) engaged for providing overall project guidance, coordination, compilation of information relating to FPOs, maintenance of Management Information System.

What Do They Do?

Unlike big farmers, small farmers can’t achieve scale whether in production or marketing the produce when working at the individual level. This is where the FPO serves as platform for small farmers to put a united front and achieve scale. It provides for selling of farmers produce from the farm gate, thereby enhancing farmers’ income. This will shorten the supply chain, and accordingly marketing cost will get reduced, resulting in better income for farmers. It also opens up employment opportunities for rural youth.

These FPOs are to be created in areas where agricultural and horticultural produces are grown/cultivated, aligning to the concept of clusters.

The “One District One Product” scheme also comes handy here. The clusters under ODOP will promote specialization and better processing, marketing, branding and export.

You may also like to read: FPOs – Turning Farmers into a Market Force to Reckon With