10,000 FPOs Achieved Under Government’s Flagship Scheme

Syllabus: GS3/ Agriculture

Context

• The union government achieved the target of establishing 10,000 farmer producer organisations (FPOs) under a flagship central scheme.
  • PM Modi launched the 10,000th FPO in Bhagalpur, Bihar focusing on maize, banana, and paddy.

About

• The Central Sector Scheme for “Formation and Promotion of 10,000 Farmer Producer Organizations (FPOs) was launched in 2020.
• The scheme was launched with a budget outlay of ₹6,865 Crore till 2027-28.
• Approximately 30 lakh farmers in the country are connected to FPOs, with around 40 percent of them being women.
• Objective of the scheme are as;
  • To provide handholding and support to new FPOs up to five years from the year of its creation,
  • To provide effective capacity building to FPOs to develop agriculture entrepreneurship skills.

What are FPOs?

• A Farmer Producer Organization (FPO) is a group of farmers who work together to market and produce agricultural products.
  • FPOs are legally registered entities under Part IXA of the Companies Act or the Cooperative Societies Act of respective states.
• The Small Farmers’ Agribusiness Consortium (SFAC), under the Ministry of Agriculture, plays a crucial role in facilitating the formation of FPOs across the country.

Need for FPOs

• Indian agriculture is dominated by small, marginal, and landless farmers, who face several challenges such as:
  • Limited access to technology, quality seeds, fertilizers, and pesticides.
  • Financial constraints restricting modern farming techniques and mechanization.
  • Inability to market their produce effectively due to weak negotiation strength.
  • Lack of proper storage, transportation, and logistics support.
• FPOs help address these issues by collectivizing small farmers, enhancing their bargaining power, and enabling them to access better inputs, financial support, and market linkages.

Services provided by FPOs

• Supply quality production inputs like seed, fertilizer, pesticides and such other inputs at reasonably lower wholesale rates.
• Make available machinery and equipment like cultivator, tiller, sprinkler set, combine harvester and such other machinery and equipment on custom hiring basis for members to reduce the per 2 unit production cost.
• Make available value addition like cleaning, assaying, sorting, grading, packing and also farm level processing facilities at user charge basis on a reasonably cheaper rate. 
• Facilitate logistics services such as storage, transportation, loading/un-loading etc. on a shared cost basis.
• Market the aggregated produce with better negotiation strength to the buyers and in the marketing channels offering better and remunerative prices.

Challenges to FPO

• Complex regulatory and compliance procedures.
• Weak infrastructure for storage, processing, and transportation.
• Low farmer participation and internal governance issues.
• Limited adoption of digital platforms and technology.
• Vulnerability to climate risks and market fluctuations.

Way Ahead

• The successful formation of 10,000 Farmer Producer Organizations (FPOs) under the Central Sector Scheme marks a transformative milestone for the agriculture sector. 
• By fostering collectivization, enhancing market access, and providing financial and institutional support, this initiative has empowered millions of small and marginal farmers, including women and economically weaker sections.

Source: PIB