2. Introduction to FPO
• Eighty-seven percent of agricultural households in India are small and marginal producers, cultivating small plots
which generate low returns. Their average monthly income is Rs 6426, making farming on small plots economically
unviable (NSSO 2014). Therefore, policy makers and practitioners are turning to producer collectives as a means
for improving the economic situation of small producers.
• Such collectivisation is expected to reduce transaction costs and bring scale advantages through bulk purchase of
inputs, exchange of knowledge and information among members, cost efficiencies in value-addition and
marketing,better price realisation through aggregation and value addition and riskreduction.
• Many different organisational forms of collective enterprises have been promoted at different times in India.
• Dr. Y. K. Alagh introduced the concept of producer companies to bring together desirable aspects of cooperative
and corporate sectors for the benefit of primary producers, especially small and marginal farmers
• Subsequently, in 2002, the Companies Act of 1956 was amended to allow for a new form of corporate
entity,namely, Producer Companies (GOI 2011, GOI 2013).
• Many government programmes and schemes are now relying on Producer Companies (PCs) as vehicles for
improving the economic situation of farmers and other producers such as weavers, artisans,and others.
• PCs are engaged in a wide range of activities. and many FPCs are engaged in bulk procurement of inputs, while
others are acting as intermediaries in the value-chain by aggregating produce from small and marginal farmers and
doing some primaryprocessing(such as grading and sorting).
3. FPO-Farmers Producer Organization
Goal of FPOs: The major goal is to provide producers with higher income by forming their own organization
Aim of FPOs: To increase farmers income and provide employment
Key features(Financial Assistance)
*upto Rs 18.00 lakhs per FPO for period of 3 years
*CBBOs-Cluster Based Business Organizations providing support for the promotion of FPOs
*SFAC/NABARD-providing support for the promotion of FPOs
4. • FPO is a legal entity and it is a central sector scheme.
• The scheme is based on the produce cluster approach to enhance
production, productivity, market access, promote diversification, value
addition, processing and export.
• While adopting a cluster-based approach, the formation of FPOs will be
focused on ‘One District One Product’ for the development of product
• To strengthen the financial base of FPOs and entail them to avail
collateral free loan, there is also provision for matching equity grant of
maximum Rs. 2000/- per member with ceiling of Rs, 15 lakh /FPO and
Credit Guarantee facility upto bankable project loan of Rs. 2.00 crore
5. Imapct areas of FPO
• The Farmer Producers Organizations (FPO) are grassroot level, farmer managed legal companies
which aggregate the small producers' inputs and products, perform commercial activities, and share the
profits/benefits among the members.
• Impact areas of FPOs such as Facilitating members for profitable farming and Fund raising for value
• Impact areas such as increase in utilization of farm mechanization and power.
• Increase in input availability.
• Increase in cropping intensity.
• Increase in knowledge of improved production technology.
• Increase in adoption towards production technology while the Fundraising for value addition had three
items namely Value addition linkage and related infrastructure, Ways of raising funds and Dovetailing of
6. Role of FPO in Doubling Farmers' Income
• (1) Supply quality production inputs like seed, fertilizer, pesticides and such other inputs at reasonably
lower wholesale rates.
• (2) Make available need based production and post-production 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 unit production cost.
• (3) Make available value addition like cleaning, assaying, sorting, grading, packing and also farm level
processing facilities at user charge basis on reasonably cheaper rate. Storage and transportation
facilities may also be made available.
• (4) Undertake higher income generating activities like seed production, bee keeping, mushroom
• (5) Undertake aggregation of smaller lots of farmer-members’ produce; add value to make them more
• (6) Facilitate market information about the produce for judicious decision in production and marketing.
• (7) Facilitate logistics services such as storage, transportation, loading/unloading etc. on shared cost
• (8) Market the aggregated produce with better negotiation strength to the buyers and in the marketing
channels offering better and remunerative prices.
7. Detail of Producer companies for the year 2020 statewise
State Number of Producer Companies
Andhra Pradesh 147
Arunachal Pradesh 15
Himachal Pradesh 7
Jammu & Kashmir 10
Madhya Pradesh 237
Tamil Nadu 241
Uttar Pradesh 654
West Bengal 184
Grand Total 4959
8. • Nearly 86 per cent of farmers are small and marginal with average land
holdings in the country being less than 1.1 hectare.
• These small, marginal and landless farmers face tremendous challenges
during agriculture production phase such as for access to technology,
quality seed, fertilizers and pesticides including requisite finances.
• They also face tremendous challenges in marketing their produce due to
lack of economic strength.
• FPOs help in collectivization of such small, marginal and landless farmers
in order to give them the collective strength to deal with such issues.
Members of the FPO will manage their activities together in the
organization to get better access to technology, input, finance and market
for faster enhancement of their income.
9. Objectives of FPO
• To provide holistic and broad-based supportive ecosystem to form 10000 new FPOs to
facilitate development of vibrant and sustainable income-oriented farming and for
overall socio-economic development and wellbeing of agrarian communities.
• To enhance productivity through efficient, cost-effective and sustainable resource use
and realize higher returns through better liquidity and market linkages for their produce
and become sustainable through collective action.
• To provide handholding and support to new FPOs up to five years from the year of its
creation in all aspects of management of FPO, inputs, production, processing and
value addition, market linkages, credit linkages and use of technology etc.
• To provide effective capacity building to FPOs to develop agriculture entrepreneurship
skills to become economically viable and self-sustaining beyond the period of support
from the government.
10. Cluster Identification and Executions
of the area
FIG for FPO
14. 1.Cost of production can be reduced.
ex:*Bulk input orders
*Aggregation of produce
*Bulk transport reduces marketing cost
*Post harvest losses can be minimized
2.Easy access to modern technologies.
3.Easy communication for dissemination of information.
4.Easy access to financial resources.
5.Advantages of economics scale
Ex.for farmers as well as traders
15. 8.All form of information through technological interventions and by means of information communication tools
7.Weather based information at finger print
6.Dissemination of critical information regarding govt schemes and initiatives
5.Securing hassile free financial services with minimum paperwork
4.Post harvest management services for end to end tracebility lucrative market linkages secured through yield potential.
3.Timely Agronomy services to improve yield while mitigating crop loss
2.Implementation of climate resilence practices from sowing till the harvest
1.A centralised digital platform for effective management of resources
16. Problems facing by FPO
*Very few FPOs in INDIA
*Majority of these FPOs
are in the nascent
stage of their
*FPO lack technical
*FPO lack adequate
linkages for subsiding
17. The Future of FPO
• An FPO’s viability is higher when it plays a role in ensuring agri-
operations and becomes an essential service.
• It is important to make FPOs more cohesive entities so they can influence
the future of farming.
• Youth should be brought into this sector and technology plays an
important role in this.
• Policy level initiatives are bringing in private sector capital flow into the
agriculture sector and startups are working directly with farmers.
• This is an opportunity for FPOs.