Central Sector Scheme on Promotion & Formation of 10,000 FPOs

Government of India has launched a new Central Sector Scheme titled "Formation and Promotion of 10,000 Farmer Produce Organizations (FPOs)" with a clear strategy and committed resources to form and promote 10,000 new FPOs in the country with budgetary provision of Rs 6865 crore. Organising farmers into farmer producer organizations will help in initiating collective decisions on various aspects of agriculture and create opportunities to get involved in value adding decisions and activities.

Objectives: The key objectives of the scheme are as follows:

-         To provide holistic and broad-based supportive ecosystem to form new 10,000 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 5 years from the year of 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 government.

Key Provisions

-         To form about 2 FPOs across 5000 blocks (out of 7000 blocks) across India. 15% of FPOs to be formed in aspirational districts.

-         Minimum 300 members to be mobilized in an FPOs wherein efforts to be made to increase member base to 500 farmers.

-         Formation and Promotion of FPOs to be based on Produce Cluster Area. FPO formation will factor in ‘One District One Produce’ approach towards produce specialization.

-         The scheme provides handholding support to new FPOs for 5 years for management of FPOs including marketing and business activities and effective capacity building to FPOs to develop agri-entrepreneurship skills towards economic viability and self-sustainability beyond project period.

-         Under this scheme, FPOs will be provided financial assistance up to Rs 18.00 lakh per FPO for a period of 03 years. In addition to this, provision has been made for matching equity grant upto Rs. 2,000 per farmer member of FPO with a limit of Rs. 15.00 lakh per FPO and a credit guarantee facility up to Rs. 2 crores of project loan per FPO from the eligible lending institution to ensure institutional credit accessibility to FPOs.

-         The scheme envisages a 3-tiered implementation and monitoring structure.

o   Nodal Agency: At the National level Small Farmers Agribusiness Consortium is the nodal agency for the implementation of the scheme.

o   Implementing Agency: At the state level, various implementing agencies are identified for the implementation of the scheme. Presently 09 Implementing Agencies (IAs) have been finalized for formation and promotion of FPOs. A total of 5 Implementing agencies namely NABARD, NAFED, NCDC, FDRVC and SFAC have been appointed in Bihar for the implementation of the 10,000 FPO scheme.

Cluster Based Business Organizations: Implementing Agencies (IAs) will engage Cluster Based Business Organizations (CBBOs) to aggregate, register & provide professional handholding support to each FPO for a period of 5 years. CBBOs have been empanelled & engaged by IAs. CBBOs will be the platform for an end-to-end knowledge for all issues related to FPO promotion.