New Guidelines for the Farmer Producer Organization (FPO) were published by the Ministry of Agriculture and Farmers Welfare as part of the scheme to form and promote 10,000 Farmer Producer Organizations (FPOs). According to the updated regulations, FPOs may register under the Companies Act of 2013 or the State’s Cooperative Societies Act, with management responsibilities required for five years of hand-holding. All the New Guidelines and the formation of the FPO (Farmer Producer Organization) are summarized in this article.
The Farmer Producer Organization (FPO) is a legal body that was established under the Companies Act or Co-operative Societies Act in the year 2013 for the states Concerned to utilize collectives through economies of scale in the production and sale of agricultural and related industries.
Suggested Read: Producer Company Registration in India under Companies Act, 2013
The following are the goals of formation of the FPO under the FPO Scheme:
Farmers will have better access to high-quality inputs and technologies through the development of FPOs because of their collective strength. Additionally, the farmer will be able to access better financial and marketing opportunities because to economies of scale, which will improve income generation.
Following are the significant services and activities performed by the Farmer Producer Organization for the development under the new regulations:
The Cluster-Based Business Organizations in the States will be formed by the Department of Agriculture and Farmer Welfare by allocating Cluster to Implementing Agencies. These Cluster-Based Business Organizations (CBBOs) will be used to develop and promote FPOs, providing a platform for comprehensive knowledge of all FPO promotion-related concerns. There will be five categories of specialists in the CBBOs, including
The government is giving equity grants to FPOs to help them build their financial bases and make it easier to borrow funds from financial institutions for projects and the working money they need for company expansion. Following are the goals of the Equity Grant given to FPO:
The following requirements are eligible to apply for an equity grant under the Formation and Promotion of 10,000 Farmer Producer Organization (FPO) Scheme
FPO will initially require 300 members in plain areas and 100 in the northeast and hilly areas. The Department of Agriculture and Farmers Welfare has the right to modify the required membership minimum considering previous experience.
The “One District One Product (ODOP)” cluster will promote FPOs to encourage specialization and improved processing, marketing, branding. The creation of FPOs in India’s aspirational districts will receive priority, with at least one FPO being established in each block of progressive districts, under the revised criteria.
A maximum of Rs. 15 lakhs will be allocated for each FPO, with a matching grant of up to Rs. 2000 to per farmer member of the FPO.
The government is accelerating the flow of institutional credit to FPOs by lowering the risks taken by financial institutions. This will strengthen its financial capacity to carry out better business strategies that will result in higher profitability.
The main goal of CGF is to offer a Credit Guarantee Scheme Cover to Eligible Lending Institutions (ELI) in in order to allow them to offer Farmer Producer Organizations credit without the need for collateral through reducing the lending risks associated with loans.
Credit Guarantee for an FPO or Federation of FPOs that is insured by the Scheme may be obtained through an ELI (Employer Liability Insurance). It must be guaranteed that the ELI has approved within six months of the date of application for the Guarantee.
On February 29, 2020, Prime Minister Narendra Modi launched 10,000 FPOs from Chitrakoot throughout India. A farmer producer business can be established by 10 or more producers working together, as well as by two or more producer agencies. The National Conference of Cluster-Based Business Organizations (CBBOs) was held by the Ministry of Agriculture and Farmers Welfare as part of the Farmer Producer Organization.
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