Farmer Producer Organisations are defined as “membership-based organisations or federations of organisations with elected leaders accountable to their constituents with an objective to develop and deploy the aggregation mechanism of farmers, wherein farmers/producers with common interest agree to pool their resources together to form a group, jointly deal with various issues of farming; be it credit, input sourcing, deployment of farm technology and good agricultural practices, post harvest handling or onward sale of agricultural produce”.
With typical holdings of less than 1 hectare, farmers cannot individually enjoy economies of scale and afford to invest in farm mechanisation/technology for enhancing farm productivity, nor optimally procure inputs nor directly access buyers.
Aggregation through FPOs is the only feasible option left for farmers to enhance their bargaining power and farm-related value accruals.
Cost of production or cultivation may be reduced by procuring all necessary inputs in bulk at wholesale rates
Aggregation of produce and bulk transport reduce marketing cost, therefore, enhancing the net value accruals to the producer.
Building scale through aggregation of commodities lends advantage of economies of scale and attracts buyers, processors, and retailers to the farm gate.
Access to modern technology, extension services and joint training on Good Agricultural Practices (GAP) and ensuring traceability of agriculture produce.
Post-harvest losses can be minimised through joint storage and value addition facilities.
Adverse price fluctuations and distress sale can be managed or avoided
Access to institutional credit against stock, without collateral by virtue of joint liability implicit in the FPO framework.
Greater bargaining power to farmers and greater quality orientation in production and processing activities.
Through operating inputs shops, FPOs are successfully reducing their procurement cost of insecticides, pesticides, fertiliser as well as seeds.
Through providing custom hiring services in terms of farm equipment and machines like tractors, tillers, and harvesters, savings are made in production and cultivation costs.
By operating common facilities for primary and secondary processing and direct sale, FPOs are enabling higher value of accruals to farmers.
Being able to offer volumes, they are even able to directly negotiate with and sell to large buyers and retailers.
There are mainly three implementing agencies for formation of FPOs
a. NABARD b. SFAC 3. NCDC
Apart from these, the PAMCL (West Bengal Agri-Marketing Corporation) is also selected as an IA
To closely and cohesively work CBBOs to ensure that CBBOs perform their activities to make FPOs economically sustainable.
NABARD and NCDC maintain and manage Credit Guarantee Fund (CGF)
To prepare Annual Action Plan & ensure targets of new FPO formations are achieved for each Financial Year.
To coordinate with concerned Value-Chain Organization(s) regarding stages of formation and promotion of FPOs by those organizations along with FPO management cost & utilization of previous amount along with documentary proof from time to time as well as requirement of Equity Grant for channelizing their claim for payment.
A CBBO is an entity which has professional experience and exposure in formation of FPOs in agriculture and allied sectors, and providing handholding support to the FPOs.
Assist in community mobilisation - cluster finalisation, baseline survey, value chain study, formation of groups.
Registration of FPOs and Training of BOD’s on roles, responsibilities, management –
Registration of Companies/ FPOs with the Registrar of Companies (ROC); capital/ equity mobilisation.
Training and capacity buildings of FPOs/farmer groups - Training needs identification, develop training modules; conduct basic training workshops; exposure visits.
Preparation and execution of Business Plans- Business plan preparation (for different incubation services), acquiring land, and mobilising equity capital.
Incubation/handholding services for sustainability - The incubation/handholding services include ensuring input, credit, market linkages, preparing and implementing related business plans. Also facilitating establishment of necessary common facility.
Facilitating traceability, compliance and global market connectivity.
Under the CSS for Formation & Promotion of 10,000 FPOs, financial support to Farmer Producer Organization (FPO) up to maximum of Rs. 18 lakh / FPO or actual, whichever is lesser is provided during three years from the year of formation. It is provided to make them sustainable and economically viable. Hence, the fourth year onwards of formation, the FPO has to manage their financial support from their own business activities. The indicative financial support broadly covers the support for salary of its CEO/Manager and Accountant, onetime registration cost, office rent utility charges, one-time cost for minor equipment, including furniture and fixture etc.
• Producer members’ own equity supplemented by a matching Equity Grant from Government, which is required to strengthen financial base of FPOs and help them to get credit from financial institutions for their projects and working capital requirements for business development. Equity Grant shall be in the form of matching grant up to Rs. 2,000 per farmer member of FPO subject to maximum limit of Rs. 15.00 lakh fixed per FPO. This Equity Grant is not in the form of government participation in equity, but only as a matching grant to the FPOs as farmer members’ equity
It shall be a legal entity as per para 2 of this guidelines.
It has raised equity from its Members as laid down in its Articles of Association/ Bye laws, as the case may be.
The number of its Individual Shareholders is in accordance with the terms hereto read together with the Scheme.
Minimum 50% of its shareholders are small, marginal and landless tenant farmers as defined by the Agriculture Census carried out periodically by the Ministry of Agriculture, GoI. Women farmers’ participation as its shareholders is to be preferred. Maximum shareholding by any one member shall not be more than 10% of total equity of the FPO.
A farmer can be member in more than one FPO with different produce clusters but he/she will be eligible only once(for any one FPO that he/ she is a member) for the matching equity grant up to his/her share.
In the Board of Directors (BoD) and Governing Body (GB), as the case may be, there shall be adequate representation of women farmer member(s) and there should be minimum one woman member.
It has a duly constituted Management Committee responsible for the business of the FPO. It has a business plan and budget for next 18 months that is based on a sustainable, revenue model as may be determined by the Implementing Agency.
Credit Guarantee Fund (CGF) provides suitable credit guarantee cover to accelerate flow of institutional credit to FPOs by minimizing the risk of financial institutions for granting loan to FPOs so as to improve their financial ability to execute better business plans leading increased profits.
To monitor and review the progress of FPO development and functioning by holding its regular meetings.
To suggest the potential produce clusters in the district (where FPOs can be formed & promoted) and will also assist Implementing Agencies, CBBOs and other stakeholders in identification of cluster(s) and activity (ies) and also in mobilization of farmers.
To resolve the financial constraints of FPOs through District Level Bankers’ Committee