A Farmer Producer Organization (FPO) is a type of Producer Organisation (PO) where farmers are its members. The PO is an organisation of any produce, such as non-farm products, agricultural, artisan products, etc., by producers. The Small Farmers’ Agribusiness Consortium (SFAC) provides support for FPOs promotion. The idea behind the FPOs is that the farmers who are the producers of agricultural products can form groups and register themselves under the Companies Act, 2013.
Rationale behind creation of FPO
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- The main aim of the FPOs is to increase the income for the producers through an organisation of their own. A small producer does not have the volume to take advantage of economies of scale.
- The FPOs helps to eliminate the chain of intermediaries in agricultural marketing by engaging in direct marketing of agricultural produce, thus increasing the share of profits for the farmers.
- The FPOs can benefit farmers to compete with large corporate enterprises by increasing the bargaining power of the group.
- The FPOs can provide quality and low-cost inputs to member farmers such as the purchase of machinery, loans for crops, input agricultural inputs (pesticides, fertilisers, etc).
Promotion of FPO by Government
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- Since 2011, the government has intensively promoted the FPOs under the NABARD, SFAC, NGOs and state governments. There was an announcement of measures for supporting the FPOs in Budget 2018-19, including a five-year tax exemption.
- The FPOs are promoted and formed through the Cluster-Based Business Organisations (CBBO) and engaged at the cluster or state level by implementing the agencies.
- The Budget 2019-20 talked of setting up additional 10,000 FPOs in the next five years.
- The FPOs are promoted under the ‘One District One Product’ to encourage better branding and specialisation, processing, marketing, and exports by the FPO.
