CCEA okays formation of 10,000 FPOs by 2024 with Rs 4,496 crore outlay to boost farmers income

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Published: February 19, 2020 6:21:05 PM

The scheme also envisages a further committed liability of Rs 2,369 crore for 2024-25 to 2027-28 period towards hand-holding of each FPO for five years from its aggregation and formation, taking the total size to Rs 6,865 crore.

The ministry will allocate cluster/states to implementing agencies, which in turn will form the cluster based business organization in the states.The ministry will allocate cluster/states to implementing agencies, which in turn will form the cluster based business organization in the states.

The government on Wednesday approved setting up of 10,000 new farmer produce organisations (FPOs) by 2024 with budgetary support of nearly Rs 4,500 crore as part of its efforts to cut production cost and boost income of farming community.

Further, an amount of Rs 2,369 crore has been estimated for hand-holding of these FPOs during 2024-25 to 2027-28 period, taking the total size to Rs 6,865 crore.

“The Cabinet Committee on Economic Affairs (CCEA), chaired by Prime Minister Narendra Modi, has given its approval for 10,000 FPOs to be formed in five years period from 2019-20 to 2023-24 to ensure economies of scale for farmers. Support to each FPO to be continued for 5 years from its year of inception,” Agriculture Minister Narendra Singh Tomar told reporters after the meeting.

The CCEA has approved a new central sector scheme ‘Formation and Promotion of Farmer Produce Organizations (FPOs)’ to form and promote 10,000 new FPOs with a total budgetary provision of Rs 4,496 crore for five years (2019-20 to 2023-24), an official statement said.

The scheme also envisages a further committed liability of Rs 2,369 crore for 2024-25 to 2027-28 period towards hand-holding of each FPO for five years from its aggregation and formation, taking the total size to Rs 6,865 crore.

The minister said there will be three implementing agencies to form and promote FPOs, namely Small Farmers Agri-business Consortium (SFAC), National Cooperative Development Corporation (NCDC) and National Bank for Agriculture and Rural Development (NABARD).

States may also, if they desire, nominate their implementing agency in consultation with Union Agriculture Ministry.

The scheme is likely to create 1.5 lakh jobs.

“Small and marginal farmers do not have economic strength to apply production technology, services and marketing including value addition. Through formation of FPOs, farmers will have better collective strength for better access to quality input, technology, credit and better marketing access through economies of scale for better realization of income,” the statement said.

Initially, the minimum number of members in FPO will be 300 in plain areas and 100 in North East and hilly areas. However, the minimum number of membership can be revised with approval of Union Agriculture Minister.

Priority will be given for formation of FPOs in aspirational districts in the country with at least one FPO in each block of aspirational districts.

The ministry will allocate cluster/states to implementing agencies, which in turn will form the cluster based business organization in the states.

“FPOs will be formed and promoted through Cluster Based Business Organizations (CBBOs) engaged at the state/cluster level by implementing agencies. The CBBOs will have five categories of specialists from the domain of crop husbandry, agri marketing/value addition and processing, social mobilisation, law & accounts and IT/MIS,” it added.

These CBBOs will be platform for an end-to-end knowledge for all issues in FPO promotion.

The FPOs will be promoted under ‘One District One Product’ cluster to promote specialization and better processing, marketing, branding and export by FPOs. There will be a provision of equity grant for strengthening equity base of FPOs.

“There will be a credit guarantee fund of up to Rs 1,000 crore in NABARD with equal contribution by DAC&FW (Department of Agriculture, Cooperation and Farmers Welfare) and NABARD and Credit Guarantee Fund of Rs 500 crore in NCDC with equal contribution by DAC&FW and NCDC for providing suitable credit guarantee cover to accelerate flow of institutional credit to FPOs by minimizing the risk of financial institutions for granting loan to FPOs,” it said.

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