Eye on agri growth: Govt to create 30,000 farmer producer bodies in a decade

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August 21, 2020 4:45 AM

Under a new central law on inter-state trade, farmers now have freedom to sell their produce in any market within the country, without being hamstrung by the APMCs.

The Centre has also allowed states to nominate their own implementing agency in consultation with agriculture ministry. No state levies will be imposed on trade outside the APMC mandis and payment has to be made to the farmer within three working days.

The Centre is gearing up to create 30,000 farmer producers’ organisations (FPOs) in next 10 years and the incentives announced for 10,000 FPOs in February may be extended to all such new ventures. The focus on FPOs is significant after the three major legal reforms in the agriculture sector implemented last month.

“There is potential to build 30,000 FPOs in India and it is possible to create them by 2030. We all should work to achieve the target,” Ashok Dalwai, CEO, National Rainfed Area Authority (NRAA), and chairman, Empowered Body, Doubling Farmers’ Income, said on Thursday at an on-line conference of CEOs of 200 farmer producer cooperatives from Maharashtra, Gujarat and Madhya Pradesh. The MahaFPC had organised a training programme for these CEOs to address several issues like capacity building, scaling up operation, credit and quality.

Earlier, in February, the Centre had approved a Rs 6,865-crore scheme for setting up of 10,000 new FPOs and ensuring their growth by FY28. While budgetary support of Rs 4,496 crore will be spent by FY24, an additional Rs 2,369 crore has been estimated for hand-holding of these FPOs until 2027-28. This is part of the government’s efforts to cut production cost and boost income of farming community with a target to create 1.5 lakh jobs. The finance minister had allocated `500 crore for FY21 to launch the scheme on FPOs.

Under a new central law on inter-state trade, farmers now have freedom to sell their produce in any market within the country, without being hamstrung by the APMCs. No state levies will be imposed on trade outside the APMC mandis and payment has to be made to the farmer within three working days.

Via another Ordinance on contract farming, farmers would get share of post-contract price surge, after they sign agreements of contract farming with private players. The two ordinances, along with another one in the offing to give effect to the amendments proposed to the Essential Commodities Act to ease stock holding restrictions on commodities till the food processors in the value chain, will together go a long way in unshackling the entire agriculture-to-food-processing-to-retailing value-chain and giving farmers the choice to sell their produce in any market across the country.

There are three implementing agencies to form and promote these FPOs — Small Farmers Agri-business Consortium (SFAC), National Cooperative Development Corporation (NCDC) and National Bank for Agriculture and Rural Development (NABARD). The Centre has also allowed states to nominate their own implementing agency in consultation with agriculture ministry. 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 the Centre.

There will be a credit guarantee fund of up to Rs 1,000 crore in NABARD in which both the Centre and Nabard will have equal contribution of Rs 500 crore each. Similarly, a Credit Guarantee Fund of Rs 500 crore in NCDC has been provided with equal contribution of Rs 250 crore each by the government and NCDC. This will help accelerate flow of institutional credit to FPOs and minimise the risk of financial institutions for granting loan to these new ventures.

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