The trend of an increasing number of farmers becoming shareholdings in farmer producer organisations (FPOs) has boosted local aggregation and reduction in cost of production by achieving economies of scale, a senior government official said.
In the last five years, over 5 million farmers have taken equity in more than 10,000 FPOs.
Of the total shareholders, Telangana (0.67 million), Uttar Pradesh (0.59 million), Andhra Pradesh (0.57 million), Madhya Pradesh (0.32 million) and Maharashtra (0.3 million) account for 50%, according to the agriculture ministry.
Women farmers have 38% share in these collectives.
“Increase in shareholding in FPOs has also led to collectivisation of small and marginal farmers while members farmers get cheaper agri inputs, including fertilisers, crop protection products and equipment,” an official told FE.
The scheme for formation of 10,000 FPOs with a budgetary provision of Rs 6,865 crore for the five years was launched in February 2020.
Rising Turnover and Market Access
In FY25, 340 FPOs have crossed Rs 10-crore sales turnover while over 1,100 farmers collectives reported sales in excess of Rs 1 crore. The cumulative turnover of these FPOs has crossed Rs 15,282 crore.
These collectives were registered under several provisions such as the Companies Act, 2013 (farmer producer companies), cooperative societies Acts of the states or the multi-state cooperative society Act.
For sustaining these collectives, the government provides a matching grant of up to Rs 2,000 per farmer member of the FPO, with the maximum limit being Rs 15 lakh per collective.
Expanding Licences and E-Market Presence
Over 5,880 FPOs have seed licence while more than 5,500 farmer collectives have licence to distribute fertilisers. In addition, over 400 FPOs have dealerships for distribution of agrochemicals, which ensures that the benefit of dealer discount is passed on to member farmers.
Over 200 collectives are selling their products on platforms such as GeM while sales of agri produces have also commenced in a significant way via Amazon and Flipkart.
Several collectives formed in the last five years under the central sector scheme have also carried out procurement of oilseeds, pulses and grain under the minimum support price.
Under the scheme, the government provides financial assistance of up to Rs 18 lakh per FPO for a period of three years.