The government is likely to extend the central scheme for promotion of farmer producer organisations (FPOs) by four to five years beyond the current end date of FY25.
So far, under the scheme, over 9,200 FPOs have been set up either as companies or co-operatives, against the target of having 10,000 such collectives by FY25.
“We will take the programme forward and extend it,” Faiz Ahmed Kidwai, additional secretary, ministry of agriculture, told FE.
The central sector scheme titled “formation and promotion of 10,000 FPOs” was launched in 2020 with a budgetary provision of Rs 6,865 crore. The target was to create 10,000 new FPOs by March, 2025 and it aimed at enhancing farmers’ income through aggregation of their agricultural produce and supplier of various inputs thus reducing cost of cultivation.
Till now, 9,200 farmers’ collective have been formed under the programme with 2.5 million farmers as shareholders in these entities which have presence across 33 states and union territories. These FPOS have a combined turnover of Rs 1,300 crore and the government has infused R 450 crore as matching equity in these collectives.
Speaking at the event on the occasion of the report on the state of sector report – 2024 – farmers producer organisation in India by Samunnati and National Association for Farmer Producer Organizations, Kidwai said FPOs are at critical movement in their journey “unless we extend the programme by another four to five years, we bring it to some solid conclusion , it may be a missed opportunity,”.
He said that financial support provided to farmers’ collectives for three years, is likely to be extended by a couple of years so that these entities reach some kind of economy of scale.
The government has increased allocation for FPOs formation for the current fiscal to Rs 581 crore, an increase of 30% from allocation of Rs 450 crore as revised estimate for FY24.
Under the input licensing scheme of the agriculture ministry, 30,000 licenses for supplying fertiliser, seeds, pesticides have been given to farmers collectives in the last two months.
Stating that the cost of finance for the FPOs for accessing finance from non-banking finance companies is high, Kidwai said “ We need to give them instruments when they need finance at much bigger scale and at a lower interest cost,”.
Under the scheme, FPOs created by 14 agencies including Small Farmers Agri-consortium (SFAC), farmer’s collective Nafed, Nabard and National Cooperative Development Corporation are provided financial assistance up to Rs 1.8 million per FPO for a period of three years.
In addition, provision has been made for matching equity grants up to Rs 2,000 per farmer member of an FPO with a limit of Rs 1.5 million per FPO. FPOs are registered as the producer company provision under the companies Act or co-operative societies act of the concerned states.
Around 7500 farmers’ collectives across various states are now able to sell unique agricultural products including rice, pulses, millets, honey, mushrooms, spices, and value-added products on the government’s e-commerce platform — Open Network for Digital Commerce (ONDC).