The government is expected to announce a new policy on Farmer Producer Organizations (FPOs) within a fortnight which a view to ensuring better credit flows to them at viable rates and promote common branding of products while linking them to industry and boost farmers’ income, Faiz Ahmed Kidwai, additional secretary, ministry of agriculture, said on Tuesday.

“The new policy for FPOs have been finalised and it would be announced shortly,” Kidwai said at the sidelines of fourth FPOs conclave organised by agri-value chain NBFC Samunnati here.

He said that while several state governments such as Karnataka, Kerala, Uttar Pradesh, Maharashtra and Tamil Nadu have formulated separate policies for promotion of FPOs, a national policy would help in bringing uniformity. Cost of financing for FPOs is quite high, Kidwai said.

The agriculture ministry is discussing with the finance ministry and the Reserve Bank of India to bring down cost of borrowing by FPOs to viable levels. Kidwai stated that talks with the ministry of corporate affairs on developing a specific definition for FPOs as these entities do not function as companies.

Earlier this year, the agriculture ministry had constituted an expert group under the chairmanship of Kidwai for drafting the national policy on the FPOs.The group held consultations and meetings with different stakeholders and prepared a draft of the policy, which was put in public domain in June for seeking comments.

So far more than 9,000 farmers’ collectives with 2.28 million farmers members have been registered under the companies or cooperatives acts under a central sector scheme aimed at enhancing farmers’ income through aggregation of their agricultural produce and supplier of various inputs.

Kidwai said the plan to expand membership of these FPOs to 5 million over the next 2 -3 years through adding more farmers members

He said that equity grants of Rs 410 crore have been released to FPOs, as matching contributions to what they have collected and credit guarantee cover worth Rs 400 crore to FPOs.

In addition so far 3832 FPOs have been provided with licenses for selling seeds while 3461 collectives have fertiliser licenses. Close to 3000 collectives have received approval for selling pesticides while 700 entities have mandi licenses.

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).

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.

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 scheme, FPOs 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.

Meanwhile, Samunnati launched an online search instrument – ‘Bharat FPO finder’ which is the government verified data based on farmers’ collectives.

Currently, there are around 40,000 FPOs – cooperatives and producers’ companies.