Saturday, April 4, 2020


CCEA gives approval to formation of 10,000 FPOs between ’19-20 & ’23-24
Friday, 21 February, 2020, 13 : 00 PM [IST]
Our Bureau, New Delhi
The Cabinet Committee on Economic Affairs (CCEA), chaired by Prime Minister Narendra Modi, has given its approval for 10,000 FPOs (farmer producer organisations) to be formed in the five-year period between 2019-20 and 2023-24 to ensure economies of scale for farmers. Support to each FPO be continued for five years from its year of inception.

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

Brief of the scheme
A new Central Sector Scheme, titled Formation and Promotion of Farmer Produce Organisations (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) with a further committed liability of Rs 2,369 crore for period from 2024-25 to 2027-28 towards handholding of each FPO for five years from its aggregation and formation.

Initially 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 so desire, nominate their implementing agency in consultation with DAC&FW.

DAC&FW will allocate cluster/states to implementing agencies, which, in turn, will form the cluster-based business organisation in the states.

FPOs will be formed and promoted through cluster-based business organisations (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 and accounts and IT/MIS. These CBBOs will be platform for an end-to-end knowledge for all issues in FPO promotion.

There will be a National Project Management Agency (NPMA) at SFAC for providing overall project guidance, data compilation and maintenance through integrated portal and information management and monitoring.

Initially the minimum number of members in FPO will be 300 in plain area and 100 in the North-East and hilly areas. However, DAC&FW may revise the minimum number of membership based on experience/need with approval of the 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.

FPOs will be promoted under One District One Product cluster to promote specialisation 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 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 minimising the risk of financial institutions for granting loan to FPOs.

States/UTs will be allowed to avail loan at prescribed concessional rate of interest under the Agri-Market Infrastructure Fund (AMIF) approved for set up in NABARD for developing agriculture marketing and allied infrastructure in GrAMs, by making marketing and allied infrastructure, including Common Facilitation Centre/Custom Hiring Centre for FPOs as eligible category for providing assistance to States/UTs.

Adequate training and handholding will be provided to FPOs. CBBOs will provide initial training. Professional training of CEO/Board of Directors/accountant of FPOs will be provided in organisational training, resource planning, accounting/management, marketing, processing, etc. in reputed national/regional training institutes.

The report of Doubling of Farmers’ Income (DFI) has emphasised this fact and recommended formation of 7,000 FPOs by 2022 towards convergence of efforts for doubling the farmers' incomes.

In the Union Budget 2019-20, the Government has announced creation of 10,000 new FPOs to ensure economies of scale for farmers over the next five years, for which a dedicated supporting and holistic scheme as the Central Sector Scheme is proposed for targeted development of FPOs and its sustainability.
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