The central government has decided to extend the Farmer-Producer Organization Scheme, launched with the aim of organizing farmers and increasing their income, until 2031. Agriculture Secretary Devesh Chaturvedi informed that the government is preparing to continue this scheme until the next Finance Commission cycle. It aims to address the shortcomings that have prevented many FPOs from performing to their full potential.
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An ambitious scheme launched in 2020
This scheme was launched in February 2020 to form 10,000 FPOs. Over the years, a large number of FPOs have been formed across the country, many of which have come into existence in the last two years. Since these organizations are still in their nascent stages, they require ongoing guidance at the technical, financial, and management levels.
Government Focus on Strengthening FPOs
The Ministry of Agriculture has acknowledged that the biggest challenges to making FPOs successful are capacity building and easy access to capital. The new expanded scheme will focus on addressing these issues. The government wants FPOs to not only provide farmers with a platform to sell their produce but also transform them into strong business models by connecting them to the market.
Preparing for Relief in Company Law
FPOs are registered under the Companies Act, which sometimes makes it difficult for farmers to comply with regulations. To address this problem, the Agriculture Department has requested the Ministry of Corporate Affairs to waive penalties for the first three to four years. This will allow farmers to establish their organizations without pressure and gradually become more compliant with all regulations.
How Farmers Benefit from FPOs
FPOs are formed by 10 to 15 or more farmers forming a company. Being in a group increases their bargaining power, and they are less dependent on middlemen. Collective sales enable farmers to earn 20 to 50 percent higher prices for their crops. Furthermore, collective procurement of inputs like seeds, fertilizers, pesticides, and fuel reduces farming costs by 10 to 30 percent.
Subsidies, Grants, and Unsecured Loans
Through FPOs, farmers can access government assistance for cold storage, warehouses, sorting-grading machines, packaging, and processing units. Equity grants of up to ₹50 lakh are available for warehouse construction. FPOs also receive unsecured loans, which can be repaid within three years. Interest subsidies are also provided, reducing financial burden.
Direct Links to Large Markets
Through FPOs, farmers have direct access to large retail and e-commerce companies. This allows them to earn significantly higher profits by selling processed and packaged products instead of raw materials. The government believes that this model can transform farmers into not just producers but also successful agri-entrepreneurs.