India Completes Formation of 10,000 Farmer Producer Organisations

Context

India has reached a significant milestone in agricultural collectivisation with the completion of 10,000 Farmer Producer Organisations (FPOs) under a flagship Central Sector initiative. Importantly, 21.96 lakh women farmers are members of these organisations, underscoring the scheme’s emphasis on gender-inclusive rural development.

Scheme Overview: Formation & Strengthening of Farmer Producer Organisations

Nature of the Scheme: A centrally sponsored programme aimed at establishing and nurturing 10,000 farmer-owned collectives across the country, enabling small and marginal farmers to jointly undertake aggregation, value addition, and market-oriented activities.

Year of Initiation: February 2020.

Nodal & Executing Institutions:

• Small Farmers’ Agribusiness Consortium (SFAC)
• National Bank for Agriculture and Rural Development (NABARD)
• National Cooperative Development Corporation (NCDC)
• National Agricultural Cooperative Marketing Federation of India (NAFED)

Core Objective: To improve farm income stability and market access by strengthening farmer collectives, enhancing access to finance, technology, quality inputs, and organised value chains, while reducing dependence on intermediaries.

Operational Design & Support Framework

• Area-based and crop-specific approach: FPOs organised around crop clusters in alignment with the One District One Product (ODOP) initiative.
• Financial assistance package:
  • Handholding and professional support up to ₹18 lakh per FPO for three years
  • Equity support up to ₹15 lakh per FPO, capped at ₹2,000 per farmer
  • Credit guarantee coverage for institutional loans up to ₹2 crore per FPO
• Market integration: Forward and backward linkages facilitated mainly through NAFED, including procurement and value-chain participation.
• Skill development: Capacity enhancement programmes delivered by BIRD, Lucknow and LINAC, Gurugram.
• Social inclusion: Targeted focus on women farmers, smallholders, and farmers from aspirational districts.

Why it Matters

• Strengthens smallholder agriculture: Nearly 86% of Indian farmers benefit through collective bargaining and scale efficiencies.
• Economic outcomes: Studies indicate around 22% higher price realisation and about 31% lower marketing costs through FPO-based channels.

Source : PIB