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Time of India
6 days ago
- Business
- Time of India
Empowering smallholder farmers & marginal farmers through formation & promotion of FPOs
Dr. Prashant Prabhakar Deshpande has post-graduated in Economics with a Gold Medal in 1976 and was awarded a Ph.D in Social Sciences from Nagpur University in 2007. Introduction The Central Sector Scheme for Formation and Promotion of 10,000 Farmer Producer Organisations (FPOs) was launched by Prime Minister Narendra Modi on 29th of February, 2020. The scheme was launched with a budget outlay of Rs 6,865 crore till 2027-28. Since the launch of the scheme, Rs 254.4 crore in equity grants have been released to 4,761 FPOs and credit guarantee cover worth Rs 453 cr has been issued to 1,900 FPOs. Recently, FPOs were in the spotlight as India reached a transformative milestone by establishing 10,000 Farmer Producer Organisations (FPOs), ahead of the March 31, 2025, deadline, collectively bringing together nearly 30 lakh farmers across the country, 40% of whom are women. These FPOs are now conducting business worth thousands of crores of rupees, contributing immensely to the growth of the agricultural sector. On the occasion of the release of the 19th instalment of PM-KISAN in Bhagalpur, Bihar, the Prime Minister launched the 10,000th FPO, a milestone marking a significant leap in Farmer Welfare and inclusive agricultural development. The 10,000th FPO was registered in Khagaria district and focuses on maize, banana, and paddy. The concept behind the Farmer Producer Organisations Farmers who are the producers of agricultural products can form groups. To facilitate this process, the Small Farmers' Agribusiness Consortium (SFAC) was mandated by the department of agriculture and cooperation, ministry of agriculture, government of India, to support the state governments in the formation of FPOs. Objectives To provide a holistic and broad-based supportive ecosystem to form to facilitate the development of vibrant and sustainable income-oriented farming and overall socio-economic development and wellbeing of the agrarian communities. To enhance productivity through efficient, cost-effective, and sustainable resource use to realise higher returns through better liquidity and market linkages for their produce and become sustainable through collective action. To provide handholding and support to new FPOs up to five years from the year of their creation in all aspects of management of FPO, inputs, production, processing and value addition, market linkages, credit linkages, and use of technology etc. To provide effective capacity building to FPOs to develop agriculture entrepreneurship skills to become economically viable and self-sustaining beyond the period of support from the government. The Farmer Producer Organisations (FPOs) The FPOs are collectives formed by farmers to: Enhance productivity; Reduce costs, and; Improve market access through cooperation. The primary aim of an FPO is to enable farmers to benefit from the economies of scale, enhancing overall Farmer Welfare. The Small Farmers' Agribusiness Consortium (SFAC) under the Ministry of Agriculture plays a pivotal role in supporting the formation of the FPOs, which are registered under either: The Companies Act, or; The Co-operative Societies Act. Need for FPOs Small, marginal, and landless farmers face challenges during the agriculture production phase, such as: Access to technology; Quality seeds; Fertilisers and pesticides, and; Requisite finances. Challenges in marketing their produce due to a lack of economic strength. FPOs help in the collectivisation of such small, marginal, and landless farmers, giving them collective strength to deal with such issues. managing their activities together to get: Better access to technology; Inputs; Finance, and; Market for faster enhancement of their income. The way FPOs help Smallholder Farmers Achieving Economies of Scale FPOs help small and marginal farmers reduce input costs and secure better prices by aggregating purchases and sales. Enhanced Credit Access Access to institutional credit since long a barrier for smallholders, is improved through FPOs, aligning such support with ongoing government schemes for farmers aimed at financial inclusion. Accessing Global Markets FPOs enable smallholders to access international markets. Overcoming Shrinking Farm Sizes With average landholding size shrinking from 1.08 hectares in 2015–16 to just 0.74 hectares in 2021–22, FPOs help farmers aggregate resources and invest in modern equipment. This consolidation enables economies of scale: Allowing for bulk purchases; Shared services, and; Use of advanced machinery is improving productivity, a key enabler of agricultural sector growth. Supporting Value-Addition & Processing Through shared infrastructure like mini-mills and cold storage FPOs help farmers earn more by adding value to raw produce, strengthening Farmer Welfare through diversified income streams. Key Features of the Scheme Up to Rs 18 lakh financial aid over 3 years Matching equity grant of Rs 2,000 per farmer (max Rs 15 lakh) Credit Guarantee up to Rs 2 Crore in project loans Cluster-based handholding support for 5 years Challenges Faced by FPOs Many farmers joining FPOs have limited exposure to modern agricultural practices, quality standards, and market requirements. Most farmer-leaders lack formal training in business management, financial planning, human resources, and strategic planning. Most FPOs begin with minimal capital contributed by farmer members who themselves have limited financial resources, creating a precarious situation where the organisation struggles to invest in necessary infrastructure, working capital, or growth opportunities. Farmer members often expect immediate benefits from their FPO membership but are reluctant to make significant financial contributions. Traditional financial institutions often view these organisations as high-risk borrowers due to their agricultural focus, limited collateral, and perceived management weaknesses. Many FPOs lack the market intelligence necessary to make informed decisions about what to produce, when to sell, and at what prices, putting them at a disadvantage competing with established suppliers or negotiating with buyers. Epilogue By fostering collectivisation, enhancing market access, and providing financial and institutional support, the initiative has empowered millions of small and marginal farmers, including women and economically weaker sections, boosting agricultural productivity and income, contributing to rural job creation and economic resilience. As FPOs continue to evolve, they promise a more equitable and resilient future for India's agricultural landscape, it is opined. Critics however state that it is critical to move beyond numbers. They opine a target-oriented approach may work in the initial phase. As such, although reaching the target of 10,000 FPOs ahead of the March 31, 2025 deadline is commendable, there is now a need to focus on better outcomes. Facebook Twitter Linkedin Email Disclaimer Views expressed above are the author's own.
Hindustan Times
09-07-2025
- Business
- Hindustan Times
SC committee, NABARD discuss steps to ease farmers' woes
The high-powered committee constituted by the Supreme Court to look into farmers' issues held a meeting with the National Bank for Agriculture and Rural Development (NABARD) on Tuesday on ways to ease farmer distress. The meeting was held at the committee's office in Panchkula and attended by Shaji KV, chairman of NABARD. (HT) One of the main stakeholders in improving farmers' conditions, NABARD is an apex development bank to promote sustainable and equitable agriculture and rural development. The meeting was held at the committee's office in Panchkula and attended by Shaji KV, chairman of NABARD. Formed in September 2024 to resolve farmers' issues, the committee, headed by former Punjab and Haryana high court judge Nawab Singh, questioned NABARD over a host of issues: Farmers Producer Organisations (FPOs); enhancing farmer income and cold-chain infrastructure. NABARD officials told the committee that the strategy to enhance farmers' income was rooted in financial inclusion, agri-value chain development, sustainable infrastructure and livelihood diversification. The committee is reported to have confronted the NABARD, questioning, 'Why not put the policy on ease of doing farming on par with the ease of doing business.' When the committee wanted to know the concrete steps relating to farming distress, NABARD said it had been promoting as many as 7,400 FPOs across the country. On this, the committee quipped: 'What is the outcome of promoting FPOs given various challenges.' The committee highlighted that ground reports suggested that many FPOs were lying defunct and there was a need to revisit the programme. 'Over the past few months, various stakeholders have, through representations before the committee, mentioned large-scale failure of FPOs. We asked the officials from NABARD regarding any plans to revisit the scheme,' one of the committee members told HT. NABARD, however, said it was a workable model for small and marginal farmers amid the challenges of effective implementation at the ground level. 'NABARD has promoted over 7,400 FPOs involving 27. 53 lakh farmers — 82% of whom are small/marginal — ensuring better market access and income. Banks disbursed ₹1.96 lakh crore under the SHG-Bank Linkage Programme in FY2025 benefiting 17 crore rural households with affordable credit,' said an official of NABARD during the meeting. We are inviting all stakeholders: Committee The committee claimed that they had been doing everything they could and inviting all stakeholders over the past few months to address the issue of farmer distress. The committee members, agricultural scientist Devinder Sharma; former Haryana DGP BS Sandhu; economist Dr RS Ghuman and member-secretary Dr Amit Kumar Agrawal; were present in the meeting. This panel of experts was constituted by a Supreme Court bench, headed by justice Surya Kant, to recommend comprehensive reforms in the agrarian sector with the aim of improving farmer welfare. Earlier in May, the committee had also held discussions with the Kerala agriculture minister to examine state's fruit and vegetables support programme, and the concept of Farmers' Debt Relief Commission.
