FARMER PRODUCER ORGANISATIONS (FPOS) - AN AVENUE FOR FINANCING TO FARMERS

India has about 12.5 Crore farmer households of which over 85% are small and marginal farmers with land holdings of less than 2 hectares. The average size of land holding is 1.33 hectare/ farmer household. Due to this fragmentation and disorganization, farmers face constraints such as procuring inputs like seeds and fertilizers at reasonable prices, lack bargaining power in the market, realizing better value for their produce, access to technology, etc. As a result majority of the small producers are unable to realize optimal value from their farming operations and make economic progress. On the other hand, in case of non-farm sector activities, the problems relate more to the quality of the product and marketability. It is felt, by organising themselves collectively, producers can utilize scale to procure inputs at a lower price, and gain more selling power for their produce/product. Forming a producer organization can provide a strong platform to take up collective business activities, build capacity and provide linkages to markets.

- J. Rajesh Kumar

Concept of FPO's - A brief introduction

A Farmer Producer Organisation is a legal entity formed by primary producers, viz. Small and marginal farmers, which is directly engaged in agriculture and allied activity as crop production, dairy, fishery, animal husbandry, poultry, beekeeping and sericulture etc. Various policy level initiatives are being taken by Government aimed at promoting the concept of producer organizations. Some of them include, having a dedicated source of funding to FPOs from the Rashtriya Krishi Vikas Yojana (RKVY), Equity Grant and Credit Guarantee Fund Scheme by Small Farmers Agribusiness Consortium (SFAC) for Farmer Producer Companies, setting up of Producers Organizations Development Fund (PODF) in NABARD and PRODUCE fund of Government of India etc. A FPO can be a producer company, a cooperative society or any other legal form which provides for sharing of profits/ benefits among the members.

Essential features of a FPO

• Formed by a group of producers for either farm or nonfarm activities.

• It is a registered body and a legal entity.

• Producers are shareholders in the organization.

• It deals with business activities related to the primary produce/product

• It works for the benefit of member producers.

• A part of the profit is shared amongst the member and rest of the surplus is added to its owned funds for business expansion.

• Need of formation of FPO