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Farmer Producer Organisations

A Farmer Producer Organisation (PO) is a legal entity formed by primary producers, viz. farmers, milk producers, fishermen, weavers, rural artisans, craftsmen. A FPOs can be a producer company, a cooperative society or any other legal form which provides for sharing of profits/benefits among the members.

The Government of India has approved and launched a Central Sector Scheme of “Formation and Promotion of 10,000 Farmer Producer Organizations (FPOs)” to form and promote 10,000 new FPOs till 2027-28.

Objectives of FPOs

i.To enhance the production, productivity and profitability of farmers and helped their economic strength for improving their income.

ii. To provide holistic and broad-based supportive ecosystem to form 10000 new FPOs to facilitate development of vibrant and sustainable income-oriented farming and for overall socio-economic development and wellbeing of agrarian communities.

iii. To enhance productivity through efficient, cost-effective and sustainable resource use and realize higher returns through better liquidity and market linkages for their produce and become sustainable through collective action.

iv. To provide handholding and support to new FPOs up to five years from the year of its creation in all aspects of management of FPO, inputs, production, processing and value addition, market linkages, credit linkages and use of technology etc.

v.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.

vi.To provides training and education to employees, farmer members so they can effectively contribute to the growth of their FPO.

NABARD provides financial and development support to FPOs through the following programmes:

i. Producers Organisation Development Fund (PODF): NABARD created a dedicated fund Producers Organisation Development Fund to support producer organizations adopting a flexible approach to meet the needs of producers. Any registered producer organizations are eligible to get the fund.

Support under PODF is provided as under:

 Loan-linked grant support is available to the FPOs for promotion, capacity building & market interventions.

 Grant assistance is also available to eligible agencies for organizing / conducting workshops, meetings, round table meetings, special studies, IT-based interventions, etc. is available without linking to availing institutional loan.

ii. ‘Producers’ Organization Development and Upliftment Corpus’ (PRODUCE) Fund: NABARD has created this Fund to encourage new FPOs and support their initial financial needs, to make them credit worthy, commercially vibrant and sustainable business enterprise of farmers.

iii. Central Sector Scheme for Promotion and Nurturing of Farmers Producers Organisations (FPOs): The objective of the scheme is to promote new FPOs and make them creditworthy, commercially active and sustainable business enterprises for farmers to meet their initial financial needs.

Small Farmers Agri-Business Consortium (SFAC):

SFAC is a specialized organization that focuses on increasing income through integration and agribusiness development of small and marginal farmers.

SFAC offers Schemes like Equity Grant and Credit Guarantee Fund Scheme to Farmer Producer Companies to improve availability of working capital and development of business activities and promotes development of small agribusiness through its VCA Scheme for value added processing and marketing linkages.

SFAC is also operationalizing the National Agricultural Market Electronic Trading (e-Nam) platform. The aim is to provide a single integrated market for agricultural produce by finding higher prices for farmers. SFAC is progressing towards establishing an eco-system for Farmer Producer Companies to make them sustainable and viable in the long run.

1. Equity Grant Scheme: The Equity Grant Fund (EGF) enables eligible Farmer Producer Companies (FPCs) to receive a grant equivalent in amount to the equity contribution of their shareholder members in the FPC, thus enhancing the overall capital base of the FPC.

Primary objectives of Equity Grant Scheme

a) Enhancing viability and sustainability of FPCs.

 b) Enhancing credit worthiness of FPCs.

 c) Enhancing the shareholding of members to increase their ownership and participation in their FPC.

2. Credit Guarantee Fund Scheme: The Fund has been set up for providing a Credit Guarantee Cover to Eligible Lending Institutions (Scheduled Commercial Banks included in 2nd schedule of RBI Act, RRBs, NCDC, NABARD and its subsidiaries) to enable them to provide collateral free credit to FPCs by minimising their lending risks in respect of loans.

Primary objectives of Credit Guarantee Fund Scheme:

a) To provide a Credit Guarantees Cover for loans to FPOs by Eligible Lending Institution thereby maximizing their lending risk in respect of Credit facilities so as to encourage them to provide collateral credit to FPOs.

3. Venture Capital Assistance Scheme: Small Farmers’ Agri-Business Consortium (SFAC) would provide Venture Capital to qualifying projects on the recommendations of the bank/financial institution financing the project. It is financial support in the form of an interest free loan provided by SFAC to qualifying projects to meet shortfall in the capital requirement for implementation of the project.


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