27 Oct Farmers Producer Organisation (FPO)
This article covers “Daily Current Affairs” and the topic details “ Farmers Producer Organisation (FPO)”. This topic has relevance in the Agriculture section of the UPSC CSE exam.
For Prelims:
About FPO?
Initiatives for the Promotion of FPOs
For Mains:
GS 3: Agriculture
Suggestions for improvement?
Why in the news?
Over the past few years, Farmer Producer Organizations have addressed the issue of fragmented land holdings, which hinder the realization of economies of scale and deter agricultural investments.
About FPO:
A Farmers Producer Organisation (FPO) is a legal entity established by primary producers, including farmers, milk producers, fishermen, weavers, rural artisans, and craftsmen, primarily consisting of farmers as members. FPOs can be registered as Cooperatives (under the Cooperative Societies Act of the respective State), Farmer Producer Companies (under the Companies Act, 2013), or Societies (under the Society Registration Act, 1860).
FPOs offer several benefits to small and marginal farmers, such as:
- Facilitating land pooling to address issues related to fragmented landholdings.
- Leveraging economies of scale for the collective purchase of agricultural inputs and the sale of produce.
- Enabling the sharing of services, including knowledge input, production supervision, storage, and transportation, which helps reduce transaction costs.
- Involving farmers in value addition activities such as input supply, credit, processing, marketing, and distribution.
- Serving as an interface between farmers and the global market, allowing them to export agricultural commodities.
- Providing access to capital for farmers and managing risk through diversification.
- Promoting economic democracy at the grassroots level.
Initiatives for the Promotion of FPOs:
- SFAC (Small Farmers Agri-business Consortium): SFAC serves as the nodal agency at the national level for the creation of FPOs. They operate a Credit Guarantee Fund to help financial institutions mitigate credit risks when lending to Farmer Producer Companies (FPCs) without requiring collateral. Additionally, SFAC provides matching equity grants of up to Rs. 10 lakh to double the share capital of FPCs, thereby strengthening their financial position.
- NABARD (National Bank for Agriculture and Rural Development): NABARD offers financial support to FPOs through two dedicated funds: “Producers Organization Development Fund (PODF)” and “PRODUCE Fund (Producers’ Organization Development and Upliftment Corpus).” These funds are created with the aim of encouraging the formation of new FPOs and helping them fulfill their initial financial needs.
Suggestions for improvement:
- Analysis of Limited Success: Evaluate the reasons behind the limited success of existing FPOs and take outcome-oriented actions to address challenges.
- Collaborative Farming: Form FPOs based on adjoining land holdings and common produce to achieve higher economies of scale and engage in value addition activities.
- Enhanced Credit Support: Provide increased credit support, including subsidies, collateral-free loans, and low-interest credit facilities to counter reluctance from banks.
- Income Tax Exemption: Grant FPOs income tax exemption to incentivize their formation and growth.
- Hand Holding and Training: Offer regular training and guidance to FPOs through government agencies, agricultural extension services, and NGOs.
- Professional Management: Allow private sector investments in FPOs by amending the Companies Act, bringing expertise and efficiency to FPO operations.
- Market Linkages: Support FPOs with direct procurement by the government, freight cost subsidies for wholesale buyers, and connections to online marketing platforms.
- Village Producer Organizations (VPOs): Develop VPOs as joint ventures of multiple FPOs, focusing on specific agricultural products and post-production activities for comprehensive value chains.
Source: Farmer Producers’ Organisations: Engines of agri-innovation in UP | The Indian Express
Q.1 Regarding the Farmers Producer Organisation (FPO), recently seen in the news, consider the following statements:
- FPOs can only be registered under the Companies Act, 2013.
- FPOs are exclusively composed of farmers as members.
Which of the statements given above is/are correct?
(a) 1 only
(b) 2 only
(c) Both 1 and 2
(d) Neither 1 nor 2
Download plutus ias current affairs eng med 27th Oct 2023
Q.2 Regarding the SFAC (Small Farmers Agri-business Consortium), consider the following statements:
- SFAC is the nodal agency for the creation of FPOs
- SFAC primarily focuses on promoting large-scale agribusiness enterprises.
- SFAC provides grants of up to Rs. 10 lakh to individual farmers.
How many of the above statement/s is/are correct?
(a) Only one
(b) Only two
(c) All three
(d) None
Q.3 FPOs (Farmers Producer Organizations) have gained significant importance in India’s agricultural landscape. Discuss the key roles and benefits of FPOs in promoting agricultural sustainability, enhancing farmers’ income, and contributing to rural development.
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